The State Commission of Energy and Water Regulations decided, in a closed session on August 14, to give Tren, the company owned by the national company Road Infrastructure (RI), a ten-year license to trade electricity. The document is expected to be issued within two months.

With the license, Tren will be able to sell electricity to Bulgarian State Railways (BSR) at a minimal profit. BSR owns train carriages and the locomotives. Currently the engines do not have electricity meters and the energy consumed by them is estimated through calculations.

RI is also holding negotiations with Kozloduy nuclear power plant to buy 50MW of electricity. The talks started after the last electricity price increase on July 1 2007, which imposed a ticket price increase of 15 per cent, Bulgarian-language Monitor reported on August 16.

RI executive director Anton Ginev said that the company intended to sell electricity to railway stations and to consumers located near the stations. Therefore, RI needed to apply for a second license to be a final supplier. According to Ginev this can happen without the Energy Act amendments.

However, lawyers commented that RI’s intention to sell electricity to final consumers is unlikely to be achieved as these clients are within the area supplied by licensed electricity distribution companies. According to the lawyers, RI’s intentions could provoke strong opposition from the distribution firms, which would not allow current licenses to be breached.

At the last changes to the Energy Act, some corrections were made, which could allow RI to obtain the license.

The RI managing board also discussed the regulations of the procedure to choose the strategic investor for the telecommunications operator that BSR is about to establish. The company will require the investor to provide finance for the telecommunications network development and maintenance.

Ginev said that international companies had shown an interest in being involved in the new venture as well as in renting the infrastructure. One of the company’s problems is the lack of public-private partnership regulations he said, as reported by Bulgarian-language daily Dnevnik on August 15.

To achieve its goal of selling electricity to households RI will need to separate, on an accounting level, the activities of electricity distribution and trade, and to create a new company for the electricity distribution part of the business. Bulgarian-language daily Pari also reported that the Energy Act does not allow RI to be the final supplier.

The other option is for RI to export electricity. According to Ginev, RI will try to offer competitive prices, but anticipates that it will only generate minimal profits in at the start of operations. However, one of the problems RI could encounter is that the market has insufficient electricity. Pari also reported that the establishment of Tren is part of the reform process that the company is undertaking, hoping to pull itself out of its current crisis sooner rather than later.

Another action, which would allow BSR to renovate its rolling stock, would be to take out a loan of 120 million leva. BSR is negotiating it with several banks.