Minister Vladimir Malinov: There will be no electricity regime

Energy / Bulgaria
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There will be no electricity regime, since in the last month there were several different sources of information that there would be one - there will be no electricity regime and Bulgarian consumers should be calm. This was stated in the studio of "The Day Begins with Georgi Lyubenov" by the acting Minister of Energy Vladimir Malinov.

Electricity prices

He emphasized that he was familiar with the proposed report of the EWRC on the increase in the price of electricity from January 1, 2025 and explained that one of the reasons for the requested price increase is the higher consumption by household consumers, and the other concerns the lower expectation in the price decision of the energy regulator from July 1.

"There is a higher consumption of electricity in households than what was foreseen in the EWRC price decision for this regulatory period, which began on July 1st of this year. And it is precisely this higher consumption that should be covered. This is one of the reasons for the increase. The second increase is the prices, since the EWRC price decision, which is currently in effect, includes a projected price for electricity, which is currently significantly higher."

Bulgarian households will continue to pay a price that will be many times lower than the one on the free market, the energy minister specified and gave an example:

"Just a few days ago, Moldova declared an energy crisis. Also, the previous week, the Romanian Minister of Energy said that there is a serious danger of quite long power outages in Romania, so we live in this world. It is for this reason that when demand is greater, electricity prices have gone up accordingly."

Malinov explained that steps have been taken to solve the problem at a European level, to remove the so-called bottlenecks where electricity from Central and Western Europe can also reach our markets. At the local level, the Kozloduy NPP is operating at full capacity and more than 2,000 megawatts per hour are available. Eight units are operating at the Maritsa East 2 TPP and produce 1,500 megawatts. So, the entire energy sector is working well to ensure market security, assured Minister Vladimir Malinov.

The minister was categorical that there will be no shock increase in the price of electricity after the liberalization of the electricity market, since the budget has allocated 400 million leva for the transitional period of 6 months after the market is liberalized. "We want there to be predictability," he said. At the same time, he drew attention to the importance of an information campaign among Bulgarian electricity consumers.

Tax on subsoil resources

The Ministry of Energy does not support the so-called "tax on subsoil resources", Vladimir Malinov also stated. "The Ministry of Energy did not support it, and does not support it, because it will hinder investments", he explained.

As is known, the initial idea in the draft budget was for the introduction of such a tax, but it was later understood that it would only be a one-time tax. In this regard, in response to a question from the presenter, the Minister of Energy explained that he had held talks with the mining companies and they had agreed to this one-time tax. He explained that the revenues would not be as envisaged by a similar tax of about 400 million leva and would be lower by about 140-150 million leva. "Yes, the revenues would be lower, but this is a balanced solution", said the Minister.

Oil and gas exploration

Vladimir Malinov expressed optimism regarding oil and gas drilling in the Black Sea. "What we have completed within a few months as part of the procedure is that Shell will take the rights to explore the Khan Tervel block, which is in Bulgaria's exclusive economic zone in the Black Sea. We return again to the topic of the "additional tax" - it was the foreign companies that were worried. Yes, they will not be subject to the tax, because within the next year they will conduct a feasibility study, but this does not give them the opportunity for a serious volume of investments. The two blocks (Tervel and Khan Asparuh) next year, the good news is that two more drillings are about to be carried out to establish the presence (of oil and gas)," said the minister, giving details about the new consortium between OMV and the Israeli company NewMed. "Immediately after the New Year, we will continue the conversation about Bulgarian participation in their consortium," said Malinov.

He explained that Shell will invest 16.6 million in the study for the Khan Tervel block. euros to carry out the necessary 3D surveys. The concession contract with Shell will be for a period of 5 years. The expectation is to receive data earlier than this period.

It is also expected that real data from the drilling in the Khan Asparuh block, according to the Minister of Energy, will be available by the end of the year or rather by mid-2026.

“These are companies with serious experience and the confirmation, their participation, the beginning of the investment process again, shows that they have serious data”.

"Bulgargaz" and "District Heating Sofia"

In response to a question from the presenter about the higher prices of natural gas of "Bulgargaz", the minister explained that nevertheless they will be lower than those on the Dutch exchange by 4-5 euros/MWh. "The second good news is that we are secured in the long term. Both through the long-term contract with Azerbaijan and through LNG", the supplies", said the minister, emphasizing the interest of the largest companies in the tenders for the supply of liquefied natural gas, held by "Bulgargaz".

Vladimir Malinov did not ignore the issue of the relations between "District Heating Sofia" and "Bulgargaz". As is known, the district heating company owes 1.6 billion leva to the Bulgarian Energy Holding and the gas company.

