In an effort to streamline Bulgaria’s energy activities and meet EU standards, the Bulgarian government consolidated seven major state energy companies last year into Bulgarian Energy Holding (BEH), which had total assets of €5.38 billion (BGN10.5 billion) at the end of 2008 and total revenues of €2.6 billion (BGN5.1 billion). It employs 11,000 people.
Galina Tosheva, CEO, explains, “One of the main tasks for BEH is to introduce best practices in our companies, as well as a European corporate culture. We are showing our companies how to work with European companies and implement European directives. Our goal is to create a modern holding company with modern subsidiaries guided by the same policy and decision making process. We will provide the framework and the subsidiaries will adapt their business to the framework.”
BEH aims to upgrade the security of Bulgaria’s energy supplies, position Bulgaria as an important regional energy player, and attract investors to Bulgaria’s energy activities. On the operational level, BEH aims to achieve transparency, initiate upgrading the regulatory framework, improve the operational effectiveness and efficiency of its subsidiaries, boost investment potential, and enhance the value of human capital.
Diversifying energy supplies: a key goal
The group has ambitious goals, including projects it will launch in 2009-2010 which are aimed at diversifying Bulgaria’s sources of energy supplies over the short and medium term. Such projects include the construction of gas interconnections between Bulgaria and Greece and Bulgaria and Romania; constructing a regional liquid natural gas (LNG) terminal; modernising and expanding the Chiren underground gas storage facility; constructing a second UGS facility; researching Bulgaria’s gas production capabilities; modernising the energy transport infrastructure; and building a second electricity interconnection with Greece.
In mid-July this year, BEH signed a Memorandum of Understanding with DEPA (Greece) and Edison International Holding (Italy) as a step towards the execution of the Bulgaria-Greece Gas Interconnection project (Komoteini – Dimitrovgrad – Stara Zagora) securing a prospect for the supply of 1 bln.c.m. per year Azeri gas already principally discussed at a government level, which is aimed at increasing Bulgaria’s energy security.
Seven independent energy enterprises
Within BEH are seven operationally independent energy enterprises: Maritsa East Mines, TPP Maritsa East 2, NPP Kozloduy, National Electric Company, Bulgargaz, Bulgartransgaz, and Bulgartel.
Maritsa East Mines: Bulgaria’s largest lignite coal mining company
Maritsa East Mines, Bulgaria’s largest lignite coal mining company, exploits the Maritsa East lignite field and plays a crucial role in ensuring adequate energy supplies for the country. Its core activities are coal production and sales. It is fully compliant with international standards and has been certified ISO 9001:2000, OHSAS 18001:1999, and ISO 14001:2004.
Maritsa East Mines holds a concession for lignite coal production until 2040, and its mine reserves are estimated at over 2 billion tonnes; this can satisfy Bulgaria’s demand for coal for the next 60 years at an annual production rate of 35 million tonnes. Maritsa East Mines’ assets are estimated at €376 million (BGN735 million) and its total revenue for 2008 was around €215 million (BGN420 million).
The company employs around 7,500 people and has been steadily upgrading its equipment and facilities, including repairing and upgrading its heavy-duty mining equipment, renewing its automation technology, and initiating a project for the development of a new power plant.
Maritsa East Mines has had decades of experience in the coal sector and has established productive partnerships with government institutions, research centres an the private sector, both local and foreign.
The Kozloduy Fund, administered by the European Bank for Reconstruction and Development (EBRD), will provide €15.1 million in grant support for the programme to upgrade the energy efficiency of Maritsa East Mines. This initiative will result in an overall reduction in energy consumption of about 13% to 15%, as well as a reduction in CO2, SO2 and harmful emissions.
Maritsa East 2: largest thermal power plant
BEH’s Maritsa East 2, one of three power plants in the Maritsa East complex in South-Eastern Bulgaria, is the country’s biggest thermal power plant burning local lignite coal and employs more than 2,300 people. Its main activity is the production of electricity.
Maritsa East 2 has a total installed capacity of around 1,500 MW and consists of eight generating units, six of which are equipped with flue gas desulphurisation (FGD) plants. The plant burns local lignite coal extracted from the Maritsa East field.
Maritsa East 2 has recently made significant investments in upgrading its equipment and meeting EU environmental standards. It has rehabilitated its older units (1-4) and equipped them with FGD plants with the goal of reducing harmful emissions
and dust concentration in the plants’ discharged flue gases. Maritsa East 2 has decreased its sulphur dioxide emissions by 94% while also boosting its production capacity by 156 MW. With around €439 million (BGN859 million) in assets at the end of 2008, the company achieved revenues of around €274 million (BGN535 million) last year.
Kozloduy: Bulgaria’s only nuclear power plant
Kozloduy, Bulgaria’s only nuclear power plant, accounts for 35% of Bulgaria’s annual energy generation and plays a key role in the Bulgarian and regional economy. Through generating electricity at the lowest prices in the country, Kozloduy ensures affordable electricity for its customers. The company employs around 4,500 people, which makes it one of the biggest employers in Bulgaria. It is also one of the most prosperous subsidiaries within the BEH group with assets exceeding €0.92 billion (BGN1.8 billion) and total revenues in 2008 of around €398 million (BGN777 million).
Safety is a top priority for Kozloduy, which is overseen by the Nuclear Regulatory Agency within the Bulgarian Council of Ministers. Kozloduy has regularly received positive ratings for safety from the International Atomic Energy Agency (IAEA), the World Association of Nuclear Operators (WANO) and the EU’s Atomic Questions Group, among others.
