SAT, 05 MAY 2001 00:29:08 GMT
Electricity in Exchange for American Political Support
Vice Premier Zotev, labelled as a Russian lobbyist, was accused for
postponing the conclusion of the electricity deal with two American
AIM Sofia, April 26, 2001
God forbid for a Bulgarian to be accused of being a Russian lobbyist –
he is finished. It's quit another thing if he enjoys the reputation of
an American lobbyist - that is allowed, and even commendable.
Lately, storm clouds are gathering over the head of Vice Premier Petar
Zotev. Everything happened out of the blue, only a day before the
working visit of Prime Minister Kostov to USA on April 23. On that day,
Ognjan Mincev, a political scientist who is thought to be close to the
authorities, accused him of delaying and sabotaging the work of a
commission entrusted with finalising the deal with two American
companies. These are AES and ENTERDZI companies which want to invest USD
1.4 billion in thermo-electric power plants Marica-Istok 1 and 3.
According to Mincev, the Vice Premier and his friend Rumen Ovcarov
(Deputy President of the Bulgarian Socialist Party) are lobbying for the
Russian firm ATOMENERGO that allegedly neither wants competition nor
Bulgaria to become independent from the Russian supply of power.
It is hardly a coincidence that such an accusation came from a
political scientist of Mincev's calibre and, in addition, from the web
site of the electronic edition of "Mediapool" which could not be called
anti-governmental (it is edited by Stojan Georgijev - former supporter
of Kostov's Government). The more so as the scandal broke literally a
few hours before Prime Minister's plane took off for Washington.
There was no doubt that everything was staged - one of the major topics
of Kostov's visit to USA was Bulgaria's transformation into the Balkan
power generation center with the assistance of American investments.
However, someone had to take all the blame for procrastinating such a
large investment in the power sector. In such cases the easiest thing to
do is to accuse someone as a Russian lobbyist.
It is true that this is a fourth year that these two American companies
are trying to make the mentioned deals - ever since DS came to power.
The question is why did the Government take so long to bring a decision
on this when its exceptionally favourable inclination towards all
American wishes is common knowledge. It would be frivolous to claim that
Kostov did not know what was going on. Last year alone he received three
letters on this subject - two from a group of American Congressmen
explaining the importance of this project with the participation of
ENTERDZI and one from the then State Secretary, Madeleine Albright.
American Ambassador to Sofia Richard Miles also used every opportunity
that presented itself during his meetings with Kostov to remind him of
the postponed projects.
There were other responsible factors in the power sector in the last
four years during which the deals could not be finalised - Zotev's
predecessor Evgeni Bakardzijev, for one. However, all this time Ivan
Siljaski was the chief of the Energy Complex (NEK). Thus, if someone
should take the blame for the lack of progress with these deals then it
is no one else but Siljaski. It is therefore strange why wasn't he
stigmatised as a Russian lobbyist. He always obeyed the Prime Minister's
orders so that the deal would have been closed long ago had such an
order been given. As far as Zotev is concerned, he is a hard nut to
crack. Also, he is not a SDS member, but primarily an expert. That is
why he was appointed chief of inter-ministerial working group, which the
Government had set up this February to get acquainted with all projects
under the Contract for the purchase of the thermo-electric power plants
Marica-Istok 1 and 3. The task of this group was to give its opinion on
these projects, and not to prepare the Contract for signature. The group
assessed that projects were risky and should not be approved unless
altered. Which risks were in question?
No one is willing to disclose the details regarding offers, but it came
out that one of the Contracts - the one with the American giant AES on
the thermo-electric power plant Marica-Istok 1 - entails a serious risk
of a significant rise of electricity prices in Bulgaria. Under that
Contract the state would be under the obligation to buy electricity at
above average national rates over the next 15 years. The rate agreed
with the Americans was 4.5 to 5 cents per kWh (kilowatt-hour). It is
even above the one at which Bulgaria exports electricity to Turkey (3.5
cents). That would mean that the average price of electricity in
Bulgaria would have to go up and that the population would be the one to
bear the brunt.
On the other hand, there are no problems with the project with ENTERDZI
for Marica-Istok 2 thermo-electric power plant. NEK will be buying
electricity from ENTERDZI at the price of 3.13 to 3.15 cents per kWh,
which would not entail the rise of electricity rates for the population.
It is quite another thing that IMF, World Bank and the EU are against
this country entering a long-term contract on the purchase of
electricity before finishing the reform of its energy sector.
Guarantees that the electricity would be bought from Marica-Istok 1 and
3 thermo-electric power plants would put other producers in Bulgaria at
a disadvantage. They have only one-year Contracts. Consequently,
economic risks were the reason behind Siljaski's long delay in
finalising draft contracts. However, all of a sudden these reasons
turned from purely economic into political ones, and the Vice Premier
was labelled Russian lobbyist. Apart from power interests of Moscow,
which doesn't want another alternative on the Balkans, the nuclear
lobby, which is against strong thermo-electric power plants and instead
wants a new nuclear power plant in Belen, also took certain actions.
Bulgaria's attempt at protecting its economic interests at this point
and, for example, withdrawal from the power deal with the Americans,
would cast a shadow on relations between Sofia and Washington. That
would adversely affect the SDS's prospects at the coming parliamentary
elections on June 17.
There is no doubt that Kostov was forced to promise Washington that he
would straighten things out. If these deals are not approved until the
elections it is hard to say whether they will ever be, for it is unclear
whether the currently ruling party, with Kostov as a leader, will
succeed in preserving its current position.
Bearing in mind that Kostov's visit to Washington was hanging by a
thread until the last moment, it is quite possible that the American
power interests prevailed which is why the Bulgarian Prime Minister was
invited to come to America. Thus, Kostov will have to repay this favour
hoping that he can count on future political support of the "big
brother" across the Ocean.
However, no matter how the power deals with the Americans turn out,
there will always remain a suspicion that this was done at the command
of political circles. Scandals usually follow such deals. That happened
with the "deal of the century" on the export of electricity in exchange
for construction works, which was closed with Turkey. Prime Minister
Kostov personally gave his blessing to this Contract. It turned out
subsequently that the selected company DZEILAJN HOLDING was in financial
troubles up to its neck and that "friends" who guaranteed for it, had
been accused of bribe-taking. However, irrespective of the scandal,
DZEILAJN does not want to give up a profitable contract and is even
threatening Bulgaria with international arbitration.
The problems with ENTERDZI and AES are similar - both companies want
the state to give some guarantees for these projects. True, these are
not direct state guarantees for private credits, such as was the case
with DZEILAJN. Things are different now - the Bulgarian Government is
demanded to send an official letter stating that it is behind these two
It never happened that the USA asked for something and did not get it
on a silver platter. In this case things have just took too long.
Intentionally - mind you. Firstly, to have Prime Minister Kostov invited
to the White House and secondly, to elicit open support at the coming
Ad, as far as Vice Premier Zotev is concerned - he simply served
as an ideal alibi.