Annual consolidated management report
Consolidated corporate governance statement
Consolidated non-financial statement
Consolidated report on payments to governments
Independent Auditors’ Report
Consolidated Financial Statements
Bulgarian Energy Holding EAD
31 December 2021
Bulgarian Energy Holding EAD
Contents
Annual Consolidated Management Report ............... i
Consolidated Corporate Governance Statement ....... ii
Consolidated Non-financial Declaration ................ iii
Consolidated Report on Payments to Governments iv
Independent Auditors’ Report .................................. v
Consolidated Financial Statements ......................... vi
Consolidated Statement of Profit or Loss ................. 1
Consolidated Statement of Comprehensive Income . 2
Consolidated Statement of Financial Position .......... 3
Consolidated Statement of Changes in Equity ......... 5
Consolidated Statement of Cash Flows .................... 7
Notes to the Consolidated Financial Statements ...... 9
1. Corporate information ......................................... 9
2. Basis for preparation of the consolidated financial
statements .......................................................... 11
3. Changes in accounting policy ............................ 11
4. Accounting policy ............................................. 12
5. Segment reporting ............................................. 48
6. Revenue from sales ........................................... 51
7. Other operating income ..................................... 53
8. Cost of natural gas, electricity and other current
assets sold .......................................................... 56
9. Cost of acquisition of property, plant and
equipment .......................................................... 56
10. Cost of materials ................................................ 56
11. Hired services expenses ..................................... 56
12. Expenses for impairment of financial assets, net
……………………………………………..57
13. Employee benefits expenses .............................. 57
14. Other operating expenses .................................. 57
15. Finance income.................................................. 58
16. Finance costs ..................................................... 58
17. Income tax expenses .......................................... 58
18. Earnings per share and dividends ...................... 59
19. Property, plant and equipment ........................... 60
20. Intangible assets ................................................ 67
21. Investments in joint ventures, associates and other
enterprises .......................................................... 68
22. Trade and other receivables ............................... 74
23. Deferred tax assets and liabilities ......................77
24. Inventories .........................................................79
25. Financial assets at fair value in other
comprehensive income ......................................80
26. Cash and short-term deposits .............................81
27. Assets and liabilities classified as held for
distribution to owners ........................................82
28. Assets and liabilities classified as held for sale .83
29. Share capital and reserves ..................................84
30. Loans and lease liabilities ..................................85
31. Deferred financing .............................................92
32. Retirement employee benefit obligation ............94
33. Provisions ..........................................................96
34. Deferred income ................................................99
35. Trade and other payables .................................100
36. Related party disclosures .................................101
37. Categories of financial assets and liabilities ....104
38. Financial Risk Management Objectives and Policy
……………………...…………………….105
39. Fair value measurement ...................................112
40. Capital management policies and procedures ..113
41. Commitments and contingent liabilities ..........114
42. Events after the end of the reporting period .....125
43. Approval of the consolidated financial statements
... ………………………………………….130
BULGARIAN ENERGY HOLDING EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
31 December 2021
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
1
Board of Directors as at the date of issue of the consolidated financial statements
Veselina Lachezarova Kanatova – Buchkova
Ivan Todorov Andreev
Zheko Mihaylov Zhekov
Anton Georgiev Simeonov
Stelian Penchev Koev
Diyan Stanimirov Dimitrov
Angel Emilov Yankov
Address
Bulgaria
Sofia Region, Stolichna Municipality, Sofia city 1000
Oborishte District, 16, Veslets Str.
Servicing banks
Allianz Bank Bulgaria AD
Bulgarian-American Credit Bank AD
BNP Paribas S.A.
Bulgarian Development Bank AD
D Commerce Bank AD
Central Cooperative Bank AD
Citibank N.A.
European Bank for Reconstruction and Development
Eurobank Bulgaria AD
European Investment Bank
First Investment Bank AD
ING Bank AD
Investbank AD
International Bank for Economic Co-operation
Municipal Bank AD
DSK Bank AD
United Bulgarian Bank AD
UniCredit Bulbank AD
International Investment Bank AD
Raiffeisenbank (Bulgaria) AD
Auditors
DZZD AUDIT BEH with participants in the consortium audit firms Grant Thornton OOD, registration
№ 032 and Zaharinova Nexia EOOD, registration № 138 from the public register of auditors in Bulgaria.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
2
1. General
Company name
BULGARIAN ENERGY HOLDING EAD (BEH EAD)
UIC
831373560
Address
Bulgaria
Sofia Region, Stolichna Municipality
Sofia city 1000
Oborishte District,
16, Veslets Str.
Scope of Business Activity
Acquisition, management, evaluation and sale of shares in
commercial companies operating in the fields of production,
extraction, transmission, transit, storage, management, distribution,
sale and/or purchase of natural gas, electricity, heat, coal, as well as
and all kinds of energy and raw materials for production and
participation in the management of such companies, their financing,
acquisition, evaluation, issuance and sale of bonds, acquisition,
evaluation and sale of patents, sublicensing of the use of patents of
the aforementioned companies as well as carrying out of its own
production or trade.
Directors
As of December 31, 2021 the Company is managed by a Board of
Directors (BD) consisting of:
- Veselina Lachezarova Kanatova – Buchkova
Chairman of the BD
- Plamen Dilkov Dilkov
Deputy Chariman of the BD
- Ivan Todorov Andreev
Member of the BD and Executive Director
- Zheko Mihaylov Zhekov
Member of the BD
- Anton Georgiev Simeonov
Member of the BD
- Stelian Penchev Koev
Member of the BD
- Diyan Stanimirov Dimitrov
Member of the BD
- Valentin Alexiev Nikolov
Member of the BD
- Alexander Plamenov Tzarnorechki
Member of the BD
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
3
At the date of issuance of the report the Company is managed by
a Board of Directors consisting of:
- representatives of the state in the Board of Directors: Stelian
Penchev Koev, Ivan Todorov Andreev – Executive Director,
Zheko Mihaylov Zhekov, Anton Georgiev Simeonov;
- independent members of the Board of Directors: Diyan
Stanimirov Dimitrov, Veselina Lachezarova Kanatova –
Buchkova, Angel Emilov Yankov;
- members of the Board of Directors for the period from the
date of registration until a new selection procedure: Veselina
Lachezarova Kanatova – Buchkova, Anton Georgiev
Simeonov, Zheko Mihaylov Zhekov and Angel Emilov
Yankov .
The company is represented by the Executive Director.
Bulgarian Energy Holding EAD (parent company) together with its subsidiaries form an economic
group. The holding structure is presented in the chart below:
Structure of Bulgarian Energy Holding EAD as of 31 December 2021
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
4
The Company is the sole-shareholder of the following subsidiaries:
NPP Kozloduy EAD
Scope of Business Activity
Use of nuclear energy for generation of electric and thermal power,
which activity is performed based on the availability and
maintenance of: valid license for generation of electric and thermal
power by an electricity power generation facility specified in the
license, valid licenses for operation of nuclear facilities pursuant to
the Safe Use of Nuclear Energy Act (SUNEA), issued by the
Bulgarian Nuclear Regulatory Agency (NRA) (a valid authorization
for production activities carried out by the power generation facility
specified in it, issued by the Inspectorate on the Safe Use of Nuclear
Energy for Peaceful Purposes);
Import and export of fresh and spent nuclear fuel;
Investment activity related to the company's operations as specified
in the Scope of Business Activity;
Construction, assembly and repair activities in the field of electric
and thermal power generation;
Sale of high and medium voltage electric and thermal power.
Operation of radioactive waste management facilities according to a
valid license under the Safe Use of Nuclear Energy Act (SUNEA).
Directors
The company is managed by a Board of Directors and as of 31
December 2021 it is represented by the Executive Director – Nasko
Asenov Mihov.
Licenses
The company holds the following licenses:
– License issued by the NRA for operation of a nuclear facility,
Series E, Reg. No. 5303/03.11.2017, in force as of 06.11.2017, for
operation of unit five of NPP Kozloduy EAD, valid for a period of
10 years;
– License issued by the NRA for operation of a nuclear facility,
Series E, Reg. No. 5535/03 October 2019, for operation of unit six
of NPP Kozloduy EAD, valid for a period of 10 years;
– License for generation of electric and thermal power No. Л-049-
03/11.12.2000; valid for a period of thirty years;
– License for transmission of thermal power No. 050-
05/11.12.2000; valid for a period of thirty years;
– License issued by the NRA, Series И-11024, Reg. No. 04358
dated 1 April 2014 for use of ionizing radiation sources for business
purposes - performing non-destructive testing with radiation
methods for site: Inspection Body of type C - Test Center
“Diagnostics and Control”. Orders have been issued by NRA
Chairman - No. AA-04-1/27.01.2016 and No. AA-04-
132/29.08.2018 and No. АА-04-171/27.10.2020 - for amendment of
the License related to changes in the inventory of used X-ray
defectoscopes. The term of the license is until 31 March 2024;
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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– License issued by the NRA, Series И-1708, Reg. No.04366 of
08.04.2014 (amended with order No. АА-04-106/10.07.2020) for
the use of sources of ionizing radiation for business purposes -
radiochemical control, radiation monitoring of the environment and
metrological control, for a period of 10 years;
– License for transportation of radioactive substances, issued by
NRA, Series T-14002 Reg. No. 04435, dated 30 June 2014,
(amended with order No. АА-04-78/01.06.2020) for a period of 10
years;
– License for electricity trade No. Л-216-15/18.12.2006, for a
period until 18.12.2026;
– License Series CO, Reg. No. 5794 in force as of 05.10.2021 for
conducting specialized training for activities in nuclear facilities
(NF) and with sources of ionizing radiation that have an impact on
safety and issuance of certificates of competency to persons
professionally engaged in activities in NF and sources of ionizing
radiation, other than those under Article 64, paragraph 1, item 1 and
item 2 of SUNEA - issued by the NRA. Term of the license – until
05.10.2026;
– License issued by the NRA for operation of a nuclear facility,
Series E, Reg. No. 04441 of 25.06.2014, for the operation of Depot
for spent nuclear fuel of NPP Kozloduy EAD, valid for 10 years;
- license issued by the NRA for operation of a Depot for dry
storage of spent nuclear fuel from WWER-440 reactors, Series E,
reg. № 5016 dated 28.01.2016, for a period of 10 years;
Investments in enterprises
NPP Kozloduy EAD is the sole owner of the capital of HPP Kozloduy
EAD and NPP Kozloduy - New Builds EAD and holds the
controlling interest of 63.96% in Interpriborservice OOD, Kozloduy,
holding 71 (seventy-one) shares of its capital. The Company has a
minority share of 1.12% in ZAD Energy AD.
Bulgargaz EAD
Scope of Business Activity
Public supply of natural gas and related purchases and sales, purchase
of natural gas for the purpose of storing it in a gas storage facility,
marketing research and analysis of the natural gas market in the
country.
Directors
The company is managed by a Board of Directors and as at 31
December 2021 it is represented by Nikolay Angelov Pavlov, acting
as the Executive Director.
Licenses
Individual license for public supply of natural gas on the territory of
the Republic of Bulgaria - License No. Л-214-14 dated 29 November
2006, issued by the Energy and Water Regulatory Commission for a
period of 35 (thirty-five) years.
Pursuant to Art. 21, para. 1, item 1 and in connection with Art. 39,
para. 1, item 5 of the Energy Act with a decision of the Energy and
Water Regulatory Commission of 16.09.2021 Bulgargaz EAD
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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acquired a license for trade in natural gas No. А0435 for a period of
10 years.
Bulgartransgaz EAD
Scope of Business Activity
Storage and transmission of natural gas; maintenance, operation,
management and development of gas transmission grids;
maintenance, operation, management and development of
underground gas storage facilities; development of programs and
activities for ensuring the compliance of the natural gas transmission
and storage activities with the requirements of the European energy
legislation; development of pricing policy for access to and
transmission on the gas grids, storage of natural gas and connection
to gas transmission grids; administration of natural gas transactions
and arranging the balancing of the natural gas market in compliance
with the requirements of the current legislation; engineering,
investment, manufacturing and service activity; import of goods,
machinery and equipment related to the company's operations;
centralized operational management, coordination and control on the
operation of gas transmission grids.
Directors
The company is managed and represented by a Management Board.
As at 31 December 2021 the Executive Director is Vladimir Asenov
Malinov.
Licenses
The company holds licenses issued by the Energy and Water
Regulatory Commission (EWRC), as follows:
− License for natural gas transmission on the territory of Republic
of Bulgaria, No. Л-214-09 dated 29 November 2006, for a period of
35 years;
− License for the natural gas transmission on the territory of
Republic of Bulgaria, No. Л-214-06 dated 29 November 2006, for a
period of 35 years;
− License for storage of natural gas on the territory of Republic of
Bulgaria, No. Л-214-10 dated 29 November 2006, for a period of 35
years.
Investments in enterprises
Bulgartransgaz EAD is the sole owner of the capital of Balkan Gas
Hub EAD and owns 50% of the shares of Bulgartel AD.
Mini Maritsa-Iztok EAD
Scope of Business Activity
Coal extraction and distribution, industrial, commercial, leasing,
repair operations, foreign trade, training and retraining of coal mining
personnel for the purpose of generating income, carrying out
activities on prophylactic and rehabilitation in recreational facilities
owned by the company, as well as any other activity not prohibited
by law.
Directors
The company is managed by a Board of Directors and as at 31
December 2021 it is represented by Andon Petrov Andonov, acting
as the Executive Director.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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Licenses
The Company holds the following Licenses:
− License for “electricity trading” No. Л-480-15 dated 20 October
2016 issued by the Energy and Water Regulatory Commission
(EWRC) for a period of 10 years.
− License issued by the Ministry of Transport, Information
Technology and Communications for the transportation of “Rail
freight”, issued in 2016 for a period of 5 years. The license was
updated on 14.05.2021 and is valid until 13.05.2026.
Investments in enterprises
Mini Maritsa-Iztok EAD holds a minority share of 3.68% in ZAD
Energy.
TPP Maritsa East 2 EAD
Scope of Business Activity
Generation of electric and thermal power, transmission and
distribution of thermal power, construction and repair works in the
electric and thermal power sector, construction and repair works in
the field of electric and thermal power generation, investments,
acquisition and management of copyrights, rights on inventions,
trademarks and industrial designs, know-how and other intellectual
property, as well as any other activity not prohibited by law or
regulation, and when authorization or license is required – after such
an authorization or license is obtained.
Directors
The company is managed by a Board of Directors and as at 31
December 2021 it is represented by Eng. Zhivko Dimitrov Dinchev,
acting as the Executive Director.
Licenses
The company holds the following licenses issued by EWRC:
- License for generation of electric power No. Л-091-01 dated 21
February 2001 valid for a period of 20 years; By Decision No. И1-Л-
091 of 02 July 2020, the term of the license was extended for another
20 years.
- License for trading with electric power No. Л-498-15 dated 31
January 2028 valid for a period of 10 years;
Investments in enterprises
TPP Maritsa East 2 EAD is the sole owner of the capital of
Professional Football Club Beroe - Stara Zagora EAD. The Company
holds minority share of 0.96% in ZAD Energy.
Natsionalna Electricheska Kompania EAD (NEK EAD)
Scope of Business Activity
Generation of electric power, centralized purchase and sale of electric
power, supply of electric power to consumers, connected to the
transmission grid, import and export of electric power, construction
works and repairs in the field of power generation, investment
activities, implementation and promotion of energy efficiency in the
generation of power.
Directors
The company is managed by a Board of Directors and as at 31
December 2021 it is represented by Ivan Todorov Yonchev, acting as
the Executive Director.
Licenses
The company holds the following licenses issued by EWRC:
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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− License for public supply of electricity No. Л-147-13 dated 17
December 2004, valid for a period of 35 years;
− License for power generation from HPP and PSHPP No. Л-073-
01 dated 14 February 2001, valid for a period of 35 years;
− License No. 1-230-15 dated 4 June 2007, for electricity trade for
a period of 10 years. By decision of the Energy and Water
Regulatory Commission (EWRC) No. И2-Л-230 of 15 September
2016, the term of the license for electricity trade was extended,
including the rights and obligations of the coordinator of the standard
balancing group with 10 years;
− License No. Л-408-17 dated 1 July 2013 for supply of electricity
from a supplier of last resort, valid for a period of 26 years. (Decision
No. Иl-Л-408 dated 29 January 2014 amending/supplementing
License No. Л-408-17 dated 1 July 2013, issued for the activity
“supply of electricity from a supplier of last resort” with the rights
and obligations of coordinator of a special balancing group).
Internal structural units
NEK EAD, Hydro Power Plants Enterprise, Plovdiv – performs
electricity generation, construction and maintenance of hydro power
generation facilities, investment activity.
NEK EAD, Dams and Cascades Enterprise, Sofia – performs
technical operation and maintenance of dams and hydro power
facilities.
Investments in enterprises
NEK EAD holds 27% of the capital of ContourGlobal Maritsa East 3
AD, 27% of the capital of Contour Operations Bulgaria AD, 42% of
the capital of ZAD Energy, 34 % of the capital of POD “Allianz
Bulgaria” AD, 24% of the capital of HPC “Gorna Arda” AD and
interest in Transbalkan Electric Power Trading S.A. - NECO S.A. –
50%.
Electricity System Operator EAD (ESO EAD)
Scope of Business Activity
Transmission of electricity, unitary operational planning, coordination
and management of the electricity system of the Republic of Bulgaria,
provision and management of third party access on a non-
discriminatory basis to grid users or group of grid users, joint operation
of the electricity system with the electricity systems of other countries,
coordinated development and interoperability of the electricity
transmission grid with interconnected electricity transmission grids the
coordinated development and interoperability of the interconnected
transmission grid, expansion, reconstruction, modernization,
operation, maintenance and provision of the reliable operation of the
electricity transmission grid, including the availability of all necessary
ancillary services, maintenance and development of auxiliary grids,
repairs and services in the field of energy, other commercial activities
and services that are not prohibited by law.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
9
Basis for preparation of the consolidated financial statements
BEH EAD operates in compliance with the Bulgarian and European legislation. The consolidated
financial statements of the Group are prepared in accordance with the International Financial Reporting
Standards, developed and issued by the International Accounting Standards Board and approved by the
European Union.
Responsibility of the Management
The Management confirms that an adequate accounting policy has been applied in the preparation of the
consolidated financial statements for 2021 and they have been prepared on a going concern basis.
The Management is responsible to keep proper accounting records, to carry out appropriate asset
management and to undertake the measures necessary to avoid and detect any possible frauds and other
irregularities.
The Consolidated management report for 2021 is prepared in accordance with art. 45 of the Accountancy
Act and art. 247 of the Commercial Act and is approved by the Board of Directors of Bulgarian Energy
Holding EAD.
2. Establishment, management and structure
Legal status
Parent company
BEH EAD is a sole owner joint-stock company, established in 2008, after a change of the company's
name, articles of association and subject of activity of Bulgargaz Holding EAD, where the capital of the
company is increased by an in-kind contribution at par value of all shares in the capital of Natsionalna
Elektricheska Kompania EAD, NPP Kozloduy EAD, TPP Maritsa East 2 EAD and Mini Maritsa-Iztok
EAD. Thus, all state energy companies operating in the field of production, extraction, transmission and
trade in energy resources are united in the structure of BEH EAD.
The sole owner of the capital of BEH EAD is the Republic of Bulgaria and the rights of sole owner are
exercised by the Minister of Energy, who has the capacity of a principal and is empowered to make all
Directors
The company is managed and represented by the Management Board.
As at 31 December 2021 the Executive Director is Angelin Nikolaev
Tsachev.
Licenses
The company holds the following licenses issued by EWRC:
− License for transmission of electricity, No. Л-419-04 dated 18
December 2013, valid for a period of 35 years.
− License No. Л-221-17 dated 28 December 2006 for the activity
"management of the electricity system" (amended by Decision No.
И1-Л-221-17 dated 29 September 2008). The validity of the license is
until 17.12.2039.
Investments in enterprises
Electricity System Operator EAD is the sole owner of the capital of
ESO Engineering EOOD and owns 50% of the capital of Bulgartel AD.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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decisions within the competencies of the sole owner of the capital, in accordance with the law and the
Articles of Association of the Company.
The company is managed by a one-tier management system. Governing bodies are:
• Sole owner of the capital in their capacity of General Meeting – the Minister of Energy of the
Republic of Bulgaria;
• Board of Directors.
At the date of preparation of these consolidated financial statements, there are no plans for privatization
of the company, it is included in the list of state companies not subject to privatization - Appendix No.
1 to art. 3, para. 1 of the Privatization and Post-Privatization Control Act.
Companies in the Bulgarian Energy Holding Group
NPP Kozloduy EAD was established on 28 April 2000 by Decision No. 7 dated 28 April 2000 in
accordance with company case No. 582/2000 of Vratsa district court. The company has its registered
office and address of management at: Kozloduy town, Vratsa District, NPP site, tel. code 0973, and ZIP
code 3320.
Since 18 September 2008 the sole owner of the capital of NPP Kozloduy EAD is BEH EAD.
HPP Kozloduy EAD is registered in Vratsa district court under company case No. 495 dated 2004 with
the purpose of building a hydroelectric plant, generation and distribution of electricity from small
hydropower plant for utilization of the residual resource of the spent water from NPP Kozloduy EAD.
The sole owner of the capital of HPP Kozloduy EAD is NPP Kozloduy EAD.
NPP Kozloduy – New Builds EAD was established on 9 May 2012 by the issue of 200,000 ordinary
registered shares with par value of BGN 10. The share capital was subscribed and fully paid by NPP
Kozloduy EAD. The Company's scope of activity is construction of units of a nuclear power plant. The
sole owner of the capital of NPP Kozloduy – New Builds EAD is NPP Kozloduy EAD.
Interpriborservice OOD is established by Decision No. 55 dated 13 April 1988 of the Council of
Ministers, as a specialized company for installation, setting, repair, maintenance of automated process
control systems, supply of instruments, equipment and spare parts for NPP, TPP and others. Partners in
the company are Russian and Ukrainian companies working in the field of energy. As at 31 December
2017 NPP Kozloduy EAD owns 71 shares with par value of BGN 100 each, representing 63.96% of the
registered capital.
Bulgargaz EAD is registered in Bulgaria in accordance with the Commercial Act. The Company was
entered in the Commercial Register under No. 113068, Vol. 1534, p. 35, company case No. 16440/2006
and is registered pursuant to Decision No. 1 dated 15 January 2007. The company has its registered
office and address of management: Sofia, Stolichna Municipality, 47 Petar Parchevich Str. The sole
owner of the capital of Bulgargaz EAD is BEH EAD.
Bulgartel EAD is registered under company case No.13115/2004 in accordance with the Commercial
Act by decision of Sofia City Court dated 30 November 2004. The company has its registered office and
address of management: Sofia, Lyulin municipality, complex Lyulin 2, 66 Pancho Vladigerov Blvd. The
owners of the capital of Bulgartel AD are Electricity System Operator EAD and Bulgartransgaz EAD
with 50% share each.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
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Bulgartel Skopje DOOEL is a sole-owner joint stock company registered in the Central Register of the
Republic of Macedonia on 3 December 2008 under No. 643867. The Company has its registered office
and address of management in Macedonia, Skopje, Ortse Nikolov Str. The sole owner of the capital of
Bulgartel Skopje DOOEL is Bulgartel EAD.
Bulgartransgaz EAD is registered in accordance with the Commercial Act by Decision No. 1 dated 15
January 2007 of Sofia City Court under No. 113067, vol. 1543, p. 32, company case No. 16439/2006.
The Company’s registered office and address of management is: Sofia, Lyulin municipality, complex
Lyulin 2, 66 Pancho Vladigerov Blvd. The sole owner of the capital of Bulgartransgaz EAD is BEH
EAD.
Balkan Gas Hub EAD is a sole-owner joint stock company with registered office in the Republic of
Bulgaria, incorporated in the Commercial Register and the Register of Non-Profit Organizations with
the Registry Agency under UIC 205478458 on January 18
th
, 2019. The Company’s address of
management is Bulgaria, Sofia, Lyulin municipality, complex Lyulin 2, 66 Pancho Vladigerov Blvd.
The sole owner of the capital of Balkan Gas Hub EAD is Bulgartransgaz EAD.
Mini Maritsa-Iztok EAD is registered under company case No. 2444/1993, reg. 1, vol 1, p. 12, ch. 6
of Stara Zagora District Court in accordance with the Commercial Act under Decision No. 2773 dated
7 July 1993. The Company’s registered office and address of management is: Radnevo town, Stara
Zagora region, 13 Georgi Dimitrov Str. The sole owner of the capital of Mini Maritsa-Iztok EAD is
BEH EAD.
Natsionalna Elektricheska Kompania EAD is registered in accordance with the Commercial Act by
Sofia City Court under No. 196, vol. 5, p. 98, under company case No. 29869/1991. The Company’s
registered office and address of management is: Sofia, 5 Veslets Str. The sole owner of the capital of
NEK EAD is BEH EAD.
Electricity System Operator EAD is registered in accordance with the Commercial Act by Sofia City
Court under Decision No.1 dated 4 January 2007 under company case No. 16298/2006, batch
No.112765, vol. 1528, reg. 1, page 53. The Company’s registered office and address of management is
in Sofia, Vitosha district, 201 Tzar Boris III Blvd. The sole owner of the capital of ESO EAD is BEH
EAD.
ESO Engineering EOOD is registered in the Commercial Register and the Register of Non-Profit Legal
Entities with the Registry Agency on February 18
th
, 2021 with UIC/PIC 206401308. The address of
management of the company is Sofia city, 24, Petko Y. Todorov blvd. The sole owner of the capital of
the company is Electricity System Operator EAD.
TPP Maritsa East 2 EAD is registered by Decision No. 2591 dated 30 June 2000 of Stara Zagora
District Court in accordance with the Commercial Act under company case No. 1338/2000, reg. 1, vol.
2, p. 46, account 23. The Company’s registered office and address of management is: Kovachevo village,
Stara Zagora district. The sole owner of the capital of TPP Maritsa East 2 EAD is BEH EAD.
Professional Football Club Beroe – Stara Zagora EAD is registered as sole owner joint stock
company with one-tier management system. The Company is registered in the Commercial Register on
7 May 2008. The registered office and address of management is Kovachevo village, Stara Zagora
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
12
district, Radnevo municipality, Bulgaria. The sole owner of the capital of PFC Beroe – Stara Zagora
EAD is TPP Maritsa East 2 EAD.
No separate branches of the enterprise are set up in the structure of BEH EAD.
Parent Company History
BEH EAD is the successor of the State company Oil and Gas, founded in 1973, renamed to
Gasosnabdyavane in December 1975. In accordance with the Decree on Business Activities, in the
beginning of 1990, the entity was renamed to Bulgargaz. Pursuant to a decision of the Council of
Ministers, dated 12 May 1993, Bulgargaz was transformed into a sole-owner joint stock company.
With a transformation plan dated 27 October 2006 and its annexes, Bulgargaz EAD was transformed
into Bulgargaz Holding EAD by separation of two sole-owned joint-stock companies – Bulgartransgaz
EAD and Bulgargaz EAD under the conditions of Article 262 (d) of the Commercial Act. Bulgartransgaz
EAD and Bulgargaz EAD are legal successors of the respective portion of the property (rights and
obligations) of Bulgargaz Holding EAD. The transformation was registered in the court with decision
No. 45 of 15 January 2007 of the Sofia City Court.
With Protocol No. РД-21-305 of 18 September 2008, the Minister of Economy and Energy changes the
company name, the Articles of Association and the scope of activity of Bulgargaz Holding EAD and
establishes Bulgarian Energy Holding EAD, and the capital is increased by in-kind contribution at par
value of all shares of the capital of Natsionalna Elektricheska Kompania EAD, NPP Kozloduy EAD,
TPP Maritza East 2 EAD and Mini Maritza Iztok EAD.
Information under Art. 187e and Art. 247, para. 2 of the Commercial Act
Share capital
As at 31 December 2021, the share capital of the parent company BEH EAD amounts to BGN
3,462,941,744 divided into 3,462,941,744 ordinary registered voting shares with a nominal value of
BGN 1 each. The entire amount of the Company's capital is subscribed and paid in full. The Company's
shares are ordinary, registered, non-privileged, with voting rights.
Information regarding the remuneration of the members of the Board of Directors of Bulgarian
Energy Holding EAD and its subsidiaries under management and control contracts
The remuneration of the members of the Board of Directors of Bulgarian Energy Holding EAD
and its subsidiaries is as follows:
Remuneration of the key management personnel
In thousand BGN
2021
2020
Remuneration
3,384
3,082
Social security contributions
247
225
Social costs
160
110
Contract termination benefits
-
20
Total
3,791
3,437
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
13
Information regarding the acquisition and holding of shares of the companies by the members of
the Board of Directors
The members of the Board of Directors do not own shares of the company. Privileges or exclusive rights
to acquire shares and bonds of the company are not envisaged for them. All shares of BEH EAD are
owned by the State, and the shares of NPP Kozloduy EAD, Bulgargaz EAD, Bulgartransgaz EAD, Mini
Maritsa-Iztok EAD, NEK EAD, TPP Maritsa East 2 EAD and ESO EAD are 100% owned by BEH
EAD.
