The DCEFR report contains findings that ENERGO-PRO cannot accept

The Company has strictly complied and coordinated its activities with all the decisions and instructions of the Regulator in recent years

The report issued today by DCEFR on the audit carried out in ENERGO-PRO contains allegations regarding activities and practices for the period from 2008 to 2013. During this period, the company was under the constant control of all state institutions entrusted with functions in the energy sector, including under the constant supervision and inspections by the DCEFR. We would like to point out that the report contains allegations of activities that have been undertaken following a series of successive regulatory decisions in recent years.

At the present time, we are clarifying several key statements that create false impressions in the public domain.

For example, the report claims that the company generated “additional revenues” in the amount of BGN 131 million. We must emphatically emphasize that these funds have nothing to do with the company's revenue. The company did not benefit from these funds, but on the contrary - these are funds that were invested in the implementation of basic activities of distribution and supply of electricity in North-East Bulgaria. The funds in question, necessary for the operation of the company, were not provided for in the price decisions of the DCEFR. Due to the fact that the Commission systematically underfinanced the company's operating activities, it was necessary to redirect funds from other sources, including shareholders' own funds, in order to cover the shortfall and ensure the normal functioning of the network and the supply of electricity to final consumers. Underfunded operating expenses include necessary and inherent activities such as repair and maintenance of the network, purchase of work tools and clothing, fuel and vehicle repairs, salaries and insurance of employees, etc.

In the information provided, another statement is striking — that in the territory serviced by ENERGO-PRO, checks were carried out on the quality of the supplied electricity, in which it was found that it did not meet the quality indicators. The actual facts indicate that the checks carried out during the audit were not a representative sample, as they were not made at random. In practice, 7 checks were carried out on customer complaints about voltage fluctuations in small settlements. Again, the fact is missed that these sections of the network are in dire need of investment, the funds for which the Regulator has been constantly cutting in recent years.

Regarding the finding that the company did not fulfill the investment program set, we must clarify that for 2013. DCEVR has not recognized a single BGN for investments, so there is no way ENERGO-PRO Networks AD could not have failed to implement its investment program recognized by the Commission. For the second regulatory period, 2008-2013, the depreciation costs recognised by the EBRD are lower even than those reported in 2007, which should have been recognised in full. Nor has the EAFRD recognised the full amount of operating expenditure for 2007, which determines the financial indicators for the next 5 years. This makes it impossible for the company to finance the full amount of the investments, because the necessary financial resource went to cover unrecognised operating expenses only up to their level for 2007, to which must be added the unrecognised depreciation costs for the same period. If DCEFR had recognized the full depreciation expense for the defining year 2007, as well as the depreciation costs of the recognized investments (according to the EBRD Guidelines), ENERGO-PRO Networks AD would have been able to finance the full amount of the investment program agreed by the DCEFR.

Surprisingly, the DCEFR report indicates the figure of BGN 190.444 million in outstanding investments. They are calculated on the basis of the investments claimed in the company's price statements, which, however, are not recognized, validated and calculated by the DCEFR in the investment prices. Of the BGN 521, 182 million requested by ENERGO-PRO, the Commission recognized BGN 388, 775 million, which is a decrease of BGN 132, 407 million.

The facts undoubtedly prove that, despite the insufficient volume of investment costs recognised by the ECHR, in the years following the privatisation of companies, the number of unplanned outages (accidents) and their duration have decreased many times over.

ENERGO-PRO has always carried out its activities in compliance with Bulgarian legislation. In all its actions, the company strives to work efficiently and in the interests of its customers. The company's experts will thoroughly familiarize themselves with the findings of the audit of the DCEFR, after which the company will issue an official opinion.