Following the Gas Price Hike: How Will the New Prices Affect Businesses in Bulgaria?

Natural gas prices are expected to continue rising in December, according to the Energy and Water Regulatory Commission (EWRC). Households using gas for heating will already be paying around 20% more this month, the regulator estimates. The Association of District Heating Companies has warned that if gas prices continue to rise after the New Year, heating and electricity prices charged by district heating companies may have to be adjusted administratively. Meanwhile, businesses already expect food prices to continue increasing as a result of higher gas costs.

Household gas consumers will pay 20% more in November, Tаско Ерменков, an EWRC representative, said on the programme More from the Day. This is according to the commission’s calculations following the increase in gas prices of almost 33% at the beginning of the month.

Tasko Ermenkov, EWRC representative: “Unfortunately, this is beyond the control of the EWRC or anyone else. If we had not changed the supply mix, if we had not told Bulgargaz to change its mix, the increase today would have been 39%.”

Prices will continue to rise because of the geopolitical situation. Businesses that use natural gas in production are already struggling.

Anatoli, pizzeria owner: “We have already raised the prices of pizzas and pasta dishes. You can see that a pizza in Italy costs €5–6, while here pizzas are already €7, €8 or €10. If we raise them any further, I expect many restaurants will close.”

This will also affect the wages of people working in businesses of this kind.

Anatoli, pizzeria owner: “They certainly won't be getting Christmas bonuses – that needs to be clear. But we are not even talking about Christmas bonuses here. A large part of the sector is currently unable to pay decent wages, given the prices people have to contend with just to make ends meet. In my opinion, there will be no wage increases. Not only will there be no increases, there will be no additional incentives either.”

This is also why restaurant prices in Bulgaria are higher than in neighbouring countries, Anatoli Kolev added. The situation is also difficult for district heating companies, particularly the district heating company 'Toplofikatsia Sofia', which will be unable to pay the new gas price and already owes more than BGN 1.5 billion for natural gas to the Bulgarian Energy Holding (BEH) group.

Kremen Georgiev, Chair of the Association of District Heating Companies: “It really cannot afford it, but whether the debt is two billion or BGN 1.55 billion is not the most critical issue. District heating companies will indeed incur further debts to Bulgargaz. In practice, everyone will pay what they can under the circumstances. But we hope that this increase will last for no more than another month, for example.”

BNT: And if prices do not come down, what are the next steps?

Kremen Georgiev, Chair of the Association of District Heating Companies: “The next step is for the EWRC to take action to change the prices charged by district heating companies. The EWRC has stated that this will not happen for heating, but it could happen for electricity.”

The association’s calculations show that district heating prices remain socially oriented and do not reflect the companies’ actual costs.

Kremen Georgiev, Chair of the Association of District Heating Companies: “They have never been realistic; they have always been socially oriented.”

BNT: If they were to reflect actual costs, how much higher would they have to be?

Gas Prices Rise by Almost 33% from Yesterday

Kremen Georgiev, Chair of the Association of District Heating Companies: “Quite a lot – tens of per cent. For Toplofikatsia Sofia, it would be hundreds of per cent: 200 or 300%, in other words at least two to three times higher.”

The EWRC acknowledges that the situation with district heating in Sofia is indeed difficult.

Tasko Ermenkov, EWRC representative: “The situation at Toplofikatsia Sofia is poor, and I would say this is due to the company's short-sighted management.”

He said it was necessary to establish why the company had so far failed to invest in cogeneration facilities that could generate electricity and help offset its losses. He also promised that there would be no increase in heating prices from the New Year.