The Sofia municipality and the Bulgarian Economy and Energy Ministry (EEM), the two owners of Toplofikatsiya Sofia, reached a principle agreement to sell all shares of the company.

The sale was seen as one of the country's last big energy privatisation deals, Reuters said.

An agreement was expected to be signed within a week, EEM said in a media statement.

"The EEM hopes to attract a strategic investor with experience and financial capacity to develop the company. This would guarantee the interests of the public and a further competitive development of the company," mediapool.bg quoted the ministry media statement.

It was hoped that the sale of the plant, the country's third-largest energy complex after nuclear power plant Kozloduy and the Maritsa East coal mining complex, could be launched in 2007, but disagreements between the two shareholders delayed the sale, Reuters said.

Sofia municipality and the EEM discussed several variants to sell Toplofikatsiya Sofia, including attracting an external consultant to advise on the procedure. This idea was abandoned when it became clear that Toplofikatsiya Sofia did not have the financial means to pay a consultant.

With the proposed sale of the company, the question of attracting an external consultant to secure a transparent privatisation procedure was raised again, mediapool.bg said.

Toplofikatsia Sofia's assets were estimated at 620 million leva at the end of 2006. It ended the year with revenues of 317 million leva and a net loss of 10.5 million leva, Reuters said.
For 2007 the loss was expected to reach 27 million leva. The plant owed more than 120 million leva to its gas supplier while it has had difficulty collecting money owed by its debtors.