Bulgaria's Economy Ministry Rejects Sofia City Plan for 27.8 Mln Euro Cap Hike at Debt-Ridden Heating Utility

The government owns 42% of Toplofikatsia Sofia's current registered share capital of 107 million levs and the city controls the remainder.

The ministry said in a statement that it fully supports the planned capital hike but that there are conditions that should be met before it is carried out. 

The European Commission should first review the proposed capital hike to say whether it represents government aid, the ministry said. Also, the city authorities should  inform the creditors of the heating utility of the planned move, so that they would not seek early repayment.

Earlier this month, local media reported that the city parliament had decided to raise its stake in the heating utility to 78% from 58% by a capital injection with the aim to help the company pay debt owed to gas firm Bulgargaz.

Toplofikatsia Sofia, which is slated for privatisation, is the third-largest energy company in Bulgaria after the Kozloduy nuclear power plant and the largest coal mining and electricity complex Maritsa East. It has the capacity to produce six million megawatthours of heating energy and 850,000 MWh of electricity per year.

The government has said it plans to sell the company in a tender by November, but political bickering has delayed the procedure. Finnish utility company Fortum, Czech CEZ, and French companies Dalkia and Electricite de France have so far expressed interest in the privatisation of Toplofikatsia Sofia.

(1 euro = 1.95583 Bulgarian levs)