Current Affairs ČEZ could lose Bulgarian distribution licence
The Bulgarian operation of the Czech state-controlled energy firm ČEZ has run into serious problems after Bulgaria’s energy regulator launched proceedings to revoke its licence to operate in the country. The decision came after nationwide protests against high electricity prices centred on the Czech company which controls around 40 percent of Bulgaria’s electricity distribution market. On Wednesday, Bulgarian Prime Minister Boyko Borisov announced his cabinet was stepping down after 14 protesters were injured in clashes with the police. Ilin Stanev from Bulgaria’s leading business daily Dnevnik says that the threat to cancel ČEZ’s licence is for the most part politically motivated.
“It‘s mainly political, that’s obvious. It all started with the protests against high electricity bills. Most of the distribution companies made an unfortunate decision to introduce quite strange accounting periods; in December, they only accounted for 20 days because they said the rest was the holidays, and in January, they counted 40 days. So the bills doubled, and many people thought this was someone rigging the system and trying to exploit them. And ČEZ was the easiest target for many reasons: first of all, its own practices were sometimes dubious.”
What do you mean? There have been accusations that ČEZ’s tenders in Bulgaria were not transparent.
“Let me give you an example: there are some people, Bulgarians, in ČEZ’s board of directors, who have strange background. The nickname of one of them is the ‘Karatist’; he is very close to a notorious Bulgarian businessman who was a close business partner of the prime minister. There are suspicions that ČEZ was providing ways for the ruling party, GERB, to get contracts. At the same time, ČEZ’s Bulgarian power plant, TEC Varna rarely declares tenders for coal deliveries and instead goes through middlemen, which makes the coal more expensive. So you wonder why they are doing this; their business practices were always dubious in comparison to the other distributors.”
Today, Bulgarian Prime Minister Boyko Borisov announced his government was stepping down. How is it related to the issue of high electricity prices?
“To some extent it is. People started protesting against electricity bills but the protest turned anti-government, and over the last couple days, they turned violent, especially yesterday when a couple of people were injured. We think the violence was driven by someone who wants the government to go, but anyway the government in the end could not withstand the situation.”
Do you think ČEZ will in the end lose its licence? It’s probably difficult to predict because the regulator is an independent body but do you think ČEZ’s licence is set to be revoked?
“Right now, I simply cannot say because with the fall of the government, the regulator will probably not be very hasty with its decisions. But yesterday, Bulgarian prosecution also asked the regulator to appoint a manager of the company to manage ČEZ during the period of the investigation. That would mean the state would control the company in a couple of days. But with the fall of the government, I cannot predict what’s going to happen. But ČEZ is in high risk. I think most of the proofs given against ČEZ are ridiculous but they are not in a very good position.”