Kozloduy meets the World Nuclear Association’s concept of nuclear renaissance and adheres to the high environmental requirements of the Kyoto Protocol since it does not release any greenhouse gases into the atmosphere. Kozloduy has two units with total electricity generation of 2000 MW. In 2004, Kozloduy EAD was the first trade participant in Bulgaria’s liberalised electricity market.
National Electric Company: bringing electrical power to Bulgaria and beyond
The National Electric Company (NEK), with almost 3,000 employees, holds a license for electricity trading, is the owner of the power transmission grid, is the public provider of electricity to four end suppliers and 90 industrial consumers, and is involved in the open electricity market.
Its core activities are generating and transmitting electricity, centralising purchases and sales of electricity, supplying electrical energy to customers connected to its transmission network, importing and exporting electrical energy, building and maintaining power generation and transmission facilities, investing, and promoting energy efficiency.
NEK is Bulgaria’s primary exporter of electricity as well as the largest producer of electricity from hydro-power sources. It owns and operates 29 hydro-power and pumped plants, with a total installed capacity of 2563 MW in the generating mode and 943 MW in the pumping mode.
Most of NEK’s hydro-power is generated by its 14 largest hydro-power plants, which have a total installed capacity of 2480 MW. NEK also owns Bulgaria’s electricity transmission network, which extends 15,130 km, and NEK has invested around €153 million in its power transmission infrastructure. Priority projects for NEK are the Tsankov Kamak Hydro Power Project and NPP Belene. The organisation’s estimated assets totalled €2.5 billion (BGN5 billion) in 2008 and its total revenues that year were €1.5 billion (BGN3 billion).
Bulgargaz: country’s public supplier of natural gas
Bulgargaz, established following the restructuring of Bulgargaz Holding, is Bulgaria’s public supplier of natural gas. With around 35 employees, Bulgargaz works with 42 gas distributors and 258 end consumers, including district heating companies and industrial consumers. Its natural gas is supplied by companies partly owned by foreign interests, including Gazprom Export, Overgaz and WIEE-Zug. Bulgargaz also obtains gas from domestic producers.
In 2007, Bulgargaz supplied 3.7 billion cubic meters of natural gas, a rise of 1.73% over the previous year. Around 92% of the natural gas Bulgargaz supplies is imported. Bulgargaz’s 2008 assets were around €111 million (BGN699 million) and it achieved total revenues of more than €0.7 billion (BGN1.4 billion) last year.
Bulgargaz (along with Bulgartransgaz, which handles transport and storage of natural gas) made considerable efforts to ensure additional natural gas supplies from Greece for Bulgarian consumers during the energy crisis which hit the country in January 2009, and thanks to discussions they held with Greek suppliers, Bulgargaz and DEPA S.A. (Greece) signed an agreement at the end of January 2009 for additional natural gas supplies in the event of a crisis via the existing transit network.
There is also a confirmed technical possibility for a similar scheme and an agreement in principle with the Turkish side. Currently, Bulgargaz is in talks with BOTAS (Turkey) for such an agreement. In early June this year, Bulgargaz initiated talks with Russia’s Gazprom concerning changes in the existing gas supply contract to avoid the problems experienced in the past.
Bulgartransgaz: transporting and storing natural gas
Bulgartransgaz has been licensed to provide natural gas transmission transmission, transit of natural gas, and natural gas storage, and is the only company licensed to handle natural gas transmission in Bulgaria.
Bulgartransgaz owns and operates a 2,645 km gas transmission network with high pressure branches to ensure the reliable transmission of natural gas to consumers and gas distribution companies throughout the country. It also owns and operates a network for transit transmission and an underground storage facility, including nine compressor stations with a total capacity of 263 MW.
Bulgartransgaz’s main gas pipeline for transporting gas to Bulgaria’s consumers covers 1,700 km, has three compressor stations with total capacity of 49 MW, and has 68 gas pressure reduction stations and eight gas measuring stations. The company’s transit network covers
945 km and includes six compressor stations with total capacity of 214 MW. The Chiren underground gas storage facility has one compressor station with a total capacity of 10 MW. Bulgartransgaz employs almost 1,000 people and had assets of around €0.7 billion (BGN1.4 billion) at the end of 2008, with revenues that year of around €77 million (BGN150 million). By helping to ensure reliable supplies of natural gas in Bulgaria, Bulgartransgaz is a major player in the country’s energy sector.
Bulgartel: state-of-the-art telecom “carrier of carriers”
Bulgartel was established in 2004 to manage and more effectively utilise the Bulgargaz fiber-optic telecommunications system, and today Bulgartel operates an 850 km fibre-optic telecom network. Bulgartel is an alternative operator based on the “carrier of carriers” model, providing telecommunications operators within the country and abroad with a reliable ground network.
The company is continually expanding its presence throughout the country and aims to participate on an equal footing in the forthcoming consolidation of the European telecom market by working with other alternative carriers in the Balkan region and beyond. Bulgartel’s assets at the end of 2008 totalled around €8.7 million (BGN17 million) and its total revenues that year were about €2.5 million (BGN5 million).
Thanks to these BEH companies, Bulgaria’s energy sector has excellent growth prospects. CEO Galina Tosheva concludes, “We at BEH are trying to implement best practices. We are open, transparent, ready to communicate, ready to learn, and ready for joint ventures. We are a stable and reliable partner.”