Bulgarian government gives up plan to join CEZ asset sale deal

Bulgarian government gives up plan to join CEZ asset sale deal
By bne IntelliNews April 3, 2018

Bulgaria’s government does not intend to participate in the deal to sell assets of Czech energy company CEZ, Finance Minister Vladislav Goranov said at a session of the parliamentary committee investigating the deal, daily Dnevnik reported on April 3.

In February CEZ announced that it had selected the small family-owned Bulgarian firm Inercom Group as the buyer of its Bulgarian assets, raising serious concerns about the buyer’s ability to fund and run such strategic energy assets. Inercom was also found to be owned by a close friend of Bulgaria's energy minister.

The deal turned into one of the main political scandals in the country and has further destabilised the already unstable ruling coalition. All the main political parties are using it as a tool to gain popularity and reduce support for Boyko Borissov’s third government. Borissov himself is trying to calm down the situation and show that the government can and will control of the situation and will not allow the sale to harm the interests of consumers. 

As part of the efforts to calm down the situation, Borissov said the government was seeking to take control of CEZ’s assets in Bulgaria. However, in March CEZ rejected the government’s attempt to join the deal until an arbitration case filed by the Czech company is completed.

CEZ has filed an arbitration against Bulgaria with a court in Washington that could cost the government in Sofia up to €600mn in compensation for the Czech company.

“This is the consolidated position of all participants in the meeting [with Inercom and Borissov] – that we do not think, despite the public interest, that this is the method for protection of the interests of Bulgarian citizens,” Dnevnik quoted Goranov as saying.

He added that the government has enough regulatory mechanisms to protect the consumers’ interests.

At the same time, Goranov said that the government still has not received a reply from CEZ on whether its participation in the deal would be accepted.

Petr Baran, former operations director of CEZ, has said that the company decided to exit Bulgaria due to the bad business environment and the conflicts with Bulgaria’s government. Baran claimed that no serious company showed an interest in the deal and that CEZ finally decided to sell its assets to an unknown company. He has also said that CEZ had unsuccessfully invited the government to buy its stake several times.

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