"What I can confirm is that Bulgargaz will not stop natural gas supplies to District Heating Sofia, but we must act. We must act and that is why I took a very proactive position. I invited the mayor to a meeting, held meetings with all the parties represented in the local Sofia parliament and said: We must act! Yes, the long term is very important, but let's outline the short-term measures first. We lifted the garnishments that were imposed on District Heating's accounts, but now we want it to pay itself - no more than what it paid last year. Regardless of the fact that the bills it will receive and the invoices will be higher, the same financial resource should be set aside and we use these few months to look for a long-term solution. We developed programs that were approved by the Council of Ministers at my proposal. Modernization fund - we are planning 310 million there. euro grant financial resource, which 100% will finance the construction of heating or cooling systems such as "District Heating Sofia" is one of the official beneficiaries, which will be replaced with renewable energy. So, this is the first (extended) hand. We are ready, as the largest creditor of "District Heating", to jointly seek the solution for a future strategic investor who will develop this company", said Malinov.

Gas transmission

The conversation in the morning block also highlighted the positive meeting with the Foreign Minister of Hungary, Péter Szijjártó, on the search for a solution for the transportation of natural gas through Bulgaria. "We have a common position on the transmission of green energy from the Caucasus, the Caspian region to Central and Eastern Europe. Precisely as one of the measures where energy is not enough. We are together in two initiatives – the green corridor, which includes the submarine cable under the Black Sea, which is for the transmission of electricity from the Caspian region to Central and Eastern Europe, and the other is again an initiative through the Caspian region through Georgia and Turkey for the transmission of green energy,” the minister said. As part of the discussion with Minister Péter Szijjártó, Malinov pointed out the transmission of natural gas during the winter months, through our country to Hungary from the point of view of the sanctions imposed against Gazprombank. “We discussed a solution… At the moment, there are no unpaid fees to Bulgartransgaz, but what I want to declare once again is that Bulgartransgaz will provide its services qualitatively and on time, as it has always done, only if they are paid,” Malinov was categorical.

In response to the presenter, the minister specified that at the moment these payments have been made through Gazprombank. "From now on, strictly observing the sanctions, we will not accept payments from Gazprombank, and this is a commitment of the companies that use the Bulgartransgaz gas transmission system to find a solution. Peter Szijjarto and I discussed a solution, which I hope will be objectively achieved within the next 10 days, which naturally includes the Hungarian side as a consumer of part of this Russian natural gas, and I believe that this will provide certainty. But if there are no payments, the service will not be provided.

The minister also commented on the issue of supplies to Moldova and guaranteed the possibility of Bulgaria's gas transmission system for supplies of blue fuel.

"Botaş"

Rearding the renegotiation of the terms of the contract with the Turkish company "Botaş", Malinov explained that Bulgargaz has hired a serious Swiss company to analyze the consequences, "in case the desired result is not achieved during the negotiation process, what are the probabilities of terminating this contract".

"I personally believe that the implementation of the contract should continue under different parameters. Parameters that are in line with the current reality," he said, specifying that Bulgargaz had made such a proposal, and in particular, it was to reduce the quantities, capacity, to reduce the fee and divide it into a fixed and variable one, which would be paid only in the case of using the service, and the reaction is expected. At the same time, the energy minister noted that the initial reaction of the Turkish side was not positive, but in his words, "Step by step we are getting closer to each other and I believe that we will have a positive result," Malinov said.

"The good news is that we currently have no financial burden. Because in the last 6 months, Bulgargaz has not paid this fee and we are receiving understanding from the Turkish side, because they are not looking for this financial resource. So, at the moment, for the second half of 2024, Bulgargaz has not paid this fee. This is one of the steps within the negotiation process," the minister said, specifying that this is not a formal agreement between the two companies, but an agreement at the political level and "understanding on the part of my Turkish colleague."

Nuclear Energy

The Minister of Energy also explained the program for diversification of the nuclear fuel of the Kozloduy NPP and expressed hope that work will begin on testing the fuel of unit 6 within the framework of the contract with Framatom.

"The news that is coming this week is that we will sign a contract with Westinghouse to start the tests and the licensing process of their fuel, as well as for the 6th unit of the Kozloduy NPP. So, step by step, slowly, we are moving forward. We are moving forward in a process that is irreversible," said Vladimir Malinov. Regarding the burial of nuclear fuel, he specified that we are not building a nuclear fuel repository, but only discussing the possibility of geological burial of nuclear fuel.

"Chiren"

On the topic of the underground gas storage facility in Chiren, the minister said that "two of the stages of the expansion of Chiren are having a positive effect. The gas pipeline was put into operation and is already operating. The above-ground facilities will be activated by the end of the year and will be put into operation in the first quarter of next year. The new public procurement for drilling is about to be announced. At each stage, the capacity of Chiren will be increased. With the first two facilities, starting from May 1 next year, the production and storage capacity will be increased from 550 million cubic meters to 720 million cubic meters. After the three additional wells are drilled, we will reach 820 million cubic meters,” Malinov said, specifying that professionals should be left to do their job. As a task for his upcoming visit to Brussels, he outlined an extension of the provision of grant funding by Brussels, supported by the necessary arguments.

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