The state does not intend to buy the Bulgarian business of ČEZ, and the government’s intentions a month ago were just an “attempt to soothe” society. This became clear following the statement of Finance Minister Vladislav Goranov on Tuesday (3 April) before the special parliamentary commission which is investigating the deal. Krassen Nikolov has the story.
Krassen Nikolov is a journalist specialised in judiciary affairs. He works for Mediapool and is a regular contributor for BulgarianPresidency.eu for the six months of the Bulgarian Presidency of the Council of the EU.
The scandal in Bulgaria broke out in February because of the decision by ČEZ to sell its assets in the country to the unknown business lady Ginka Varbakova and her company “Inercom Bulgaria”.
Varbakova has signed a contract with ČEZ, but she does not have the necessary experience and her own financial resource to manage a business for €1 billion a year. People’s fears are related to the fact that Verbakova will guarantee the electricity supply to 40% of the population, including the capital Sofia.
Parliament has begun an investigation because of doubts that Varbakova is a decoy buyer. The prime minister, Boyko Borissov was personally involved in the scandal. It became clear that the state-owned Bulgarian Development Bank had sent a letter to ČEZ confirming interest in financing the deal. The latest poll by the Alfa Research Sociological Agency showed that 57% of Bulgarians are convinced that Borissov’s GERB party or the prime minister himself stands behind Varbakova.
Five days after the publication of this research, Finance Minister Vladislav Goranov announced that the state would not participate in the deal. Thus, the company “Inercom” remains the favorite as individual buyer of the assets. In early March, Borissov wished “complete control” of the state over the deal and the energy company, although it’s not unusual for him changing positions at 180 degrees.
From the beginning of the scandal Vladislav Goranov opposed the government’s participation in the negotiations between Inercom and ČEZ. Now he said that he had explained to Borissov his position, and that the PM had accepted as its own those reservations, and that he gave up the state participation. However, the doubts that Varbakova is not the real buyer remain.
The official exit of the state from the negotiations between Inercom and ČEZ has the potential to speed up the conclusion of the deal. With additional guarantees on ČEZ-Bulgaria’s loans and offers to minority shareholders, the deal will be in excess of €500 million. It is not yet clear where the funding will come from.
Goranov explains that any intervention by the government may be seen as “an attempt to expropriate assets and a ban on disposing of property”. And this, in turn, may lead to new cases of ČEZ against Bulgaria. The Czech company has already filed a €600 million case against the state before international arbitration. The motive is unlawful intervention by the state on the energy market, which has harmed ČEZ’s business.
Against this background, Chief Prosecutor Sotir Tsatsarov announced that Ginka Varbakova’s husband, Slavcho Varbakov, features in four prosecution cases. He has been accused of being part of an organized crime group for tax crimes, but in 2014 the charges were lifted. The name of the owner of “Inercom” Ginka Varbakova is also present in the prosecution files in one case. It is related to accusations of fraud by a leasing company with which Varbakova has worked. Under this contract, among other things, she can make use of a Ferrari car.
BSP leader Kornelia Ninova commented that her political force remains in its position that “Inercom” should not buy “ČEZ-Bulgaria”. She repeats that this should be done by the state.
“What happened in a month that suddenly the position was reversed – the state will not participate, full stop. And what will happen to the national security, with these three million Bulgarians who are dependent of the ČEZ supply? Is it true, that ČEZ has already submitted to the national energy regulator an application for increasing the price of electricity? People are worrying, but there is nothing on the surface, things are happening backstage”, Ninova told the Bulgarian National Radio.