The State Commission for Energy Regulation (SCER) decided to grant a licence to AES to build and operate Maritsa Iztok 1 thermal power plant, the press office of AES in Bulgaria announced on Monday.
The company asserted that the licence has already been given while the press office of the SCER clarified that there were several conditions that had to be met first. The licence will officially come into force once the company presents sufficient proof of financing as well as land ownership right of the site where the additional facilities will be built.
AES already signed a contract in May with British-French company Alstom to become the main contractor of the project. If everything goes according to plan, construction works will commence in April 2003, and will last for 36 months. The project is the largest private sector investment in Bulgaria.
AES is expected also to sign funding agreements with Germanys export credit agency KfW, the European Bank for Reconstruction and Development and a US agency guaranteeing foreign investments.
The project envisages building a new 670-megawatt facility at Maritsa Iztok 1. The investment will amount to some $850 million the biggest ever to be made in Bulgarias energy power system.
However, the example set by AES and the other US company Entergy (with Maritsa Iztok 3) will be left with no followers. Back in June, Energy and Energy Resources Minister Milko Kovachev told Parliament the state would cease signing long-term contracts for energy facilities such as the ones on the rehabilitation of Maritsa Iztok 1 and 3.
The contracts are pure indulgence to investors and shift market risk to consumers, Kovachev said. He added that the European Commission has been against similar agreements, because they would likely threaten market competition.
The chairman of the SCER, Konstantin Shushulov, countered Kovachev, saying that, while on a visit to the US (back in June), Bulgarian representatives from the managing body of the commission had required a particular answer on the issue from the US regulatory body.
Their answer was that such contracts were valid for a three to five-year term and secured the provision of supplies for the energy systems and investors, Shushulov said.
By September, the other US company Entergy is expected to sign an agreement with the European Bank for Reconstruction and Development, Societe General, the Black Sea Bank for Trade and Development and Credit Agricole under the financing of the project valued at over $470 million.
The Government expects that by 2004, Rousse, Bobov dol and Varna thermal power plants will be privatised, while total investment for this year would reach some $470 million.
Meanwhile, Germanys E.ON Energie announced it was interested in investing in Sofias electricity-distribution company. Dnevnik daily newspaper reported on Monday the German company offered to set up a joint venture in which it would hold the majority stake and the Bulgarian party (yet unknown) would participate with a contribution in kind.
Privatisation Agency executive director Apostol Apostolov said that this would violate the Privatisation Act and would not ensure a transparent selection of an investor. According to experts, however, the investment proposed is equivalent to privatisation and it would be a pity to miss an investor like E.ON.
E.ON is the second biggest electricity company in Germany after RWE. On Friday the company bought Ruhrgas, which two months ago showed interest in the privatisation of Bulgarias gas-transit network and the forthcoming privatisation of Bulgargas.
According to Bulgarias energy strategy, due to be approved by Parliament this week, the countrys seven electricity-distribution companies have to be sold by the middle of next year. This week, the European Bank for Reconstruction and Development is expected to approve the sales consultant on the deals out of eight companies invited to submit offers: Amro Bank, Paribas, Citigroup, CSFB, HSBC, JP Morgan, Rothschild, and Roland Berger/Raiffeisen.
Between 51 and 80 per cent of the seven companies are envisaged to be sold to strategic investors. At least $350 million is expected to be received for each of the companies, Kovachev said. The assessment is based on an analysis of similar sales in Ukraine and Slovakia.
The company asserted that the licence has already been given while the press office of the SCER clarified that there were several conditions that had to be met first. The licence will officially come into force once the company presents sufficient proof of financing as well as land ownership right of the site where the additional facilities will be built.
AES already signed a contract in May with British-French company Alstom to become the main contractor of the project. If everything goes according to plan, construction works will commence in April 2003, and will last for 36 months. The project is the largest private sector investment in Bulgaria.
AES is expected also to sign funding agreements with Germanys export credit agency KfW, the European Bank for Reconstruction and Development and a US agency guaranteeing foreign investments.
The project envisages building a new 670-megawatt facility at Maritsa Iztok 1. The investment will amount to some $850 million the biggest ever to be made in Bulgarias energy power system.
However, the example set by AES and the other US company Entergy (with Maritsa Iztok 3) will be left with no followers. Back in June, Energy and Energy Resources Minister Milko Kovachev told Parliament the state would cease signing long-term contracts for energy facilities such as the ones on the rehabilitation of Maritsa Iztok 1 and 3.
The contracts are pure indulgence to investors and shift market risk to consumers, Kovachev said. He added that the European Commission has been against similar agreements, because they would likely threaten market competition.
The chairman of the SCER, Konstantin Shushulov, countered Kovachev, saying that, while on a visit to the US (back in June), Bulgarian representatives from the managing body of the commission had required a particular answer on the issue from the US regulatory body.
Their answer was that such contracts were valid for a three to five-year term and secured the provision of supplies for the energy systems and investors, Shushulov said.
By September, the other US company Entergy is expected to sign an agreement with the European Bank for Reconstruction and Development, Societe General, the Black Sea Bank for Trade and Development and Credit Agricole under the financing of the project valued at over $470 million.
The Government expects that by 2004, Rousse, Bobov dol and Varna thermal power plants will be privatised, while total investment for this year would reach some $470 million.
Meanwhile, Germanys E.ON Energie announced it was interested in investing in Sofias electricity-distribution company. Dnevnik daily newspaper reported on Monday the German company offered to set up a joint venture in which it would hold the majority stake and the Bulgarian party (yet unknown) would participate with a contribution in kind.
Privatisation Agency executive director Apostol Apostolov said that this would violate the Privatisation Act and would not ensure a transparent selection of an investor. According to experts, however, the investment proposed is equivalent to privatisation and it would be a pity to miss an investor like E.ON.
E.ON is the second biggest electricity company in Germany after RWE. On Friday the company bought Ruhrgas, which two months ago showed interest in the privatisation of Bulgarias gas-transit network and the forthcoming privatisation of Bulgargas.
According to Bulgarias energy strategy, due to be approved by Parliament this week, the countrys seven electricity-distribution companies have to be sold by the middle of next year. This week, the European Bank for Reconstruction and Development is expected to approve the sales consultant on the deals out of eight companies invited to submit offers: Amro Bank, Paribas, Citigroup, CSFB, HSBC, JP Morgan, Rothschild, and Roland Berger/Raiffeisen.
Between 51 and 80 per cent of the seven companies are envisaged to be sold to strategic investors. At least $350 million is expected to be received for each of the companies, Kovachev said. The assessment is based on an analysis of similar sales in Ukraine and Slovakia.
