The private traders’ first attempt to export electricity was not very successful
Could you guess which company won the bulk of power export quotas (see the chart) in the first tender in the history of the energy sector which admitted rivals of the monopoly NEK?
Of course, it was NEK. The state power grid operator won most of the power export quotas (see the chart) as it was the only bidder that could provide enough power for exports.
The tender last week was for the allocation of different power quotas that can be exported and delivered across Bulgaria in accordance with the capacity and the quantities requested by neighbouring countries for October. The quotas are measured and traded in megawatts (MW). The quotas are for direct exports to Greece, power supplies from Romania to Greece via the Bulgarian territory and exports to it, as well as supplies from Serbia and exports to it. Apart from NEK, only five out of eight private companies that took part in the tender were admitted to the power export deals, namely CEZ Trade Bulgaria, EFT Bulgaria, Arcadia Service, Vivid Power and Enemona Utilities. The tender was staged by the Electricity System Operator (ESO), a subsidiary of NEK, which maintains the power transmission network. ESO was empowered to allocate power export quotas at the beginning of 2007.
Who from Whom
It was not surprising that NEK won the bulk of power export quotas. Apart from being an experienced monopoly in the sector, it also produces hydroelectricity. Besides, just a few months before the planned allocation of power export quotas NEK bought up almost all output of the power plants, except for the output of the nuclear power plant (NPP) Kozloduy.
The quotas designated for the liberalised market account for about one-fifth of the total 37 billion KWh of electricity that is used in the country. This is the amount which the power plants are allowed to sell at freely negotiated prices to the market players. The rest are bought also by NEK at regulated prices so that the population of Bulgaria can use cheaper electricity.
NEK can afford to buy up almost all of the quotas intended for the liberalised market because it can offer the highest price to the producers. On the one hand, it is a large company with enough financial resources. On the other hand, being the owner of the national power grid whose maintenance costs are fixed, the company does not pay any power transmission fees. Any other power trader has to add to the end power price the transmission fees it has to pay to NEK. However the traders think that NEK would hardly sell them power at prices lower than the international ones. It means that some of them will hardly be able to use the quotas they won.
And Who to Whom
The export quotas to Greece drew the biggest interest because the electricity there is most expensive and the demand is high. Under company data, the price of electricity in Greece is some 70-80 euro/MWh compared to 60 euro on the Bulgarian-Romanian border.
ESO did not disclose the prices, which the bidders in the tender offered. Until now the national monopoly has never revealed the export rate either. This is the reason why it is difficult to calculate the profit from exports. What is certain is that the profit of NEK is huge. If the price of electricity is 70-80 euro/MWh on the Bulgarian-Greek border, NEK pays only some 70 levs to the Bulgarian power plants, according to market players. The local traders pay less for the electricity generated by a nuclear power plant.
For now the traders did not say whether they had contracted any company from Greece, Serbia and Romania. The major buyer in Greece is the Public Power Corporation (PPC), which periodically exports electricity to Italy and other countries.
ESO is to specify the terms for the transfer of power quotas. Thus traders that fail to sell their power quotas abroad will be allowed to transfer them to another player. It is not clear yet whether there will be displeased candidates.
Allocated Power Export Quotas (MW)*
To Greece...................................October 1-5.................... October 6-31
NEK............................................85................................... 185
Vivid Power................................9......................................6
Arcadia Service...........................4.....................................4
Enemona Utilities........................2.....................................5
To Serbia.................................... October 1-31
NEK.............................................180
CEZ Trade...................................10
From Romania.............................October 1-7...................October 8-31
EFT Bulgaria................................25..................................25
CEZ Trade...................................10..................................10
To Romania.................................October 1-31
NEK.............................................60
CEZ Trade...................................8
* The power export quotas from Serbia via the Bulgarian territory are not included over the lack of bidders
Bidders:
- CEZ Trade Bulgaria, a unit of Czech CEZ, which owns the district power distributors in Sofia, Sofia region and Pleven;
- EFT Bulgaria, owned by Danish EFT Group. It is linked to Bulgarian businessman Bogomil Manchev;
- Arcadia Service is also affiliated with Bogomil Manchev;
- Vivid Power’s owner is Vivid PG, in which Alfa Finance Holding holds a 56 pct stake;
- Enemona Utilities is a subsidiary of the engineering, construction and energy group Enemona.
(1 euro = 1.9558 Bulgarian levs)
22-28/09/07, P59
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