Caretaker Energy Minister seeks the dismissal of the management of gas operator “Bulgartransgaz”

The caretaker Minister of Energy Andrei Zhivkov has asked the Bulgarian Energy Holding to dismiss the management of the state-owned gas operator “Bulgartransgaz”, the ministry announced on July 5. The reason for this is the results of an inspection by the Energy and Water Regulatory Commission (EWRC), the Ministry of Energy explained.

At the end of last week, the energy regulator announced the results of its inspection of the gas operator, which shows that during the implementation of the Balkan Stream project, "Bulgartransgaz" did not request prior approval from the energy regulstor, EWRC, for the conclusion of contracts for construction activities and for the bank loans with which the payments for them have been made.

"All this is in violation of the Ordinance on licensing of activities in the energy sector, the Energy and Water Regulatory Commission reports," the energy ministry explained.

The loan agreements signed by “Bulgartransgaz” EAD have increased the indebtedness of the gas operator from BGN 4 million in the beginning of 2019 to over BGN 2.6 billion today. These contracts were supposed to be approved by the EWRC, but “Bulgartransgaz” EAD did not notify the regulattor about them at all.

The conclusions of the state regulator confirm the facts presented by the team of the Ministry of Energy at the beginning of its term. The review of the financial condition of the state energy companies then found that as a result of the large-scale investment programme of “Bulgartransgaz” EAD the company's liabilities increased significantly.

This would be justified only if it implies an increase in cash flows in the company - a forecast that is not confirmed by the financial analysis of Balkan Stream, explained the Ministry of Energy.

Thus, today's inspection of the EWRC confirms that the Balkan Stream project has a negative impact on the overall financial position of “Bulgartransgaz” and leads to over-indebtedness of the company. This confirms the conclusions of the Ministry of Energy for inefficient management of the state-owned gas operator.

The ministry has also asked other state-owned energy companies to reduce their costs by between 10% and 30%.

image by BGNES Bulgarian Energy Holding

A written confirmation of the request made by the Minister of Energy is expected in Bulgarian Energy Holding (BEH) EAD, after which it will be considered by the Board of Directors of BEH EAD. This is stated in an official statement from the holding on July 5.

It should be borne in mind that Bulgartransgaz EAD is a vertically integrated enterprise with a two-tier management system. It is an independent transmission operator, according to the Energy Act, added by BEH.

The decision of the Board of Directors of Bulgarian Energy Holding EAD will be publicly announced.

The position of the holding is in relation to a report by the Energy and Water Regulatory Commission regarding an inspection of Bulgartransgaz EAD.

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