Information regarding the participation of the members of the Board of Directors in companies
as unlimited liability partners, the possession of more than 25 percent of the share capital of
another company, as well as their participation in the management of other companies or
cooperatives as procurators, managers or board members
Jacklen Yosif Cohen – Executive director of Bulgarian Energy Holding EAD and member of the Board
of Directors from 25.07.2015 to 31.05.2021. Participation in the management of the following
companies:
o Contour Global Operations Bulgaria AD – member of the Board of Directors to date;
o South Stream Bulgaria AD – member of the Board of Directors to date;
o NPP Kozloduy EAD - Chairman of the Board of Directors until 23.04.2021.
Andon Petrov Andonov - Chairman of the Board of Directors of Bulgarian Energy Holding EAD from
25.07.2019 to 31.05.2021. Participation in the management of the following companies:
o Mini Maritsa Iztok EAD - Executive Director and member of the Board of Directors until
11.01.2022;
Zhivko Dimitrov Dinchev - member of the Board of Directors of Bulgarian Energy Holding EAD from
09.03.2015 to 31.05.2021. Participation in the management of the following companies:
o TPP Maritsa East 2 EAD - Executive Director and member of the Board of Directors to date;
Valentin Alexiev Nikolov - Executive Director of Bulgarian Energy Holding EAD from 31.05.2021 to
19.11.2021 and member of the Board of Directors from 31.05.2021 to 07.01.2022. He owns more than
25 percent of the capital of the following company:
o SUZVEZDIE LUV EOOD - sole owner of the capital to date.
Ivan Todorov Andreev - Member of the Board of Directors since 31.05.2021 and Executive Director
of Bulgarian Energy Holding EAD since 12.11.2021. Participation in the management of the following
state-owned enterprise:
o STATE ENTERPRISE RADIOACTIVE WASTE - member of the Board of Directors until
26.04.2021
Diyan Stanimirov Dimitrov – Chairman of the Board of Directors of Bulgarian Energy Holding EAD
from 31.05.2021 to 12.11.2021 and member of the Board of Directors from 31.05.2021. Participation in
the management of the following company:
o TPP Maritza East 2 EAD – member of the Board of Directors until 27.04.2021;
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
14
Stelian Penchev Koev - Member of the Board of Directors of Bulgarian Energy Holding EAD from
31.05.2021 to date. He owns more than 25 percent of the capital and participates in the management of
the following company:
o EXACT TAX OOD - Partner and manager until 14.01.2021;
Alexander Plamenov Tzarnorechky – Member of the Board of Directors of Bulgarian Energy Holding
EAD from 31.05.2021 to 07.01.2022. He owns more than 25 percent of the capital and participates in
the management of the following company:
o MUSLITO OOD - Partner and manager until 02.03.2022, when the company was deleted
due to liquidation;
Veselina Lachezarova Kanatova-Buchkova - Chairman of the Board of Directors of Bulgarian Energy
Holding EAD since 12.11.2021. She has no participation as an unlimited liability partner, does not own
more than 25 percent of the capital of another company and does not participate in the management to
other companies or cooperatives such as procurator, manager or board member.
Plamen Dilkov Dilkov - Deputy Chairman of the Board of Directors of Bulgarian Energy Holding EAD
since 12.11.2021. He owns more than 25 percent of the capital and participates in the management of
the following companies:
o ZTE OOD - manager from 28.01.2021 to 11.02.2021;
o DILKOV ESTATE EOOD - sole owner of the capital and manager until 27.07.2021;
o Pravets Estate EOOD - manager from 23.07.2021 to 29.07.2021;
o AI2 Energy OOD - manager until 29.07.2021;
o BULGARIA ENGINEERING EAD - member of the Board of Directors until 16.09.2021;
Zheko Mihaylov Zhekov - Member of the Board of Directors of Bulgarian Energy Holding EAD since
12.11.2021. He has no participation as an unlimited liability partner, does not own more than 25 percent
of the capital of another company and does not participate in the management of other companies or
cooperatives such as procurator, manager or board member.
Anton Georgiev Simeonov - Member of the Board of Directors of Bulgarian Energy Holding EAD
since 12.11.2021. He owns more than 25 percent of the capital of the following company:
o AGRA CONSULT OOD - Partner to date
Information regarding contracts under Art. 240b of the Commercial Act
The Company has not entered into contracts with members of the Board of Directors, other than
management and control contracts, neither with related parties.
Personnel
Number of personnel:
2021
reported
2020
reported
% change
2021/2020
20,092
20,386
(1.44%)
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
15
Labor productivity – revenue/number of personnel (in thousand BGN):
2021
reported
2020
reported
% change
2021/2020
556.88
274.44
102.92%
Related parties
As of 31 December 2021 the economic group BEH holds interests in the following joint ventures,
reported in the consolidated financial statements using the equity method:
Company
State of
incorporation
Main activity
2021
Investments
%
BGN’000
Joint ventures
ICGB AD
Bulgaria
Construction and operation
of a gas transmission
system
50.00%
51,252
South Stream Bulgaria AD
Bulgaria
Construction and operation
of a gas transmission
system
50.00%
10,460
Transbalkan Electric Power
Trading S.A. – NECO S. A
Greece
Sales of electricity
50.00%
812
SEleNE CC
Greece
coordinating the security of
the electricity network in
Southeast Europe
25.00%
119
Gastrade S.A.
Greece
construction of a liquefied
natural gas terminal
20.00%
26,220
Total joint ventures
88,863
As at 31 December 2021, the economic group BEH holds interests in the following associated
companies, reported in the consolidated financial statements using the equity method:
Company
State of
incorporation
Main activity
2021
Investments
%
BGN’000
Associated companies
ContourGlobal Maritsa East 3 AD
Bulgaria
Generation of electricity
27.00%
90,517
Contour Global Operations
Bulgaria AD
Bulgaria
Operation and maintenance
of a thermal power plant
27.00%
1,353
ZAD Energy
Bulgaria
Insurance company
48.08%
16,474
POD Allianz Bulgaria AD
Bulgaria
Pension insurance
company
34.00%
25,613
Hydro Power Company Gorna
Arda AD
Bulgaria
Construction of
hydropower plants
24.00%
0
Total associated companies
133,957
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
16
3. Main results for 2021
3.1. Financial result
The reported net financial result of the Group for 2021 is a profit of BGN 1,349,303 thousand and the
change, compared to the profit reported in 2020 in the amount of BGN 157,201 thousand, is an increase
of BGN 1,192,102 thousand.
The change in the financial result is mainly influenced by the reported increase in the amount of revenues
from sale of electricity and natural gas. The reported increase in the revenues from sale of electricity is
due to the manifested trend of the electricity market in the country in 2021 towards recovery of electricity
consumption as a result of increased economic activity. This resulted in an increase in the electricity
market price, as well as in growth of all major energy sources in 2021. Since the beginning of 2021,
with the gradual recovery of the economies in the countries of the European Union and the normal
functioning of most industry sectors, the electricity demand on the Bulgarian and the European energy
exchanges has increased significantly, leading to rising prices in the “day ahead” segment. The export
of electricity from Bulgaria, which showed an increase compared to last year, also had an impact on the
increase in the market prices in 2021. The implemented market coupling of the Bulgarian Electricity
Exchange with the Greek Energy Exchange in May 2021 and with the Romanian Energy Exchange in
October 2021 on the day-ahead market segment also had a significant impact when determining the
price levels in our country in direction of equalization of wholesale prices in market areas. On the other
hand, the continuing trend also in 2021 to increase short-term trade at the expense of long-term
electricity supplies did not create conditions for long-term price stability and predictability for
producers.
In 2021, the total volume of revenues from sale of natural gas was influenced by the growth of the sold
quantities of natural gas by 37% compared to 2020, reported by Bulgargaz EAD. The increase is mainly
due to higher customer consumption in most industries. The trend in the structure of natural gas
consumption in 2021 shows that the main consumers remain the companies in the energy sector, and a
significant increase in sales realized under the Gas Release Program and through a virtual trading point
is also reported. In the Chemistry sector, the registered decline is 19% due to the loss of one of the
company's major customers, which in the last quarter of 2021 has not renewed its contract with the
public supplier.
The reported weighted average prices for both supply and sale of natural gas in 2021 are significantly
higher than those achieved in 2020, which is due to the rising prices on international exchanges, most
significantly manifested in the last quarter of 2021. The considerable increase in the average delivery
price is due to the fact that under the contract with the main supplier of the company Gazpromexport
OOO it is determined by a hybrid formula, taking into account both the quotations of alternative to
natural gas fuels and the quotations of the European gas hubs, which in 2021 show a significant growth.
On the other hand, the costs for purchase of natural gas were positively influenced as a result of
agreements signed on 29.12.2020 with an Azerbaijani company, and from the beginning of 2021 the
first partial quantities of natural gas from Azerbaijan were delivered. In connection with the delay in the
construction of the IGB project, the supply of Azeri gas to the Bulgarian border was made through the
Greek gas transmission network DESFA through a temporary supply point of IT "Nea Mesemvria". In
2021, the largest share in the sales of natural gas are those on the free market (about 49% of total sales),
which together with the growth in sales of natural gas under the Gas Release Program of over 489%
clearly shows the potential for sales in unregulated segments, which is in line with the adopted initiatives
for gradual liberalization of the natural gas market.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
17
A significant increase is also reported in the book value of natural gas, electricity and other current assets
sold, which in 2021 amounted to BGN 4,765,634 thousand, compared to BGN 2,439,580 thousand in
2020, which represents an increase of BGN 2,326,054 thousand or over 95% on annual basis.
The change for each of the main components forming the financial result is presented in the table below:
Financial results
2021
2020
Restated
Change
2021/2020
BGN’000
BGN’000
BGN’000
%
Total revenue
11,188,850
5,594,695
5,594,155
99.99%
Cost of natural gas, electricity and
other current assets sold
(4,765,634)
(2,439,580)
(2,326,054)
(95.35%)
Operating expenses
(4,820,519)
(2,879,635)
(1,940,884)
(67.40%)
Finance income/costs, net
(80,518)
(120,535)
40,017
33.20%
Share of the financial result of equity
accounted investments
41,470
40,325
1,145
2.84%
Income tax expenses
(207,084)
(31,546)
(175,538)
(556.45%)
Loss from discontinued operations
(7,262)
(6,523)
(739)
(11.33%)
Net profit
1,349,303
157,201
1,192,102
758.33%
The main reasons for the significant growth of the financial result in 2021 compared to the previous year
are related to the gradual recovery of the consumption in the country in view of the previously imposed
COVID-19 restrictions, which is the reason for the growth in the demand for various energy sources.
Electricity and natural gas prices on the international markets, especially in the last quarter of 2021,
reported record high levels as a result of the volatility of the global gas markets and the growing
geopolitical tension. The reduced supplies through Russian gas pipelines to the EU, as well as the low
occupancy of the gas storage facilities in Europe before the winter season, have put pressure on prices,
which has also affected the price of electricity on European exchanges. The electricity producers from
the Group, in the conditions of the high-water year 2021 in combination with increased costs for
greenhouse gas emissions, managed to sell the electricity produced by them, taking into account the
effects of the market changes occurring during the year.
Thus, in 2021 the profit at EBITDA level increased by 157.06% and reached BGN 2,323,202 thousand
compared to BGN 903,753 thousand reported in 2020. The operating financial result (EBIT) of the
Group's activities for 2021 is a profit amounting to BGN 1,602,697 thousand, which is BGN 1,327,217
thousand more than the profit of BGN 275,480 thousand reported in 2020.
The total amount of assets increased by BGN 4,075,977 thousand, and in 2021 they reached BGN
24,491,487 thousand. The reported growth is mainly due to the increase in the amount of Property, plant
and equipment of the Group as of 31.12.2021 by 11.04% compared to the previous year due to
revaluation of the assets in the Group by a licensed appraiser and, on the other hand, of the increased
cash.
The reported increase in the amount of the working capital is a consequence of the growth of the current
assets in view of the reported growth of short-term receivables and cash, and also as a result of the
decrease in current liabilities, affected by the drop of the value of provisions and obligations under bond
issues placed.
The table below provides information on the key performance indicators of the Group's financial
position as at 31 December 2021.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
18
Main Indicators
2021
2020
Restated
Change
2021/2020
BGN’000
BGN’000
BGN’000
%
Total revenue
11,188,850
5,594,695
5,594,155
99.99%
Total expenses
(9,586,153)
(5,319,215)
(4,266,938)
(80.22%)
EВIТDA
1)
2,323,202
903,753
1,419,449
157.06%
EВIТ
2)
1,602,697
275,480
1,327,217
481.78%
EВТ
3)
1,563,649
195,270
1,368,379
700.76%
EВIТDA margin
20.76%
16.15%
28.54%
Total assets
24,491,487
20,415,510
4,075,977
19.97%
PPE
4)
18,057,654
16,262,201
1,795,453
11.04%
Working capital
5)
3,430,829
605,875
2,824,954
466.26%
Cash and short-term deposits
2,932,730
1,446,179
1,486,551
102.79%
Equity
14,694,994
11,718,921
2,976,073
25.40%
1) EВIТDA – earnings before interest, taxes, depreciation and profit in associated
and jointly controlled entities;
2) EВIТ – earnings before interest, taxes and profit in associated and jointly
controlled entities;
3) EВТ – earnings before tax;
4) PPE –property, plant and equipment;
5) Working capital – current assets minus current liabilities;
BEH EAD was established as a corporate structure that unites the state-owned energy companies. The
main revenues of the Group originate from transmission, storage and sale of natural gas, electricity
generation, transmission, supply and sale, as well as coal mining and sale.
Taking into account the characteristics of the current market model, the activities of the companies and
their financial results depend on the influence of external factors related to the macroeconomic factors
and market trends, as well as to the market regulation models applied by the independent regulatory
authority – Energy and Water Regulatory Commission (EWRC/the Commission).
The current market functioning model provides the existence of companies performing the functions of
a public supplier of electricity and natural gas. At present, these functions are carried out by two
companies from the structure of BEH Group – Natsionalna Electricheska Kompania EAD – public
supplier of electricity, and Bulgargaz EAD – public supplier of natural gas. As public suppliers, both
companies are subject to regulation by EWRC, and the Commission determines the selling prices of
electricity and natural gas at which the companies sell their products to the end suppliers. Due to the
past imperfections of the pricing models used on the regulated market, especially on the electricity
market, significant tariff deficits have been generated in the past that have had an impact on the financial
performance and the position of the companies in the Group.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
19
The reported financial results by individual types of segments are presented below:
• Electricity segment
Electricity
2021
2020
Restated
Change
2021/2020
BGN’000
BGN’000
BGN’000
(%)
Revenue from sales:
- external customers
8,187,073
4,128,963
4,058,110
98.28%
- other segments
902,621
742,581
160,040
21.55%
Segment revenue
9,089,694
4,871,544
4,218,150
86.59%
Changes in finished goods and work
in progress
5,019
1,607
3,412
212.32%
Cost of acquisition of property, plant
and equipment
42,446
34,729
7,717
22.22%
Cost of natural gas, electricity and
other current assets sold
(3,614,551)
(2,420,509)
(1,194,042)
(49.33%)
Expenses for materials
(1,515,346)
(613,138)
(902,208)
(147.15%)
Hired services expenses
(307,641)
(277,497)
(30,144)
(10.86%)
Depreciation, amortisation and
impairment
(436,717)
(423,527)
(13,190)
(3.11%)
Employee benefits expenses
(654,234)
(603,961)
(50,273)
(8.32%)
Expenses for impairment of financial
assets, net
3,605
4,263
(658)
(15.44%)
Impairment of property, plant and
equipment, net
(4,874)
(5)
(4,869)
(97380.00%)
Expenses on provisions
259,701
(79,312)
339,013
427.44%
Other operating expenses
(1,055,396)
(295,480)
(759,916)
(257.18%)
Operating profit for the segment
1,811,706
198,714
1,612,992
811.72%
Operating loss of the segment from
discontinued operations
(7,262)
(6,523)
(739)
(11.33%)
Within the Group, operations in the Electricity segment are carried out by the following companies:
NEK EAD, ESO EAD, NPP Kozloduy EAD, TPP Maritsa East 2 EAD. In compliance with the legal
regulations, the companies hold licenses for generation, sale, transmission and trade of electricity. They
carry out their operations in accordance with the requirements of the EU directives and regulations in
the field of energy, the Energy Act and the Ordinance for regulating the electricity prices. The regulation
of their operations is carried out by the independent specialized authority – EWRC.
In 2021, the total electricity produced in the country increased by 17% compared to the previous year
and amounted to 47,826,281 MWh compared to 40,880,993 MWh produced a year earlier. In 2021, an
increase in net trade electricity export, amounting to 8,819,008 MWh, or by 156.51% higher than the
reported (3,438,053 MWh) in 2020.
In 2021, the total amount of electricity produced by the generating companies within BEH Group
amounted to 24,420,336 MWh, marking an increase of 14% compared to the production recorded in
2020.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
20
In 2021, TPP Maritza East 2 EAD reported gross electricity generation of 5,963,808 MWh, which is
56.1% more than the one reported in 2020 (3,820,143 MWh). Sold electricity amounted to 5,123,105
MWh and was 57.5% more than the sold 3,252,582 MWh in 2020. The growth is due to the reported
increase in the sales on the free market towing to the favourable market conditions, which allowed the
plant to sell its production at competitive prices.
The sales of TPP Maritsa East 2 EAD on the regulated market in 2021 amounted to 1,934,607 MWh, or
36.5% lower compared to 2020, which is due to the smaller amount of electricity imposed as additional
obligations on TPP Maritsa East 2 EAD for servicing the society in the form of provision of quantities
of electricity to NEK EAD to satisfy the requests of the end suppliers in connection with the needs of
the regulated market segment. On the free market in 2021, TPP Maritza East 2 EAD achieved significant
growth of sales, reaching 3,069,759 MWh, or 2,916,958 MWh more than in 2020 (152.801 MWh).
In 2021, the gross electricity generation from NPP Kozloduy EAD continues to be at high levels,
reaching an amount of 16,486,894 MWh, which is 0.84% less than the record 16,625,765 MWh
produced a year earlier. During the year, units 5 and 6 operated steadily at the increased power level.
The amount of electricity sold on the regulated in 2021 amounted to 2,944,071 MWh and it is 0.32%
less than the one sold in 2020. The sales on the free market realized by Kozloduy NPP EAD in 2021 are
12,743,467 MWh, reporting a decrease of 0.61% on an annual basis. The sales on the balancing market
in 2021 amounted to 3,800 MWh, and compared to 2020 (34,953 MWh) there was a decrease of 31,153
MWh due to higher amounts of electricity sold in the "day ahead" market segment.
The production of electricity from HPPs and PSHPPs of NEK EAD in 2021 was typical for a very wet
year, and the hydroelectric power plants in the structure of the company produced 3,605,893 MWh.
Compared to 2020, a significant increase in production was reported, whereas the growth is 51.6%, or
1,227,912 MWh more as a result of the increased volumes of water resources in the dams.
In 2021, NEK EAD fulfilled its obligations in accordance with its licensing activities and provided the
required amount of electricity to the end suppliers. In accordance with the changes in the regulations
and the last two pricing decisions of EWRC, NEK EAD participates as a priority on the regulated market,
fulfilling its obligations to society under the Energy Act. The company continues to guarantee the
security of the electricity system by providing services for balancing and regulation of the power system
through its capacities in HPPs and PSHPPs.
In 2021, the purchases of electricity by NEK EAD were carried out in accordance with the price
decisions of the EWRC for the regulatory periods 2020-2021 and 2021-2022, as well as in accordance
with the applicable regulations.
In 2021 the process of step-by-step liberalization of the electricity market in Bulgaria continued, as the
obligations of the Public Supplier to purchase electricity gradually decreased and on the regulated
market the obligation of NEK EAD to purchase electricity from RES and High efficiency cogeneration
producers with installed capacity below 1 MW (until 30 June) and less than 500 kW (as of 01 July)
remained.
In 2021 NEK EAD purchased 14,028,157 MWh of electricity, reporting an increase in purchases by
2.4% or 330,652 MWh more as compared to the previous year. The structure of the purchased electricity
has been changed, reporting a decrease in the purchases from the quota power plants and an increase in
the compulsorily purchased electricity under Article 93a and Article 94 of the Energy Act.
In 2021, the amount of electricity purchased by the company under long-term contracts and at
preferential prices was 8,670,289 MWh, which is an increase of 1,396,666 MWh or 19.2% more. On
the other hand, the total amount of electricity purchased from the quota power plants for 2021 decreased
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
21
by 1,075,882 MWh or by 17.0% compared to the report for 2020, which is mainly due to the smaller
amount of electricity supplied by TPP Maritza East 2 EAD .
The base-load condensing power plants with long-term contracts - AES-3C Maritsa East 1 TPP and
ContourGlobal Maritsa East 3 TPP in 2021 supplied NEK EAD with energy in the amount of 8,264,142
MWh, which is 20.1% more than the energy purchased in 2020.
Purchased electricity from RES producers, in compliance with the obligations as per the Energy Act and
Energy from Renewable Sources Act is 403.482 MWh, compared to 387,672 MWh in 2020, reporting
an increase of 4.1%.Pursuant to the amendments in the Energy Act and the price decision of the EWRC
for the regulatory period 2021-2022, from 01.07.2021 NEK EAD buys electricity only from RES and
High-efficiency cogeneration producers with an installed capacity below 500 kW, and until 30.06.2021
the company bought electricity from producers with a capacity below 1 MW. A decrease is reported in
the quantities of electricity purchased from high-efficiency cogeneration plants, as the quantities
purchased for 2021 are minimal - 2,665 MWh, compared to 4,101 MWh in 2020.
The electricity sales of NEK EAD in 2021 amounted to 17,306,753 MWh, which is 10.8% more than
the reported data for the previous year, when the company's sales were at the level of 15,615,317 MWh.
The increase of 1,691,436 MWh is entirely due to the significant increase in free market sales, which
offset the decline in end-user sales.
In 2021 NEK EAD reported a decrease in sales on the regulated market, which is due to the amendments
to the Energy Act, according to which non-household consumers connected to the low voltage network
must choose a trader and enter the free market. The sold electricity for the end suppliers in 2021
amounted to 12,088,565 MWh, establishing a decrease of 13.5% or 1,890,858 MWh in comparison with
the reported sales for the previous year. This is due to the fact that a significant part of small business
consumers already buys the electricity they need on the organized electricity exchange .
In 2021, NEK EAD sold 5,079,893 MWh on the free market, which is 224.5% more than the reported
sales for the last year. The significant increase in the sales of NEK EAD in 2021 reflects the increased
demand for electricity in this market segment. Gradually during the year most sectors in the country and
the region started working at normal capacity, which resulted also in growth of electricity demand of
traders and consumers on the electricity exchanges. In addition, the increased demand was influenced
by the increased demand for electricity on the day-ahead market, the growth of exports from the
Bulgarian electricity system and the coupling between the Bulgarian Independent Electricity Exchange
and the Greek and Romanian exchanges. This process had an impact on increasing the price convergence
between the Bulgarian electricity market and other exchanges, where price levels are significantly more
attractive.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
22
• Natural Gas Segment
Natural gas
2021
2020
recalculated
Change
2021/2020
BGN’000
BGN’000
BGN’000
(%)
Revenues from sales:
- external customers
2,579,183
1,120,031
1,459,152
130.28%
- other segments
140,017
75,387
64,630
85.73%
Segment revenue
2,719,200
1,195,418
1,523,782
127.47%
Changes in finished goods and work in
progress
52
(39)
91
233.33%
Cost of natural gas, electricity and other assets
sold
(2,071,839)
(759,496)
(1,312,343)
(172.79%)
Expenses for materials
(5,831)
(4,508)
(1,323)
(29.35%)
Hired services expenses
(24,368)
(19,054)
(5,314)
(27.89%)
Depreciation and amortisation
(182,005)
(108,445)
(73,560)
(67.83%)
Employee benefits expenses
(77,121)
(75,079)
(2,042)
(2.72%)
Expenses for impairment of financial assets, net
(2,153)
8,056
(10,209)
(126.73%)
Impairment of property, plant and equipment,
net
26
0
26
100.00%
Other operating expenses
(35,744)
(43,675)
7,931
18.16%
Expenses on provisions
(1,508)
(1,511)
3
0.20%
Technological costs of natural gas
(60,402)
(27,712)
(32,690)
(117.96%)
Operating profit for the segment
258,307
163,955
94,352
57.55%
The operations of transmission, transit, storage and public supply of natural gas are carried out pursuant
to licenses issued to Bulgartransgaz EAD and Bulgargaz EAD, in compliance with the Energy Act and
the bylaws, which follow the European legislation in the field, as well as the regulatory requirements of
EWRC.
In pursuance of the requirements of Commission Regulation (EC) 715/2009 of 13 July 2009 on the
conditions for access to natural gas transmission networks, the Energy Act and the bylaws, as of
01.10.2017 Bulgartransgaz EAD effectively introduced the entry-exit pricing model for the offered
services for access and transmission of natural gas for the gas transmission system, owned by the
Company, including the national gas transmission network (NGTN) and the gas transmission network
for transit transmission (TNTT). With the introduction of the entry-exit tariff model, the model of pricing
of the services for access and transmission of natural gas provided by Bulgartransgaz EAD is changed,
by switching from a “post stamp” model with uniform prices, determined entirely for the transported
quantities of natural gas, imposed at the exit points of the gas transmission network, to an entry-exit
model with a two-component tariff and a predominant component based on a reserved capacity. The
new system is a result of the requirements imposed by the European and national regulatory framework
in the natural gas sector.
From 01.10.2017 Bulgartransgaz EAD has implemented an effective daily balancing regime in
accordance with the Natural Gas Balancing Rules and Methodology for setting a daily imbalance fee in
accordance with the requirements of Regulation 312/2014 establishing a Network Code on Gas
Balancing of Transmission Networks.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
23
The necessary revenues of Bulgartransgaz EAD for the period 2017-2019 and basic parameters of the
tariff model are approved with Decision НГП-01/01.08.2017 of the EWRC. As of 1 October 2017
Bulgartransgaz EAD introduced an effective daily balancing regime in accordance with the Natural Gas
Balancing Rules and Methodology for setting a daily imbalance fee in accordance with the requirements
of Regulation 312/2014 for establishing a Network Code on Gas Balancing of Transmission Networks.
The expected effect of the implementation of Regulation 312/2014 is for operators to perform market-
oriented balancing using short-term standardized products, for network users to perform primary
balancing, and for operators to play a role in residual balancing, which aims for a fully balanced system
on a daily basis, for which the main responsibility lies with the users, increased liquidity and
competition, increasing the churn rate of the hubs (the ratio between the commercial volumes of gas to
the physical deliveries).
With the introduction of the new balancing regime, the requirements of the Regulation, in particular in
the section regarding the requirements for providing information and daily financial clearing of the
accumulated daily imbalances with a monthly settlement period, are met.
In 2021, the quantities of natural gas transmitted through the national gas transmission network amount
to 35,430,143 MWh, reporting an increase of 13.6% (4,093,062 MWh) compared to the 31,337,081
MWh transmitted in 2020. Traditionally, in 2021 the seasonality in the transmission of natural gas was
preserved, with the most MWh transmitted in January and the least MWh of natural gas transmitted in
August. The average daily reserved capacity of entry and exit points of the gas transmission network,
owned by Bulgartransgaz EAD, increased by 149% in the fourth quarter of 2021 compared to the same
period in 2020.
The quantities of natural gas transmitted outside the territory of the Republic of Bulgaria to the
neighbouring countries in 2021 were 101,778,328 MWh, registering an increase of 168% or by
63,761,793 MWh in comparison with the quantities transmitted in 2020.
The increase in natural gas outflows to Greece is 10.96% or by 3,492,793 MWh compared to the
previous 2020. In 2021, over eighteen times more quantities of natural gas were transmitted to the border
with Romania - 32,488,098 MWh, or 30,752,385 MWh more than the quantities transmitted in 2020. In
2021, natural gas outflows by 927,333 MWh (25.95%) more were transferred to our border with
Northern Macedonia, compared to those transferred in the same period in 2020.
From the beginning of 2021, a new interconnection point to the border with Serbia - Kireevo/Zajecar
was put into operation. The transmitted natural gas outflows in this direction are 29,418,834 MWh,
which represents 28.9% of the total tranmitted during the period.
For the Republic of Turkey, no cross-border transmission of natural gas took place during the reporting
period of 2021, as the commissioning of the Turkish Stream gas pipeline, through which Turkey supplies
its own natural gas, started in early January 2020.
An increase of 27.35% is reported in the share of transmitted natural gas outflows to Romania, while a
decrease of 49.10% is reported in the share of transmitted natural gas to Greece, and in the reporting
period of 2020 it was 83.9%. Despite the decrease in the relative share, 3,492,793 MWh more natural
gas was transmitted to Greece compared to 2020. The share of transmitted natural gas in the direction
of Northern Macedonia in 2021 decreased by 4.98%,, compared to total transmitted natural gas flows
through the gas transmission network to neighbouring countries, in2020. However, 927,331 MWh more
natural gas was transmitted in this direction compared to the same period in 2020, as the total
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
24
transmission of natural gas flows during the twelve months of 2021 was increased. A share to the border
with Turkey was not reported in 2021, as no transmission was made in this direction.
