Bulgaria’s power sale

SOFIA – Bulgaria will net 693 million euros ($856 million) from the sale of its seven power distributors, which officials and analysts say is a clear win for the EU candidate country’s efforts to push ahead with economic reforms. Czech utility CEZ, Germany’s E.ON and Austria’s EVN were picked as winning bidders for 67 percent stakes in the power firms, which Bulgaria is selling to liberalize its energy market ahead of its planned European Union entry in 2007. «This deal proves that Bulgaria has a competitive energy sector,» Energy Minister Milko Kovachev told reporters. Officials said the results of the tender put Bulgaria at the top of the league for power firm sell-offs in Eastern Europe, with the price attained per customer being 230 euros, compared with 200 euros in the Czech Republic and 100-150 euros in Romania. «The privatization was very successful because it went in one bang and followed clear rules,» said Krassen Stanchev, an analyst with the Institute for Market Economics, an independent Bulgarian think tank. «It’s a good trend to be followed.» Five European utilities last week filed binding bids for the electricity distributors, grouped in three regional packages – western Bulgaria, southeastern Bulgaria and northeastern Bulgaria. The government chose to negotiate the sale of its biggest, western Bulgaria, with CEZ, while Austria’s EVN was selected for the southeastern companies and Germany’s E.ON for the northeastern. Kovachev said the deals would be finalized by the end of September. Italian energy firm Enel and Greece’s Public Power Corporation had also submitted final bids for the distributors, which have around 4.5 million customers. In all, CEZ bid 281.5 million euros for the 67 percent stake in the western power firms, while EVN bid 271 million for the southeastern companies and E.ON 140.7 million for the northeastern. The government also said it would get a total of 1.33 billion euros when it offers for sale its minority stakes in the distributors, not earlier than 2008. Under the sell-off plan, the state can sell the remaining 33 percent stakes in the firms for a share price which should be equal or above the one achieved for the controlling stake. The selected winners will be able to renegotiate details on the deals, but not the price, the core activity or the bar on selling the controlling stake until 2008. A spokesman for EVN, which has placed the two highest bids for both the western and southeastern distributors, said the company was ready to start talks with the government. E.ON said it was waiting for a written confirmation from the Bulgarian government to start firm contract negotiations. «We expect to sign an agreement by September,» a spokesman for the German utility said. The Czech state-controlled utility, which is also eying power acquisitions in Slovakia, said that buying into Bulgaria’s energy sector was the biggest investment made by a Czech company abroad and a milestone for CEZ.