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Sofia Heating Utility to Loose BGN 30 M Monthly if Prices Remain Unchanged

Date: 22.10.2008

If the General Assembly of the shareholders of Sofia's troubled heating utility "Toplofikazia" approves the proposal of the city's municipality to increase its capital share by BGN 55 M, the municipality is to become the utility's majority owner, according to Rosen Zhelyazkov, the municipality's Head Secretary.

Zhelyazkov spoke on Tuesday and added that the municipality would also have to manage the utility's long-term debt of EUR 120 M, while the BGN 55 M would only cover short-term obligations.

By the end of the heating season, the State must change the prices of heating energy, otherwise the utility would continue losing money at the rate of BGN 30 M per month.

According to Sofia' Mayor Boyko Borisov, the Stage was refusing to pay some of the utility's debts, despitethe funds to do so, and the Sofia municipality was purchasing a loosing company.

"We are coming up with BGN 55 M to just patch some basic holes with the clear understanding that such move is not good for us. The State refuses to become our partner. They say: we either obtain the entire utility and make all decisions, otherwise you take it, and we guarantee that you would incur losses of BGN 30 M per month, because we are the ones deciding on the price of natural gas and heating energy. By March, we would be with BGN 120 M in the hole - this is the gift we receive from Prime Minister Stanishev," the Mayor said Tuesday.

Borisov further stated that the Sofia Municipality had entered in negotiations with the French "Gas de France," for direct sale of natural gas to "Toplofikazia" by the use of foreign gas lines. In the future, if a suitable investor comes along, the heating utility might have the potential to produce both heating and electrical energy, which, according to the State regulator - State Commission for Energy and Water Regulation, would bring the heating prices down as much as 5 times.

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