Bulgaria's Vidachim stops operations - report

The layoffs are caused by recent changes in regulations whereby state-operated electricity company NEK no longer pays Vidachim for the electricity it produces, state-run radio broadcaster BNR said, quoting the country's energy minister Temenuzhka Petkova.

According to Petkova, Vidachim relies not so much on the production of tires, but on payments from NEK for electricity produced. Since payments have stopped, Vidachim is unable to pay its employees.

Petkova said in a press release on Sunday that NEK is operating at a loss from buying power from Vidachim since it pays 15 levs ($8.1/7.7 euro) per MWh more than it sells it for. NEK has been paying preferential prices to Vidachim since 2002 and, in 2013 alone, Vidachim's total revenue amounted to 54 million levs, of which 52 million levs were generated from selling electricity.

“Electricity production should be an additional and not core business of a company,” Petkova noted.

In November last year, Vidachim suspended operations over 19 million levs in overdue payments from NEK.

The parliament approved, at the end of February, amendments to the energy legislation, which are expected to reduce NEK's deficit, which stands at 3 billion levs. The measures envisage that those plants whose operations are inefficient will be excluded from the country's energy mix, and curb power production from biomass, among others.

Petkova also said in the press release that the measures are expected to reduce NEK's deficit by about 300-350 million levs per year.

Vidachim, set up in 2007, operates a plant near Vidin, on the banks of the Danube.

(1 euro=1.95583 Bulgarian levs)