Bulgaria's planned energy holding company, expected to take over the assets of five state-run energy companies into its fold, would exploit synergies that would make the country's energy sector more competitive in the region, said Jan Skarvil, director of consulting at Deloitte Bulgaria, on February 20 2008.

Deloitte was picked by the Bulgarian Ministry of Economy and Energy to explore the feasibility of a mega-energy structure, to be named Bulgarian Energy Holding (BEH) which it presented at a news conference.

The future company - with assets estimated at four billion euro, an annual profit of 114 million euro and total installed capacity of 6000 MW - would follow the example of other Central and Eastern European peers, Skarvil said.

According to the plans unveiled by the Cabinet, the new entity would incorporate the assets now held by Kozlodui nuclear power plant, power grid operator NEC, gas company Bulgargaz, the country's biggest thermal power plant Maritsa Iztok 2 and the eponymous mines in central Bulgaria. Additionally, through NEC and Bulgargaz, it would hold majority stakes in the planned nuclear power plant at Belene and several big pipeline projects, including South Stream and Bourgas-Alexandroupolis.

Similar energy asset consolidations had happened in the Czech Republic, Poland and one was currently underway in Romania, Skarvil added.

The reason behind the consolidation, he said, was to build an entity, which would be financially sound and stand a better chance of attracting financing from banks. The loans would, in turn, help upgrade the obsolete infrastructure and, in the longer run, achieve synergies and efficiencies that would make the entity competitive on regional level.

The disparate organisational and managerial structures of all five companies forced Deloitte to opt for a phased-out setup of the company. The first stage would entail the creation of a financial holding, whereby the parent company would hold a minority – between 25 and 49 per cent – stake in each of the five companies, with the rest staying with the economy ministry.

The financial holding would be in charge of setting strategic objectives, but the individual companies, remaining operationally and legally independent, would decide on ways to achieve them on their own.

After synchronising organisational structures, the entity would be ready to act as an operational holding and all companies would be strategically, financially and operationally run by BEH.

Bulgarian Economy and Energy Minister Petar Dimitrov, also present at the news conference, declined to give a detailed timeline for the consolidation of the companies into the holding. He did say, however, that the planned bourse listing of the holding would not occur until the holding company became operational, which he expected to happen two years after it was created.