Balkan Gas Hub EAD was established as an operator of a natural gas trading platform in accordance
with the Bulgarian Energy Law. In 2021 Balkan Gas Hub EAD offers the following services for access
to its e-commerce platform: i) Segment for offering quantities under the Gas Release Program provides
the public supplier with a software and commercial environment for release of quantities, in accordance
with the amended and supplemented Energy Act of the Republic of Bulgaria; ii) Short-term (spot)
segment of the platform, which offers short-term standardized intra-day, day-ahead products, as well as
time and local products for the needs of balancing the network of the transmission system operator.
Trade is conducted on an anonymous basis in accordance with the provisions of Regulation (EU) No.
312/2014; iii) Long-term segment of the trading platform, which offers products traded on a medium
and long-term basis - weekly, monthly, quarterly and annual.
In the beginning of December 2019, Balkan Gas Hub EAD signed the Agreement for Implementation
of the Gas Release Program, adopted by the Energy and Water Regulatory Commission (EWRC) with
a decision under Protocol No. 209, item 2. In this regard, in view of conducting auctions under the Gas
Release Program (GRP) for 2020, according to the requirements of Art. 176a of the Energy Act, Balkan
Gas Hub EAD, in its capacity as a party to the Agreement for implementation of the Program and as a
provider of the software environment for its implementation, ensured the successful conduct of fifteen
auctions in 2020 and twelve auctions in 2021.
As of 2020, Balkan Gas Hub EAD launched a short-term and long-term segment of the trading platform,
as well as a brokerage service that allows the registration of contracts between a trader and an end
customer/end supplier with a place of physical delivery an exit point, to which the end customer/end
supplier is connected. The short-term segment includes "day-ahead", "intra-day" and "weekend”
products. In the long-term segment, products are traded for a week (Monday to Monday), a calendar
month, a calendar quarter and a calendar year. Also, the long-term segment is provided with the
opportunity to conclude and register non-anonymous transactions with a view to a wider range of
services to customers. At the end of 2021, the platform has over 50 participants in the short- and the
long-term segment and the Company offers to its customers the use of an additional screen as an
additional service.
In 2021, Balkan Gas Hub EAD offered the services for reporting transactions concluded or registered
through the system of Balkan Gas Hub EAD in connection with the requirements of Regulation (EU)
1227/2011 on wholesale energy market integrity and transparency, through developed and implemented
functionality of the company's information system. This type of service is divided into two subtypes: (1)
The reporting service in which Balkan Gas Hub EAD sends to the European Union Agency for
Cooperation of Energy Regulators (ACER) data on the transactions of the respective market participant
with wholesale energy products, executed at the organized market of Balkan Gas Hub, including
coordinated and uncoordinated orders and (2) Service for providing access to data for the purpose of
self-reporting - for clients using another reporting organization. Balkan Gas Hub EAD also offers access
to ready-to-report XML documents containing data on the transactions of the respective market
participant on the organized natural gas market, prepared in the form and according to the requirements
of ACER. Each member of the platform has the right to provide a Declaration for refusal to use the
reporting services, which releases Balkan Gas Hub EAD from the commitment to provide and/or report
data and this remains the responsibility of the member of the platform in his capacity of a participant in
the energy market for wholesale trade.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
25
The activity of Bulgargaz EAD, public supply of natural gas, is regulated by the Energy Act and the
bylaws. According to the Law for amending and supplementing the Energy Act (LAS of the Energy
Act), promulgated in SG, No. 79 of 2019, an organized exchange market for natural gas is created, its
functioning and the role of market participants are regulated in it. As of 01.12.2019, a new obligation
was introduced for Bulgargaz EAD to annually offer for sale on the organized power exchange certain
quantities of natural gas in accordance with the release program regulated in Art. 176a EA.
The amendment of Art. 30, para. 1, item 7 of the Energy Act (EA), promulgated SG, No. 79 of 2019,
significantly narrowed the circle of entities, to which Bulgargaz EAD sells natural gas at a regulated
price. The change entered into force as of 01.01.2020 and Bulgargaz EAD, as a public supplier, sells
natural gas at regulated prices only to:
(i)
natural gas end suppliers;
(ii)
a person to whom a license for production and transmission of thermal energy has been
issued.
All other customers directly connected to the gas transmission network are excluded from the regulated
market.
Following the changes in the legislation, Bulgargaz EAD operates as follows: i) on a regulated market
- at prices regulated by the EWRC; (ii) on an organized power exchange - at freely negotiated prices;
iii) under the Program for release of natural gas on an organized power exchange - under the terms of
the Agreement for implementation of the program, approved by EWRC; (iv) outside the organized
power exchange (on the domestic and the international markets) - at freely negotiated prices.
In pursuance of the Natural gas trading rules, Bulgargaz EAD binds the terms of delivery under contracts
with its customers with the terms of its long-term contracts.
As of 31.12.2021, 34,299,747 MWh of natural gas were sold, which is an increase of 9,255,847 MWh
or 36.96%, compared to the quantities sold in 2020 - 25,043,900 MWh. The quantities sold at regulated
prices in 2021 are 13,151,266 MWh, and their growth compared to 2020 is by 2,004,161 MWh or
17.98% more. The quantities from unregulated activity in 2021 sold at freely negotiated prices amount
to 16,867,481 MWh, and the ones under the Gas Release Program amount to 4,281,000 MWh.
In 2021 the reported increase in the sold quantities of natural gas compared to 2020 is mainly due to the
increased consumption of customers mainly from the sectors Energy, Distribution Companies, on the
organized power exchange and under the Gas Release Program, while at the same time there is a
decrease in consumption in the Chemistry and Glass and Porcelain sectors.
The natural gas market in Bulgaria is relatively small, and to date the trade in natural gas is developing
mainly in the direction of imports to Bulgaria. Imports are fully liberalized, while exports are technically
limited and practically symbolic. It is also essential to improve the functioning of the regulated market
as well as the gas exchange (Balkan Gas Hub EAD trading platform) in order to ensure predictability of
the supply and the execution of natural gas transactions to be secured and guaranteed.
To meet its customers’ needs for natural gas in 2021, Bulgargaz EAD bought 34,050,420 MWh of
natural gas (2020: 25,038,266 MWh). The purchased quantities of natural gas from imports as of
31.12.2021 amount to 33,381,232 MWh, which is 98.03% of the total purchased quantities, as the
company purchased quantities at a virtual trading point in the amount of 506,390 MWh, as well as
natural gas from Bulgartransgaz EAD under balancing contracts in the amount of 162,798 MWh.
During the reporting period, a total of 34,050,420 MWh (2020: 25,038,266 MWh) of gas were
purchased, which is an increase of 9,012,154 MWh, or 35.99%.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
26
To ensure the security and continuity of natural gas supplies to its customers, Bulgargaz EAD reserves
and uses the capacity of the underground gas storage in the village of Chiren (Chiren UGS), owned by
Bulgartransgaz EAD.
The extracted quantities of natural gas in 2021 amount to 3,247,567 MWh, which is 737,520 MWh or
29.38% more, compared to 2020 (2,510,047 MWh). The pumped quantities of natural gas in 2021 are
495,801 MWh more than in 2020, when they were 2,501,067 MWh. The company has at its disposal
2,071,621 MWh of gas in Chiren UGS as of 31 December 2021.
• Coal segment
Coal
2021
2020
Restated
Change
2021/2020
BGN’000
BGN’000
BGN’000
(%)
Revenue from sales:
- external customers
419,331
341,844
77,487
22.67%
- other segments
182,707
119,910
62,797
52.37%
Segment revenue
602,038
461,754
140,284
30.38%
Changes in finished goods and work in progress
13,581
22,642
(9,061)
(40.02%)
Cost of acquisition of property, plant and
equiment
8,711
9,543
(832)
(8.72%)
Cost of natural gas, electricity and other assets
sold
(7,900)
(3,478)
(4,422)
(127.14%)
Expenses for materials
(163,485)
(103,639)
(59,846)
(57.74%)
Hired services expenses
(42,149)
(33,238)
(8,911)
(26.81%)
Depreciation and amortisation
(95,334)
(95,738)
404
0.42%
Employee benefits expenses
(295,683)
(266,656)
(29,027)
(10.89%)
Expenses for impairment of financial assets, net
(2,984)
(5,961)
2,977
49.94%
Impairment of property, plant and equipment, net
(2,468)
0
(2,468)
(100.00%)
Other operating expenses
(28,443)
(2,673)
(25,770)
(964.09%)
Expenses on provisions
(5,829)
(17,277)
11,448
66.26%
Operating profit\ (loss) for the segment
(19,945)
(34,721)
14,776
42.56%
The lignite coal extracted by Mini Maritsa-Iztok EAD is intended for the supply of the thermal power
plants in the Maritsa East complex (TPP Maritsa East 2 EAD, ContourGlobal Maritsa East 3 AD, AES
Maritsa – 3C Maritsa East 1 EOOD and Brikel EAD), with which the subsidiary is linked in terms of
technology and market.
One of the priorities in the activity of Mini Maritsa-Iztok EAD is the implementation of the planned
overburden activities aimed at stabilization of the mining horizons and the increase of the land resistance
coefficient. Therefore, the production levels are consistent on one hand with the extraction opportunities
provided by the land, and on the other hand with the needs of the plants that the company supplies. The
extracted coal in 2021 amounts to 27,084 thousand tons, by 6,484 thousand tons (31.5%) more than the
amount extracted in 2020. The larger amount of energy fuel in 2021 is due to the increased consumption
mostly by TPP Maritsa East 2 EAD and the other two plants in the East Maritsa basin. Coal consumption
is affected by the electricity load of the country's electricity system, which in 2021 was increased
compared to the previous year.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
27
The reported revenues from coal sales in 2021 amount to BGN 497,075 thousand and are by BGN
118,034 thousand (31.14%) more than the revenues reported for the previous year. The reported increase
compared to 2020 represents the net effect of the increased coal extraction and decreased calorific value.
The estimated and reported sales prices of the quantities of lignite coal sold by the Company for all
counterparties were formed at a fixed price of BGN 77.00/TCF
1
effective as of 01.07.2014.
• Administrative Activity Segment
Administrative activity
2021
2020
Restated
Change
2021/2020
BGN’000
BGN’000
BGN’000
(%)
Revenue from sales:
- external customers
3,263
3,857
(594)
(15.40%)
- other segments
766,821
169,147
597,674
353.35%
Segment revenue
770,084
173,004
597,080
345.12%
Expenses for materials
(129)
(135)
6
4.44%
Hired services expenses
(4,394)
(5,773)
1,379
23.89%
Depreciation and amortisation
(1,219)
(1,248)
29
2.32%
Employee benefits expenses
(5,955)
(5,346)
(609)
(11.39%)
Expenses for impairment of financial assets,
net
(527,058)
(217,709)
(309,349)
(142.09%)
Other operating expenses
(402)
(1,686)
1,284
76.16%
Expenses on provisions
(754)
(756)
2
0.26%
Operating profit\ (loss) for the segment
230,173
(59,649)
289,822
485.88%
The administrative services rendered to the companies from the other segments are mainly performed
by the parent company BEH EAD.
In 2021 there was no change in the rate of deduction from the profits of state-owned companies and
enterprises in favour of the state. According to Ordinance No. 1 of the Council of Ministers of
28.04.2021, the dividend deduction shall be kept at 50% of the net profit after the deductions for the
Reserve Fund.
The largest share in the segment revenues is formed by the dividends accrued by the subsidiaries of BEH
Group. In 2021 the reported income from dividends and participations (including revenue from overdue
interest) reached BGN 762,748 thousand, compared to BGN 168,319 thousand in 2020. They are formed
on the one hand, from the dividend due by some of the subsidiaries with a positive financial result for
2020 such as NPP Kozloduy EAD, ESO EAD, Bulgargaz EAD, Bulgartransgaz EAD and on the other
- from the distribution of additional dividends. In 2021, the Board of Directors of Bulgarian Energy
Holding EAD distributed an additional dividend from other reserves to the subsidiaries NPP Kozloduy
EAD and ESO EAD in the total amount of BGN 505 million. In addition, due to the intensive investment
activities related to the expansion of the national gas transmission infrastructure, which hindered the
payment of dividends in favour of the holding, in 2021 Bulgartransgaz EAD paid the dividend due by
the company for 2019 and 2020.
1
TCF = 1 ton of coal with a calorific value of 7000 kcal/kg.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
28
The income from dividends and participations, accrued in favour of BEH EAD in 2021 on the basis of
the reported by the subsidiaries net financial result in 2020, after deducting the contributions to the
Reserve Fund, amounts to BGN 257,200 thousand, reporting an increase of BGN 88,881 thousand
compared to their value of BGN 168,319 thousand in the previous reporting period.
In terms of administrative costs, the efforts of the management are focused on their optimization by
applying a selection of good management practices and approaches aimed at effective use of available
resources.
The group does not perform research and development activities.
3.2. Ratios
• Profitability of revenue - net profit/operating income
2021
reported
2020
reported
% change
2021/2020
0.121
0.028
329.19%
This indicator summarizes the overall efficiency of the operations of BEH-group.
• Return on Equity (ROE)
2021
reported
2020
reported
% change
2021/2020
0.092
0.013
584.50%
The ratio indicates the efficiency of turning the equity into profit.
• Return on Assets (ROA)
2021
reported
2020
reported
% change
2021/2020
0.055
0.008
615.41%
The ratio provides information about the efficiency of turning the assets into profit.
3.3. Compliance with the covenants according to the terms and conditions of the bond issues
of BEH EAD
The values of the covenants that BEH EAD is obliged to observe on a consolidated basis according to
the terms of the bond issues placed are as follows:
Covenants
as of 31.12.2021
as of 31.12.2020
EBITDA Coverage ratio > 4.0
17.26
6.46
Debt Coverage ratio < 4.5
0.39
1.92
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
29
3.4. Commitments, contingent liabilities and other significant events
Litigation and claims arise during the normal course of business of the Company. The Company's
management is of the opinion that the costs necessary to resolve these disputes and claims will not have
a material effect on the financial status and cash flows in future financial periods.
Bulgarian Energy Holding EAD
Loan from the European Investment Bank
In October 2019, Bulgarian Energy Holding EAD and the European Investment Bank concluded a
Financing Agreement for construction of an IGB gas pipeline worth EUR 109.9 million secured by a
state financial guarantee from the Republic of Bulgaria, the Guarantee Agreement for which was ratified
by the National Assembly. The loan is provided to Bulgarian Energy Holding EAD as a shareholder in
ICGB AD. For its part, BEH EAD transfers the loan financing to the project company through a
Shareholder Loan Agreement in the same amount, under the same financial conditions set in the
agreement with the European Investment Bank and without additional margin for Bulgarian Energy
Holding EAD. The repayment of the loan by the European Investment Bank will be carried out using a
grace period for repayment of the principal of the disbursed tranches, which according to the Agreement
concluded with the bank may last up to 7 years from the date of disbursement of the tranche.
On 17 August 2020, the first tranche of EUR 30 million was disbursed under the following conditions:
payment of interest every six months at an annual interest rate 0.259%, five-year grace period for
payments on the principal, payment of principal twice a year, the last instalment being due on 17 August
2045.
On 18 January 2021, a second tranche of EUR 30 million was disbursed under the following conditions:
payment of interest every six months at an annual interest rate of 0.237%, five-year grace period for
principal payments, payment of principal twice a year, the last instalment being due on 18 January 2046.
On 1 December 2021, a third tranche of EUR 30 million was disbursed under the following conditions:
payment of interest every six months at an annual interest rate of 0.612%, five-year grace period for
principal payments, payment of principal twice a year, the last instalment being due on 1 December
2046.
Proceedings of the European Commission against Bulgarian Energy Holding EAD and its
subsidiaries
Bulgarian Energy Holding EAD
Two proceedings have been initiated by the European Commission against Bulgarian Energy Holding
EAD and its subsidiaries for possible abuse of a dominant position – Case AT.39767 - BEH Electricity
and Case AT.39849 - BEH Gas.
Case COMP/B1/AT.39767 BEH Electricity
The case concerns a possible infringement of Art. 102 of the Treaty on the Functioning of the European
Union (TFEU) in connection with the inclusion of territorial restrictions in the supply contracts
concluded by subsidiaries of Bulgarian Energy Holding EAD - Natsionalna Electricheska Kompania
EAD, NPP Kozloduy EAD and TPP Maritsa East 2 EAD, on the wholesale electricity market in
Bulgaria, in the period September 2008 - March 2013.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
30
The proceedings were initiated in 2012 with a view to the adoption of a decision under Chapter 3
(Articles 7 to 10) of Council Regulation 1/2003 of 16 December 2002 on the implementation of the rules
on competition laid down in Articles 81 and 82 of the EC Treaty (Articles 101 and 102 TFEU).
By Decision C (2015) 8860 of 10 December 2015 on case AT.39767 BEH-Electricity, the EC approved
as legally binding the Commitments for a period of five years from the starting date of operation on the
day-ahead market, proposed by the Bulgarian Energy Holding EAD, Natsionalna Electricheska
Kompania EAD, TPP Maritsa East 2 EAD, NPP Kozloduy NPP and Bulgarian Independent Energy
Exchange EAD and terminated the proceedings.
By Decision C (2016) 2246 of the European Commission dated 12 April 2016, the EC approved a
Supervising Manager - ADVOLIS, to supervise the current management of Independent Bulgarian
Energy Exchange EAD and the operation of the day-ahead market platform under the terms and
conditions attached to the EC Decision. On April 22
nd
, 2016, a mandate for a Supervising Manager was
concluded between Bulgarian Energy Holding EAD and ADVOLIS in accordance with the
Commitments under case AT.39767 BEH-electricity for a period of 5 years from the date of launching
the Day Ahead platform. (19.01.2016).
Pursuant to the Commitments, Bulgarian Energy Holding EAD undertakes to separate the Independent
Bulgarian Energy Exchange EAD from its structure and to transfer the ownership of the capital to the
Bulgarian Independent Energy Exchange EAD. The deadline for the transfer of the ownership of
Independent Bulgarian Energy Exchange EAD was extended by the EC until 31 January 2018.
The change of ownership of the Bulgarian Independent Energy Exchange EAD was entered in the
Commercial Register on 15 February 2018.
In the period from the establishment of Independent Bulgarian Energy Exchange EAD until the moment
of transfer of its ownership the company has established itself as a key player in the electricity market
in the country. The important role of the electricity exchange, its efficient operation and management
have laid the foundation for the reform of liberalization of the electricity market in the country.
Works are focused on the integration of the Bulgarian electricity exchange "day ahead" with the
mechanism of Price Coupling of the Regions adopted at European level.
At the end of January 2021, the Supervising Manager ADVOLIS submitted to the European
Commission a final report on the AT case. 39767 BEH-electricity, which states that the commitments
in the case have been met by BEH and its subsidiaries.
The European Commission has accepted the final report of the Supervising Manager without remarks
and has released ADVOLIS from its duties as Supervising Manager in the case by official letter dated
22 March 2021.
Case COMP/B1/AT.39849 - BEH gas
The case concerns a possible infringement of Art. 102 of the Treaty on the Functioning of the European
Union (TFEU) in relation to alleged actions of BEH EAD and its subsidiaries – Bulgargaz EAD and
Bulgartransgaz EAD – aimed at:
• preventing their competitors from gaining access to key gas infrastructure (gas transmission
network and natural gas storage facility) in Bulgaria, explicitly or implicitly denying access to third
parties or causing delays;
• preventing competitors from gaining access to an import main pipeline by reserving capacity which
remains unused.
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The proceedings were initiated in 2013 with a view to the adoption of a decision under Chapter 3
(Articles 7 to 10) of Regulation 1/2003.
On 23 March 2015, the EC issued a Statement of Objections. Bulgarian Energy Holding EAD and its
gas subsidiaries submitted their respective responses to the European Commission on 9 July 2015
(Bulgargaz EAD), 10 July 2015 (Bulgarian Energy Holding EAD) and 17 July 2015 (Bulgartransgaz
EAD).
On 24 November 2017, the 44
th
National Assembly of the Republic of Bulgaria adopted a decision for
taking the necessary actions for termination of Case COMP/B1/AT.39849 - BEH Gas, whereby the
National Assembly supported the termination of the case under Art. (7) of Regulation (EC) No. 1/2003
without acknowledging the alleged infringements and without assuming responsibility for them, by
fulfilling the obligations arising from a possible prohibition decision, including a possible financial
sanction. To date, the European Commission has not taken a formal decision to close the case, including
on the possible amount of the financial penalty.
On 26 July 2018, a decision was adopted by the 44
th
National Assembly of the Republic of Bulgaria for
taking actions for termination of Case COMP/B1/AT.39849 - BEH Gas pursuant to Art. 9 of Regulation
(EC) No 1/2003 by entering into commitments by the Bulgarian side and reaching an agreement with
the European Commission. The second decision of the NA comes as a result of the development of case
COMP/B1/AT.39816 between the EC and Gazprom, where on 24 May 2018, the Commission
announced that an agreement had been reached and it was closed under Art. 9 of Regulation (EC)
No.1/2003 without a financial sanction.
On 17 December 2018, the European Commission notified the adoption of Decision C (2018) 8806 in
case AT.39849 BEH-Gas, whereby the European Commission imposed a fine on Bulgarian Energy
Holding EAD (BEH), its subsidiary for gas supply Bulgargaz EAD and its subsidiary for gas
infrastructure Bulgartransgaz EAD ("BEH Group") in the amount of EUR 77,068,000 for blocking the
access of competitors to key gas infrastructure in Bulgaria in violation of EU antitrust rules. The decision
was received in the registry offices of the three companies on 19.12.2018, which set the start of the
appeal period of the EC Decision (two months and ten days after notification of the Decision to the
parties) and payment of the fine (three months after the notification of the Decision to the Parties), set
therein. The appeal against the decision does not delay the payment of the fine.
On 18 March 2019 two unsecured bank guarantees were issued by ING Bank NV in favour of the EC,
for a total amount equal to the total amount of the fine of EUR 77,068,000, as follows:
• Bank guarantee amounting to EUR 51,379 thousand, covering 2/3 of the total amount of the
fine, securing the obligations of Bulgarian Energy Holding EAD and Bulgargaz EAD;
• Bank guarantee in the amount of EUR 25,689 thousand, securing the obligation of
Bulgartransgaz EAD on the imposed penalty.
On 4 July 2019, the Bulgarian state, through the Ministry of Foreign Affairs, filed an application to
intervene in the case in support of BEH EAD and its gas subsidiaries.
On 26 August 2019, the European Commission presented its Defence to the General Court in response
to the complaint filed by Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD.
On 29 November 2019, Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD filed
a Response against the Defence of the European Commission.
On 20 February 2020, within the period specified by the General Court of the European Union, the
Republic of Bulgaria submitted through the Ministry of Foreign Affairs (MFA) the official position of
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the Republic of Bulgaria in case T-136/19, previously provided by the Ministry of Energy to the Ministry
of Foreign Affairs (MFA), whereby the state intervenes in support of Bulgarian Energy Holding EAD,
Bulgargaz EAD and Bulgartransgaz EAD against the European Commission before the General Court
of the European Union. The General Court examined additional documents and requested information
in order to clarify all the circumstances attached to the case. By letter of 14 March 2022, the Court
requested the European Commission to provide non-confidential versions of the documents listed by the
Court. A response from the European Commission is expected.
It should be borne in mind that the General Court set 13.07.2022 as the date of the hearing of the parties.
4. Risk factors
The Group's risk management policies identify and analyse the risks affecting the Group, set risk limits
for individual types of risks, define rules for risk control and compliance with the established limits.
Risk management policies and systems are subject to regular review in order to identify the changes
occurred in the market and activities. By trainings and application of the established standards and
procedures, the Group aims to develop discipline and constructive control environment where all
employees understand their role and obligations. The main types of risks to which the Group is exposed
in the course of its business are as follows:
4.1. Interest rate risk
Interest rate risk is the risk of adverse change in interest rates leading to an increase in interest expenses
and/or a decrease in the company's interest income.
The Group is exposed to risk of change in the market interest rates primarily in terms of its financial
assets and liabilities with variable (floating) interest rates.
Within the Group's asset structure, the interest-bearing assets are represented by cash, bank deposits and
loans, the majority of which are at fixed interest rates. The Group also has granted loans with a combined
structure of the loan interest rates, which contains two components – fixed and variable. The borrowed
funds of the Group are in the form of long-term and short-term loans and predominantly have a fixed
interest rate. This approach minimizes the likelihood of unfavourable changes in the cash flows.
4.2. Currency risk
The Group carries out purchases, sales, lending and borrowing operations in foreign currencies – Euro,
US Dollars, Japanese Yen, British Pounds, Swiss Francs and Macedonian Denars. The majority of these
operations are performed in Euro and US Dollars. Since the exchange rate of BGN/EUR is fixed at
1.95583, the currency risk arising from the Group's Euro exposures is minimal.
The Group makes payments for construction and installation works, deliveries for assets under
construction and goods in US Dollars. In this regard, there is a risk of a change in the exchange rate
ratios. Consequently, the Group is exposed to the risk of changes in the exchange rate of the US dollar.
In the event of material fluctuations in the future, the Group may hedge its exposure through derivative
instruments such as foreign currency swaps.
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4.3. Liquidity risk
Liquidity risk arises if the Group fails to meet its obligations when they become due. The Group applies
an approach that provides the necessary liquidity resources to meet the incurred liabilities under normal
or stressful conditions without incurring unacceptable losses.
One of the objectives of the parent company is to provide, if necessary, financial resources to its
subsidiaries in order to maintain their operations and to implement certain strategic projects.
The parent company finances the operating activities of the companies in the Group in two ways:
• Internal financing, within the economic group, by redistribution of the free cash resource. Bulgarian
Energy Holding EAD acts as an intermediary between the companies, by coordinating the
conditions between them and monitors the execution of transactions at market levels.
• The interest rates on money loans and deposits are based on market levels. The interest rate
conditions of cash and currency deposits are tied to a percentage that is the market rate for similar
transactions in the transaction period (floating or fixed).
• External financing - in case of shortage of funds in the economic group, Bulgarian Energy Holding
EAD may undertake actions for external financing. This is the preferred method to raise funds for
the implementation of investment projects. On 7 November 2013, the parent company successfully
placed a bond issue at a rate of EUR 500,000 thousand on the Irish Stock Exchange, with a five-
year maturity and an annual coupon of 4.250%. A second bond issue was placed on 2 August 2016
by the parent company again on the Irish Stock Exchange. The issue was at the amount of EUR
550,000 thousand with a five-year maturity (August 2021) and an annual coupon of 4.875%. In
2018 BEH EAD placed a third bond issue in three tranches, totalling EUR 600,000 thousand for a
period of 7 years and an interest coupon of 3.5%. With part of the funds from the third issue, BEH
EAD repaid the first bond loan maturing on November 7
th
, 2018. On July 15
th
, 2021, BEH
successfully placed its fourth bond issue in the amount of EUR 600,000 thousand at an annual
interest rate of 2.45%. Proceeds from the fourth issue were used to refinance the Holding's second
bond issue maturing on August 2
nd
, 2021, as well as for general corporate purposes, except for coal-
related activities.
4.4. Market risk
Market risk is related to the fact that a change in market prices, such as foreign currency, interest rates
or equity instruments, will affect the Group's income from financial instruments. The purpose of market
risk management is to control market exposure with acceptable parameters while optimizing the returns.
The Group undertakes periodic analyses on the macroeconomic environment in the country and an in-
depth analysis of specific macro indicators, including information on interest rates to be presented to the
Board of Directors. It is responsible for assessing the future risks faced by the Group. In the event of a
deterioration in market conditions, hedging instruments may be used.
4.5. Credit risk
In carrying out its activities, the Group is exposed to credit risk, which is related to the risk that some of
the counterparties will not be able to fully meet their obligations in the usual timeframe. The customer
credit quality is measured by taking into account financial status, past experience and other factors. The
Group's receivables are presented in the consolidated statement of financial position in net amount in
net amount, after deducting the accrued impairment for expected credit loss.
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In relation to the credit risk of uncollectability of receivables from counterparties, the Group takes the
following precautionary measures:
• for commercial and other receivables that are overdue and were not secured upon their
origination, deferred payment arrangements are concluded and a collateral of not less than the
initially recognized amount of the claim is negotiated;
• for other contracts that are not secured, the following usual measures are taken in advance in
case of overdue payment by the debtor company – offsetting liabilities to the Group against
overdue receivables, and if the amount of the liabilities is not big enough to cover the
receivables, then other out-of-court options for settling the receivables are sought.
The Group is currently monitoring and analysing the servicing of the receivables, the reasons for the
defaults and the changes in the financial capacity of the debtor companies and the status and quality of
the collaterals received.
