For nearly 15 years in Bulgaria there have been talks about liberalization of the gas market, strategies have been written and tonnes of other programme documents have been created in order to facilitate the mass usage of natural gas in the everyday life of people, but the results, to say it frankly, have been entirely lamentable. Gasification in Bulgaria has reached only to 2-3% of the population, while in some European countries, 90 percent of citizens use natural gas for heating and other household needs. Logically, the network built so far in Bulgaria is about ten times shorter compared to average levels in the European Union.
Meanwhile, the State Energy and Water Regulatory Commission (SEWRC) in recent years has issued many licenses for distribution of natural gas, and they were long-term ones. Information from the records of the regulator shows that it has allowed the gasification of around 160 municipalities in the country out of totally 264. Moreover, these licenses cover most of the major Bulgarian cities and a number of summer and winter resorts, where it can be assumed that the population is far more creditworthy.
The discrepancy between
distributed licenses and actual results
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has obviously not been overlooked by Minister of Economy and Energy Traycho Traykov. The slow pace of gasification puts a serious question about how licensees fulfill the conditions set out in their licenses? I urge SEWRC and its chairman Angel Semerdzhiev to critical examine the issued permits and where investments are delayed or not carried out at all, to consider revocation of licenses, Mr. Traikov told the BANKER weekly.
These intentions proclaimed by the Minister suggest that soon we can expect the rearrangement of the current gas map in the country. Today
the largest player on the market
nbsp;
is Overgas Inc. According to the information system Daxy, 50% of its shares are held by Russian company Gazprom and judging by the number of licenses issued by SEWRC, it has been permitted to gasify 52 municipalities, among which Sofia, Varna and Rousse.
Second ranks the company Citygas Bulgaria, which has a license for gas distribution in 33 Bulgarian municipalities located mostly in the region of the Thracian Valley. Since October 2011 the company has been the sole property of Italian Group Societa Gas Rimini.
Another major player on the domestic gas distribution market is the Black Sea Technology Company, owned by the Italian Amga Azienda Multiservizi. The company holds the licenses to supply natural gas for 32 municipalities, mainly concentrated in northern and eastern Bulgaria.
The presence of foreign companies is complemented by one local – Ace Gas – the sole owner of which is Bulgarian Rila Gas, which has a license to distribute natural gas in the western region, covering 22 municipalities.
Given that these four companies dominate the market, they will prove to be most affected by any revision of the investment plance and hence of their existing licenses. However things look quite differently from a corporate viewpoint. These companies regularly excuse themselves with heavy administrative procedures for the construction of gas supply network and the joining of households to it.
For over ten years we have been terrorized by municipalities who have constantly been inventing
fees, that make gasification more expensive
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Although the number of permits per property has decreased from 27 to 15, the requesting of these 15 documents shows no commonsense. There should be uniform standards of the public administration for gasification rather than have each municipality inventing its own rules and fees, said Executive Director of Overgas Inc. Sasho Dontchev. According to him, it is not appropriate investments in gas equipment to be reflected by the municipalities in their tax assessment of housing units because thus people pay higher taxes for their properties and increased garbage fees. Moreover, in this way, through gasification, small settlements reduce their waste, because it no longer dispose of ashes from the previously used wood and coal for heating.
One of the well-known experts when it comes to natural gas, is the chairman of the regulator Angel Semerdzhiev. A few months ago, in one of his speech, he outlined the problem accurately: Our gas distribution companies are rather difficult to expand because the market is very specific to them. The prices at which gas is sold in most cities are competing with those of central heating. It is just that its distribution network is not sufficiently developed, and now someone must pay for its development. When it starts to depreciate, when many consumers use it, it will add less value. At present their pipes add more value as their usability is very low.
Many experts believe that
the outcome of this vicious circle
could be seen in a state assisting households to equip their homes with gas installations absorbing money from the EU funds and the future sale of saved greenhouse gas emissions.
