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Bulgarian water and sewerage utilities face bankruptcy due to high electricity prices

Bulgarian water and sewerage utilities face bankruptcy due to high electricity prices

Photo: Bulgarian Water and Sewerage Holding

Published

December 8, 2021

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Published:

December 8, 2021

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State-owned water and sewerage utilities in Bulgaria are facing bankruptcy due to high electricity prices caused by the energy crisis. The government and regulatory authorities are trying to find the solution, but for now they have different views on the issue.

Electricity prices on power exchange IBEX in Bulgaria have risen fivefold since January, from EUR 45 per MWh to about EUR 220.

In total, 23 water and sewage companies under the Bulgarian Water Supply and Sewerage Holding pay EUR 150 per MWh while the price in their business plans is EUR 40 per MWh, according to the state-owned holding. Business plans serve as a basis for setting their service prices which are both approved by the Energy and Water Regulatory Commission (EWRC).

Electricity suppliers are warning the companies under the Bulgarian Water Supply and Sewerage Holding, which serve about four million people out of seven million in Bulgaria, they would be cut off over unpaid bills.

A few days ago, the holding managed to postpone the termination of supply for one of its companies, ViK Vidin, which was announced by the supplier Energo-Pro, the holding said on its website.

Representatives of the holding, the Ministry of Regional Development and Public Works, and the Energy and Water Regulatory Commission have held meetings but no solutions have been found yet.

Ministry: utilities need new prices now

The ministry and the holding are blaming the EWRC. It has been refusing to take action for several months to protect its operators, despite existing legal provisions, they say.

Deputy Minister Valentin Gramatikov stressed water and sewerage companies soon won’t be able to perform their services.

There is no possibility that the new business plans with new prices would be approved by the commission and come into force on January 1, so these companies must have new prices now, he said.

The current debt to suppliers reached EUR 9 million, but it could climb to EUR 70 million

Executive Director of the Bulgarian Water and Sewerage Holding Kancho Kanchev underlined the current electricity prices do not correspond to the ones in the companies’ business plans.

Due to the huge difference, the debt to suppliers is EUR 9 million and almost all the firms have officially announced electricity would be cut off, said Kanchev, adding that if nothing is done the debt is set to reach EUR 70 million.

The ministry sees three solutions: a price revision by the commission due to unforeseen and unavoidable events in line with the law on water supply and sewerage services, speeding up the procedure for adopting business plans, and to change the rule for setting the prices of services.

Energy and Water Regulatory Commission: only government can save utilities

The Energy and Water Regulatory Commission has said it cannot save water and sewerage utilities from bankruptcy, arguing it is not responsible for the matter.

EWRC claims it doesn’t have any powers to set prices back in time or apply the measures and points to the Bulgarian government as in the case of subsidies for businesses.

The commission said it would approve the prices of water supply and sewerage services for 2022 as part of the procedure for approving the new business plans.

EWRC Chairman Ivan Ivanov asserted that the only chance to deal with the situation is for the government to roll out a compensatory mechanism.

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