March 1, 2018 / 2:00 PM / 2 years ago

Bulgaria wants controlling stake in CEZ's Bulgarian assets

SOFIA (Reuters) - Bulgaria’s government wants a controlling stake in the Bulgarian assets of Czech utility CEZ (CEZP.PR), which are being sold, Finance Minister Vladislav Goranov said on Friday.

CEZ has signed a contract with a small Bulgarian solar energy producer, Inercom, to sell a power distributor that provides electricity to over three million Bulgarians, along with other assets.

The deal has raised concerns in Bulgaria over Inercom’s ability to finance and operate strategic energy assets.

“The talks are at quite an early stage. We expressed clearly our will that we want to participate in this deal, one way or another,” Goranov told reporters after a meeting between Prime Minister Boyko Borissov and Inercom’s owner, Ginka Varbakova.

When asked what stake Bulgaria would like to have, Goranov said, “at least a controlling stake.”

The deal, whose value was not disclosed but is estimated at around 320 million euros ($390 million), has drawn headlines in both countries. Transparency International also said on Thursday the deal “raises red flags” and worries over the sources of funds for its financing.

“Governments must ensure that state-owned enterprises and companies providing essential public services are held to the highest standards of transparency and accountability,” said Patricia Moreira, managing director of Transparency International.

Czech Prime Minister Andrej Babis said in a statement he had talked to Borissov and told his counterpart that CEZ management had assured him that, after its checks on Inercom and its financing, there was no reason the deal should not go through.

Inercom’s Varbakova said she was leaving for Prague to hold talks with CEZ and she was willing to let the Bulgarian state in on the deal, provided that CEZ agrees.

“If it will calm down the final consumers, yes, I am willing to accept state participation in the deal. I am willing to transfer the contract I have if the seller would agree to that. These talks are pending,” she said.

CEZ, though, said it had no information on Bulgaria’s intention to take a controlling stake in the assets. A spokesman said the company would wait to hear from Inercom but added the contract was already signed.

Reporting by Tsvetelia Tsolova in Sofia and Jason Hovet in Prague, editing by Jane Merriman, Larry King

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