Bulgaria may list energy monopolies stakes in ‘08

SOFIA - Bulgaria may list minority stakes in its state gas and power monopolies on its bourse at the start of 2008 if the ruling coalition approves the long-debated plan, the economy and energy minister said on Wednesday.

By (Reuters)

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Published: Wed 26 Sep 2007, 4:30 PM

Last updated: Sat 4 Apr 2015, 11:45 PM

Petar Dimitrov said his Socialist-led government would not consider full privatisation of gas monopoly Bulgargaz and power utility NETC as they wanted to protect consumers and ensure that domestic energy prices remained low.

‘We have been discussing the creation of a joint energy holding, a minority stake in which will be listed on the bourse,’ the minister told Reuters in an interview.

‘It could be done in the beginning of next year. The strategy is ready. If there is a political will it will be implemented,’ he added.

Sofia’s move to lump the two companies together would be at odds with a European Commission plan to open markets for more competition and force energy utilities to separate energy generation from transmission networks.

But Dimitrov said the proposed combination of Bulgargaz and NETC into a joint holding company followed a wave of consolidation in western Europe.

‘All energy giants in Europe move towards consolidation. We have no reasons to be happy with small energy companies,’ he said.

The two Bulgarian companies are small players on the European market but are expected to attract strong investor interest.

NETC owns the high-voltage power grid and is the dominant power exporter in Bulgaria, while Bulgargaz owns the entire gas network and is a shareholder in international oil and gas pipeline projects such as the planned Nabucco gas link from the Caspian to Europe.

The government has been debating the possible partial privatisation of the energy monopolies over the past two years, to raise private capital for their growth, but no concrete actions have been undertaken so far.

Low energy prices

Dimitrov said that passing a majority stake in Bulgargaz and NETC into private hands was out of the question.

‘For now it is in the interest of the Bulgarian people not to do that. Our domestic energy prices are twice as low as the regional prices,’ he said.

‘A private company would like to sell on the international market ... We would have to import more expensive electricity then, which would lead to a shock adjustment of prices to European Union levels’.

Electricity prices in Bulgaria, which meets all of its power needs from domestic production, are twice as low as average EU prices. Prices of gas, all imported from Russia, are about 30 percent lower than average EU levels, the ministry’s data showed.

The former communist country has gradually increased energy prices over the past 15 years but is reluctant to free the market as Bulgaria remains the poorest European Union nation, with average incomes at about a third of the bloc’s levels.

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