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EVN to Sign Contract for Bulgarian Hydro Power Plant in 2011 Q1
EVN TO SIGN CONTRACT FOR BULGARIAN HYDRO POWER PLANT IN 2011 Q1
Date: 08/12/2010
Source: novinite.com
EVN to Sign Contract for Bulgarian Hydro Power Plant in 2011 Q1

Austrian company EVN is expected to purchase a 70% stake in the Bulgarian hydro power plant project "Gorna Arda" from Turkish company Ceylan in the first quarter of 2011.

This has been announced by Joerg Solgelner, Regional Manager of EVN Bulgaria, as cited by the Pari Daily. EVN and Ceylan are currently in negotiations for the buyout.

According to Solgelner, there are still important questions with respect to the Gorda Arda ("Upper Arda") project that have to be settled before a contract for starting work on it could be signed.

Thus, the project company for the construction of the 160 MW cascade could be formed by the spring of 2011, with a 70% of EVN and a 30% share of the Bulgarian National Electric Company NEK. Yet, the project could be delayed by land expropriation procedures.

EVN is expected to receive a Class A investor status that will provide it with benefits for the construction since the Rhodope Mountain where the hydro power plant is located, is considered an underdeveloped region.

In July 2010, Austrian utility EVN signed a deal with Bulgaria's state power utility NEK to take a majority stake in the Bulgarian hydropower project. Under the agreement Austrian utility EVN will own a 70% stake, while NEK will hold the remaining 30% in the joint venture.

Back then the opposition Socialist Party criticized the government for the agreement asking how and why the EVN company was selected for the project without a tender, to which Economy Minister Traikov replied no tender was necessary for this specific project under the existing legislation.

The agreement for the construction of Gorna Arda hydropower project in southern Bulgaria, between Austria's energy firm EVN and Bulgaria's dominant state power utility NEK was signed during the visit of Prime Minister Boyko Borisov in Vienna in the middle of July.

Austria's Alpine Bau withdrew from the construction of Gorna Arda hydropower project in the middle of May, leaving energy firm EVN, which holds a 67% stake in one of Bulgaria's three power distributors and serves clients in Southwestern Bulgaria, the sole partner of NEK.

At the beginning of September 2009, Bulgaria's new government sealed a letter of approval for the construction of the hydro power project on the Arda river.

This was a requirement for wrapping up of the sale of a 30,1% stake, owned by Turkey's CCG, part of the Ceylan conglomerate, to an Austrian consortium of EVN and Alpine Bau.

The move was made after a trial in the International Court of Arbitration, in which Ceylan Holding filed claims for EUR 75 M against the other member in the joint venture - Bulgaria's National Electric Company NEK, was suspended for three months.

The Turkish company was contracted to implement the project under an electricity-for-infrastructure swap deal Bulgaria and Turkey signed in 1998, during the term of the government of Ivan Kostov. The launch of the hydropower construction was delayed after the Turkish company ran into financial troubles.

The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. It is planned to have an electricity production capacity of 160 MW.


Topic: Business



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