Finance Ministry inspectors have been asked to audit Bulgarian Energy Holding (BEH) and the way in which the company spent 700 million leva in state funding allocated under the previous cabinet, Finance Minister Simeon Dyankov said during question time in Parliament on November 27.

Set-up in September 2008 as the umbrella holding for most state-owned energy assets by the socialist-led cabinet of Sergei Stanishev, BEH was handed 300 million leva to finance the equity contribution of its subsidiary NEK, the national power grid operator, to the joint venture that would build and operate the Belene nuclear plant.

A further 400 million leva were given to cover BEH investment plans.

An initial inspection showed that the 300 million leva allocated for the capital increase in the Belene project company were instead spent on payments, including equipment orders, to Russia's Atomstroyexport, the company picked to build the two 1000MW reactors at Belene, Dyankov said in Parliament.

The holding company's failure to spend the money on the purpose they were earmarked for was one of the reasons German utility RWE, picked to buy 49 per cent in the company that would build and operate Belene, decided to pull out from the project, Dyankov said.

The funds allocated for BEH investments were meant for the restructuring of heating utility Toplofikatsiya Sofia, but the way in which the money was spent did not improve the company's financial situation, only to a change in the identity of its main creditor. Worse yet, interest owed on Toplofikatsiya Sofia's debt increased by15 million leva.

Socialist leader Stanishev and former economy and energy minister Petar Dimitrov rejected any accusation of wrongdoing and said Dyankov was exploiting the issue in a manipulative way, because the funds were not allocated from the state Budget, but the fiscal reserve.