Sofia Set to Decide Fate of Foreign Electricity Companies

From Financial Times Website

By Christian Oliver in Brussels

Bulgarian authorities are poised to decide whether to eject a trio of Czech and Austrian electricity distributors in a case that is alienating Sofia's EU partners and raising suspicions of undue Russian influence.

The case hinges on a payment dispute between the distributors – Austria's EVN and the Czech companies CEZ and Energo-Pro – and Bulgaria's state electricity company, NEK, with each side claiming to be owed money by the other.

The European Commission, the EU's executive arm, and six EU nations have complained to Bulgaria about its handling of the case, which is being viewed as a test of the rule of law in the bloc's poorest member state.

The case is also being watched as a barometer of Russian influence amid concerns that local businessmen with Russian backing have been lobbying to build stakes in the grid business if the foreign investors are stripped of their licences.

Bulgaria already faces scrutiny over possible moves to give special treatment to a Russian natural gas pipeline at a time when the west and Russia are in conflict over the Ukraine crisis.

The South Stream pipeline, developed by Russia's Gazprom, would carry Russian gas across the Black Sea and through the Balkans to Austria – bypassing Ukraine – and has been a strategic priority for Moscow. The Commission has threatened legal action if the Bulgarian parliament amends the national energy law to exempt a portion of South Stream from EU competition rules.

Ognyan Minchev, director of Sofia's Institute for Regional and International Studies, noted that Russian influence was a factor in both cases, and was often exercised through local...