August 14, 2018
August 14, 2018
State-owned energy company Bulgarian Energy Holding (BEH) has secured a EUR 100 million investment from the European Bank for Reconstruction and Development (EBRD) in its seven-year EUR 550 million bond issuance to refinance an earlier bond under better terms, in what will improve its financial structure and is expected to help with the country’s energy market liberalization.
According to analysts, the energy market liberalization in Bulgaria has been stalled over factors such as the need for BEH to finance major investments in the energy sector. The EBRD’s involvement will help restructure the company’s balance sheet and improve the long-term financial sustainability of Bulgaria’s power sector, the EBRD said.
As part of the current and previous BEH bond purchase by the EBRD, which took place in 2016, the EBRD and the Bulgarian government have been cooperating on a Bulgaria-Energy Sector Regulatory Development Program which aims to help with market liberalization in line with recent changes in the energy legislation, also partially facilitated by the EBRD.
BEH controls the country’s major energy assets, including the public suppliers of electricity and gas. Together with its key subsidiary, Natsionalna Elektricheska Kompania (NEK), BEH produces about 60% of the country’s electricity.
BEH’s long-term stability is fundamental to ensuring the continued progress of Bulgarian energy market reforms, the EBRD said, adding that its participation in the issuance is expected to further entrench its role as a key partner for the authorities, strengthening its impact in the second phase of the Energy Sector Regulatory Development Program.
In the first half of 2018, NEK reported a BGN 74 million (EUR 37.8 million) net loss, announcing that as a result of poor financial results, it does not plan to continue financing several investments, including the Upper Arda cascade, the Mesta cascade, and several smaller projects, in the next five years.
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