Bulgaria's NEK 9-mo net profit slumps on lower power output, sales

NEK's total revenue amounted to 2.62 billion levs in the nine months through September, down from 3.95 billion levs a year earlier, the company said in a preliminary unaudited financial statement published by parent company Bulgarian Energy Holding.

Revenue from sales of electricity fell by 60% to some 1.2 billion levs in the first nine months of last year, partly due to falling power prices on the Bulgarian and European power exchanges after last year's price surges. The share of electricity sales in the overall revenue fell to 46% in the review period from 76.1% in the like period of 2022.

The fall in revenue was also due to a 25% yearly drop in electricity output from state-owned hydropower plants to 1,522,985 MWh, as a result of insufficient rainfall. In addition, weak demand and negative trading conditions on power exchanges led to a decline in electricity sales on the Independent Bulgarian Energy Exchange (IBEX) and the unregulated market, NEK said.

Furthermore, current high levels of carbon prices on European exchanges, of 86 euro ($91.75) per tonne on average, reflects on the costs of power plants with long-term contracts and negatively affects NEK's competitiveness on IBEX, the company added.

Total electricity sales in the review period amounted to 10,386,660 MWh, or 18% less than a year earlier. There was an 80% annual drop in sales through IBEX and on the regulated markets, to 628,817 MWh.

Between January and September, NEK purchased 8,954,912 MWh of electricity, or 16.2% more than in the same period of 2022. The share of quota-based purchased electricity went up to 39.5% in the first nine months to end-September compared to 28.2% a year ago.

In the same period, the overall amount of power purchased under pre-set quotas from the Kozloduy nuclear power plant and the coal-fired Maritsa East 2 plant increased 17.3% year-on-year to 3,538,425 MWh. The total amount of power purchased under long-term contracts or at preferential prices decreased 44.7% year-on-year to 4,006,217 MWh in the review period.

NEK's total assets slipped by 3.7% on the year to 5.45 billion levs.

Last month, Bulgaria's parliament approved amendments to the country's energy laws, paving the way for the liberalisation of the power market for households. According to the updated legislation, from July 1, 2024 NEK will no longer be a public provider and producer quotas for the regulated market will no longer exist.

(1 euro = 1.95583 levs)