The Group has a significant concentration of credit risk in respect of receivables from Toplofikatsia
Sofia EAD, which constitute 31% of the total net non-current and current receivables. As of 31
December 2021, the carrying amount of the receivables from Toplofikatsia Sofia EAD amounts to BGN
333,911 thousand (2020: BGN 557,668 thousand).
Credit risk arising from other financial assets of the Group, such as cash and other financial assets, is
the credit exposure of the Group arising from the likelihood that its contractors may fail to meet their
obligations.
The Group's maximum credit exposure with respect to its financial assets amounts to their respective
carrying amount in the consolidated statements of the financial position as of 31 December 2021.
4.6. Regulatory risk
Regulatory risk is determined by the specificity of the activity. Pursuant to Art. 21, para. 1, item. 8a, 8b,
8c, Art. 30, para 1 and art.33a of the Energy Act, the following prices are subject to regulation by the
EWRC:
o The prices at which the producers, within the limits of the availability set by the Commission
under Art. 21, para. 1, item 21 sell electricity to the public supplier;
o The prices at which the producers sell heat to the heat transmission plant and to directly connected
customers;
o The prices at which the heat transfer company sells heat to customers;
o The prices at which the public supplier sells to the end suppliers the electricity purchased on the
grounds of Art. 21, para. 1, item 21;
o The prices at which the public supplier sells natural gas to the end suppliers of natural gas and to
a person who has been issued a license for production and transmission of heat energy; the prices
are approved on monthly basis and are applied from the first day of the month for which they are
approved;
o The prices at which end suppliers sell natural gas to customers connected to the respective gas
distribution networks;
o The prices at which end suppliers sell electricity to household end customers for sites connected
to a power distribution network at a low voltage level;
o Prices for access and/or transmission through the transmission grid;
o Prices for connection to the grids;
o Prices for access and transmission of natural gas through transmission and/or distribution
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networks, except when the Commission, at its discretion, approves a methodology for setting the
price for access and transmission over a transmission network;
o Prices for access and/or transmission through electricity distribution networks;
o Prices for access and storage of natural gas in a storage facility;
o Prices for the distribution of traction electric energy on the distribution networks of the railway
transport;
o Prices for provision of services to customers, as determined by the Commission, related to the
licensed activity;
o including the price or price component through which all end customers connected to the
electricity system, including the transmission system operator and the electricity distribution
system operators, participate in the compensation of the costs under Art. 34 and Art. 35.
o (new – SG, No. 59 dated 2013, in force as of 05.07.2013, amended No. 9 dated 2021, in force as
of 02.02.2021) it determines for each price period a limit value of the costs of the electricity
transmission network operator for purchasing availability for additional services pursuant to Art.
105, para. 2;
o (new – SG, No. 38 dated 2018, in force as of 08.05.2018, amended No. 41 dated 2019, in force
as of 01.07.2019) it determines annually by June 30 premiums for electricity from renewable
sources and from high-efficiency cogeneration of electricity and heat produced by power plants
with a total installed electrical capacity of 500 kW and over 500 kW;
o for the purposes of pricing, it determines annually by 30 June an estimated market price of the
electricity for covering the technological costs of the electricity transmission network operator
and of the electricity distribution network operators.
Price regulation has a significant impact on revenue, expense, and hence on the overall economic and
financial position of the Group.
4.7. Cash flow risk
The cash flow risk depends on fluctuations in the amount of future cash flows associated with a given
monetary financial instrument. The Group plans its cash flows and floating rate financial instruments
are of a short-term nature of less than 1 year.
Detailed information regarding the Group's financial risk management objectives and policy and the
main categories of financial assets and liabilities, is included in the consolidated financial statements of
BEH EAD for 2021.
5. Future development, investments, forthcoming significant transactions and other information
pursuant to Art. 247 of the Commercial Act
5.1. Future development of Bulgarian Energy Holding EAD
The objectives of BEH EAD are focused on the following main areas and priority areas:
Financial sustainability of BEH Group and the electricity sector in the country
•
Provision of funding for key activities and projects:
✓ Effective management of financial assets and instruments;
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✓ Participation in the capital markets in order to attract external financing from international
financial institutions on competitive terms;
✓ Assimilation of the advantages arising from the scale of the holding structure (economies of
scale);
✓ Support to independent transmission operators in the process of negotiating the necessary
credit resources to finance projects of particular importance to companies, in the context of
climate change mitigation and sustainable development of the low-carbon economy
•
Cost optimization in BEH Group:
✓ Forecasting and planning the amount of costs of BEH Group;
✓ Transparency and predictability of costs;
✓ Enhancing the efficiency of the business activities;
•
Eliminating the deficits in BEH Group:
✓ Ongoing monitoring and control over the amount of the generated tariff deficit;
✓ Providing cooperation and support to the Ministry of Energy, EWRC and the Energy
Commission in the development of normative and regulatory changes related to the reformation
of the sector and the compensation of the generated tariff deficits in the system;
Ensuring the security of the energy system
Projects
•
Diversification of sources:
✓ Projects aimed at guaranteeing the supply of natural gas through new sources. The goal is
independence by providing more than one source of natural gas.
✓ Main current investment projects in this area - Gas interconnector Greece-Bulgaria.
•
Diversification of routes:
✓ Projects aimed at eliminating the risk of a single natural gas import route and for optimal use
of existing gas transmission routes
✓ Implementation of the concept for development of a regional gas hub on the territory of
Bulgaria
✓ Shareholding of Bulgaria through Bulgartransgaz EAD in the new FSRU terminal (LNG
terminal) near Alexandroupolis, Greece.
✓ Reservation by Bulgargaz EAD of capacity from the liquefied natural gas terminal to the city
of Alexandroupolis, Hellenic Republic.
•
Security, reliability and continuity of gas supplies
✓ Expansion of UGS Chiren
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•
Extending the life of the facilities, ensuring the security of the system, combined with
ensuring long-term profitability.
✓ Projects to extend the useful life of a number of key capacities for the energy system,
contributing to the security of electricity supply, the balance of the energy system and
increasing the value of the services offered.
✓ Main ongoing projects in this direction - ensuring the long-term operation of the 5th and 6th
nuclear power units over their design service life in the next 30 years and implementation of
measures ensuring the operation of the units at increased capacity; rehabilitation of hydropower
capacities, expansion of the production capacity and modernization of the capacities in order
to guarantee the long-term and efficient exploitation of the hydropower resource of our
country;
✓ Diversification of fresh nuclear fuel supplies
•
Regional and European interconnection of systems.
✓ Projects aimed at optimally connecting the Bulgarian market with the regional and European
markets, thus fulfilling one of the basic European goals - coupling of the markets, on the one
hand, and increasing energy security on the other.
✓ Main ongoing projects in this area - gas interconnectors connecting Bulgaria with neighboring
countries, which will contribute to increasing the regional connectivity of the systems, such as
the Bulgaria-Serbia interconnector, the Bulgaria-Northern Macedonia interconnector; as well
as the possibilities for a second one in this direction. Expansion and increase of the capacity
of the electricity transmission network, increase of the cross-border capacity between the
countries in the region, digital transformation of power grid management systems.
•
Liberalization of the electricity market:
✓ Active participation in:
o day-ahead exchange market
o bilateral contract exchange market
o intra-day exchange market
o balancing market
✓ Implementation of projects for market mergers in the day-ahead and intra-day segments with
neighbouring countries, which will lead to increased liquidity and competition in the electricity
exchange market, limitation of price volatility and automatic access to markets across Europe.
o Local project for unification of the day ahead market on the Bulgarian-Romanian border:
on October 28
th
, 2021 the successful unification was carried out as a result of the close
cooperation between the Bulgarian and Romanian electricity exchange operators and
electricity system operators and energy regulators of both countries. With the inclusion
of the Bulgarian-Romanian border, the region of Southeast Europe (SEE) is now fully
integrated into the day-ahead market within the European Union.
o Project for market coupling of the day-ahead markets on the Bulgarian-Greek border
implemented within the Local Implementation Project 14 – LIP 14: the project is expected
to be implemented at the end of 2022, in parallel with the intra-day market coupling within
the borders of Slovakia, which is being implemented within the framework of Local
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Project 17 (LIP 17). The joint tests of the two projects are expected to start in April/May
2022.
✓ Implementation of projects envisaged in the draft Recovery and Resilience Plan:
o "Digital transformation and development of information systems and real-time systems
of the Electricity System Operator in a low-carbon economy." The aim of the project is
complete modernization of the activities for planning, management and maintenance of
the electricity transmission network of the country through the introduction of modern
digital tools and methods to ensure the necessary manoeuvrability, security, reliability
and fast response in the management of the power system in the conditions of low
carbon production, as a result of the tendency to build renewable sources and
intermittent generation, increasing the flexibility of operational management and
monitoring of the electricity system. The total value of the investment is EUR 311
million, of which EUR 189 million, or 60%, is planned to be financed with European
funds provided by the Instrument for Recovery and Resilience.
✓ Implementation of the reforms envisaged in the draft Recovery and Resilience Plan:
o liberalization of the wholesale market - elimination of the role of public provider and
elimination of the quotas for the regulated market. The long-term electricity purchase
agreements for Maritza East 1 (AES) and Maritza East 3 (Contour Global) expire in
2024 and 2026, respectively, and are not planned to be renewed.
o reforms of the balancing market by shortening the deadlines for netting imbalances
between participants and removing price restrictions for activating balancing energy, as
well as those in case of shortage and surplus.
o liberalization of the wholesale electricity market, according to the set deadline of
30.06.2022;
o liberalization of the retail electricity market, by 31.12.2025;
The criteria for identifying households in a situation of energy poverty and vulnerable
consumers should be defined in the national legislation of the country. Another important
point is the gradual and stage by stage transition to a liberalized market by gradually
eliminating regulated prices for household customers, in the conditions of a liberalized
wholesale electricity market in two successive stages (in 2023 and 2025) and ending the
determination of energy quotas for supply on a regulated market by the EWRC.
•
Liberalization of the gas market:
✓ Development of a competitive natural gas market, in the context of the European goals for
building an interconnected and single pan-European gas market by building a gas distribution
centre (hub) on the territory of Bulgaria, which will contribute to:
o maintaining the role of Bulgaria as a main country providing input quantities and trade
in natural gas, as well as cross-border transmission to the region and the EU
o ensuring the security of natural gas supply, not only for Bulgaria, but also for Europe
and the region
o development of the natural gas market in Bulgaria and the region
o providing a suitable market environment for organized trade in natural gas on a market
basis
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5.2. Expected investments
Bulgarian Energy Holding EAD
Project for construction of the gas interconnector Greece-Bulgaria
At present, the investment priorities of Bulgarian Energy Holding EAD are focused on the successful
implementation of the project for construction of the gas interconnection Greece-Bulgaria. The project
is implemented by the joint investment company ICGB AD with equal participation of BEH EAD and
IGI Poseidon. IGI Poseidon is a joint investment venture, with equal participation of DEPA SA. and
Edison International Holding NV. The joint venture is expected to build and own the pipeline, allocate
its capacity and receive revenues from natural gas transmission.
The total estimated value of the project from the beginning of its implementation, including the design
phase, to the completion of the construction and commissioning phase is about EUR 240 million.
The procedure for certification of the company as an independent gas transmission system operator
according to the ITO model, set in Directive 2009/73, was initiated in the beginning of 2022 by ICGB
AD, for the purpose of issuance of certification decisions by the energy regulators in Bulgaria and
Greece before the date of commercial operation. The company is preparing a Compliance Program to
be approved by the regulators that will be included in the certification procedure, by which the functional
separation will be confirmed and measures for independent operation will be applied by shareholders.
These obligations are stated in the Decision of the regulatory bodies EWRC and RAE from 2018 for
granting an exemption under Art. 36 of Directive 2009/73. The company has received a license for
transmission of natural gas under the Energy Act on the territory of Bulgaria. Actions will be taken to
conclude agreements for interconnection with the neighbouring operators of IGB - Bulgartransgaz EAD,
the Trans-Adriatic Gas Pipeline and DESFA.
The EU grants approved for the implementation of the project are in the process of utilisation - a grant
under the European Energy Recovery Program worth EUR 45 million and a grant from OPIC 2014-
2020 worth EUR 39 million.
In August 2020, EUR 30 million of the EIB loan in the form of the first tranche was disbursed. In January
2021, another EUR 30 million of the loan in the form of the second tranche was disbursed. In December
2021, a third tranche worth EUR 30 million was disbursed. The remaining part of the loan is expected
to be disbursed through a fourth tranche worth EUR 19.9 million in the first half of 2022.
Completion of construction and installation works, testing of the gas transmission system,
implementation of the procedures for obtaining the necessary permits for the use of the gas transmission
infrastructure by the authorities in Bulgaria and Greece, and commercial operation are planned for the
second quarter of 2022.
5.3. Future development in 2022 by segments
• Electricity segment
A significant factor that has a material impact on the activities of the companies of BEH Group is the
ongoing liberalization of the electricity market in Bulgaria and its coupling with the Internal Single
Energy Market of the European Union. In pursuance of the state policy for achieving full liberalization
of the electricity market in Bulgaria, the government is working hard to implement a roadmap for market
liberalization.
Due to its specificity, most of the subsidiaries of BEH EAD carry out their activity in the conditions of
a hybrid energy market, consisting of a regulated and unregulated (free) market segment. During the
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period 2012-2015, the financial standing of the companies in the group was negatively affected by the
imperfections of the regulatory framework setting the operating conditions of the regulated market
segment, as a result of which a significant tariff deficit was formed in the public electricity supplier
NEK EAD. Since 2015 to date a number of legislative and regulatory changes have been undertaken,
aimed on the one hand to improve the financial standing of NEK EAD, and on the other hand to achieve
gradual liberalization of the Bulgarian electricity market. The state set up the Security of the Electricity
System Fund, whose main function is related to accumulation of funds from the introduced 5%
contribution from the revenues of electricity producers and transmission operators, revenues from the
obligations to society fee and from the sales of carbon allowances. Initially, the revenues were used to
cover non-reimbursable expenses incurred by NEK EAD in the performance of its functions as a public
supplier, related to mandatory purchase of electricity from the power plants with long-term contracts for
purchase of electricity, renewable energy and high efficiency cogeneration at preferential prices.
Subsequently, with a series of legislative changes, a large number of producers with preferential prices
were listed on the electricity exchange, concluding "premium agreements" with the Security of the
Electricity System Fund, according to which the fund compensates them by paying a premium, being
calculated as the difference between the preferential price of the specific producer and the estimated
market price determined by the EWRC for the respective price period. Thus, NEK EAD's commitments
for mandatory purchase of electricity have been steadily declining over the years.
At the end of 2017, an amendment to the Energy Act introduced an obligation, according to which as of
1 January 2018 transactions with electricity at freely negotiated prices, concluded by electricity
producers with a total installed capacity over 5 MW, are carried out on the organized electricity exchange
market. Steps have thus been taken to (i) ensuring equal conditions for the trade participants; (ii)
increasing the liquidity of the electricity exchange in the country, as a prerequisite for achieving a fair
market price and development of competition towards full liberalization of the electricity market in
Bulgaria.
With amendments to the Energy Act in 2018, a number of legislative changes were introduced, which
support the state's efforts aimed at achieving full liberalization of the electricity market in the country,
and the adopted measures are related to:
- obligation of the transmission system operator and the electricity distribution operators to
purchase electricity for the technological losses on a market basis. This approach has been
implemented in many European countries and is a prerequisite for increasing the liquidity in the
electricity exchange, while encouraging operators to seek to reduce losses.
- integration of RES and electricity producers with indicators for high-efficiency combined heat
and power (cogeneration), whose energy is purchased at preferential prices from the public
supplier, on the free market. These producers sell the electricity they produce at market prices and
receive a premium for each megawatt-hour sold until net specific production is reached, with high
efficiency cogeneration indicators. Through, the introduced mechanism, power plants with a total
installed capacity of 4 MW and over 4 MW, producing electricity from renewable sources and
cogeneration plants, are compensated by a “premium contract”, which premium is calculated as
the difference between the preferential price of the specific producer and the EWRC forecasted
market price for the respective pricing period. Parties to the "premium contract" are the specific
producer and the Security of the Electricity System Fund, as an institution administering the
implementation of the mechanism.
- the functions for administering of the “obligation to society” price were transferred by NEK
EAD to the Security of the Electricity System Fund.
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With the amendments to the Energy Act adopted in 2019, the gradual integration of RES producers and
electricity producers with indicators for high-efficiency combined heat and power generation
(cogeneration) on the free market continued, as the plants with total installed capacity of 1 MW and
above 1 MW should sell the energy produced by them on the electricity exchange, and the commitment
of the public supplier to buy the amount of electricity produced by them was dropped.
In 2020, the started reform in the Energy sector for full liberalization of the wholesale market and
integration of the national market into the common European energy market continued.
The other goal of the amendments to the Energy Act of 2020 was related to the continuation of the
liberalization of the wholesale electricity market and the increase of its liquidity. With the amendments
to the Energy Act of 2020, all producers, with the exception of sites with a total installed electrical
capacity of less than 500 kW, should offer the electricity they produce at freely negotiated prices. This
provided additional amounts of electricity in order to achieve a stable and predictable market.
With the legislative changes, these producers entered the free market on 1 July 2021 through a "premium
contract" concluded with the Security of the Electricity System Fund, thus, the public supplier is not
expected to continue to purchase the energy produced by them at preferential prices.
An important step in the process of full liberalization is the elimination of the regulated market segment
and the introduction of household consumers on the free market. The electricity market in Bulgaria is
partially liberalized, with the regulated segment being 40% of the total electricity consumption. In line
with the EC's Third Liberalization Package, Bulgaria has taken steps towards full liberalization of the
electricity market. It is envisaged that the retail market will be liberalized by 31.12.2024, and for this
purpose it is necessary to take steps to define energy-poor consumers and develop adequate mechanisms
to support them.
The amendments to the Energy Act in 2021 created the necessary regulatory prerequisites for the actual
participation of renewable energy and high efficiency cogeneration producers with sites with a total
installed electrical capacity of 500 kW to 1 MW on an organized exchange and balancing electricity
market. The amendments to the Electricity Trading Rules (ETR) (amended and supplemented, SG No.
110 of 24 December 2021) regulated clear rules and conditions for participation of these producers in
the electricity exchange. Another important change in the ETR was the abolition of the unification of
standard and/or combined balancing groups through a common financial settlement. This aims to
facilitate and simplify the work of the independent transmission operator in the administration of the
balancing groups, as well as to overcome the complex and often controversial relationships within such
unifications. The amendments to the ETR eliminate the existing in practice controversial points and
ambiguities regarding the rules for supply from a supplier of last resort, regulating the conditions and
manner of initial registration on the market at freely negotiated producer prices, as well as the transfer
of balancing group members from an existing coordinator to a new one, in case of transformation and
transfer of a commercial enterprise to an existing coordinator.
With amendments to the Energy Act (promulgated in SG, No. 9 dated 2021, in force as of 02.02.2021),
the transactions for purchase of cold reserve to ensure the security of the electricity system were dropped.
This objective will be achieved through the conclusion of competitive transactions for purchase of
availability of additional services, namely participation in primary frequency regulation, automatic
secondary regulation and manual secondary regulation of frequency and exchange capacity in
accordance with the provisions Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing
a guideline on electricity transmission system operation, to the extent specified in this Regulation.
According to said Regulation, each transmission system operator shall manage its control area with
sufficient reserves to increase and decrease the active capacity so as to be able to deal with imbalances
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For the year ended 31 December 2021
42
in its control area caused by the mismatch between supply and demand and emergencies. The legal
changes were brought in line with the Regulation, explicitly stipulating that the operator provides the
necessary reserves by concluding contracts for additional services on a market basis - after conducted
auction. The abolition of the transactions for purchase of cold reserve availability is another step towards
the introduction of a capacity provision mechanism. The changes are aimed at settling market relations
in the transition period before the full liberalization of the wholesale electricity market and creating a
predictable environment for all market participants. The full liberalization of the wholesale electricity
market and the introduction of a capacity provision mechanism will allow all producers to take part in a
competitive procedure, which in turn will lead to an increase of the liquidity on the free electricity
market.
As a result of creating the necessary conditions for the actual participation of producers of renewable
energy and high efficiency cogeneration with sites with a total installed electrical capacity of 500 kW
to 1 MW on the organized electricity exchange it is expected that its liquidity and stability will be
increased. Higher traded volumes will lead also to the demand/supply of a larger number and variety of
exchange products, which correspond to the greatest extent to the portfolio of the respective trading
participant, thus encouraging competition between them. By eliminating the possibility of unification of
standard and/or combined balancing groups through a common financial settlement, it is aimed to
optimize the balancing costs. With the amendments in the rules for supply by a supplier of last resort,
the relationship between the main supplier/balancing group coordinator, the last resort supplier, the end
customer and the transmission or distribution system operator have become clearer.
The change in the way of functioning of the electricity market and the elimination of the figure of the
public supplier will lead to a complete transformation of the profile of Natsionalna Electricheska
Kompania EAD and the company will participate on the market as a producer and trader.
With the projected growth of RES capacities, the need to procure balancing energy to cover the dynamics
of their production in the process of managing the electricity balance in the country, Natsionalna
Electricheska Kompania EAD will be of increasing importance for guaranteeing the security of the
power system, through the 31 hydroelectric power plants and the only PSHPP in the country operated
by the company. In addition, the Company will be a key player on each of the exchange trading platforms
by offering attractive products at competitive prices. The technical characteristics of the generation units
of TPP Maritza East 2 EAD allow the plant to offer both basic and modulated electricity at peak hours,
which is traditionally traded at a higher price, however, the main challenge for the plant remain the high
prices of carbon allowances, which limit the company's ability to actively participate in the market given
the high cost of the produced electricity.
On 28 October 2021, the Independent Bulgarian Energy Exchange (IBEX) successfully started working
in the conditions of market coupling on the border with Romania as part of the single Day-Ahead
European market. The successful coupling is the result of the close co-operation between the Bulgarian
and the Romanian electricity exchange operators and electricity system operators, as well as the energy
regulators of the two countries. With the inclusion of the Bulgarian-Romanian border, the region of
Southeast Europe (SEE) is now fully integrated into the Day-ahead market within the European Union.
The implemented market coupling allows the simultaneous calculation of electricity prices and cross-
border flows in Europe. The efficient use of the power system and the cross-border interconnectors as a
result of greater coordination between the energy markets adds value to the benefit of all market
participants. The integration of the border between the market zones of Bulgaria and Romania into the
single Day-ahead market is another significant achievement in the implementation of the European
target model. Apart from the interconnection powerline between Greece and Italy, the Day-ahead
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markets in Greece and Bulgaria are already connected to the European market and to the north via the
Bulgarian-Romanian border.
The full liberalization of the market and especially the uniting of Bulgarian electricity market with the
single European market will lead to a partial convergence of prices in Bulgaria with those in
neighbouring countries. The expected introduction of "green duties" on the production of countries,
which are outside the EU and therefore do not apply the high environmental standards of the community,
will have a positive impact on the activities of companies and will limit the process of carbon leakage.
This, in turn, implies higher revenues for the producers in the country, increased demand for electricity
in the country and respectively growth in the sales of electricity by the subsidiaries of BEH Group which
are electricity producers.
In order to ensure the adequacy of the national resources, the EU has adopted Regulation (EU) 2019/943
on the internal electricity market, which allows the Member States to put in place a capacity provision
mechanism in case of concerns about the adequacy of the electricity supply, which should operate on a
market basis.
In the coming years, the Bulgarian electricity market is expected to face challenges arising from the new
European legislative framework, which requires also a transition to a new low-carbon market model.
Given the energy mix of the country, in which coal-fired power plants have a significant share of
production and provision of additional services and taking into account the enhanced decarbonization
measures and the European practices, the Capacity Mechanism needs to be introduced in order to ensure
a smooth transition to the new market model.
The measure is expected to help ensure the necessary level of resource adequacy, both in the medium
term, by supporting the existing capacities, and in the long term, by stimulating investment in low-
emission production.
The current legislation considers the Capacity Mechanisms as a temporary measure, which should be
preceded by clear commitments to eliminate the identified market imperfections. To this end, as part of
the State aid procedure, the Member States are required to adopt measures to eliminate the identified
irregularities by drawing up an Implementation Plan with a time schedule for adoption of measures.
In connection with the initiated procedure for prior notification of the Capacity mechanism, pursuant to
Article 20 (4) of Regulation 2019/943, the Bulgarian state through the Ministry of Energy sent an
implementation plan containing a time schedule for adoption of measures for market reforms in the
energy sector, as part of the state aid notification process. The plan has been prepared in accordance
with Article 20 (3) of Regulation 2019/943 and includes: analysis of the electricity market in Bulgaria;
identification of regulatory and market distortions; analysis of the necessary market reforms and the
Member State Implementation Plan. Following the submission of the National Implementation Plan
with a time schedule for adoption of measures to the EC, withing four months, the Commission should
issue an opinion on whether the measures are sufficient to eliminate the established regulatory deviations
or manifestations of market inefficiency. In January 2021, the Ministry of Energy officially presented
to the European Commission the Implementation Plan, from which moment the formal deadline for
submitting an opinion by the European Commission began to run.
The recommendations of the EC on the Implementation Plan of Bulgaria are expressed with an opinion
of the EC of May 20
th
, 2021. The Commission considers that the purchase of electricity by NEK is not
conditioned by the market, but instead is governed by minimum purchase obligations (in the case of the
long-term electricity purchase contracts between NEK of ME1 and ME3), as well as by decisions of the
regulatory body on the regulated prices and quotas, which, according to the commission, distort
competition in the electricity market. The Commission recognizes that the regulated prices at which
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NEK purchases electricity may be so low as to lead to elimination of free market suppliers who purchase
electricity from producers at market prices. On the other hand, the Commission has expressed as a
positive signal the in-depth reform of the Bulgarian wholesale electricity market, due to which the entire
Bulgarian electricity generation should be able to compete for the entire demand in the country at free
prices. This would mean that all electricity producers from BEH Group will be released from their quota
or similar obligations to NEK when servicing the regulated market.
According to the Commission, in view of the termination of the long-term electricity purchase contracts
and the abolition of quota purchase obligations and the role of NEK as a public supplier, Bulgaria should
take into account the potential consequences of such termination for the proper functioning of the market
and should take measures to ensure that there is a liquid forward market, a day-ahead market and an
intra-day market in Bulgaria. The offering of forward products should be done through transparent and
specialized auctions organized periodically (at least four times a calendar year). Forward products
should include different maturities, including products for at least a quarter and a year ahead, for constant
supply of both base and peak loads. The auction conditions should be non-discriminatory and should
ensure equal access for all market participants. There should be no restrictions on the use of the
electricity offered, including any restrictions on resale or export. The Commission considers that it is
crucial for the competition to increase the balancing period. It appeals to Bulgaria to take steps to include
more balancing service providers by reviewing the requirements for pre-ranking and monitoring,
allowing the participation of as many technologies as possible.
The Commission appeals to Bulgaria to define the concept of "vulnerable customers" and to introduce
as soon as possible specific measures to protect them in times of crisis. The country should make
assessment of the number of households in energy poverty and set an indicative target for reducing
energy poverty.
Bulgaria should amend its Implementation Plan to take the utmost account of the Commission's
comments, after which the country should publish its amended plan and inform the Commission.
Given the EU's policy of transition to a low-carbon economy and the high share of coal in Bulgaria's
energy mix, this transition will require higher levels of investment and active measures in the social
sphere. In this regard, it is essential to provide the necessary funding in sufficient amount and flexibility
to ensure the transition at EU level. In order to achieve a fair transition, the citizens and regions most
affected by its transition will be actively involved. Providing incentives for the active participation of
these regions and society in the reforms is a guarantee of their success.
An analysis of the potential for replacement capacities, while ensuring the country's energy security,
will be made, with regard to the consequences of the transition to a carbon-neutral economy to power
system. In this regard, the draft Plan for Recovery and Sustainability of Bulgaria provides for the
establishment of a Commission for Energy Transition with broad stakeholder participation, which will
develop scenarios for decarbonization of the power sector and a Roadmap to climate neutrality.
The draft Recovery and Sustainability Plan envisages the construction of a 6000 MWh battery
installation, appurtenant infrastructure, funding for geophysical research in six regions for construction
of geothermal power plants, as well as investment in the project for "Digital transformation and
development of ESO information systems and real-time systems in the conditions of low-carbon
economy".
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ANNUAL CONSOLIDATED MANAGEMENT REPORT
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45
• Natural Gas Segment
In January 2019, Bulgartransgaz EAD established its subsidiary Balkan Gas Hub EAD (BGH EAD) as
the first step in the process of implementing the concept for construction of a gas distribution centre on
the territory of Bulgaria. Balkan Gas Hub EAD operates trading platforms for the needs of the natural
gas markets within the Balkan Gas Hub. In synergy with the physical infrastructure of the gas
distribution centre, the company provides the necessary prerequisites for construction of the first liquid
physical and commercial gas hub in the region of Southeast Europe, based in Bulgaria.
