Only two companies filed the paperwork required to take part in the open bid auction for the sale of 251 400 shares or the whole Bobov Dol thermal power plant before the deadline on April 25. The two bidders are Consortium Energia MK AD and Minna Kompania EOOD, Bulgarian Privatisation Agency (PA) said on April 29. Both companies are linked to one person, local businessman Hristo Kovachki.
After the PA looks at the documents and should the candidates meet its criteria, the agency will allow them to buy an information memorandum and receive registration certificates that will give them the right to take part in the auction. Five companies bought tender documentation by the first deadline of April 15, the PA said on April 16. The other three were Damco Energy from Greece, which is a shareholder in the National Electricity Company’s power export and trading joint venture company; Sencap, also from Greece; and Electrabel from Belgium. Electrabel is also one of the two finalists in the tender to pick a strategic investor in Bulgaria’s Belene nuclear power plant.
The starting auction price for 100 per cent of Bobov Dol power plant is 100 million leva, while the bidding step is one million leva, PA said.
The two companies still in the race for Bobov Dol need to meet several conditions. To qualify, potential bidders that are power distributors have to have sold five TWh of electricity generated by its own facilities over the past three financial years, to have at least one billion euro own capital and to have a long-term credit rating of at least A- from Standard&Poor’s or Fitch Ratings, or A3 from Moody’s Investor Services. For coal suppliers, the requirement is to have mined or delivered at least 1.25 million tons of coal over the past three financial years. Alternatively, coal supplier consortia have to have mined or delivered three million tons of coal over the past three years and firms mining coal in Bulgaria had to own at least 51 per cent in the consortium.
Minna Kompania is owned by Nikifor Vangelov, according to its court registration, who also owns 50 per cent of Vugledobivna Compania coal-mining company. Vangelov is deputy chairperson of Municipal Bank supervisory board and is on the management team of supermarket chain Evropa, both owned by Kovachki, Bulgarian language Dnevnik daily reported.
Consortium Energia MK includes Choukourovo, Beli Breg, Stanyantsi, Oranovo and Otkrit Vugledobiv mines, all owned by Kovachki, and Balkan MK owned by Krassimir Mihailov. Mihailov previously rented the Bobov Dol mines and owns the Pirin mine.
According to Bulgarian-language weekly Kapital, there was no doubt that Kovachki’s companies would meet the PA’s criteria for Bulgarian coal producers, as they were drafted with that goal in mind.
Kovachki did not hide that he was behind both Bulgarian bidders. “We bought the documents through two companies in order to be sure that we fulfill the conditions,” a spokesperson for the businessman said. “We will take part in the auction with the company that meets all necessary conditions.”
The main shareholder in Sencap, one of the other companies that bought tender papers, is Greece’s Public Power Corporation (PPC), which was previously picked by the PA to buy the power plant.
As previously reported by The Sofia Echo, the agency cancelled its negotiations with PPC in May 2007, after the company has spent more than a year in talks with the nearby mines without reaching any agreement. Without setting any specific limits, the PA insisted that PPC had to buy at least part of the coal it would use at the power plant from the mines in the Bobov Dol area. PPC then sued the agency, but a Bulgarian court dismissed its claim against the cancellation of the previous tender last month.
After seeing the PA’s new requirements, PPC sources said that “the current procedure gives an advantage to an exact group of buyers”, as quoted by Kapital. PPC said it planned to take its case to the European Union, bowing out of the race that, according to the company, does not guarantee an honest and transparent privatisation process. None of the bidders has filed a complaint with the Competition Protection Commission, nor did the watchdog launch its own probe.
Barring a last-minute intervention from Brussels, Hristo Kovachki looks certain to be the new owner of the Bobov Dol power plant after the June 26 auction.
