Bulgaria's Economy and Energy Ministry has secured the approval of the country's competition watchdog to merge several state-owned energy firms under the umbrella of a holding company, Economy Minister Petar Dimitrov told reporters on September 19.

The European Commission has also been notified of the deal and has not reacted negatively, he said as quoted by website investor.bg.

Rather than create a new entity, the ministry changed the name of Bulgargaz Holding to Bulgarian Energy Holding (BEH) transferred its stakes in four companies to it - mining conglomerate Mini Maritza Iztok, thermal power station Maritza Iztok 2, nuclear power plant Kozloduy and power grid operator NEK. The holding company already had three subsidiaries - gas provider Bulgargaz, transit firm Bulgartransgaz and telecoms firm Bulgartel.

The ministry is also considering whether to transfer its 33.3 per cent stake in the three power distribution utilities in the country, majority owned by CEZ, EON and EVN, to the energy holding, Dimitrov said.

The Cabinet approved the plans to establish the holding in February and Deloitte was picked to explore the feasibility of a mega-energy structure, winning in June the tender to advise the Government on the set up of the new entity.

BEH would exploit synergies that would make the country's energy sector more competitive in the region, Deloitte officials have said. With assets estimated at four billion euro, an annual profit of 114 million euro and total installed capacity of 6000MW, it would follow the example of other Central and Eastern European peers, according to the consultant.

Through NEK and Bulgargaz, the holding would hold majority stakes in the future nuclear power plant at Belene and several big pipeline projects, including South Stream and Bourgas-Alexandroupolis.

The initial plans were for a phased-out approach, whereby the holding would take on minority stakes in the companies from the ministry, but with Bulgargaz running into financial hot water recently, the ministry decided to speed up proceedings, as that would transfer the individual liabilities of the subsidiaries to the holding company.

BEH would operate as a financial holding for at least one fiscal year, after which it would become an operational holding, with all companies strategically, financially and operationally run by BEH, Deputy Economy Minister Galina Tosheva said, quoted by investor.bg.

Tosheva was appointed interim chief executive of BEH, until the executive management is picked, which is expected to take up to two months. Mini Maritza Iztok CEO Ivan Markov will chair the board of directors, with NEK chief executive Lyubomir Velkov appointed deputy chairperson of the board.

BEH would be listed, but is unlikely to happen in the near future, given the turbulence on the global financial markets, Tosheva said.