Bulgaria, NEK’s profit increases by close to 1,500%, to 352 million euros in 2021, SEE Energy News
High prices on electricity on the free market and hyperproduction of hydropower plants enabled NEK’s record profit of 352 million euros
Bulgaria’s National Electric Power Company (NEK) ended 2021 with a record profit of 688.6m levs (352m euros), compared to just 43.3m levs (22.1m euros) a year earlier. This practically means an increase of almost 1,500%, and the main reason is high prices on the free market, given that hydropower plants owned by NEK are among the largest producers of electricity in the country.
However, NEK’s liabilities still reach 2 billion euros. The good news is that there are no delays in execution.
Maintaining good results is likely to be one of the biggest challenges for NEK’s new CEO, Martin Georgiev, appointed in early May.
Several factors contributed to NEK’s impressive profit – the high average price of electricity on the free market (around 99 euros per MWh), which enabled a significant increase in revenues, as well as higher revenues from the sale of balance energy.
Revenues from electricity sales increased by close to 60%, to 2.3 billion levs (1.18 billion euros), which includes sales on the free market, which increased by 459%, to 986 million levs (about 504 million euros) ).
At the same time, there is an increase in hydropower production, by 51.6% annually. Electricity from these plants is sold mainly on the free market, which means that production costs are almost unchanged – about 44 euros per MWh. In other words, the profit margin is over 100%.
NEK’s revenues from the Electricity Security Fund also increased by over 66% to 1.6 billion levs (818 million euros). These funds are intended for the compensation of “American” thermal power plants and small power plants on RES.
However, in the first quarter of this year, NEK recorded a negative financial result – minus 8.5 million levs (4.35 million euros) before taxes.
The reason for this sharp change is the fact that last year’s profit was used for early repayment of loans in the amount of 1.17 billion levs (close to 600 million euros) to pay obligations in the arbitration dispute with Atomstroyexport regarding the NE Belene project.
NEK still expects a profit – if FSES approves the requested funds to the company, the profit could reach 307 million levs (157 million euros).