Bulgaria will have little room to lower consumer power bills after an expected cut this week without forcing generators to sell below cost or offering subsidies that would draw fire from the European Union, traders and market participants said on Monday, Reuters reported.


Bulgaria has been rocked for weeks by sometimes violent demonstrations over high electricity prices, deepening poverty, cronyism and corruption in the European Union's poorest member state. The rallies forced the resignation on February 20 of Prime Minister Boyko Borisov's government five months before his term was due to expire, clearing the way for early elections on May 12.


Parliament pushed through a plan to cut electricity prices by 8% as it attempts to defuse public anger and stop the building protests against high power bills. The tariff cut is set to start this month. That will further hurt the country's electricity distributors owned by Czech companies CEZ and Energo-Pro, and Austria's EVN - which are already the focus of protesters' ire, and further deteriorate relations between Bulgaria and its EU partners, particularly the Czech Republic.


While many Bulgarians had sought deeper cuts, market participants warn generators could soon be selling power at a loss. As it is, big industrial consumers and distribution grid companies will likely fund the reductions, they added. "There is little room because the tariff is based on the real cost for power production, grid transmission, renewable energy support and other things," one trader with a large international utility operating in the region told Reuters. "Tariffs should not go below costs. A further decrease will hit generating companies and others."

Source BNE