Amendments to the Energy Act aimed at creating conditions for demonopolisation of the market and
establishment of a liquid natural gas exchange market, including measures to overcome the current low
liquidity, were adopted in 2019. The changes enable natural gas traders to conclude deals in the same
place and thus to provide benefits for all market participants. The introduction of exchange trading is
one of the first and main prerequisites for creating a competitive environment for extraction companies,
traders and consumers of natural gas. An opportunity is created for market makers and liquidity
providers to participate in the market.
Bulgargaz EAD will have a main role in this process. The Energy Act provides for a gradual increase
in the quantities of natural gas that the public supplier Bulgargaz EAD should sell in the organized
exchange market, which may not be less than:
1 2,220 GWh in 2020;
2 4,281 GWh in 2021;
3 6,342 GWh in 2022;
4 8,720 GWh in 2023;
5 11,099 GWh in 2024.
These quantities are offered for sale by Bulgargaz EAD under the terms and conditions of an agreement
approved by the Energy and Water Regulatory Commission for implementation of a natural gas release
program concluded between the operator of the organized natural gas market (Balkan Gas Hub EAD -
a subsidiary of Bulgartransgaz EAD) and the public supplier (Bulgargaz EAD). The agreement also
determines the procedure for conducting auctions for release, the price mechanisms for release,
including the initial price in an auction, the term of the agreement, types of products offered and the
periods of their offering.
The quantities traded on the gas exchange market will be sold as follows:
• To cover domestic consumption in Bulgaria;
• In the neighbouring markets - Greece, Turkey, Romania, Macedonia and Serbia;
• Through connectivity between hubs: via Serbia / Hungary / Austria to Central Europe; via
Romania / Hungary to Central Europe; via Romania / Moldova to Ukraine (reverse of the
Trans-Balkan gas pipeline), etc.
• Through swap and spread products, including options and futures
An important step in the direction of achieving effective liberalization of the natural gas market in
Bulgaria are the amendments made in 2021 in the Energy Act (promulgated in the State Gazette, No. 9
of 2021, in force as of 02.02.2021) and through the Law on Amendments and Supplements to the Energy
Efficiency Act (promulgated in SG, No. 21 of 2021). They introduced the concept “closed gas
distribution network”, defining the obligations of the operators of this type of networks to apply prices
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ANNUAL CONSOLIDATED MANAGEMENT REPORT
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46
for access and/or transmission of natural gas, not higher than the prices for access and/or transmission
through the gas distribution network of the operator, from which licensed territory the territory for which
a license has been issued for “distribution of natural gas in a closed gas distribution network” activity is
excluded. In view of the possibilities for construction of a large new gas infrastructure, as well as in case
of significant increase in the capacity of the existing one, its reconstruction and modernization, which
would allow for the development of new sources of gas supplies in the country, with the amendments
of the Energy Act EWRC has been given the possibility for temporary exemption from its licensing
obligations in respect of such projects in the conditions of maintaining competition in the respective
markets, which are likely to be affected by the investment or to affect the effective functioning of the
relevant regulated systems or the security of natural gas supplies in the European Union. In line with the
European initiatives to achieve full carbon neutrality in 2050, the amendments to the Energy Act
introduced also the concept “green hydrogen” and the obligation of the gas transmission system operator
to connect facilities for the production of this type of gas from renewable sources.
• Coal segment
Mini Maritsa-Iztok EAD is the largest coal mining company in Bulgaria. It operates the Maritsa East
lignite field, which has a productive area of 240 km
2
and is of key importance for maintaining and
ensuring the electricity balance in the country.
Considering the current technological state of the mines in the field and the extraction during the period
2015-2018, in 2021 Mini Maritsa-Iztok EAD should concentrate its efforts on opening activities in order
to ensure the safety of the mines.
Another important priority of the company is the rehabilitation, modernization and renewal of the heavy
mining equipment, which will provide for the efficient exploitation of the deposit and ensure the supply
of lignite coal to the Maritsa East region power plants.
The set goals for decarbonization of the economy presuppose significant changes in the future
development and positioning of the company. The strategy for future development of Mini Maritsa-
Iztok EAD will be directly dependent on the state policy with regard to the mining sector in view of the
European initiatives for carbon neutrality and achieving zero emissions of carbon dioxide.
• Corporate governance
BEH EAD will actively continue its activities on the implementation of effective management practices
within the Group. The aim of the management is to provide a long-term vision for the development of
the Group companies which is in line with the Energy Strategy of Bulgaria.
The management of BEH EAD works in close cooperation and enjoys the necessary support from the
State represented by the Minister of Energy. In the process of management of the holding and its
subsidiaries, all important decisions regarding the management strategy and their future development
are taken after being agreed and approved by the principal – the Minister of Energy.
6. Events after the end of the reporting period
No adjusting events or significant non-adjusting events occurred after the reporting period until the date
of approval of the financial statements for publishing except for the following non-adjusting events:
Extension of the emergency epidemic situation in connection with the spread of Covid-19
In connection with the continuing global pandemic of Covid-19, with Decision of the Council of
Ministers No. 826 of November 25
th
, 2021 the term of the emergency epidemic situation in Bulgaria
was extended until March 31
st
, 2022. Based on Order РД-01-138/17.03. 2022 of the Minister of Health
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of the Republic of Bulgaria on the staged easing of the temporary anti-epidemic measures in the country,
the emergency epidemic situation in the country was finally terminated after 31 March 2022.
Military conflict between Russia and Ukraine
In the early hours of February 24
th
, 2022, Russia started military actions in neighbouring Ukraine. This
conflict is growing rapidly and is considered the most serious military situation in Europe since the end
of World War II. Although the Russian military may have planned the attack on Ukraine and mobilized
in the year ending on December 31
st
, 2021, this should not be considered a critical event to suggest that
the conflict was obvious at the time. In view of this fact, the Group does not consider it necessary to
take into account further adjustments to the consolidated financial statements as at 31 December 2021
and the current conflict is considered a non-adjusting event.
Some countries have announced new packages of sanctions against the state debt of the Russian
Federation and a number of Russian banks, as well as personal sanctions against a number of individuals.
At a later stage, sanctions were imposed on Belarus as well. As of the date of the report, individual
countries and the EU have imposed four categories of sanctions on Russia and Belarus:
• sanctions against individuals and enterprises / organizations
• restrictions on business
• diplomatic measures
• restriction of economic cooperation
Due to the growing geopolitical tension, a significant increase in the volatility of securities and currency
markets, fluctuations in energy and gasoline prices, a significant depreciation of the ruble against the
US dollar and the euro are observed since February 2022. The international situation related to the
conflict between Russia and Ukraine has led to changes in the economic aspect and market conditions
associated with rising inflation, a dynamic rise in prices for basic raw materials and materials.
Moratorium on the price of electricity, WSS services and thermal energy on a regulated market
By Decision of the 47
th
National Assembly of the Republic of Bulgaria (Promulgated SG No. 108 of
17.12.2021, amended and supplemented, SG No. 108 of 17.12.2021, effective as of 17.12.2021) a
moratorium was imposed on the price of electricity, water supply and sewerage services and thermal
energy on a regulated market at the levels of 16 December 2021, in force until 31 March 2022.
Execution of orders of the Minister of Energy and conclusion of a credit line agreement with
Bulgartransgaz EAD
By Order No. Е-РД-16-113/24.02.2022 of the Minister of Energy on the grounds of Art. 70, para. 1,
para. 2, item 1, para. 3 and para. 4 and Art. 71 of the Energy Act, additional public service obligations
in connection with the escalation of tension on the border between the Russian Federation and Ukraine
were imposed to Bulgargaz EAD and Bulgartransgaz EAD. In connection with the need to ensure the
continuity of natural gas supplies on the territory of the Republic of Bulgaria by injecting additional
quantities of natural gas in Chiren underground gas storage, Bulgartransgaz EAD should take all
necessary actions to purchase natural gas in the amount of 10 million cubic meters (105,500 MWh) in
implementation of the Emergency Action Plan.
Order No. Е-РД-16-129/28.02.2022 amended and supplemented the previous Order No. Е-РД-16-
113/24.02.2022, in which additional public service obligations were imposed on Bulgargaz EAD for
purchase of additional quantities of natural gas in the period from 28.02.2022 to 31.03.2022, in the
amount of 248 000 MWh, to be pumped into Chiren UGS.
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48
Dividend paid to the sole owner of the capital
By order of the Council of Ministers of April 27
th
2022, a dividend was determined for Bulgarian Energy
Holding EAD from the financial result for 2021 in the amount of BGN 190,710,764 thousand. The
amount was paid to the account of the national budget on May 16
th
, 2022.
Bulgarian Energy Holding EAD
Change in the management of Bulgarian Energy Holding EAD
With a protocol decision of December 31
st
, 2021 of the Minister of Energy, the number of members of
the Board of Directors was reduced from 9 to 7 members, and Valentin Alexiev Nikolov and Alexander
Plamenov Tzarnorechki were dismissed. The change was entered in the Commercial Register and the
Register of Non-Profit Legal Entities on January 7
th
, 2022.
By a protocol decision of March 22, 2022 of the Minister of Energy, Plamen Dilkov Dilkov was
dismissed as a member of the Board of Directors of the company and Angel Emilov Yankov was elected
as a member of the Board of Directors until a new competition procedure is held. The change was
entered in the Commercial Register and the Register of Non-Profit Legal Entities on March 28
th
, 2022.
Natsionalna Electricheska Kompania EAD
Liability to the Ministry of Energy for provided remunerated financial aid
On March 10, 2022, the Council of Ministers decided by Decision No. 142 NEK EAD to reimburse to
the budget of the Ministry of Energy the received remunerated financial aid by March 31
st
, 2022 once
in full (BGN 1,176,661 thousand) under the budget BGN bank account of the Ministry of Energy in the
Bulgarian National Bank. The company has not made additional adjustments to the financial statements
as of 31.12.2021, as it is considered a non-adjusting event.
On 13 April 2022, the Council of Ministers decided by Decree No. 52 that the deadline for
reimbursement is changed to April 15
th
, 2022.
On 14 April 2022, NEK EAD entered into a loan agreement with BEH EAD in the amount of BGN
700,000 thousand at an annual interest rate of 2.44% and a repayment period of 33 months from the date
of concluding the agreement according to a repayment plan.
The debt to the Ministry of Energy was repaid on April 15
th
, 2022.
Technical failure during pre-commissioning tests of a unit at Chaira PSHPP
On 22 March 2022, commissioning tests were carried out in accordance with a contract for rehabilitation
of Chaira PSHPP concluded between Natsionalna Electricheska Kompania EAD and ABB-Voith
Consortium. Technical failure was established in the stationary (fixed part) of the turbine during the
tests. Taking into consideration the stage in which the unit is, namely pre-commissioning tests, the event
does not qualify as an accident, but as unsuccessful water tests. At this point, the unit is stopped from
operation until establishment of the cause and elimination of the consequences, and expert inspections
of the failure are being performed.
TPP Maritsa East 2 EAD
Actions taken by Maritza East 2 TPP EAD, sole owner of the capital of Professional Football Club
Beroe – Stara Zagora EAD for sale of shares of Professional Football Club Beroe – Stara Zagora EAD
A purchase and sale agreement of 5,480,000 shares, representing 100% (one hundred percent) of the
capital of “Professional Football Club Beroe – Stara Zagora” EAD was concluded on February 25
th
,
2022, in the town of Stara Zagora, between TPP Maritsa East 2 EAD, UIC 123531939, with registered
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ANNUAL CONSOLIDATED MANAGEMENT REPORT
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49
office: Kovachevo village, postal code 6265, municipality of Radnevo, Stara Zagora District,
represented by Eng. Zhivko Dimitrov Dinchev – Executive Director, as the owner of 5,480,000 (five
million four hundred and eighty thousand) ordinary registered voting shares, with a nominal value of
BGN 1 (one) each, representing 100% of the capital of “Professional Football Club Beroe – Stara
Zagora” EAD and NGO “Association for Support of Football-Beroe”, UIC 206794473, with registered
office: Stara Zagora, postal code 6000, 87 Hadji Dimitar Assenov Str., 6th floor, office 2, represented
by Svetoslav Mitkov Minevski – Chairman of the Management Board.
The changes in the current state of the club were published in the Commercial Register on 10 March
2022.
NPP Kozloduy EAD
Provision of assets owned by NPP Kozloduy EAD to the State Enterprise “Radioactive Waste” (SE
RAW), included in Annex 1 to Decision No. 27/25.01.2022 of the Council of Ministers of the Republic
of Bulgaria
By Decision No. 27 of 25.01.2022, the Council of Ministers of the Republic of Bulgaria announced Site
”Facility for treatment and conditioning of solid RAW with a high volume reduction factor” together
with the movable and immovable property, including assets under construction under started projects
for implementation of the activities for decommissioning of nuclear facilities for private state property.
In this regard, Kozloduy NPP EAD provides free of charge for management and administration to SE
RAW assets included in Annex 1 of Decision No. 27/25.01.2022 of the Council of Ministers. BEH EAD
is obliged to reduce the capital of Kozloduy NPP EAD by the value of the assets and to increase the
capital of Kozloduy NPP EAD by the same amount at the expense of retained earnings from previous
years and other reserves of Kozloduy NPP EAD. The assets transferred to SE RAW should be written
off from the balance sheet of Kozloduy NPP EAD at book value as of 31.12.2020. As of the date of
preparation of these financial statements, the decision is being implemented and the assets are expected
to be transferred.
Establishment of a new subsidiary
With Minutes No. 4/10.02.2022 of meeting of the Board of Directors of NPP Kozloduy EAD a decision
was made to establish a new subsidiary NPP Service EOOD with sole owner of the capital NPP
Kozloduy EAD. The subject of business activity of the new company is servicing of automation tools,
software and technical complexes, automated technical complexes and instrumentation, etc. and any
other commercial activity not prohibited by law.
Approval of a draft loan agreement with Bulgarian Energy Holding EAD
With Minutes No. 11/29.03.2022 of meeting of the Board of Directors of Kozloduy NPP EAD, it
approved a draft agreement for provision of loan to its owner BEH EAD in the amount of BGN 350,000
thousand for up to 12 months. The agreement should be concluded after obtaining a permit from the
EWRC in accordance with the requirements of Article 21, paragraph 1, item 23 of the Energy Act.
Bulgargaz EAD
EWRC decisions determining the price at which the public supplier sells natural gas
The price at which the public supplier sells natural gas to the final suppliers of natural gas and to the
persons to whom a license for production and transmission of thermal energy has been issued, amounting
to BGN 133.41 per MWh (excluding excise duty and VAT) for January 2022, and subsequently – in the
amount of BGN 142.59 per MWh (excluding excise and VAT) for April 2022 was approved with
decisions of the EWRC.
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Change in the Board of Directors of Bulgargaz EAD
By a protocol decision of January 28
th
, 2022 of the Board of Directors of Bulgarian Energy Holding
EAD, the following new members of the Board of Directors of Bulgargaz EAD have been elected:
Ivan Topchiyski – Chairman and member of the Board of Directors of Bulgargaz EAD
Lyudmil Yotsov – Member of the Board of Directors and Executive Director of Bulgargaz EAD
Angela Slavova – Member of the Board of Directors
Anton Adamov – Member of the Board of Directors
Stefan Voynov – Member of the Board of Directors
The changes were entered in the Commercial Register and the Register of Non-Profit Legal Entities on
February 3
rd
, 2022.
Compensation program for household customers on natural gas and district heating companies using
natural gas as their main fuel
In order to mitigate the economic consequences of the sudden instability of energy market prices, the
Council of Ministers developed and adopted by its Decision No. 31 of 25 January 2022 a Program for
compensation of household customers for natural gas and district heating companies using natural gas
as their main fuel, supporting with a fixed amount of one MWh. The program aims to protect and support
business and consumers in general to deal with the effects of fluctuations of the natural gas prices.
Initially, the program covered a support period from 1 December 2021 to 31 January 2022 inclusive, but
subsequently the period was extended until the end of the heating season, i. e. until April 30
th
, 2022.
According to the Program, the amount of compensation is calculated as 50% of the difference between
the price of a public provider approved by the EWRC for the respective month and the estimated price
of natural gas for the first quarter or respectively for the second quarter of 2022. A contract for
implementation of the Program has been concluded between Bulgargaz EAD, in its capacity of Supplier
and the Ministry of Energy. The compensation program has been implemented by the Company by
reducing the amount due for payment for natural gas supplies through the relevant tax documents issued
in March 2022.
Suspension of natural gas supplies from Gazpromexport OOO to Bulgargaz EAD
On 26 April 2022, the Russian company Gazpromexport OOO notified the subsidiary Bulgargaz EAD
that as of 27 April 2022, it would suspend gas supplies to Bulgaria. Despite the existence of a valid, in
force supply contract with a term until 31.12.2022 and strict compliance with the terms of the contract
by Bulgargaz EAD, the supply of natural gas to the Republic of Bulgaria was suspended. The new two-
stage payment procedure proposed by the Russian country is not in line with the existing agreement
valid until the end of 2022 and poses significant risks for the Bulgarian country, including making
payments without receiving any gas supplies from the Russian country. The proposed mechanism
implies real risks for the Bulgarian country of unilateral and uncontrolled suspension of supplies,
without providing for the corresponding possibility to seek liability from the Russian supplier. The new
method of payment is set as a process that includes control over the financial assets of Bulgargaz EAD,
intended for payment of supplies under the contract, to be controlled by a financial institution associated
with Gazpromexport OOO, and not by an independent third party. In order to limit the consequences of
the actions of the Russian company, Bulgargaz EAD has taken all necessary actions, not contrary to
Bulgarian legislation, to ensure the integrity of the country’s gas transmission system and continuity of
supply to Bulgarian domestic and industrial consumers. At present, no restrictive measures are required
for the consumption of natural gas in Bulgaria.
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
51
Mini Maritsa-Iztok EAD
Approval of a new coal price
According to a letter from the Ministry of Energy with ref. No. Е-26-Б-206 dated 14.02.2022 and
decision of the Board of Directors of Mini Maritsa Iztok EAD, as of 1 March 2022, a new price for coal
extracted by the Company in the amount of BGN 87.35 per ton conditional fuel (TCF) has been
approved. All our lignite customers have been notified of the price change. The price until March 1
st
,
2022 is BGN 77.00 per TCF (effective from July 1
st
, 2014). The increase is 13.44%.
Additional agreements with Brikel EAD
On 14 February 2022, an Additional Agreement to Contract No. 2-2015/09.09.2015 for supply of lignite
coal was concluded with Brikel EAD, which regulates the amount of transport fees and extends the term
of the Contract from 01.01.2022 to 31.12.2022, by negotiating quantities of lignite coal, which Mini
Maritza-East EAD will deliver to Brikel EAD during this period.
On 21 February 2022, an Additional Agreement to Contract No. 2-2015/09.09.2015 for supply of lignite
coal was concluded with Brikel EAD. The agreement is in force since March 1
st
, 2022, and it changes
the price of lignite in the amount of BGN 87.34 per TCF without VAT.
Tax revisions
With an act for set-off or refund No. П-29002922001140-004-001 of 12.01.2022 the unduly paid
principal in the amount of BGN 2,526,435.24 under Revision Act No. Р-29002920007219-091-
001/16.09.2021 together with the due interests in the amount of BGN 1,422,679.17 were refunded on
13.01.2022.
The precautionary measures under RA No. 29002920007219-091-001/16.09.2021 were revoked with a
decree for revocation of imposed security measures of 12.01.2022, issued by the main public
administrator of TD of NRA LTPI, on the grounds of art. 208 of TIPC.
Change in the management of Mini Maritsa Iztok EAD
On February 4, 2022, Ilza Mitkova Chinkova was entered in the Commercial Register as an Executive
Director and a member of the Board of Directors of Mini Maritsa Iztok EAD.
Bulgartransgaz EAD
Investment decision for construction of the liquefied natural gas terminal in Alexandroupolis, Greece
On 27 January 2022, at the General Assembly of the Shareholders of Gastrade SA in Athens, a final
investment decision for construction of the liquefied natural gas terminal in Alexandroupolis, Greece,
was approved unanimously, thus starting the implementation of the project. Bulgartransgaz EAD
approved the above with decisions under item 6 of Protocol587/25.01.2022 of the Management board
of Bulgartransgaz EAD, approved by decision under item 1 of Minutes НС 5/25.01.2022 of the
Supervisory Board of Bulgartransgaz EAD and decision 14/2022 of the Board of Directors of Gastrade
SA of 26.01.2022, as well as decisions under item 1 of Protocol588/27.01.2022 of the Management
board of Bulgartransgaz EAD, approved by a decision under item 1 of Protocol 6/27.01.2022 of the
Supervisory Board of Bulgartransgaz EAD. The expected deadline for construction of the terminal in
Alexandroupolis, Greece and the beginning of commercial operation is the end of 2023.
Electricity System Operator EAD
Program for compensation of the costs of the transmission and distribution system operators for the
purchase of electricity used for technological losses
Bulgarian Energy Holding EAD
ANNUAL CONSOLIDATED MANAGEMENT REPORT
For the year ended 31 December 2021
52
By decision of the Council of Ministers No. 893 of 30.12.2021, amended by Decision No. 92 of
25.02.2022, the compensation of the network operators for their technological losses will continue until
the end of March 2022. The compensation for the period from 01.01.2022 to 31.03.2022 will be paid on
the basis of a tripartite agreement between the Ministry of Energy, the Security of the Electricity System
Fund and ESO EAD. The maximum amount of compensation for each month will be determined on the
basis of the quantities of electricity for technological losses for the respective month, confirmed by the
Ministry of Energy by comparing with the quantities of active electricity, according to the information
and value for each megawatt hour available in the Security of the Electricity System Fund, calculated
as the difference between the average monthly price of electricity for base load on the Day-ahead market,
according to data provided by the Independent Bulgarian Energy Exchange EAD (IBEX) and the
forecast market price set by the EWRC. The funds will be paid from the SESF.
IVAN ANDREEV
CEO
9 June 2022
Sofia city
BULGARIAN ENERGY HOLDING EAD
CONSOLIDATED CORPORATE GOVERNANCE STATEMENT
31 December 2021
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
2
1. GENERAL PROVISIONS
This consolidated corporate governance statement of BEH EAD Group comprising the parent company Bulgarian
Energy Holding EAD (BEH EAD, the Company) and its subsidiaries, was prepared in compliance with the
requirements of Art. 40 para. 1 of the Accountancy Act and according to Art. 100m, para. 8 in relation to para.7, item
1 of the Public Offering of Securities Act (POSA).
Bulgarian Energy Holding EAD is a company of public interest under §1, item 22 of the additional provisions of the
Accountancy Act and Art. 2 of Directive 2013/34/EU of the European Parliament and of the Council whose
transferable securities are admitted to trading on a regulated market in a Member State of the European Union.
BEH EAD is a separate legal entity under Bulgarian law, a sole-owner joint stock company acting in accordance with
the provisions of the Commerce Act, the Public Enterprises Act, the Rules on the application of the Public Enterprises
Act (the Rules) and the other legislative acts of the Republic of Bulgaria. The Sole Owner of the Capital, who has all
the rights of a shareholder under the law and the statutes, is the Bulgarian state through the Minister of Energy.
The Company is managed by a one-tier management system. The Board of Directors has management, representation
and control functions.
Regardless of the statutory requirement for the implementation of the National Corporate Governance Code, the
adoption of such a standard is a result of the management's desire to continuously improve the principles and practices
of corporate governance adopted by the Group. The efforts of the executive management are focused on work
transparency by presenting timely and complete information, stakeholder consideration, independence, and prevention
of conflict of interest.
The Company complies with the established principles and rules of corporate governance set in the current regulations
applicable to its business. The Group will continue to strictly observe these norms and principles.
The Corporate Governance Declaration is a separate report, which is published together with the management report.
Information on the implementation of the Corporate Governance Code is also available on the website of the parent
company BEH EAD:
www.bgenh.com.
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
3
2. INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, item 1 of POSA
The Group adheres, as appropriate, to the National Corporate Governance Code, approved by the Deputy Chairperson
of the Financial Supervision Commission under Art. 100m, para. 7, item 1 of the Public Offering of Securities Act by
decision № 461-ККУ dated 30.06.2016 and adopted by the National Commission for Corporate Governance, last
updated in July 2021.
The Code is applied on a "comply or explain" principle, i.e., in case of deviation, the management clarifies the reasons
for this.
3. INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, point 2 of POSA
The number of the companies in which the members of the Board of Directors can hold managerial positions and the
number of successive terms of the independent members of the Board of Directors is not defined in the regulatory acts
of BEH EAD. However, the Company complies with the good practices, without a formal regulatory requirement for
prevention of a high concentration of control functions in individual companies within the Group by one single person.
The remuneration of the Board of Directors of the parent company shall be determined in accordance with the terms
and conditions of the Rules on the application of the Public Enterprises Act. Remuneration, other than those specified
in the Regulations, is not allowed.
The parent company BEH EAD protects the rights of the sole shareholder – the Bulgarian state, as described in Chapter
three of the National Corporate Governance Code.
The Group has no validated information disclosure policy. The Group strictly complies with the requirements for
information disclosure regarding the term of disclosure and completeness of information according to the Bulgarian
legislation and the instructions of the Minister of Energy. Information on annual, semi-annual and quarterly financial
statements and activity reports is available in a timely manner on the website of BEH EAD, on the website of the
Ministry of Finance and through the web-based electronic information system for public enterprises of the Public
Enterprises and Control Agency.
BEH EAD regularly publishes on its website important and essential information for its business activities.
The Group does not have approved rules for taking into account the interests of the stakeholders but on all matters
that directly or indirectly concern them the appropriate coordination procedures are made.
Bulgarian Energy Holding EAD has issued two bond emissions that are traded on the Irish Stock Exchange - in 2018
and in 2021, not yet matured as at 31 December 2021, and the emission issued in 2018 was admitted to trading on the
Bulgarian Stock Exchange as well. The communication between the bondholders and BEH EAD is performed through
an Investor Relations Person. Information required under Bulgarian legislation as well as other important information,
at the discretion of the issuer, is published on the Company's website, the Irish Stock Exchange website, the Bulgarian
Stock Exchange website and on the website of the Financial Supervision Commission.
INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, item 3 of POSA
By decision of the Board of Directors dated 28 February 2017, an Internal Audit Unit was established at BEH EAD,
which is a separate department of direct subordination to the Executive Director. The internal audit activity is carried
out in compliance with the requirements of the Internal Audit in the Public Sector Act. The Status of Internal Audit
Department is approved by the decision of the BD of BEH EAD under item I.2.1. of Protocol
No. 68-2017/31.10.2017. Audit engagements for assurance and consultation are carried out at BEH EAD and its
subsidiaries, except for the independent transmission operators.
The internal audit assists the Group’s management and employees to achieve their objectives, by:
- Identifying and evaluating the risks in the Group with a view to allocating audit resources to
maximize coverage of the audit environment;
- Assessing the adequacy and effectiveness of the financial management and control system in
relation to:
а) identification, assessment and risk management by the Group’s management;
b) compliance with legislation, internal acts and contracts;
c) reliability and comprehensiveness of financial and operational information;
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
4
d) the effectiveness, efficiency and cost-effectiveness of the activities;
e) protection of assets and information;
f) performing tasks and achieving goals.
- Providing recommendations to the management of BEH EAD for improvement of the Group's
activities.
On 2 April 2014, the Financial Management and Control System of BEH EAD was approved and entered into force
on 14 April 2014.
The purpose of the system is to provide reasonable assurance that the objectives of the holding are achieved through:
− compliance with the legislation, the internal acts of the holding and the contracts concluded,
− reliability and comprehensiveness of financial and operational information,
− economy, efficiency and effectiveness of the activities,
− safeguarding of assets and information.
The control environment includes:
− personal integrity and professional ethics of the employees of the holding,
− management philosophy and work style,
− an organizational structure ensuring separation of responsibilities, hierarchy and clear rules, rights, obligations
and reporting levels,
− human resources management policy,
− competence of the staff.
The Risk Management Strategy of BEH EAD for 2019-2021 was adopted by decision under item I.2.3 of Protocol No
71-2018/04.12.2018 of the Board of Directors of BEH EAD.
An updated Risk Management Policy of BEH EAD was adopted by virtue of a decision under item I.3 of Protocol No
21-2022/06.04.2022 of the Board of Directors of BEH EAD in compliance with the Guidelines of the Ministry of
Finance regarding risk management at public companies. The risk management policies and procedures applied in
BEH EAD are an integral part thereof.
The Risk Management Strategy of BEH EAD for 2022-2024 was adopted by decision under item I.4 of Protocol No
21-2022/06.04.2022 of the Board of Directors of BEH EAD.
