Strategic assets should only be in good hands

Self-regulation in every industry is the right key to put business into the light

Evgeniy Ivanov, Executive Director of the Confederation of Employers and Industrialists in Bulgaria (KRIB):

Strategic assets should only be in good hands

Снимка: EconomyMagazine/Krassimir Svrakov

328 ~ 5 мин. четене
Автор: Tatyana Yavasheva

Mr. Ivanov, is it getting lighter on the territory where Bulgarian business operates?

There was a period when lightening was a more sustainable trend. But as a result of some management decisions, things started to get messy. Capital is very timid and in a situation of uncertainty, it is being invested in places with better attitude towards investors and a better business climate.

Is the price of electricity a factor for this downwards trend?

There are unpredictable price fluctuations and that prompted investors to withdraw. At the end of last year, a large number of KRIB members received warning letters that if they did not accept an average increase of about 40% within two months, the electricity would be stopped on 28th February.

Why has such pressure become possible, are we not talking about de-monopolization and liberalization of the electricity market?

The answer is hidden in the question - we are talking about... but only "talking about" is not liberalization, it is not a free market. Due to the lack of a good regulatory framework and a certain inactivity by the state regulator, gaps within the law have opened and a handful of traders managed to manipulate the market. But together with the other employers' organizations we intervened and we were able to convince the senior state management in the person of the Prime minister that all participants in the system must come together and find a solution. We were even ready to protest against electricity prices, and the protest would have been the second one within two years.

Is trading with electricity a business in the light?

So far, it has happened mostly in the dark. Officially, the market is free, but practically, it is not. After all the measures we have negotiated with the prime minister and the ministers, the price has dropped sharply from BGN 120 to BGN 80-90 per 1 MW/h, and it continues to go down. At the same time, the exchange price in Vienna was BGN 75 per MW/h. So far, the only thing that continues to be a problem are the contracts with the US power plants. We have hit a road block, but the solution is only one - renegotiation has to be done.

Do you have any concerns about the way CEZ was sold?

From a legal point of view, the way the deal is taking place is not illegal. The seller - CEZ wants to sell the assets it has bought in Bulgaria some years ago at a maximum price.

The question arises whether those behind the deal will be able to manage the system in a way that the change of ownership will not be felt?

Everything is very delicate. Strategic assets should not be allowed to fall into the wrong hands. So far, there is no toolbox to allow state intervention. Thus, the problem was taken to the level of media reasoning and a fight with hypothesis started raging. In this situation, everyone starts to think that they are allowed to interfere, to give advice and to say who can buy and who does not. Economic pressure takes place. Some say the state has sold its CEZ share of 33% and can no longer control anything. But with 33%, it still could not have any control. It is just a "blue helmet". The state was supposed to retain 34% of the ownership or a golden share. The sale of the ERPs was done by the government of Simeon Saxe-Coburg-Gotha, and it was laid down during the sale that the state would have no control.

The red light is already on that for transactions, which are sensitive for society there must be mechanisms of control and intervention. What needs to be done?

At KRIB, we are ready to assist in the development of a regulatory mechanism that guarantees the public interest in relation to assets that are considered as part of the national security and are of a high public interest.

Which are the most sensitive sectors?

First of all, energy, and secondly the defense industry. Water supply is also of particular importance. The concession of Sofiyska Voda was also subject to very serious remarks. From now on, order must be created. The water disappears, turning it into a global treasure. That means that it is also a question of national security. Transport is also of national importance. The so-called environmentalists stop the development of the tourism industry in certain regions because they have decided that it is better for Switzerland than for Bulgaria to develop ski tourism. And if we do not finish the Struma highway until 2021, we will have to return the money provided by the EU.

What is KRIB’s formula for getting business into the light?

I would advise governments to consult more often with the established experts who have met the criteria of representativeness. The state must set the bar high for organizations that have the right to legally represent Bulgarian business. KRIB is a responsible business organization that works in the light. It suffers from the presence of a grey sector. We can offer solutions and by discussions to find an answer to every difficult question. Some time ago, we initiated the connection of fiscal apparatus at gas stations to the NRA. There was tremendous resistance. More than 200 gas stations closed. It turned out that they worked in the dark, not even in the grey. Now everything with gas stations has become normal. After that, we headed for the wholesale shops; you see what has happened to the high-spirits. Every year, more than BGN 200 million go to the state as excise and VAT.

In your opinion, where are the greyest areas of the business sector?

Tourism remains an enigma. A solution has to be found there, since guest houses undercut prices and do not pay taxes and social securities. This is a scourge for the sector. The hotel business is entirely in the light, but is ruined by grey competition. There must be the same rules for all, not to give a way to the twilight zone. Construction was also a "black hole," but the lightening is a fact.

Which is in fact the right key to Business in the Light?

Self-regulation in every industry. The state must provide certain frameworks in which the industry can regulate itself.

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