Bulgarian Energy Holding (BEH), the state-owned energy sector firm, reported a net loss in its consolidated report for the first half of the year. National power grid operator NEK, its subsidiary Electricity System Operator (ESO) and mining company Mini Maritsa Iztok combined for a net loss of 98 million leva from January to June.

The deterioration was attributed to the unfavourable business environment of an economy ravaged by recession, according to the holding company's report.

NEK, which holds a power trader licence, has sold less both on the domestic and on the foreign markets. This was coupled with lower export rates dragged by softened demand in neighbouring countries.

BEH said decisions by the State Energy and Water Regulatory Commission (SEWRC), Bulgaria’s energy watchdog, have accelerated the decline, hinting at the increase in tariffs for the purchase of electricity produced by power plants by NEK as well as keeping intact the prices at which it sells to power distributors.

SEWRC chairman Konstantin Shoushoulov said he has not seen the companies’ earnings reports. "We should see where the loss came from, because when we set the rates we thought it would be covered by sales and exports," he said.

ESO, on its part, suffered from payments to power stations needed to keep mothballed production capacities ready to go back online in case of an emergency. The prices are also fixed by the regulator.

The performance of Mini Maritsa Iztok was marred by sluggish coal sales to the power plants within the Maritsa East complex. Inflation and an energy efficiency indicator determined by the Economy and Energy Ministry on vague criteria are included in the tariffs. The state-run company requested a 26 per cent price hike from July, but BEH’s management and the energy watchdog torpedoed the proposal.

The troubled companies have already considered measures to curb renovation expenses and tweak their investment programmes, the holding company said. NEK plans to curtain spending by 35 million leva this year. Mini Maritsa Iztok has slashed 30 million leva from its 2009 spending plan, executive director Todor Todorov said, adding the company could manage to offset the loss by the end of the yar.

Analysts said that the holding's subsidiaries should come up with measures to rein in spending and increase efficiency. In its audit on the companies, KPMG pointed out the lack of a unified accounting policy as a major shortcoming within the structure.

Deputy prime minister Simeon Dyankov told Dnevnik he welcomed BEH’s ambition to make its operations more transparent, saying political commitment was one prerequisite for that.

Source: Dnevnik