Sofia Municipality Eyes Bulgarian Govt's Stake in CEZ Power Utility

Sofia Municipality intends to start talks with Bulgaria's Economy Ministry in order to acquire the state minority stake in CEZ Electrorazpredelenie, the power utility supplying electricity to Sofia and Western Bulgaria.

The talks will be part of Sofia Municipality's latest brainchild to form a holding for communal services, announced Thursday Andrey Ivanov, chair of the Sofia City Council.

The potential Sofia Municipality communal holding would include the government 34% stake in CEZ as well as the Sofia heating utility Toplofikatsiya, the municipal share in Sofiyska Voda (a water-supply utility), the mineral water springs in Sofia.

However, Ivanov pointed out that the talks for the municipal acquisition of the government stake in CEZ are in a very early stage.

It is still unclear how much the state shares in CEZ Elektrorazpredelie might be valued at; it is also unclear how the Sofia Municipality's idea will affect the government's plans to sell its minority stakes in the three power utilities – CEZ, E.ON and EVN – in order to raise budget revenues.

The Finance Ministry hopes to raise a total of BGN 450 M from privatization of fully or partly state-owned assets in 2011, including the sale of the minority stakes in power utilities.

CEZ Electrorazpredelenie is 66% owned by the Czech company CEZ; it supplies electricity to over 2 million consumers in Western Bulgaria.

Last year the Bulgarian government transferred the ownership of the vastly troubled heating utility Toplofikatsiya, known for several embezzlement scandals in the past few years, to the Sofia Municipality – but together its debts amounting to some BGN 500 M.