ECONOMY

Bulgaria to begin liberalizing its energy market from start of 2002

SOFIA – Bulgaria plans to start liberalizing its energy market from 2002, in line with European Union accession requirements and IMF recommendations, the new chairman of Bulgaria’s energy agency said on Monday. Milko Kovachev said the agency plans to update the country’s energy strategy, which would map the future of the Kozloduy nuclear power plant and tackle the break-up of power and gas state monopolies. Another priority is to speed up work on energy law amendments, which after Parliament’s approval would enable the market’s liberalization from January 1, 2002, he said. They would allow local power consumers to sign delivery contracts directly with the power plants from next year. I hope that in October we would be ready to present the amendments to the government for approval, Milko Kovachev said in an interview with Reuters. Bulgaria’s lag in reforming its energy sector has prompted criticism of the International Monetary Fund earlier this year. The IMF recommended increasing competitiveness in the energy sector through restructuring of state utility monopolies including the state-owned National Electricity Company (NEC). Bulgaria has so far moved to break up NEC’s monopoly by separating power generation and delivery by setting up joint stock firms for production and distribution. Currently, NEC is the country’s single buyer of electricity from distributors and the only exporter. From 2002 the government would nominate consumers which, at certain periods, would have the right to agree to prices and quantities of electricity supply directly with the producers, Kovachev said. The energy reform was further delayed by a general election in June, in which former King Simeon Saxe-Coburg swept to power. Gas monopoly won’t split Kovachev said breaking up Bulgaria’s state natural gas monopoly Bulgargas was unlikely in the near future. The long-term contract (with Russia’s Gazprom), which is take or pay, creates difficulties and risks as far as liberalization of the natural gas market is concerned, he said. Now we have a single supplier and a single pipeline. Bulgargas is the only Bulgarian gas importer and owns the entire 2,200-km (1,380-mile) pipeline network. Russia’s Gazexport, the export arm of Gazprom, transports natural gas from Russia via Ukraine and Romania to Bulgaria and other Balkan countries. Via Bulgaria it delivers Russian gas to Turkey, Greece and FYROM. But in the longer term, Bulgaria plans to allow other gas suppliers to import gas to end consumers through the national gas distribution system, Kovachev said. Granting such access (to the pipeline network) is a very important issue for us and we need a proper legislation for that, Kovachev added. The agency plans to present to the government an updated energy strategy by mid-September, which aims to harmonize the local energy sector with European Union membership requirements, said Kovachev. Bulgaria faces tough negotiations with the EU on the earlier closure of two of four old 440 MW reactors at the Kozloduy plant. Sofia wants to run them to the end of their operational life by 2008 and 2010. The EU seeks to close them before 2006. Last year Sofia bowed to EU pressure and agreed to close two other older reactors in 2003. A report on Kozloduy’s safety and perspectives is expected to be submitted to a nuclear group at the European Council by October 30, said Kovachev. Bulgaria began EU membership talks last year and hopes to join the union between 2004 and 2007.