Bulgaria’s opposition to file motion of no confidence over energy policy

Bulgaria’s opposition to file motion of no confidence over energy policy


By Clive Leviev-Sawyer of the Sofia Globe

Bulgaria’s opposition party GERB has said it plans to file a motion of no confidence in the government of Prime Minister Plamen Oresharski on the grounds of what the party calls the cabinet’s failed policy in the energy sector.

This would be the fourth motion tabled by GERB in the space of less than a year since the Oresharski administration took office in late May 2013. Like the other three motions, it is expected to fail, as GERB has only 94 of the 121 votes required to bring down the government.

GERB leader Boiko Borissov said on May 9 that the list of the government’s failures included the lack of progress on the South Stream gas pipeline, the poor financial performance of state-owned companies in the energy sector, as well as the populist move to keep electricity prices low ahead of the European Parliament elections, scheduled for May 25. He also described Economy and Energy Minister Dragomir Stoynev as “incompetent”.

Borissov said that his party wanted the vote to happen before the European Parliament election.

The announcement comes only days before the country’s utilities regulator, the State Energy and Water Regulatory Commission (SEWRC), is set to decide whether to repeal the electricity distribution licences held by Czech CEZ and Energo-Pro, as well as Austria’s EVN.

The proceedings were prompted by the commercial dispute between them and state electricity utility NEK, which accuses the power distribution companies of unlawfully offsetting and failing to pay bills due for electricity.

NEK claims that it is owed 347 million leva for electricity deliveries. The electricity distribution firms, for their part, say that the amounts have been withheld from NEK as compensation for the mandatory purchase of electricity generated by renewable energy firms, which the firms are required to buy by law.

NEK is required to compensate all such purchases, but the cash-strapped utility has made no payments over the past year, prompting the electricity distributors to withhold their own payments to NEK.

The regulator has twice postponed the public sittings at which it was scheduled to issue a ruling. Some reports in Bulgaria have claimed that at its next sitting on May 12, SEWRC will go ahead and repeal the licences, giving a populist boost to the election campaigns of the parties in the ruling coalition – a charge that Oresharski denied earlier this week, saying he put no pressure on the regulator.

The episode raises questions about the regulator’s independence, which are not helped by the recent appointment of a new chairperson of the regulator, Boyan Boev, who was before that chief executive of the Bulgarian Energy Holding, the umbrella corporation for most state-owned assets in the energy sector.

(The regulator’s critics point out that SEWRC is also partially to blame for the commercial dispute between NEK and the distribution companies, having failed to put in place a framework stipulating how NEK should compensate the distribution companies for renewable energy purchases).

This point was raised in a recent letter to Stoynev from European energy commissioner Guenther Oettinger, leaked to the Bulgarian media and published on May 8.

The letter, dating to April 4, said that the commercial dispute should be solved by courts rather than SEWRC. On the regulator, Oettinger said that its administrative capacity has not been strengthened (as recommended by the European Commission in 2013), whereas Boev’s appointment “does not contribute to building trust in the independence and impartiality of the regulator.”

Furthermore, political calls directing SEWRC to open the proceedings to repeal electricity distribution licences appeared to infringe on the regulator’s independence, a key principle of the EU’s Third Energy Package regulations.

Oettinger said that the European Commission would “closely monitor” developments and was prepared to “take the required legal steps to guarantee” that EU laws are fully observed – a not-so-subtle warning that Bulgaria could face infringement proceedings over this issue.