Bulgaria’s financial supervision body probes Eurohold over CEZ deal

By bne IntelliNews April 24, 2019

Bulgaria’s financial supervision body said on April 24 it has launched a probe into financial and insurance group Eurohold and in its main units following the announcement that it has been granted exclusivity for the acquisition of the local assets of Czech energy company CEZ.

The news that Eurohold was the preferred buyer of CEZ’s assets has raised questions about the company’s ability to fund the deal and provoked rumours that Russian financing might be involved.

The financial body said that it will probe Eurohold’s financial status and its capacity regarding the acquisition of CEZ’s assets as electricity distribution companies are considered part of critical infrastructure directly related to national security.

Earlier in April, Eurohold announced it was picked by CEZ and said it will pay with its own funds and loans from banks located in Western Europe.

In February 2018, CEZ announced it had selected local family-owned firm Inercom as the buyer of its Bulgarian assets, which raised serious concerns about the Bulgarian company’s ability to fund and run the assets. Adding to the controversy, Inercom was also found to be owned by a close friend of Bulgaria's energy minister.

However, in July, the competition watchdog CPC ruled that the highly controversial deal could not be completed as Inercom would gain excessive power on the photovoltaic electricity market. At the time, local analysts suggested that the decision of the antitrust body had no serious grounds, and aimed to put an end to the major political dispute around the sale of CEZ's assets to an unknown and politically connected company. Appeals by CEZ and Inercom were rejected. In April, CEZ terminated its agreement with Inercom.

In Bulgaria, CEZ operates an electricity distribution business with 2mn customers, a retail electricity supplier, and a wholesale trader. The Varna coal-fired power plant also owned by the firm has an installed capacity of 1,265 MW., and was recently acquired by Ahmed Dogan, the chairman of honour of Bulgaria’s ethnic-Turk Movement for Rights and Freedoms (DPS). In addition, CEZ owns two renewable plants.

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