8 Feb 2002 – The Bulgarian government has agreed to electricity price increases for domestic consumers this year, aimed at attracting investment in its power industry – undergoing a process of privatization. “Power prices have to reflect costs and we need to implement price measures so that we can encourage investors in the sectors,” said Energy Minister Milko Kovachev on Thursday.

Bulgarian households have been charged less than industry for power and Kovachev said that by raising prices to equal those for industry, power generators would become more competitive and consumption would reduce. Energy consumption in Bulgaria is amongst the highest in Europe.

A further price increase is anticipated next year with the planned closure of the two oldest 440 MW reactors at the Kozloduy nuclear power plant by end-2002. The soviet-designed plant accounts for 44 per cent of the country’s power supply but face EU pressure to be closed down by 2006.

Bulgaria is hoping to join the EU which, along with the International Monetary Fund, has been critical of the slow pace of power sector reform.

Bulgaria intends to privatize
its seven power distribution companies by the year end followed by its seven power producers but analysts say that the country first need to raise power prices if investors are to be attracted.

The country is one of the leading power producers in the region but needs to attract investment to replace the ageing infrastructure, much of which is scheduled to be retired by 2010.

Kovachev also said that a €980m project to build a new 670 MW coal-fired plant at Maritsa East One section of a lignite coal mining complex in southern Bulgaria would lead to another 10 per cent rise in prices when implemented.

The project, signed last year, is managed by US-based AES Corp. Maritsa East complex generates 30 per cent of Bulgaria’s power and the refit is designed to extend the plant’s life by 20 years.