„ Heating Sofia“ has missed the opportunity to save BGN 200 million in costs from carbon emission quotas over the last six years. The municipal company concluded contracts with unfavorable clauses with emission traders and bought allowances at prices significantly higher than the market.
These are the conclusions of an expert analysis of public data for 2019-2024 prepared for “Greenpeace” – Bulgaria. The research is based on data from official reports on verified emissions published on the website of the Executive Agency for the Environment (EPA), applications from “Toplofikatsia Sofia” to the Commission for Energy and Water Regulation (KEVR) for approval of preferential electricity prices and historical prices of European quotas on the EEX energy exchange platform.
Calculations show that during the period under review it was possible to save costs for quotas in the amount of 20 – BGN 30 million per year, if the trade in quotas was managed with the care of a good owner.
With BGN 1.6 billion in liabilities, “Heating Sofia” has been on the verge of bankruptcy for years. The company has 400,000 subscribers and, because of its critical social role, usually relies on crisis rescue measures. That is why financial damages in the amount of BGN 200 million deserve serious attention.
The period considered in the analysis starts from 2019, when the contract between “Toplofikatsia Sofia“ and “Grand Capital“ – commercial intermediary associated with energy businessman Hristo Kovacki. The contract provides, on the one hand, a commission for the intermediary for each purchased quota.
On the other hand, it also provides for a fixed price for the purchase of carbon emission allowances – an atypical condition not inherent to market principles in the emissions trading sector. This is a double win for the merchant – one from the commission and the second from the difference between the stock price and the fixed price, calculated at BGN 9.2 million.
The analysis of publicly available data related to carbon emissions trading shows that this is not the last such contract to the detriment of the indebted “Toplofikatsia Sofia”. It is noteworthy that the average price of purchased allowances exceeds – in some of the years significantly – the average market price in the relevant year. The usual practice when using stock brokers is that the broker is paid a commission, but the price at which the quotas are bought is maximally profitable for the buyer. Not in this case.
„Deliberately concluding unprofitable transactions that result in damages to a given enterprise is a crime according to Bulgarian legislation, which also provides for punishments for the guilty officials. On the alert of “Greenpeace” – Bulgaria to the Sofia City Prosecutor's Office for the trading of allowances for “Heating Sofia” in 2019-2020 an inspection was initiated.
The most urgent task before the company and the Municipality of Sofia is to stop the additional drain on the company through the trading of quotas, says Desislava Mikova, coordinator of the "Climate and Energy" campaign. in “Greenpeace“ – Bulgaria.
“Secondly, the future beyond fossil fuels should be planned, i.e. to eliminate the need to purchase allowances. The future of “Toplofikatsia Sofia“ in the next decade is related to the production of energy from renewable sources. Such a development brings with it benefits both for the economy and for the citizens and the energy security of the capital city”, adds Desislava Mikova.