The risk management policy aims to regulate the general framework of risk management processes. In general, it is a
set of measures designed to reduce the risk of errors at the stage of taking management decisions and minimizing
potential negative consequences of the decision adopted in later stages. In addition, the policy sets out the basic
principles and practices of implementing risk management processes. Risk management policy identifies, assesses
and manages risks in the Group, measures the adequacy and effectiveness of the financial management and control
systems of the holding. The risk management strategy ensures:
− Systematic and consistent implementation of a single risk management model in the Group with common
terminology, rules and procedures;
− Creating the necessary prerequisites for the successful running of the risk management process;
− Raising awareness of risk management and focusing on the key risk areas in conducting management functions;
− Stimulating the introduction and implementation of adequate and effective control mechanisms;
− Focusing the attention of the managers of the Holding and the subsidiaries on the potential events, which may
adversely affect the achievement of the strategic and operational objectives, the measures to mitigate their
negative impact and the probability of their occurrence;
− Providing the information on potential events, possible ways to mitigate their negative impact and probability
of occurrence;
− Identification of the risks that may affect the legitimate, effective, efficient and cost-effective operation of the
Holding and its subsidiaries;
− Optimal use of the resources needed to carry out the activity of the Holding;
− Protection of the institutional image and reputation of the Group.
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
5
Control activities include written policies and procedures designed to give reasonable assurance that risks are limited
to the acceptable limits set in the risk management process. Control activities include:
− authorization and approval procedures,
− segregation of responsibilities in a way that prevents an employee from being simultaneously responsible for
approval, execution, accounting and control,
− a double signature system that does not allow for a financial commitment or payment to be made without the
signatures of the Executive Director and the person responsible for accounting entries,
− rules on access to assets and information,
− procedures for the complete, correct, accurate and timely booking of all transactions,
− reporting and verification of activities - assessment of the efficiency and effectiveness of operations,
− monitoring procedures,
− human resources management rules,
− rules for the documentation of all operations and transactions related to the holding's activity,
− rules for compliance with personal integrity and professional ethics,
− the financial controller performs preliminary control over the legality before undertaking an obligation and
incurring expenses in BEH EAD or the relevant subsidiary.
4. INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, item 4 of POSA
4.1. Information under Art. 10, paragraph 1 (c) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
Bulgarian Energy Holding EAD is the owner of an economically related group, which includes the following direct
subsidiaries and joint ventures as at 31 December 2021:
Company
Country of
incorporation
Principal business
31 December
2021
31 December
2020
%
%
Subsidiaries
Natsionalna Electricheska
Kompania EAD
Bulgaria
Electricity generation and public
electricity supplier
100%
100%
Bulgargaz EAD
Bulgaria
Public supply of natural gas
100%
100%
Bulgartransgaz EAD
Bulgaria
Storage and transmission of natural gas
100%
100%
Bulgartel EAD
Bulgaria
Telecommunications
100%
100%
NPP Kozloduy EAD
Bulgaria
Electricity and heat generation
100%
100%
TPP Maritsa East 2 EAD
Bulgaria
Electricity and heat generation
100%
100%
Mini MaritsaIztok EAD
Bulgaria
Coal mining and sale
100%
100%
Elektroenergien Sistemen
Operator EAD
Bulgaria
Electricity transmission
100%
100%
Bulgartel Skopje DOOEL
Macedonia
Telecommunications
100%
100%
HPP Kozloduy EAD
Bulgaria
Generation and distribution of
electricity from a hydropower plant
100%
100%
Interpriborservice OOD
Bulgaria
Installation and technical servicing of
automated systems
63.96%
63.96%
Beroe – Stara Zagora EAD
Professional Football Club
Bulgaria
Football club
100%
100%
NPP Kozloduy – New Capacities
EAD
Bulgaria
Operation of a power generating
nuclear facility
100%
100%
Gas Hub Balkan EAD
Bulgaria
Construction and operation of an
electronic trading platform for natural
gas, energy products, green and white
certificates, carbon emissions
100%
100%
ESO Engineering EOOD
Bulgaria
Development of technology and
projects intended for energy sites and
project management
100%
-
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
6
Company
Country of
incorporation
Principal business
31 December
2021
31 December
2020
%
%
Joint ventures
ICGB AD
Bulgaria
Construction and operation of a gas
transmission system
50%
50%
South Stream Bulgaria AD
Bulgaria
Construction and operation of a gas
transmission system
50%
50%
Transbalkan Electric Power
Trading S.A. – NECO S.A.
Greece
Sale of electricity
50%
50%
Southeast Electricity Network
Coordination Center (SEleNe CC)
Greece
Regional Security Coordinator for
Southeast Europe with a view to
maintaining the electricity network
25%
25%
Associated entities
ContourGlobal Maritsa East 3 AD
Bulgaria
Electricity generation
27%
27%
ContourGlobal Operations
Bulgaria AD
Bulgaria
Operation and maintenance of a
thermoelectric power plant
27%
27%
ZAD Energy AD
Bulgaria
Insurance and reinsurance
48.08%
48.08%
Allianz Bulgaria AD Pension
Company
Bulgaria
Pension company
34%
34%
Gorna Arda AD Hydropower
Company
Bulgaria
Construction of hydropower plants
24%
24%
Gastrade S.A.
Greece
Development, exploitation, operation
and management of natural gas systems
20%
-
4.2. Information under Art. 10, paragraph 1 (d) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
BEH EAD has no issued securities with special rights of control.
4.3. Information under Art. 10, paragraph 1 (f) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
There are no restrictions on voting rights.
4.4. Information under Art. 10, paragraph 1 (h) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
The rules that regulate the appointment and replacement of board members are described in item 5.
The Sole Owner of the Capital amends and supplements the Company’s Statute.
4.5. Information under Art. 10, paragraph 1 (i) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
The powers of the members of the Board of Directors are described in item 5.
5. INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, item 5 of POSA
The management bodies of BEH EAD are:
- Sole Owner of the Capital;
- Board of Directors.
The Company has an Audit Committee appointed under Art. 107 of the Independent Financial Audit Act.
5.1. Sole Owner of the Capital
5.1.1. Status
The sole owner of the capital of BEH EAD is the Republic of Bulgaria. The rights of the State as the Sole Owner of
the Capital in the Company are exercised by the Minister of Energy who is the principal of the Company and is the
body empowered to take all decisions within the competency of the Sole Owner of the Capital under the law or the
statutes.
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
7
5.1.2. Competence
(1) The Sole Owner of the Capital has all the rights of a shareholder of the parent company BEH EAD in
accordance with the law and the statutes. The Sole Owner of the Capital has the power to decide on all matters
that the law places in the competence of the General Meeting of Shareholders.
(2) The Sole Owner of the Capital:
- amends and supplements the Statute of BEH EAD;
- increases and decreases the Company's capital;
- transforms and terminates the Company;
- elects and dismisses the members of the Board of Directors and determines their remuneration;
- elects and dismisses the chartered expert accountant;
- approves the annual financial statements after verification by the appointed chartered expert accountant;
- decides to issue bonds, distribute profit, replenish the reserve fund and distribute dividends;
- appoints the liquidators upon termination of the Company, except in case of insolvency, and concludes
a contract with them;
- dismisses the members of the Board of Directors;
- makes decisions to open, transfer or close branches of the Company;
- determines the amount of compensation to owners of nationalized property, which they receive in cases
under Article 18 of the Transformation and Privatization of State and Municipal Enterprises Act
(repealed) and the Compensation of Owners of Nationalized Property Act;
- authorizes decisions of the Board of Directors concerning: disposals of fixed assets and establishment
of real rights on real estates whose value does not exceed the lower of BGN 500 thousand or 5% of the
total carrying amount of fixed assets at 31 December of the previous year; use or rent of real estate or
assets whose carrying value exceeds 5% of the total carrying amount of fixed assets at 31 December of
the previous year; acquisition of ownership interests and/or shares in other companies as well as disposal
of ownership interests and/or shares in other companies owned by the Company; signing credit
agreements; granting loans; the conclusion of joint venture agreements; acceptance of bills of exchange;
securing the obligations of the Company by establishing a mortgage or pledge on the Company's fixed
assets; the provision of collateral in favour of third parties; the conclusion of a court or extra-judicial
agreement, which recognizes the Company's liabilities or the Company's receivables from third parties
are forfeited; a substantial change in the Company's activity; essential organizational changes essential
for the Company for long-term cooperation, and the termination of such cooperation;
- approves the choice of an insurer when concluding compulsory insurance contracts;
- authorizes the conclusion of contracts for the sale, exchange and rental of fixed assets, whereby real
rights shall be established by direct negotiation with the initial price to be determined by an independent
appraiser;
- authorizes the sale and replacement of homes, studios, offices and garages of employees of the
Company;
- approves the business program of the Company prepared by the Board of Directors;
- makes a decision on the distribution of the Company's profits and its payment and on the payment of
royalties to the members of the Board of Directors and determines their size;
- decides on other matters provided in its competence by the law and the statute.
5.1.3. Decision-making
(1) The Sole Owner of the Capital makes decisions in the competence of a regular Annual General Meeting
once a year, and in the competence of an Extraordinary General Meeting – as required. The Sole Owner of
the Capital shall not announce an invitation in the Commercial Register and the Register of Non-profit
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
8
Legal Entities for the exercise of the competence of a General Meeting. The Sole Owner of the Capital may
make decisions within the competence of a General Meeting at any time in writing.
(2) The Board of Directors fulfils its obligations under Art. 223, respectively under Art. 251 of the
Commerce Act, by sending a written application to the Sole Owner of the Capital regarding the necessity,
respectively the readiness, to make decisions by the Sole Owner of the Capital. The written application
contains suggestions on the matters on which the Board of Directors proposes to the Sole Owner of the
Capital to make decisions. Proposals do not bind the Sole Owner of the Capital to consider and decide on
the questions raised, nor limit them with respect to the range of matters they can decide on.
(3) For their decisions, the Sole Owner of the Capital shall prepare a record in writing, signed by the
Principal of BEH EAD.
(4) If the Sole Owner of the Capital wishes the members of the Board of Directors to be present during
the decision-making process, they are obliged to do so. The Sole Owner of the Capital may require the
members of the Board of Directors present or other persons invited by them to re-sign the record containing
the decisions taken.
(5) When such decisions are subject to registration, the Executive Director will be responsible for filing
an application for registration and in such case the Executive Director shall be entitled to act as the sole
representative of the Company or to authorize a person to do so.
5.2. Board of Directors of the Parent Company
5.2.1. Composition
The Board of Directors in charge of BEH EAD as of 31 December 2021 comprises the following members:
Veselina Lachezarova Kanatova-Buchkova
Plamen Dilkov Dilkov
Ivan Todorov Andreev
Zheko Mihaylov Zhekov
Anton Georgiev Simeonov
Stelian Penchev Koev
Diyn Stanimirov Dimitrov
Valentin Alexiev Nikolov
Aleksander Plamenov Tsarnorechky
Veselina Lachezarova Kanatova-Buchkova was elected Chairperson of the Board of Directors, and Ivan Todorov
Andreev was elected as a representative of the Company and was appointed as Executive Director at a meeting of the
Board of Directors.
As of the date of issue of the Corporate Governance Declaration, the Board of Directors of BEH EAD, as appointed
by virtue of the respective protocol decisions of the Ministry of Energy, comprises the following:
The following have been appointed by virtue of protocol decision No. Е-РД-21-15/19.04.2021 of the Minister of
Energy:
Ivan Todorov Andreev
Stelian Penchev Koev
Diyan Stanimirov Dimitrov
The term of the Board of Directors expired on 31 May 2026.
The following have been appointed by virtue of protocol decision No. Е-РД-21-36/05.11.2021 of the Minister of
Energy:
Zheko Mihaylov Zhekov
Veselina Lachezarova Kanatova-Buchkova
Anton Georgiev Simeonov
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
9
The appointed members of the Board of Directors shall be in office until a new competition is carried out.
The following has been appointed by virtue of protocol decision No. Е-РД-21-9/22.03.2022 of the Minister of Energy:
Angel Emilov Yankov to be in office until a new competition is carried out.
Veselina Lachezarova Kanatova-Buchkova was elected Chairperson of the Board of Directors, and Ivan Todorov
Andreev was elected as a representative of the Company and was appointed as Executive Director at a meeting of the
Board of Directors.
5.2.2. Status
(1) The Board of Directors reports to the Sole Owner of the Capital for the management of the Company.
The Board of Directors holds meetings as necessary but not less than once every three months.
(2) The Board of Directors shall consist of no less than 5 members – individuals to be elected and appointed
following a competition subject to the terms, conditions and procedure laid down in the Rules on the
application of the Public Enterprises Act.
(3) The Board of Directors shall elect one or two of its members for executive members and the remaining
shall be non-executive members. The term of the Board of Directors is for a period of 3 years from the
registration of the Board of Directors in the Commercial Register and the Register of Non-profit Legal
Entities, where the Board of Directors continues to exercise its jurisdiction until the registration of a new
Board of Directors even after the expiry of its term.
A member of the Board of Directors cannot be any individual who:
- on their own behalf or on the behalf of a third party performs commercial transactions similar to those
of BEH EAD;
- is a partner in an unlimited partnership, limited partnership or limited liability company when it carries
out activities similar to those of the Company;
- has been a member of a management or supervisory body of a company discontinued due to bankruptcy
in the last two years preceding the date of the bankruptcy resolution, where there are unsatisfied
creditors;
- is a spouse or relative up to third degree in a straight or collateral line, including by marriage, of another
member of the Board of Directors;
- has been convicted of a criminal offense of a general nature, including being deprived of the right to
hold a substantive reporting function by a sentence or administrative penalty;
- is a director or a member of an executive or supervisory body of another public enterprise;
- is a senior public office holder under Article 6, paragraph 1, items 1 through 38 and 41 through 45 of
the Anti-Corruption and Forfeiture of Unlawfully Acquired Assets Act, is a member of parliament or
secretary of a municipality;
- has outstanding public liabilities to the state or municipality;
- has no university degree or fails to meet other requirements provided by law.
(5) The Company may have one or two procurators; eligible persons for this position shall be those who
meet the aforesaid requirements. Procurators are appointed and vested with powers by the Sole Owner of
the Capital of the Company.
5.2.3. Functions
The Board of Directors of BEH EAD carries out the operational management of the Group and controls the activities
of the Executive Director of the parent company, including compliance with the Policies. It performs all the functions
and decides on all matters that are not within the exclusive competence of the Sole Owner of the Capital by virtue of
the law or the statute of BEH EAD. The Board of Directors adopts its Rules of Procedure.
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
10
5.2.4. Competence
(1) The Board of Directors shall exercise all powers of the Board of Directors in accordance with the law
and the statute of BEH EAD.
(2) The Board of Directors:
- organizes, manages and controls the overall activity of the parent company;
- prepares a business plan of BEH EAD for the whole term and for each year separately and ensures its
implementation;
- implements the investment policy of the Company and decides on the acquisition of property and other
real estate rights;
- resolves issues related to the movement and marketing of the capital securities of BEH EAD, bonds and
securities in civil turnover that are not within the exclusive competence of the Sole Owner of the Capital
or which are delegated to it by the Principal;
- elects one or two of its members as executive directors and empowers him/her to manage and represent
BEH EAD in relations with third parties. In the event that two Executive Directors are elected, they
shall represent the Company as the Board of Directors may determine.
- takes unanimous decisions on all transactions provided for in Art. 236, para. 2 of the Commerce Act;
- adopts Corporate Governance Policy, Financial and Accounting Policy, Information Technology
Policy, Human Resource Management Policy, Investment Management and Projects Policy, Public
Procurement Policy (including Policy for conducting tenders, competitions and direct contracts for the
supply of goods and delivery of works and services), policy on tenders, competitions and direct contracts
for sale, exchange and leasing of fixed assets, Risk management and internal audit policy, and other
policies that are mandatory for BEH EAD and its subsidiaries; it is also responsible for implementing
those Policies;
- makes proposals to the principal to resolve the issues that are within the competence of the Sole Owner
of the Capital and decides on any matters provided for resolution by the Board of Directors in this
Statute.
(3) With the prior written approval of the Principal, the Board of Directors may change the Executive
Director at any time and replace them with another member of the Board of Directors.
5.2.5. Contracts with members of the Board of Directors of BEH EAD, Remuneration and Expenses
(1) Each member of the Board of Directors concludes a management contract with the Sole Owner of the
Capital. The contract is concluded for a period until the end of the term of the Board of Directors and
contains the rights and obligations of the parties, the amount of remuneration and payment terms, the
liability of the parties in case of default, the grounds for termination of the contract and the type and amount
of the guarantee that members give for their management and the amount of the penalty for early
termination of the contract not by the fault of the member of the Board of Directors.
(2) Members of the Board of Directors receive remuneration determined by the terms and conditions of the
Rules on the application of the Public Enterprises Act.
(3) The members of the Board of Directors must guarantee their management with the amount of three
monthly remunerations determined by the Sole Owner of the Capital. The guarantee is returned after
termination of the contract and after the decision of the Sole owner of the Company for discharge.
(4) In case of need for business trips, the members of the Board of Directors are seconded abroad by the
Minister of Energy according to the terms and conditions determined by him/her in compliance with current
legislation and in case of business trips in the country - by the Executive Director. The Executive Director
shall be seconded by himself on behalf of the Company. When conducting meetings of the bodies of the
Company, the expenses for holding the meeting and for seconding the members of the Board of Directors,
if the venue differs from the place of residence of a member of the Board of Directors, shall be borne by
the Company.
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
11
5.2.6. Status of the executive member of the Board of Directors
(1) The Board of Directors assigns the Executive Director(s) to manage and represent the Company. The
non-executive members of the Board of Directors control the activities of the Executive Director(s).
(2) The Executive Director represents BEH EAD independently and is entitled to carry out all actions and
transactions related to the Company's activity, as well as to prepare and sign documents on behalf of the
Company and to authorize other persons to perform standalone actions and transactions. With the election
of two Executive Directors, the Chief Executive Member of the Board of Directors represents the Company
jointly with the other executive member or any of the Procurators of the Company (if elected) and is entitled
under the terms of such joint representation to carry out all actions and transactions related to the activity
of the Company, as well as to draw up and sign documents on behalf of the Company and to authorize other
persons to perform standalone actions and transactions (they may jointly authorize one person).
(3) The Executive Director organizes the activity of the Company in compliance with the law, the Statute,
the decisions of the Sole Owner of the Capital, the Policies and the Decisions of the Board of Directors.
He/she undertakes the operational management of the Company's activities, concludes and terminates the
labour and other contracts of the employees and the partners of the Company and is responsible for the
Company's records and archives. The Executive Director shall also resolve all other matters which are not
in the exclusive competence of the Sole Owner of the Capital or of the Board of Directors according to the
law, the Company Statute, or which are assigned thereto by a decision of the Sole Owner of the Capital.
(4) The management contract with the Executive Director, a member of the Board of Directors, is signed
by the Chairman or, respectively, by the Deputy Chairman of the Board of Directors. The Executive
Director signs the contracts with other members of the Board of Directors unless the representative of the
Sole Owner of the Capital signs these contracts himself/herself.
(5) The Deputy Executive Director responsible for the IGB Project carries out, independently, without any
decision or approval of the Board of Directors, all actions and activities related to the IGB Project, such as:
1. Prepares and submits for approval/permission by the Minister of Energy all issues under Art. 20,
para. 2, item 12a of the Company’s Statute;
2. Performs all operational activities necessary for the day-to-day operation and operational
management of the IGB Project and for the preparation of the documents to be submitted for
approval/permission by the Minister of Energy;
3. May independently request expert assistance on the IGB Project from all units of the Holding;
4. Carries out communication and approves the work and expenses of all external consultants of the
Company under the IGB Project;
5. Represents the Holding before third parties and signs documents, contracts, agreements, including
commitments on behalf of the Holding on all issues of the IGB Project, upon authorization by the Executive
Director and subject to the prior approval of the Minister of Energy.
5.2.7. Representation of BEH EAD
The Company is represented before third parties by the sole Executive Director independently (even if
a procurator is appointed) and in all matters related to the implementation of the IGB Project, including
the state-guaranteed Loan agreement between BEH EAD and the European Investment Bank that has
been concluded for the purposes of financing the IGB Project and the Loan Agreement between BEH
EAD and ICGB AD, which has been concluded on the basis of the Loan Agreement between BEH EAD
and the European Investment Bank for the purposes of financing the IGB Project by an authorized
Deputy Executive Director, at the discretion of the Sole Owner of the Capital.
5.3. Audit Committee
5.3.1. Composition
As of 31 December 2021 the Audit Committee of BE HEAD appointed by virtue of a decision under Protocol No. Е-
РД-21-18/28.06.2018 of the Minister of the Minister of Energy comprises the following members:
Nadezhda Dimitrova Sandolova-Hristova – Chairperson
Vanya Doneva Georgieva – Member
Magdalena Georgieva Lateva – Member
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
12
By virtue of a Protocol Decision No. Е-РД-21-8/22.03.2022 of the Minister of Energy, Nadezhda Dimitrova
Sandolova-Hristova was dismissed as a member of the audit committee with effect from the date of the said decision,
and was replaced by Antoaneta Rangelova Mincheva who was elected member of the Audit Committee with a term
of office as that of the other members – 26 February 2024.
5.3.2. Status
The Committee is a specialized, supervisory and advisory body. Members of the Committee are appointed by the
Minister of Energy of the Republic of Bulgaria in his/her capacity of the Sole Owner of the Capital of BEH EAD at
the proposal of BEH EAD's Board of Directors. The Committee consists of 3 to 5 members, one of which is appointed
as chairperson.
5.3.3. Remuneration
The remuneration of the members of the Audit Committee is determined by the Minister of Energy and is borne by
BEH EAD. By Record Protocol No. E-РД-21-7 dated 26.02.2021, the Minister of Energy determines the remuneration
of the members of the Audit Committee as follows:
- Members of the Audit Committee shall receive 80% of the monthly remuneration paid to members of the
Board of Directors of the Company.
- The Chairperson of the Audit Committee shall receive 85% of the monthly remuneration paid to members
of the Board of Directors of the Company
By Protocol № E-РД-21-25 dated 29.08.2017, the Minister of Energy has approved the Statute of the Audit Committee
of BEH EAD.
5.3.4. Duties and powers
(1) The Audit Committee carries out its work under the requirements of the Independent Financial Audit
Act, Regulation (EU) No 537/2014 of the European Parliament and the Council of 16 April 2014 on specific
requirements regarding statutory audit of public-interest entities and repealing Decision 2005/909/EC of
the Commission (Regulation (EU) No 537/2014), Directive 2014/56 and Directive 2006/43 of the European
Parliament and of the Council and this statute.
(2) The Committee has the following powers:
- to monitor the financial reporting process and make recommendations or suggestions to ensure its
effectiveness;
- to review and, at its discretion, express an opinion on the accounting policy of the holding and its
application to financial reporting.
- to monitor the effectiveness of the adopted current controls in the monthly review of the financial
condition of BEH EAD;
- to monitor the timely and reliable provision of financial information by the subsidiaries in preparation
of the annual consolidated financial statement of BEH EAD;
- to monitor the effectiveness of the internal control system, the risk management system and the internal
audit activity with respect to financial reporting in BEH EAD;
- to review and express an opinion on the risk management strategy, the holding's risk register and the
annual report on the condition of the financial management and control system;
- to express an opinion on the status and the numbers of the internal audit unit and on the strategic and
annual plans for the internal audit activity;
- discusses and approves the Annual Report on Internal Audit Activities and, where necessary, takes note
and gives opinions on individual audit reports from audit engagements, as well as on all relevant internal
audit matters;
- to be responsible for the selection procedure of the registered auditor, except where the audited entity
has a selection board, and to recommend its appointment;
- to verify and monitor the independence of the statutory auditor and to take decisions in the cases
provided by the law, in accordance with the requirements of Chapters 6 and 7 of the Independent
Bulgarian Energy Holding EAD
Consolidated Corporate Governance Statement
31 December 2021
13
Financial Audit Act, and with Art. 6 of Regulation (EU) No 537/2014, including the advisability of
providing services outside the audit under Art. 5 of the same Regulation;
- to supervise the statutory audit of annual and consolidated financial statements, including its
performance, taking into account the findings and conclusions of the Commission for Public Oversight
on Statutory Auditors regarding the application of Art. 26, para. 6 of Regulation (EU) No 537/2014;
- becomes familiar with the audit strategy and audit plan of the statutory audit and gives an opinion on
them, evaluating the arguments in favor of important decisions and making choices at the planning
stage;
- to monitor the implementation of the audit plan, making recommendations to the management of the
Holding and the auditors for elimination of any difficulties;
- reviews the draft audit reports under Art. 59 and Art. 60 of the Independent Financial Audit Act and the
identified key audit issues, the findings and the auditor's opinion, as well as forms an opinion on the
annual work of the statutory auditor, which includes: independence of the auditor; objectivity and
professional scepticism; composition of the audit team; findings from audits by the Commission for
Public Oversight on Statutory Auditors; communication and relationships with BEH EAD's
management. The annual opinion is formed on the basis of criteria adopted by the Audit Committee
and communicated in advance with the auditor;
- to discuss the auditor's additional report (prepared pursuant to Art. 11, p. 2 of Regulation (EU) No
537/2014) and to make recommendations to the management of BEH EAD for removal of the
significant weaknesses and deficiencies identified in the report;
- For the purposes of coordinating the relations with the audit committees of the subsidiaries of the
Holding, the Committee is entitled, following the approval of the Board of Directors of BEH EAD:
- to request information from the Audit Committees of the subsidiaries in connection with the
performance of their activities and, if necessary, to inform the Board of Directors of BEH EAD
when it considers that there are facts and circumstances that are relevant for the activity of the
respective subsidiary;
- to carry out investigations within its powers in the respective subsidiaries of BEH EAD after
informing the management of BEH EAD and the management of the respective subsidiary. The
investigations may be carried out at the proposal of any member of the Committee. The decision
to conduct the investigation shall determine its term and subject, as well as the persons to conduct
it.
INFORMATION PURSUANT TO ARTICLE 100m, paragraph 8, item 6 of POSA
The Board of Directors of the parent company is appointed by a protocol decision of the Minister of Energy
following a competition carried out as stipulated by the Rules on the application of the Public Enterprises Act.
IVAN ANDREEV
EXECUTIVE DIRECTOR
BULGARIAN ENERGY HOLDING EAD
Consolidated Non - Financial Declaration
According to Art. 51, Section IV of the Accounting Act
Bulgarian Energy Holding EAD
31 December 2021
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
2
TABLE OF CONTENTS
1. Brief description of the business model and general information ................................................................. 3
Holding structure ................................................................................................................................................ 3
Main activities. Mission and goals. .................................................................................................................... 4
Management bodies ............................................................................................................................................ 6
Rating in terms of the Environmental, Social and Governance Criteria (ESG rating) ........................................ 6
2. Information related to environmental issues .................................................................................................. 6
Environmental protection systems, policies and rules. ....................................................................................... 7
Monitoring of environmental indicators and resources used in the production process. .................................. 12
3. Information related to social matters ............................................................................................................ 13
Social responsibility to employees ................................................................................................................... 13
Personnel allocation .......................................................................................................................................... 13
Health and Safety at Work ................................................................................................................................ 14
Professional development ................................................................................................................................. 15
Collective labour agreements............................................................................................................................ 16
Reported results ................................................................................................................................................ 16
4. Issues related to human rights and the fight against corruption and bribery ........................................... 17
Anti-corruption plan for the energy sector ........................................................................................................ 17
Code of Ethics .................................................................................................................................................. 17
5. Impact of the COVID-19 pandemic on the business of the companies ....................................................... 17
6. Military conflict between Russia and Ukraine ............................................................................................. 17
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
3
This consolidated non-financial declaration has been prepared in accordance with the requirements of Art. 48-52
of the Accounting Act and contains a description of the policies of the companies within the “Bulgarian Energy
Holding” EAD with regard to the activities carried out in the field of ecology, social issues and those related to
employees, human rights and the fight against corruption.
1. Brief description of the business model and general information
Bulgarian Energy Holding Group (BEH) EAD includes companies operating in production and transmission of
electricity, transmission, transit and storage of natural gas, as well as lignite mining. The group occupies a leading
position in the natural gas and electricity market in Bulgaria. The Group owns the main electricity generation
companies in the country, as well as the electricity transmission network and the natural gas transmission and
transit networks. The group is also the public supplier of both electricity and gas in Bulgaria and is therefore a
strategically important state-owned company.
Holding structure
BEH EAD (parent company) and its subsidiaries form an economic group. The holding structure is presented in the
chart below:
’ESO
Engineering
’’ EOOD
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
4
Main activities. Mission and goals.
BEH EAD and the companies within BEH Group carry out their operations in compliance with the Bulgarian and
European legislation and in accordance with the licenses issued to them by the Energy and Water Regulatory
Commission (EWRC) and the Nuclear Regulatory Agency.
Brief description of the main activities
Mission and goals
Bulgarian Energy Holding EAD operates as a
financial holding company with the companies
within its structure retaining their operational
independence.
The services provided to the subsidiaries are in the
field of financial management, project management,
corporate governance and business planning, legal
and regulatory issues, public relations and
communication. These activities ensure the
implementation of a unified approach within the
group regarding the future development of energy
companies, which is in line with the directions set out
in the Energy Strategy of Bulgaria.
