The Sofia district heating utility, which consists of at least four steam generating plants, should be sold by the end of 2007 according to a memorandum of understanding signed on July 6 by the Sofia municipality, Sofia City Council and the Economy and Energy Ministry. The municipality is the majority owner of the company, while the ministry holds a minority share. The deadline for the privatisation is recommendable but depends on the speed of the preparatory procedures. The memorandum says that the heating utility should be privatised as an entire company or as self-contained parts, via open, transparent and competitive procedures; most probable being the option for selling 100 per cent of the utility’s shares in a single package.

 
Eight candidates have expressed interest to buy the utility, none of them Bulgarian entities, Russian Gazprom, the Czech ČEZ, and French Dalkia were among them.

A working group will be set up for the sale of the heating utility, which will act in close co-operation with experts from the European Bank for Reconstruction and Development (EBRD) and the World Bank. The PA has been entrusted with developing possible options for the privatisation procedure.
The utility, called Toplofikatsia Sofia, has a share capital of 107.6 million leva. Sofia municipality has a majority share of 58.2 per cent and the Economy and Energy Ministry, 41.8 per cent. The company has loan agreements with the EBRD and the World Bank, amounting to 30 million euro and 26 million euro respectively, for rehabilitation and modernisation of the system of supply of heating and institutional strengthening and reform of the utility. Both banks have asked that a private investor take over Toplfikatsia. The utility also has outstanding debts of over 100 million leva to Bulgaria’s state-owned gas company Bulgargaz for gas supplies. Toplofikatsia however, is owed around 150 million leva in unpaid bills.