Czech power utility CEZ signed a contract on Friday to sell its Bulgarian assets to Bulgarian company Inercom, hours after the Bulgarian energy minister resigned over her links to Inercom. Under the deal, Inercom Bulgaria will take over an energy distributor that provides electricity to over 3 million people in the north west of the country, an energy trader and several renewable energy assets.
The sale, estimated at about 320 million euros ($394 million), raised concerns among lawmakers across political parties in Bulgaria about the ability of the little-known company to finance and operate strategic power assets. Electricity costs are politically sensitive in the Balkan country of 7.1 million people, which also ranks as the most corrupt European Union member state, according to Transparency International.
Energy Minister Temenuzhka Petkova resigned after confirming she had known the owners of Inercom for over 20 years, but she denied any wrongdoing. Speaking to reporters in Brussels, Prime Minister Boiko Borisov said he would accept Petkova’s resignation to assuage any doubts that his government had any say in the deal.
“I want to confirm… (the government) had not influenced that deal in any way,” he said. Borisov said the country’s energy, financial and anti-trust regulators, as well as the intelligence services, would look closely into the deal, including the origin of the funds for the transaction.
Inercom, part of a group that has activities in construction and solar energy, said it was aware of the social importance of the business it will acquire and pledged to work transparently and responsibly. Inercom Bulgaria was only registered last year, but its owner had three solar parks in the country, Bulgarian media reports said.
The company offered the highest price among several bids for the Bulgarian assets, which CEZ said it received in early 2017, and was “significantly above the fair market value of the assets sold, as determined in an independent appraisal.” The deal is subject to regulatory approval.
If the deal goes through, CEZ would be the second of three strategic investors that acquired Bulgaria’s electricity distribution assets in 2004 to exit the country. Germany’s E.ON, which bought two regional distribution companies in northern and north-eastern Bulgaria, was the first to sell its assets in the country, to private Czech energy group Energo-Pro for an undisclosed amount in 2012.
Austria’s EVN, which services southern and south-eastern Bulgaria, bought the other two regional distribution companies in 2004.