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Bulgarian Government to negotiate with Contour Global over PPA termination for Maritza East 3

Bulgaria
17/09/2019
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On 11 September 2019 the Bulgarian Government directed Deputy Prime Minister Tomislav Donchev, Finance Minister Vladislav Goranov and Energy Minister Temenuzhka Petkova to initiate negotiations with U.S.-owned Contour Global Maritza East 3 AD over the termination of its 13 June 2001 power purchase agreement (PPA) with Bulgaria's National Electric Company EAD (NEC).

Maritza East 3 is a lignite thermal power plant with an installed capacity of 908 MW located near the village of Mednikarovo, Stara Zagora district. A key player in insuring the security of Bulgaria's energy supply, Maritsa East 3 was the first lignite power plant on the Balkans to operate in full compliance with Europe's highest standards for safety and environmental protection following its privatisation and acquisition by U.S.-based Entergy and Italy's ENEL.

During the upcoming negotiations, the three ministers are expected to coordinate with the European Commission’s Competition Directorate over the PPA termination. The Competition Directorate has already initiated proceedings based on a complaint from the Bulgarian Energy and Water Regulatory Commission (EWRC) charging that the PPA constitutes incompatible state aid.

Furthermore, in 2016 the World Bank suggested that the Bulgarian Government decreases NEC's availability charges to Contour Global and renegotiates the PPA.

These talks came as no news to the energy supplier. In its last publicly available annual financial statement Contour Global stated that it expected the PPA to be subject to renegotiations.

According to Energy Minister Petkova, termination of the PPA would not incur any penalties since the initial investment was repaid in full.

If the PPA is ended, Contour Global will continue selling electricity on the free market with the Ministry of Energy forecasting that this could – due to the elimination of Contour's "stranded costs" – lead to cheaper electricity for consumers.

For more information on this eAlert and Bulgaria's energy market, contact your regular CMS source or one of the following local CMS experts: Kostadin Sirleshtov, Borislava Piperkova, Elena Yotova-Yordanova.

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