Bulgaria power market not ready for foreign competition

Bulgaria’s energy sector is not yet strong enough to face competition from foreign suppliers and will remain closed at least for the time being to allow domestic players to get used to the liberalization market conditions.

In a statement, the government said it would allow some local power and gas consumers to sign delivery contracts and negotiate prices with local producers as a first step towards a long-delayed privatization process.

An official from the state Energy Regulation Commission told the Reuters news agency, “We do not plan to allow domestic power and gas consumers to sign contracts with foreign producers. Our market is still very weak and will remain closed for foreigners for now.”

Bulgaria is seeking to join the European Union but has faced criticism from the Commission and the International Monetary fund over the slow pace of reform in the energy sector.

In 1998, the Bulgarian parliament began to liberalize the country’s power sector by unbundling the generation, transmission, and distribution activities of the national electricity company, NEK. In the summer of 2000, the largest power plants and distribution networks, including the country’s Kozloduy nuclear power plant, were separated from NEK, creating seven generation and seven distribution companies.

Six of the seven independent power generators registered a profit in 2000, and some of them (but not Kozloduy) will be eligible for privatization. The government plans to sell its seven power distributors by the year-end.

Bulgaria’s electricity is mostly coal fired with nuclear and hydropower also contributing to the surplus which gives the country the surplus to export within the region. The power sector is in need of investment though, as much of the plant is scheduled for retirement by 2010.

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