The goals of Bulgarian Energy Holding are focused on the
following main areas and priority areas:
• Financial sustainability of BEH Group and the
electricity sector in the country through:
⁻ Providing funding for key activities and projects;
⁻ Cost optimization in BEH Group;
⁻ Elimination of deficits in BEH Group;
• Ensuring the security of the energy system through
project management for:
⁻ Diversification of sources;
⁻ Diversification of routes;
⁻ Security, reliability and continuity of gas supplies;
⁻ Extending the life of the capacities guaranteeing
the security of the system, coupled with ensuring
long-term profitability;
⁻ Regional and European interconnection of the
systems;
⁻ Liberalization of the electricity and gas markets.
NPP Kozloduy (NPP) EAD is the only nuclear power
plant in Bulgaria and the largest manufacturer of
electricity in the country, providing more than a one
thirdpart of the national annual electricity
production.
The mission of NPP Kozloduy EAD is to supply the
country and the region with energy in a reliable way with
safe, efficient and environmentally friendly production at a
reasonably low price.
The vision of the management of NPP Kozloduy EAD is to
continue to be a safe and secure nuclear power plant in the
long-term, to produce electricity with care for the
environment and to achieve a reasonable balance between
quantity, quality and prices.
The goal of the management of NPP Kozloduy EAD is safe,
efficient and environmentally friendly long-term energy
production with guaranteed quality and security of supply,
in accordance with national and international standards.
TPP Maritsa East 2 (TPP ME2) EAD is a basic
condensing plant with an installed capacity of 1,620
MW, located in Maritsa East Energy Complex. The
plant is a production source of strategic importance
for the country. It is a key element in the Bulgarian
energy system, providing the main load for
consumption and regulating energy in the system for
securing the supplies for the power system.
The mission of TPP Maritsa East 2 is aimed at achieving
the following strategic goals:
• Increasing the security of energy supply;
• Strengthening the position in the regional and European
markets;
• Increasing the investment attractiveness of the
Bulgarian energy sector.
Operational goals
• Continuous enhancement of the environmental status
of the plant, the region and the country;
• Transparency and good management practices;
• Enhancement of the regulatory environment;
• Sustainable financial situation;
• Pursuance of a balanced investment policy;
• Enhancement of human resource quality.
The main activity of Natsionalna Elektricheska
Kompania (NEK) EAD is production, purchase and
sale of electricity. NEK EAD owns and operates 30
In the field of power supply and trade, Natsionalna
Elektricheska Kompania EAD considers the following as
its commitment and responsibility:
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
5
hydropower plants (HPPs) and pumped storage
hydropower plants (PSHPPs) with a total installed
capacity of 2,713 MW in turbine mode and 937 MW
in pumping mode.
Natsionalna Elektricheska Kompania EAD is a
public supplier of electricity and as such occupies a
key position in the regulated market in the country.
• To provide the required quantities of electricity for the
customers of the end suppliers in the regulated electricity
market;
• To fulfil its obligations for providing public interest
services;
• To be a competitive participant in the power trade in the
free market in the country and the region;
The strategic goals of NEK EAD include:
• Expansion of the company's market positions in the
domestic and foreign markets;
• Portfolio development of business activities, ensuring
sustainability and competitiveness;
• Offering licensing services to customers that meet their
requirements.
The main activities of the Electricity System
Operator (ESO) EAD include:
• Transmission of electricity through the electricity
transmission network;
• Power System Management;
• Administration of electricity transactions in the
balancing energy market;
• Electricity metering;
The company is certified as an Independent Power
Transmission Operator.
Mission and goals:
Continuously increasing the safe and reliable operation of
the Bulgarian power system and optimizing the process of
its management, improving the quality of operation and
maintenance of the transmission network, to achieve
maximum security and economy of electricity supply.
Bulgargaz (BGAZ) EAD is mainly engaged in public
supply of natural gas, as well as its related purchases
and sales, purchase of natural gas for the purpose of
its storage in a gas storage facility, marketing
research and analysis of the natural gas market.
As a public supplier of natural gas, Bulgargaz EAD has as
its main strategic goal to guarantee the interests of the
public by providing long-term supplies of natural gas to the
country.
Bulgartransgaz (BTG) EAD is a combined gas
operator carrying out natural gas transmission and
storage activities.
The mission of Bulgartransgaz EAD, as a combined gas
operator holding licenses for transmission and storage of
natural gas, is to ensure these activities following the
interests of the state and society, to ensure conditions for
security and sustainable development of the gas market in
the country and the region, actively help the process of
liberalization in the spirit of pan-European energy policy.
Strategic goals:
• Ensuring the security and reliability of the gas
transmission system and the Chiren Underground Gas
Storage (UGS);
• Development, modernization and expansion of the
state infrastructure for transmission and storage of
natural gas. Ensuring operational efficiency and
flexibility of the system for establishing of a gas
distribution centre (hub) in the country and creation of
an organized natural gas market (gas exchange);
• Ensuring the necessary conditions for establishing a
competitive, efficient, liberalized and integrated gas
market, in accordance with the requirements of the
European legislation on the Third Energy Package for
the natural gas market.
The main activity of Mini Maritsa-Iztok (MME)
EAD includes extraction and sale of lignite coal
through the development and operation of three open
pit mines - "Troyanovo-1", "Troyanovo-sever" and
"Troyanovo-3".
The main goal of Mini Maritsa-Iztok EAD is to ensure the
smooth and secure supply of lignite coal to the thermal
power plants in the region, and respectively to fully meet
their needs.
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
6
Management bodies
The sole owner of the capital of BEH EAD is the Republic of Bulgaria with the rights of the sole owner being
exercised by the Minister of Energy, who has the capacity of Principal and is authorized to take all decisions
provided within the competence of the sole owner of the capital, according to the law and the Articles of
Association of the Company. The company is managed through a one-tier management system. The management
bodies are the sole owner of the capital in its capacity of General Assembly – the Minister of Energy of the
Republic of Bulgaria and the Board of Directors.
The subsidiaries NPP EAD, BGAZ EAD, MME EAD, NEK EAD, TPP ME2 EAD of BEH EAD are managed
through a one-tier management system. The management bodies of the companies are the sole owner of the capital
- BEH EAD, which decides upon the issues within the competence of the General Meeting and the Board of
Directors of the respective company.
The management bodies of the subsidiaries of BEH Group – ESO EAD and BTG EAD, in their capacity of
independent transmission operators, include the Supervisory Board and the Management Board. The rights of the
sole owner of the capital of the companies are exercised by the Board of Directors of BEH EAD.
Detailed information is published in the Annual Consolidated Management Report of Bulgarian Energy Holding
EAD for 2021.
Rating in terms of the Environmental, Social and Governance Criteria (ESG rating)
For a public company that is actively involved in fundraising through the capital markets, such as BEH EAD, to
attract investors’ interest means to strictly adhere to social, governance and environmental criteria pertinent to the
business that the Holding carries out. ESG rating is assigned upon the conduct of an in-depth analysis of a
company’s rules and policies relevant to the environmental, social and governance aspects of its operations; upon
an assessment of the overall impact and environmental “footprint” that the company leaves when pursuing its
business; as well as upon an extensive review of the publicly available information on the corporate website, any
company-relates articles and news updates.
On 16 December 2021, BEH Group was assigned an ESG score of 34.2 (“high”). The score was assigned by
Sustainalytics – a Morningstar Company and a globally recognised provider of ESG research, ratings and data.
The corporate ESG assessment provided for Bulgarian Energy Holding EAD is a one-off point in time assessment,
valid at the time of its delivery and has been provided based on information made available by BEH EAD. The
ESG Risk Assessment Report includes an overall ESG risk rating, assessment of the company’s exposure and
assessment of its management. Exposure refers to the extent to which the company is exposed to different material
risks related to environmental, social and governance aspects. Management assessment shows how well the
company is managing those aspects. BEH has been assigned an exposure score of 54.3 (“medium”), whereas the
management score is 39.9 (“average”).
The rating has been published on the websites of Sustainalytics and BEH EAD.
2. Information related to environmental issues
As a socially responsible structure, the protection of human health and the protection of the environment from
adverse impacts, are key priorities for the Group. BEH EAD and the companies within BEH Group strictly observe
the environmental standards and the applicable legislation in this field, both within the country and in the EU.
Environmental protection policies have been developed, aimed mainly at achieving the goals for protection of the
atmosphere and the air cleanliness, safe management, minimization and recovery of waste, energy efficiency and
assessment of the impact of raw materials on the environment, minimizing the risk of environmental damage and
accidents.
All safety standards in the operation of production facilities are strictly observed, constant, systematic and
comprehensive control over the activities, products and services that have a detrimental impact on the environment
and human health is exercised, the best available techniques are applied and introduced.
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
7
Environmental protection systems, policies and rules.
Bulgarian Energy Holding EAD
Bulgarian Energy Holding EAD operates as a financial holding company and its activity does not imply violation
of the environmental norms and the applicable legislation, both within the country and in the EU. The specifics of
the company’s operation are such that its activities do not endanger the protection of the environment in any way.
NPP Kozloduy EAD
Environmental management is a process which forms part of the NPP Integrated Management System (IMS). The
management of the non-radiation aspects of the impact of the nuclear power plant on the environment covers the
entire site and all structural units included in the organizational and management structure. It is carried out
according to the requirements of the international and Bulgarian standard BDS EN ISO 14001:2015.
To manage the significant aspects and comply with the regulatory requirements, as well as the requirements and
conditions of the permits and licenses issued to the NPP, programs are developed, the implementation of the
activities of which is controlled and reported.
The environmental policy is aimed at achieving the following objectives:
• Protection of the atmosphere and the purity of the atmospheric air.
• Reduction of the impact that the company’s business exerts on the water quality.
• Safe management and minimization of waste.
• Optimised use of raw and other materials.
• Reduction of emissions into the environment.
• Enhancement of energy efficiency.
• Minimization of the risk of environmental damage and accidents.
• Maintaining compliance of the Quality Management System with the requirements of GSR Part 2 –
Leadership and Management for Safety, BDS EN ISO 14001:2015, and the applicable legal, regulatory
and stakeholder-adopted requirements.
Environmental protection in the area of the NPP is based upon the following principles:
• Efforts to minimise the impact that the company’s business exerts on environment.
• Staff engagement.
• Contamination prevention.
• Strict compliance with the instructions of the competent environmental authorities.
• Substantiated decision-making based on risk and opportunity assessment.
• Interaction with control authorities, local authorities, the public and other stakeholders on issues related
to environmental protection.
The implementation of the statutory and other environmental requirements concerning the non-radiation
monitoring at the NPP is organized and controlled by designated structural units. The infrastructure related to
environmental protection includes facilities and means for:
• maintenance of equipment, systems and apparatus that contain fluorinated greenhouse gases (FGG);
• drainage, treatment, discharge and monitoring of wastewater;
• collection, transportation, storage and disposal of non-radioactive waste;
• safe storage and use of hazardous chemicals and mixtures, etc.
The condition of the environmental infrastructure is monitored during patrols, inspections and audits by
responsible officials, according to the internal company documents. The results are reported to the NPP
Management and are taken into account in the planning and organization of the activities.
The main competent environmental authorities with which the NPP maintains communications are the Ministry of
Environment and Water (MoEW), the Regional Inspectorate of Environment and Water (RIEW) - Vratsa, the
Danube Region Basin Directorate (BDR) - Pleven and the Executive Agency on Environment and Water (EAEW).
The management conducts annual reviews of IMS, and the results include a conclusion on the effectiveness of
IMS, including SLD, and decisions related to any need for changes in the policy, environmental objectives,
resources and activities, as well as opportunities for improvement.
The obligatory own non-radiation monitoring of water in the area of NPP Kozloduy, arising from water use and
discharge permits, issued to the Company includes:
• measuring and reporting of the quantity of water used from the Danube River;
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
8
• measurement of the quantity of waste water (by individual streams) and the concentration of the pollutants
in them, for which there are certain individual emission limitations in the permits;
• measuring the amount of groundwater extracted;
• monitoring of water levels and chemical status of groundwater bodies used for water extraction;
• monitoring of water levels and chemical status of groundwater on the industrial site, etc.
The non-radiation monitoring of water in NPP Kozloduy EAD is performed by the Testing Laboratory (TL) with
the Engineering Chemistry Sector, Quality Assurance Department. LIK-IX is accredited according to BDS EN
ISO / IEC 17025 by EA BAS under reg. №172 LI. The management system (MS) of LIK-IX is subject to annual
reviews by the management, internal audits and planned supervision by the Bulgarian Accreditation Service
(BAS).
Environmental radiation monitoring of NPP Kozloduy is carried out in compliance with the relevant national
statutory regulations (Nuclear Regulatory Agency, Ministry of Environment and Water, Ministry of Health) and
the guidelines of the EU and the International Atomic Energy Agency. The scope thereof and the arrangements
pertinent to its implementation are regulated by a long-term programme developed in alignment with the Nuclear
Regulatory Agency, the Ministry of Environment and Water, and the Ministry of Health. The main activities
related to own radiation monitoring of the environment and site of NPP Kozloduy include:
• Ensuring the conduct of reliable and safe environmental monitoring during the operation of the NPP,
which covers the following zones: the zone of the NPP’s industrial site, the surroundings thereof which
fall within a 2 km Precautionary Action Zone (PAZ), the checkpoints within a 30 km Urgent Action Zone
(UAZ), the reference points in the towns or Lom, Pleven and Berkovitsa and the routes thereto.
• Control of the radiation status within the industrial zone and compliance with the rules and regulations
on radiation safety when handling radioactive materials. Control of the collection, transport and storage
of all kinds of radioactive waste. Control of the radioactive contamination of vehicles and materials that
are removed from the industrial site zone.
• Monitoring the equivalent gamma-radiation dose rate; the radioactivity of ambient air, soil, water,
vegetation, etc. environmental components; radioactivity of foodstuffs and agricultural products produced
around the town of Kozloduy.
• Model assessments of additional dose loads of the population within the 30 km UAZ as a result of the
liquid and gaseous waste from NPP Kozloduy.
• Maintenance of emergency preparedness through field measurements and radiation scanning with the use
of a mobile laboratory for environmental radiation monitoring.
• Recording and official operational reporting of results to the national competent authorities and the IAEA
(the ALMERA network).
Environmental radiation monitoring is carried out with the use of the resources of a designated unit at NPP
Kozloduy EAD.
TPP Maritsa East 2 EAD
The company has an established and continuously improved Environmental Management System (EMS) certified
according to the international standard ISO 14001:2015 by the authorized body TÜV Rheinland Cert GmbH with
initial certification in 2009. It has a certificate Reg. № 01 104 1334435 valid from 03.02.2021 until 02.02.2024
with the following scope of application: "Power generation in desulphurization plants at all existing units and
provision of services - available power, primary and secondary frequency regulation and voltage regulation”.
The policy of TPP Maritsa East 2 EAD aims at curbing the detrimental impact on environmental components by
controlling the effects that it exerts thereon when conducting its principal business: power production and supply.
The principal objective is to maintain and continuously enhance the EMS in line with the requirements of ЕN ISO
14001 by: adhering to the applicable national and Community law in the field of environment; ensuring the
monitoring, measurement, analysis and assessment of the status of environmental components; ensuring
transparency of results; staff being trained in and motivated to actively engage in policy implementation.
The first supervisory audit carried out of the EMS in the period from 25.11.2021 to 26.11. 2021 by TÜV Rheinland
Cert GmbH did not find any non-conformities with the requirements of international standard EN ISO 14001:2015.
Comprehensive pollution prevention and control rules are followed by adhering to Integrated Permit №50/2005,
which includes rules on admissible emission levels based on the best techniques available aiming to prevent and
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
9
control emissions into the atmosphere, water and soil, waste management, energy efficiency and accident
prevention.
To prevent major accidents involving hazardous substances and to mitigate the effects thereof on human life and
health, and the environment, a classification has been made of the chemicals used and an updated Safety Report
has been approved by virtue of Resolution №60-А2/2019 of the executive director of the Executive Environment
Agency. Updated emergency plan and a safety management system are maintained.
The policies and measures aimed at mitigating the effects of climate change are implemented by joining the EU
Emissions Trading System (EU ETS) targeted towards reduction of greenhouse gas emissions. The company holds
permit №46-Н2/2020 and monitors and reports greenhouse gas emissions.
The main pollutants emitted into the atmosphere as a result of the combustion of East Maritsa lignite coal by MME
EAD, characterized by a high content of moisture, ash and sulphur from the steam generators of TPP ME 2 EAD
include: sulphur dioxide, nitrogen oxides, carbon dioxide, carbon monoxide and dust.
The minimization of dust emissions in the flue gases emitted into the ambient air from the combustion installations
of the Company is carried out in electrostatic precipitators of Russian make. The company has made efforts and
brought its activities in line with European environmental legislation.
In compliance with the requirements of Directive 2001/80/Е0 on the limitation of emissions to air of certain
pollutants, emitted by large combustion plants, the Company has built and operates desulphurisation plants (DSPs)
on all energy boilers at the respective power units: DSP 1 (unit 1 and unit 2), DSP 2 (unit 3 and unit 4), DSP 5,6
(unit 5 and unit 6), DSP 7 (unit 7) and DSP 8 (unit B).
Natsionalna Elektricheska Kompania EAD
NEK EAD has a certified "Integrated system for the management of quality, environment and health and safety at
work" with the following scope "Construction and commissioning of HPPs, SHPPs and HEPs. Management of
HEPs. Production of electricity in HPPs and SHPPs. Public supply of electricity. Power trading and coordination
of a standard balancing group. Power supply from a supplier of a last resort and coordinator of a special
balancing group. Decommissioning of HEPs, HPPs and SHPPs". In the environmental section, TÜV Rheinland
Bulgaria OOD has issued a certificate № TRBA 110 0178 for compliance with the BDS EN ISO 14001:2015
standard valid until 15.11.2022.
NEK's policy is aimed at achieving and maintaining full compliance with applicable regulatory and other
environmental requirements, reducing risks and preventing environmental incidents, as well as reducing the
consequences of environmental impacts. The activities in the Company are carried out in strict compliance with
the internal instructions and rules regarding the environment. The key internal rules ensuring environmental
protection include:
• Instruction for determining the aspects of the environment;
• - Work program with quality, environment and health and safety at work goals and measures to achieve
thereof;
• Program with long-term environmental measures of NEK EAD;
• Methodology. Risk assessment in NEK EAD;
• Instruction. Сonformity assessment;
• Non-compliance management rules.
• Instructions for safe storage and use of hazardous chemicals and mixtures.
• Instruction for administration of permits, according to the Water Act.
• Instruction on the procedure for carrying out waste management activities at NEK EAD.
• Emergency instruction and measures to reduce and prevent the consequences for the environment in case
of calamities, accidents, disasters, etc. at the sites within the area of HPP Enterprise.
• Emergency instruction and measures for reduction and prevention of the consequences for the
environment in case of disasters, accidents, catastrophes and others at the sites within the area of the
"Dams and cascades" Enterprise.
• Instruction and measures for reduction and prevention of the consequences for the environment in case
of disasters, accidents and other events in the headquarters.
• Plans for own water monitoring in the HPP Enterprise.
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
10
Electricity System Operator EAD
In 2021, ESO EAD continued to implement an environmental policy aimed at reducing the consequences of
environmental impacts as a result of its operations. The company operates in strict compliance with environmental
requirements in accordance with Bulgarian legislation and in accordance with Directive 75/439/EEC on the
disposal of waste oils.
• Activities involving treatment of waste oils and waste oil products
In pursuance of the Ordinance on waste oils and waste oil products, adopted by CMD №352/27.12.2012
(promulgated SG, issue 2/08.01.2013) and on the grounds of Art. 3, para 1 of the same Ordinance any used oils
that result from the technological processes in the system of ESO EAD are primarily utilized through reclamation
at a transformer oil reclamation facility in the area of MED Plovdiv. Reclamation is carried out through a
technological line for the treatment of critically polluted oils by a sedimentation-absorption method using
bleaching earth for transformer oils. In this type of technological treatment, the bleaching earth used is considered
hazardous waste, which is utilized by specialized contractors registered under the WMA.
To minimize the amount of released waste, ESO EAD has invested significant resources and procured an
innovative computerized plant for the processing of low and medium contaminated transformer oils. The
specialized percolation treatment plant uses a granular adsorbent, which can be made to undergo repeated recovery
/over 300 work cycles/, during which operation practically no waste is generated.
According to WMA, SG. No. 53 / 13.07.2012, art. 6, art. 7 and art. 8, as well as in connection with art. 35, the
holders of waste are obliged to provide the necessary financial means for the fulfilment of their obligations,
specified in this law.
Pursuant to the above-cited legal provisions, in 2021, ESO EAD has spent funds in the environmental field up to
BGN 337 thousand, out of the allocated BGN 428 thousand at 31.12.2021. As of 31.12.2021, the company has
accrued a provision for ecology for 2022 to the amount of BGN 373 thousand.
The activities performed, which are aimed at reducing ozone-depleting emissions of fluorinated greenhouse gases
SF6 /elegas/ are as follows:
• Coordinating the achievement of compliance with the requirements of the Clean Air Act, the requirements
of Regulation (EC) № 1005/2009 on substances that deplete the ozone layer and Regulation (EU) №
517/2014 on fluorinated greenhouse gases and associated regulations.
• Drawing up annual reports in accordance with the Annexes to the Regulations implementing Regulation
(EC) № 1005/2009 and Regulation (EU) № 517/2014.
• Coordinating the implementation of the requirements of Ordinance № 1 of 17 February 2017 on the
procedure and method of training and issuing documents for qualification of persons performing activities
involving equipment containing fluorine-containing greenhouse gases, as well as on the documentation
and reporting of fluorine-containing emissions greenhouse gases, issued by the Minister of Environment
and Water and the Minister of Interior - promulgated, SG No. 20 of 7 March 2017, effective 07/03/2017.
Activities for modernization or replacement of energy facilities containing environmentally hazardous components
with facilities of a new type, which do not contain such components.
• Gradual replacement of oil-filled circuit breakers;
• Gradual replacement of oil-filled measuring transformers;
• Commissioning of new types of lighting fixtures;
• Partial replacement of spare HV battery stations with the incorporation of non-acidic cells;
• Upgrading the existing and constructing new oil collection pits at the sites where no such facilities have
been provided so far.
Drawing up annual reports for submission to MoEW, EEA, NSI and GDFSPP-MI, according to the forms and
deadlines for reporting under Ordinance №1 of MoEW "Procedure and templates for providing information on
waste activities and procedure for keeping public registers".
Bulgargaz EAD
Bulgargaz EAD, as a public supplier of natural gas, does not carry out production activities and does not have any
production sites exerting an impact on the environment. The company does not own any infrastructure sites (linear
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
11
and on-site), while only using services related to the operation of the same, provided to it by the operator of these
sites – Bulgartransgaz EAD. Bulgargaz EAD carries out only commercial activities - purchase of natural gas for
the purpose of its sale to customers.
Bulgartransgaz EAD
Bulgartransgaz EAD has developed a high culture in the field of environmental protection, in all activities and at
all levels in the Company’s structure. The main rule is to avoid any accidents or negative impacts on the
environment by adopting an environmentally friendly behaviour in compliance with regulatory requirements. To
fulfil the commitments aimed at ensuring environmental protection, the following activities related to the
company's environmental policy are performed:
• Ensuring the necessary actions to maintain the environmental management system in accordance with the
regulatory requirements of environmental legislation and all other compliance obligations. The company
has developed, implemented and certified an environmental management system (EMS), which is in full
conformity with the requirements of ISO 14001:2015 “Environmental management systems”. In 2021,
Bulgartransgaz EAD successfully passed the first audit after the recertification according to the
requirements of the standard in connection with the operation of the EMS, which was performed by TÜV
NORD Bulgaria EOOD;
• The company applies and adopts the best available techniques. As a proof serve the projects for
modernization of the compressor stations "Ihtiman", "Petrich" and "Lozenets" – stage 2 and the
construction and commissioning of two compressor stations (CS) – Rasovo and Nova Provadia –
involving low-emission gas turbine compressor units, which meet all applicable environmental
requirements;
• Proceeds with implementing the risk mitigating policy of major accidents and limiting their consequences
through a safety management system applicable within all еntities of the company and in particular in
UGS "Chiren", which has an updated, coordinated and approved safety report for operation of an
enterprise with high-risk potential;
• Improving the qualification of the employees in relation to the issues of the environmental protection,
according to the existing staff training programme;
• Monitoring of key environmental parameters that exert significant environmental impact – in accordance
with set monitoring plans, which include monitoring of the greenhouse emissions into the atmosphere,
monitoring of waters, noise level, soils etc. Assessment of the compliance with the applicable regulatory
requirements;
• Efficient management of the waste generated by the production activity, according to the normative
requirements. Preparation of plans for construction waste management when the company is involved in
investment activities related to construction;
• Maintaining communication with control bodies and all stakeholders in resolving environmental
protection issues related to applicable environmental legislation;
• Continuous improvement of the environmental management system in order to increase its effectiveness
in relation to environmental protection.
Mini Maritsa-Iztok EAD
MME EAD is certified under ISO 14001:2015 - an international standard that defines the requirements for the
environmental management systems. It allows the organization to develop and implement policies, common goals,
instructions, regulations and programs, taking into account the legal and other requirements that the organization
should comply with towards minimizing the impact of significant aspects on the environment.
The following is achieved through the environmental management system, which forms part of the IMS:
• Supporting and improving the environmental management and performance;
• Assisting the achievement of compliance with the regulatory obligations for environmental management;
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
12
• Improving the image of the organization;
• Environmentally sound waste management across the Company.
Written documents for managing the activities related to the environment area have been approved and are being
applied, and the company policy in this area is set out in the general Statement by the Management and forms part
of the general policy of the Company. All documents are mandatory and count as an Order issued by the Executive
Director.
In accordance with the national priorities for development of the energy sector and environmental protection,
presented in "Energy Strategy of the Republic of Bulgaria" and "National Environmental Strategy", Mini Maritsa-
Iztok EAD declares sustainable development considering the requirements and expectations of all stakeholders
and continuous reduction of the adverse impact on the environment as a result of the mining activities.
In 2021, considering the timely collection of the humus in the area of the mines, 298,604.46 cubic meters of humus
were collected and deposited.
• 179,760 cubic meters of humus before the area of the mining works at Troyanovo-1 mine;
• 118,844.46 cubic meters of humus before the area of the mining works at Troyanovo-sever mine.
After coal extraction, the disturbed land is restored through technical remediation. No such activity has taken place
in 2021.
All waste is treated according to the "Program for waste management activities in the area of Mini Maritsa-Iztok
EAD for the period 2021-2026”, as endorsed by the Director of the Company.
PET bottles, ferrous and non-ferrous metal scrap, spent oil, unfit batteries and car batteries, and used electrical and
electronic equipment were handed over to licensed companies in 2021 on the basis of concluded contracts.
Monitoring of environmental indicators and resources used in the production process.
Regarding the companies of BEH Group, producers of electric energy, the following results have been reported:
Indicators for NPP Kozloduy EAD
Unit
Value
Radiation indicators (Emissions to the environment):
RBG activity in discharges
ТBq
18.1
JA activity in discharges
MBq
8.95
I-131 activity in discharges
MBq
50.78
Unbalanced water activity (without tritium)
МВq
45.29
Emissions of pollutants to the atmosphere:
CO
2
t
449
Resources used:
Water resources, of which:
Cooling water (Danube River)
thousand m
3
2,565,833
Water for CPW production (river Danube)
m
3
1,330,100
Drinking water (WSS)
m
3
252,886
Electricity ESO EAD (balancing market – shortage)
MWh
17,327
Indicators for TPP Maritsa East 2 EAD
Unit
Value
Emitted pollutants in the atmospheric air:
СО
2
t
6,673,429
SO
2
t / y
11,121.737
NOx
t / y
4,212.208
Particulates
t / y
67.096
Resources used:
Lignite coal
t / y
9,409,187.30
Water resources
m
3
/y
762,191,000
Electricity
MWh
878,745.014
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
13
Indicators for Natsionalna Elektricheska Kompania EAD
Unit
Value
Resources used:
Water resources
m
3
10,359,967,550
Electricity
MWh
16,935
3. Information related to social matters
Human Resource Management (HRM) in BEH Group is defined as a strategic approach for managing the most
valuable resource of the Group - the people who achieve the goals and provide a sustainable competitive advantage
through their ability to create uniqueness and value.
Social responsibility to employees
BEH Group invests in its employees in the belief that they are its most valuable asset. As a responsible employer,
the Group follows certain principles of workplace relations:
• No discrimination in the workplace;
• Ensuring health and safety at work;
• Providing development opportunities based on gender and age equality;
• Ensuring the right of association and labour protection of employees.
Human resources management plays a leading role in the successful implementation of the goals and priorities of
the corporate strategy of BEH EAD. With regard to human resources management, BEH EAD operates a Human
Resources Management Policy endorsed for the Group, as approved by Report № 71–2018/04.12.2018 by the
Board of Directors of BEH EAD, effective from 01 January 2019 (the Policy). The policy regulates the general
framework for the human resources management processes, while at the same time enabling the companies within
the holding structure to apply the established approach, taking account of the specifics of the companies and the
existing applicable regulations. Internal code of conduct at work and internal renumeration rules have been
developed.
BEH Group strives to select the most suitable employees, organize their training and motivate them thus offering
them opportunities for development in order for them to effectively perform the work. To achieve all this, the
company maintains a working environment and working conditions which guarantee job security, good
remuneration, in line with achieved results, opportunities for training and development and, above all, good
working relationships.
BEH Group does not tolerate any form of discrimination based on sex, race, nationality, ethnicity, citizenship,
origin, religion or belief, education, convictions, political affiliation, disability, age, property status, or other
criteria. Equal rights and opportunities for work, development and career growth are provided based solely on the
professional qualification, acquired experience, personal qualities and achieved work results.
The main areas of corporate social responsibility of the companies within the Group are focused on transparent
corporate governance, sustainable development and guaranteed quality and safety of employees. The companies
within the Group cooperate with and are members of various organizations thus supporting the adequate and
effective implementation of the strategy for corporate social responsibility.
Joint initiatives with the municipalities in the region and voluntary initiatives have been undertaken resulting from
the personal commitment of the employees to ensure lasting benefits for the local community: helping people in
need, supporting the development of public works, infrastructure and healthcare, as well as such in the field of
education, science, culture and sports. The companies contribute to a number of donation programs.
Personnel allocation
The number of employees in BEH EAD and the companies within the group, as of the end of 2021, is 20,092. The
allocation of employees by category in the subsidiaries of the holding is as follows:
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
14
Personnel allocation according to the national classification of occupations and positions:
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Managers
15
476
94
130
287
13
83
189
including women
10
121
13
33
58
7
19
21
Specialists
54
1 076
228
404
856
28
99
468
including women
29
484
73
195
221
20
51
160
Technicians and application
specialists
2
866
897
475
1092
-
241
473
including women
2
207
2106
58
136
-
71
170
Assistant administrative staff
6
212
99
123
121
1
54
215
including women
6
199
90
98
85
1
40
192
Staff engaged in services of the
population, trade and security
-
77
2
77
1
-
15
63
including women
44
2
58
-
-
13
51
Skilled workers and related
craftsmen
-
774
633
396
1143
-
239
2 002
including women
67
69
14
12
-
15
111
Machine operators and installers
3
153
209
198
126
3
305
2 736
including women
-
19
26
17
-
-
156
Professions not requiring special
qualifications
-
72
121
238
115
3
40
677
including women
-
45
55
72
92
3
30
92
Personnel allocation according to education:
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Higher education
73
2 237
909
782
1 882
41
567
1576
including women
41
865
256
316
422
27
178
351
Secondary education
7
1 451
1 329
1 207
1 835
7
505
5095
including women
6
319
271
224
176
4
60
582
Primary education
-
18
53
52
15
-
4
152
including women
-
2
10
5
6
-
1
20
Personnel allocation by age:
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Age 18 - 30 years
4
209
114
86
140
2
30
447
including women
0
65
16
13
18
1
6
19
Age 31 - 40 years
25
853
547
366
675
13
167
1486
including women
14
266
107
101
97
7
51
109
Age 41 - 50 years
29
1 075
800
585
1143
15
349
2445
including women
20
386
197
176
205
11
85
395
Age 51 - 60 years
12
1 417
792
775
1384
13
444
2313
including women
6
441
208
232
258
8
89
368
Age over 60 years
10
152
38
229
390
5
86
132
including women
7
28
9
23
26
4
8
62
Health and Safety at Work
Health and safety at work is the main priority of the holding. Given the specifics of their activities, the companies
within BEH Group purposefully follow a policy of strict compliance with the requirements of the laws and
regulations on health and safety at work in force in the country. In this regard, the main objectives relate to the
protection of life, safety and working capacity of employees in the company, as well as maintaining the health of
staff and the public in carrying out activities related to the use of nuclear energy, eliminating or minimizing existing
risks associated with the production process, adopting and implementing decisions for the implementation of legal,
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
15
socio-economic, organizational-technical, sanitary-hygienic and treatment-and-prophylactic measures to ensure
safe and healthy working environment.
The factors of the working environment are regularly measured and the risks for each work activity assessed in
order to successfully eliminate or mitigate the risks for the health and safety of workers.
Each employee receives adequate training in and is briefed on healthy and safe conditions of work in accordance
with the specifics of their position and workplace. The employees of the Group are offered a wide range of social
services related to medical cheek-ups, proper recreation, rehabilitation and recovery from the work process.
Management’s objectives, principles and priorities as regards health and safety at work have been laid down in a
Management of Health and Safety at Work Policy in place at NPP Kozloduy EAD. The key component of health
and safety at work is prevention – prior implementation of measures pertinent to health and safety at work to
prevent adverse effects, should any hazardous and harmful factors present.
A leadership approach where managers serve as role models when performing their professional duties is applied
to attain a high level of safety awareness of employees and develop a conduct of conscious compliance with safety
requirements. Mechanisms to communicate to and consult and align with employees and their representatives are
in place regarding the activities aimed at safeguarding health and safety at work.
Given the specifics of the activity in NPP Kozloduy EAD, a set of organizational and technical measures for
ensuring a safe working environment have been introduced for the protection of life, safety and working capacity
of the employees. For the safe realization of the labour process, appropriately trained and instructed persons,
possessing the necessary qualification and legal capacity, are admitted to the respective labour activities.
Employees are presented with continuous information through instructions for safe work, examples of good
practice, supportive training and opportunities for professional development. Means of collective protection are
provided. The workplaces are designed in accordance with the ergonomic requirements and the anthropometric
characteristics of the workers. All workers are provided with personal protective equipment depending on the
specifics of the workplace, the possible dangers and risks at work. Constant monitoring and analysis of the health
condition of the employees is provided, including the provision of emergency care through the Occupational
Medicine Service and its medical emergency team. Preventive medical examinations are organized, the frequency
of which is determined by the nature of the work, the working conditions and the age of the employees. Prophylaxis
is provided to strengthen the health and working capacity of workers, as well as prevention of the often ill and
chronically ill. Reduced working hours, regulated work and rest regime, as well as free food have been introduced.
In accordance with the requirements of the legislative documents, continuous control of the factors of the working
environment is performed, through periodic measurements and assessment of the risks for each labour activity.
Risk management programs have been developed in the structural units. The assessed risk is negligibly low or
small, which does not require additional measures, but compliance with those currently introduced. Workers are
informed about the possible risks and the measures taken to prevent or reduce their impact.
Operating as a dedicated unit, responsible for ensuring safety and health at work at TPP ME2 EAD, is the
“Department for safety and health at work” (DSHW). Each newly appointed employee at TPP ME 2 EAD receives
training in Safety and Health at work according to the specifics of their workplace and profession. The officials
who manage, control or are immediately involved in the technical operation of the plants, machinery and
equipment are periodically tested for their awareness of Ordinance № 9 of 9.06.2004 on the technical operation of
power plants and grids, and the HSW Regulations for non-electrical/electrical installations in power plants.
Ensuring safe and healthy conditions of work forms part of the overall concept for the future development of MME
EAD. The employees of the Company are provided with: special work clothes and personal protective equipment;
free food; tonic and invigorating drinks for night shift workers; medical staff for round-the-clock duty; ambulances
and first aid equipment; measuring the parameters of the working environment by an accredited body; opportunity
for up to 4% of the full-time jobs in the affiliates and up to 10% in the management to be occupied by transferred
workers and employees and others.
Professional development
The purpose of training for and development of employees is to improve their knowledge, skills and personal
qualities, and to provide opportunities for their development, so that the employees meet the requirements for the
position as fully as possible and adapt to the changing environment external to the company.
Taking account of the specifics of the operations and in accordance with the international standards and national
requirements, a system for personnel training and qualification has been put in place at NPP Kozloduy EAD which
forms an integral part of the plant’s management system. The Plant has its own instructional and training centre
(ITC) providing conditions for specialized training and featuring a full-scale simulator for units equipped with
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
16
ВВЕР-1000 reactors. The company conducts mandatory initial and supportive specialized training in activities
taking place in nuclear facilities and such involving sources of ionizing radiation. The scope, topics covered and
sequence of training are set out in training programs, training schedules, schedules for initial and supportive
specialized training featuring a full-scale simulator. The annual average number of training hours per employee is
50.
The employer encourages the enhancement of staff qualification and to that end provides additional paid leave to
workers and employees who continue their education by pursuing programs that allow for professional
development at the Company. Employees are given the opportunity to take part in various professional meetings,
forums and workshops to exchange experience and enhance their qualification.
A Key Position Vacancies Plan has been developed for NPP Kozloduy EAD to provide additional information in
support of the timely recruitment and training of employees to be hired at the Company in order to secure safe and
long-term operation of nuclear equipment.
Qualification enhancement in line with the latest industry techniques and technology is among the priorities of
human resource management at ESO EAD. Further training at the company takes the form of various specialised
programmes – qualification enhancement courses organised by the Professional Qualification Centre (PQC),
workshops and external training provided by authorised organisations with proven expertise in the field.
The established system for training and qualification of the personnel forms an integral part of the management
system of TPP ME2 EAD. The plant has its own Advanced Training Centre (ATC) which provides conditions for
specialized training. ATC at TPP MI2 EAD offers and organizes training courses for 7 professions and specialties.
Collective labour agreements
Collective labour agreements (CLAs) have been concluded between the trade unions and some of the companies
in BEH Group, which regulate specific labour, social security and social relations that are not regulated by
mandatory legislative provisions. CLAs guarantee compliance with the Employer's commitments to guarantee the
rights of the staff. The typical arrangements in the collective labour agreements are also aimed at maintaining the
social peace in the companies, a prerequisite for effective conduct of negotiations and a form of conflict prevention.
The arrangements establish a framework for social activities in some of the companies, and the achieved conditions
are mainly oriented towards the following: safety and health of workers and employees in the companies, providing
favourable conditions for rest and recreation of staff, social benefits, financial benefits, compensations, etc.
Reported results
The following results have been reported in relation to implemented social policies:
Indicators / th. of BGN /
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Trainings, qualifications and
workshops
12
561
60
254
239
2
2 539
186
Donations and social events
200
2 440
4 063
-
161
50
10
274
Social costs,
including
806
39 969
16 183
19 125
27 359
1 006
23 641
36 521
Free food, work clothes,
personal protective equipment
-
6 265
5 481
-
3 168
348
5 204
758
Medical care
-
1 108
299
382
826
25
51
315
Others
-
-
10 403
18 743
23 365
633
-
35 448
Indicator:
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Existence of a valid CLA
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Membership as of December
31 2021
-
3 706
2 318
2 040
3732
-
1 076
6 823
% of the number of employees
as of 31.12.2021
-
100
99.74
99.95
100
-
100
100
Newly joined members in
2021
-
231
73
110
93
-
91
129
Employees who renounced the
terms of CLA in 2021
-
0
0
130
341
-
0
0
Bulgarian Energy Holding EAD
CONSOLIDATED NON-FINANCIAL DECLARATION
For the year ended 31 December 2021
17
4. Issues related to human rights and the fight against corruption and bribery
Anti-corruption plan for the energy sector
The companies in BEH Group implement the Sectorial Anti-Corruption Plan for the energy sector
1
(Sectorial anti-
corruption plan), approved by Order № Е-РД-16-536/30.10.2015 of the Minister of Energy. This plan elaborates
on and makes more specific the priority areas for prevention of and cracking down on corruption in the energy
sector, ensuring transparent management and accountability in the conduct of activities at the Ministry of Energy
and at the companies with more than 50% state-ownership of equity.
BEH EAD and its subsidiaries apply internal rules and procedures for registration and taking action upon
complaints of corruption and/or conflict of interest and such of a more general nature, and for the protection of
persons who have submitted such information. The examination of the received complaints is carried out on the
principle of confidentiality of the information and protecting the anonymity of the persons who have submitted
such complaints. The following results have been reported in connection with the implementation of the Sectorial
Anti-Corruption Plan in the energy sector in 2021:
Indicators / number /
BEH
NPP
TPP
NEK
ЕSО
BGAZ
BTG
MME
Corruption complaints received
14
3
-
4
-
-
-
2
Identified cases of corruption
-
1
-
-
-
-
-
-
Protected persons that have filed
corruption signals
-
-
-
4
-
-
-
2
Others
8
-
-
-
-
-
-
19
Code of Ethics
BEH EAD and the companies in BEH Group have adopted a Code of Ethics, which aims to define the ethical
norms and rules of conduct in the corporate culture of employees, sets out the framework in which all employees
operate, guides them in their daily contacts with colleagues and external contractors and reflects the norms of
proper corporate behaviour. The purpose of the Code of Ethics is to achieve a more comfortable working
environment that leads to a higher level of commitment of each employee in the work process.
5. Impact of the COVID-19 pandemic on the business of the companies
The COVID-19 pandemic, which was still ongoing in 2021, resulted in a few consecutive extensions of the state
of emergency which ultimately ended on 31 March 2022. In 2021 the BEH Group`s companies took anti-epidemic
measures and established the necessary organization for the safe and quality functioning of the electricity system
(EES) in the conditions of the declared state of emergency in the country. The aim of the measures was to protect
the employees and thus to ensure the smooth and continuous operation of the country`s electricity system.
6. Military conflict between Russia and Ukraine
In the early hours of 24 February 2022 Russia commenced military activities in its neighbouring Ukraine. The
conflict quickly expanded and is now regarded the most serious military situation in Europe since the end of World
War II.
The escalating geopolitical tension has rendered securities and currency markets volatile and has caused energy
and petrol prices to fluctuate and the rouble to significantly lose value against the U.S. dollar and the euro. The
international situation having to do with the conflict between Russia and Ukraine has triggered economic changes
and shifts in market conditions related to rising inflation and continuous increase in the prices of basic raw and
other materials. A description of the possible effects that the military conflict may exert on the business of the
Group companies is offered in Note 42 “Events after the Reporting Period” of the 2021 Consolidated Financial
Statements.
IVAN ANDREEV
CHIEF EXECUTTIVE OFFICER
09.06.2022
Sofia
https://www.me.government.bg/files/useruploads/files/inspektorat/sektoren_anti_korupzionen_plan_energetikata.pdf
Consolidated Report on Payments to Governments
Bulgarian Energy Holding EAD
31 December 2021
Bulgarian Energy Holding EAD
Annual consolidated report on payments to governments for 2021
1
This consolidated report on payments to governments has been prepared in compliance with the requirements of
Art. 58 of the Accountancy Act, according to which parent enterprises operating in the field of mining, quarrying
or logging of primary forests, which are required to prepare consolidated financial statements, shall draw up a
consolidated report on payments to governments in accordance with the requirements of Section V of the
Accountig Act.
Bulgarian Energy Holding EAD is a parent company and owns the company “Mini Maritsa-Iztok” EAD.
Mini Maritsa-Iztok EAD operates in the mining industry, CEA 2008 05.20 “Mining of coal and lignite”.
1. Payments on concession contract
Under decision № 655 dated 13 July 2005 of the Council of Ministers (promulgated in State Gazette, issue 61
from 26 July 2005) a concession for mining of mineral recourses in the „Maritsa Iztok coal basin“ has been granted
to Mini Maritsa-Iztok EAD. The concession contract was signed on 11 August 2005 between the Grantor –
Council of Ministers of the Republic of Bulgaria and the Concessionaire – Mini Maritsa-Iztok EAD.
According to the contract Mini Maritsa-Iztok EAD is granted the exclusive right to conduct exploration and
mining of coal from the „Maritsa Iztok coal basin“ within the concession area and to acquire the extracted coal.
The coal extraction from the deposit is performed by an open mining within the concession area including
transport and sale of the extracted coal under the following conditions:
• within the concession area – 473,685,540.87 square meters
• for a 35-year period – as the period starts from the date of entry into force of the Contract with an option
the Contract to be extended for another 15 years if the mining continues in commercial quantities; there
are proven reserves in the Coal deposit and the Concessionaire requests in written form such extension.
For the period 01.01.2021 – 31.12.2021 concession fees to the Ministry of Energy amounting to BGN 13,265
thousand have been paid as follows:
• Paid obligation for the second half of 2020, amounting to BGN 3,829 thousand, VAT excluded, or paid
amount with VAT – BGN 4,595 thousand by 31.01.2021.
• The amount of the concession fee due for the first half of 2021 amounts to BGN 3,769 thousand, VAT
excluded, or BGN 4,522 thousand with VAT by 31.07.2021.
The amount of the concession fee due for the second half of 2021 amounts to BGN 6,176 thousand, VAT excluded,
with maturity payment to 31.01.2022, and has been paid within the agreed time.
The development of the operational mining activities of „Mini Maritsa-Iztok“ EAD based on the concession
contract is the reason for the occurrence of the following payments to different entities (governments).
2. Payments to Municipality of Radnevo
In relation to the mining activities development, Mini Maritsa-Iztok EAD has made payments under the following
projects to the Municipality of Radnevo:
• The subsidiary Mini Maritsa-Iztok EAD concluded a contract for financing and conducting rescue
archaeological investigations on 31.03.2021 with the Municipality of Radnevo in favor of the Maritza
East Archaeological Museum. The amount paid in 2021 is BGN 230 thousand.
Bulgarian Energy Holding EAD
Annual consolidated report on payments to governments as at 31 December 2021
2
3. Taxes paid
No corporate tax advance contrubutions have been accrued and paid by the subsidiary Mini Maritsa-Iztok EAD
for the period 01.01.2021 – 31.12.2021.
IVAN ANDREEV
EXECUTIVE DIRECTOR
BULGARIAN ENERGY HOLDING EAD
9 June 2022
Sofia
1
INDEPENDENT AUDITORS’ REPORT
To the sole shareholder of
Bulgarian Energy Holding EAD
Sofia, 16 Veslets Str.
Audit report on the consolidated financial statements
Qualified Opinion
We have audited the consolidated financial statements of Bulgarian Energy Holding EAD and its subsidiaries (the
“Group”), which contain the consolidated statement of financial position as of 31 December 2021 and the
consolidated statement of profit or loss, the consolidated statement of comprehensive income. statement of changes
in equity and the consolidated statement of cash flows, as well as the notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, apart from the possible effect of the matters described in the section of our report "Basis for qualified
opinion", the enclosed consolidated financial statements give a true and fair view of the financial position of the Group
as of 31 December 2021, and of its financial performance and its cash flows for the year ending on that date, in
accordance with International Financial Reporting Standards (IFRS), adopted by the EU and Bulgarian legislation.
Basis for Qualified Opinion
1. As disclosed in note 19 “Property, plant and equipment” to the consolidated financial statements, the Group owns
property, plant and equipment related to “Belene nuclear power plant project” for the construction of a nuclear power
plant by the subsidiary Natsionalna Electricheska Kompania EAD (NEK EAD). As of 31 December 2021, the assets
related to this project include assets under construction with carrying value of BGN 2,380,329,330 thousand and
other tangible fixed assets of BGN 75,170 thousand. According to its accounting policy, the Group capitalizes all
costs directly related to the project in the value of the assets under construction until the final decision on the future of
the project. By a decision dated 7 June 2018, the 44th National Assembly instructed the Minister of Energy to resume
actions to seek opportunities for the construction of Belene NPP together with a strategic investor, by allocating the
assets and liabilities for Belene NPP project in a separate project company. Pursuant to this decision of the National
Assembly and the decision of the Council of Ministers dated 27 June 2018, NEK EAD issued an invitation for
selection of a strategic investor for the project construction. Based on the received applications, the Ministry of
Economy prepared a short list of 5 companies, which sent confirmation letters for binding offers by January 2020.
The indicative deadline for submitting a binding offer was set at 31 May 2020. This period was postponed indefinitely
due to the pandemic situation. On 20 January 2021, the Council of Ministers decided to instruct the Minister of
Energy to take the necessary actions to make full use of the capacity of site № 2 at NPP Kozloduy, including the
construction of a new nuclear power plant and the rational use of the delivered equipment for Belene NPP. It was
also approved by an order of the Nuclear Regulatory Agency. As of 31 December 2021, the Group is not able to
make a reliable estimate of the value of the recognized assets related to Belene NPP project and accordingly, the
consolidated financial statements recognize neither any impairment losses on those assets, nor any provisions for
potential future obligations of the Group in connection with the termination or construction of the project.
Consequently, we have not been able to obtain sufficient appropriate audit evidence about the recoverable amount of
the above assets of the Group and the completeness of the recognized liabilities related to this project, respectively
we have not been able to determine the amount of any required adjustments and their impact on the consolidated
financial statements as of 31 December 2021.
2. Assets under construction with carrying amount of BGN 38,114 thousand as of 31 December 2021, disclosed in
note 19 “Property, plant and equipment” to the consolidated financial statements of the Group, are suspended and
without secured financing for their completion. The Group is not able to make a reliable estimate of the recoverable
amount of these assets at the end of the reporting period. As a result, we have not been able to obtain sufficient
appropriate audit evidence about the recoverable amount of these Group’s assets and the need for adjustments to
their carrying value.
3. As of 31 December 2021, the inventories presented in note 24 to the consolidated financial statements include
spare parts and consumables, basic and other materials of the subsidiary Mini Maritsa - East EAD with carrying
amount of BGN 91,532 thousand, of which more than 30% have not been used over the last three years, as well as
spare parts belonging to the subsidiary NPP Kozloduy EAD, with carrying value of BGN 99,794 thousand, including
2
spare parts and equipment from the closed power units 1-4 of NPP Kozloduy EAD of BGN 5,105 thousand. Due to
Group’s specific activities and the large volume of spare parts, we have not been able to obtain sufficient appropriate
audit evidence that the carrying amount of these materials, consumables and spare parts does not exceed their net
realizable value based on the assumptions whether they will be used or sold. Accordingly, we have not been able to
determine with reasonable assurance as to their amount presented in the consolidated financial statements and,
accordingly, whether any adjustments would be necessary to their carrying amount in the consolidated statement of
financial position as of 31 December 2021 and respectively in the results of operations for the year ending on that
date in the consolidated statement of profit or loss.
4. As disclosed in note 36 “Related party disclosures” to the consolidated financial statements, as of 31 December
2021, the Group has not recognized any past service costs and liabilities for the amount of BGN 14,327 thousand to
one of its related parties under Energy Purchase Agreement dated 7 March 2016 for reimbursement of incurred
expenses for capital investment. A reimbursement mechanism approved by Energy and Water Regulation
Commission has not been agreed for these expenses. Consequently, we have not been able to obtain sufficient
appropriate audit evidence about the amount of Group’s liabilities to this related party and the need for adjustments to
the consolidated profit or loss for the year and the consolidated statement of financial position.
5. Group's specific activities via its subsidiary NPP Kozloduy EAD, as well as the applicable regulatory framework
require the Group to prepare an estimate of its expected future costs for decommissioning of nuclear facilities. Such
an assessment was not provided to us during the audit. Consequently, we have not been able to determine with
reasonable assurance what the amount of Group's provisions should be as of 31 December 2021. Accordingly, we
have not been able to determine whether and to what extent adjustments would be necessary, relating to the Group's
provisions in the event that such an assessment has been made in accordance with the applicable legislation and
IAS 37 Provisions, Contingent Liabilities and Contingent Assets in preparing Group's consolidated financial
statements as of 31 December 2021.
We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under
these standards are further described in the section of our report "Auditors’ Responsibilities for the Audit of the
Consolidated Financial Statements". We are independent of the Group in accordance with the International Code of
Ethics for Professional Accountants (including International Independent Standards) issued by the International
Ethics Standards Board for Accountants (IESBA Code), together with the ethical requirements of Bulgarian
Independent Financial Audit Act, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified opinion.
Emphasis of matter
We draw attention to note 22.1 "Receivables from Toplofikatsia Sofia EAD" to the consolidated financial statements,
which states that Group’s receivables from Toplofikatsia Sofia EAD have a gross carrying value of BGN 980,984
thousand and a net carrying value of BGN 333,911 thousand. The long-term nature of part of these receivables and
the financial condition of the debtor signify that there is a higher credit risk associated with these receivables.
Therefore, they have been classified in stage 3 according to the impairment model applied by the Group in relation to
IFRS 9 Financial Instruments. Their recoverable amount has been determined by management on the basis of
judgements and estimates and by using the most reliable information available at the date of these estimates. The
management is in the process of finalizing the negotiations with the debtor and negotiating a plan for repayment of
the amounts. Our opinion is not modified in respect of this matter.
We draw attention to note 41 "Commitments and contingent liabilities", which provides information about Group's
commitments under the concession agreement for the development and extraction of coal. The obligation to
guarantee the payment of costs of abandoning the concession area is realized by allocating funds to special
guarantee accounts, which can be used only for the purpose for which they are intended. As of 31 December 2021,
the Group has no funds set aside in a trust guarantee account and has not issued a bank guarantee in favour of the
grantor with regard to the activities under the contract. Our opinion is not modified in respect of this matter.
As of 31 December 2021, the Group operates through its subsidiary NEK EAD the properties and facilities disclosed
in note 19 “Property, plant and equipment” with carrying amount of BGN 872,920 thousand, which have been
declared public property under Bulgarian Waters Act. According to the requirements of this law, the functions of
management and maintenance of the dam walls and the facilities adjacent to them should be performed by a dam
wall operator. This function has not been assigned to NEK EAD by the competent authorities. As of the date of the
consolidated financial statements, there is no change in the legislation on the ownership and operation of these
assets. Our opinion is not modified in respect of this matter.
We draw attention to note 42 "Events after the end of the reporting period" in which it is announced that on 10 March
2022 the Council of Ministers issued Decision №142, according to which the subsidiary NEK EAD was obliged to
repay earlier than the negotiated deadline the loan liabilities to Ministry of Energy with carrying amount of BGN
1,176,661. The debt to the Ministry of Energy was repaid as of 15 April 2022. Our opinion is not modified in respect of
this matter.
3
We draw attention to note 42 "Events after the end of the reporting period" to the consolidated financial statements,
which discloses information about the non-adjusting event related to the military invasion of the Russian Federation in
Ukraine on 24 February 2022, including the termination of supplies of natural gas by Group's main supplier. The
intentions of Group's management are to take all necessary measures to limit the potential future negative effects of
the sanctions against the Russian Federation, which have an indirect effect on all spheres of economic activity
worldwide and in Bulgaria, but the possibility of future negative impact still remains. This, in turn, could lead to a
change in the carrying amounts of Group's assets, which are determined in the consolidated financial statements by
using various judgments and assumptions by management and the most reliable information available at the date of
these estimates. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In
addition to the matters described in the “Basis for Qualified Opinion” section, we have determined the matter described
below to be the key audit matter to be communicated in our report.
Fair value of property, plant and equipment
Note 19 Property, plant and equipment to the consolidated financial statements
Key audit matter
How this matter was addressed during the audit
The Group has adopted the revaluation model for
subsequent measurement of the main classes of property,
plant and equipment. The revalued amount represents the
fair value of the asset at the date of revaluation, less
subsequent depreciation and accumulated impairment
losses. The revaluation of property, plant and equipment is
carried out every 3 years.
As of 31 December 2021, the fair value of property, plant
and equipment is BGN 14,432,966 thousand, which
represents 59% of Group's total assets. The revaluation
reserve of non-financial assets as of 31 December 2021 is
BGN 9,119,316 thousand. It increased in 2021 by
BGN 1,640,859 thousand, net of tax because of the carried
out fair value measurement during the year.
Revaluations are performed by an independent licensed
appraiser with sufficient frequency so that the carrying
amount does not differ materially from the value that would
have been determined if fair values were used at the end of
each reporting period. The latest revaluation of Group's
assets was performed as of 31 December 2021.
The assets subject to revaluation are specific and
specialized, strictly related to the activities of the Group and
the alternative use of a significant part of them is difficult or
impossible. Therefore, other uses by market participants are
unlikely to maximize the value of assets, and it is therefore
accepted that their current use in the business maximizes
their value. The appraiser used two main approaches and
valuation methods: “Market approach” through “Market
analogues method” for lands for which there is a real market
and observable data on prices of recent market transactions
for similar properties; and the "Cost approach" through the
"Depreciated replacement value method" for the fair value of
buildings, machinery and equipment. Assets’ fair value
measures the new value of the respective asset at the
valuation date, reflecting its acquisition costs less its
physical wear and tear and the functional and economic
impairment resulting from its operation.
Due to the importance of property, plant and equipment in
Group’s consolidated statement of financial position and the
use of accounting judgments and estimates, we consider
this matter to be a key audit matter.
During the audit, our audit procedures included, but
were not limited to:
- assessment of the adopted accounting policy by the
Group regarding the subsequent measurement of
property, plant and equipment and analysis of its
compliance with applicable IFRS;
- gaining an understanding of the process and
procedures for revaluation of Group's assets, including
of the controls applied;
- checking the qualifications and objectivity of the
independent external valuer employed by the Group,
as well as the appropriateness of the approaches,
methods and assumptions used to determine the fair
values of assets, in order to conclude on the
compliance with IFRS 13 "Fair Value Measurement";
- testing of input data on which the assessment of
properties, machinery and equipment is based,
according to appropriate supporting documentation, to
assess accuracy and completeness of data;
- gaining an understanding and assessment of the
reasonableness of the main results calculated by the
independent external appraiser, as well as the key
assessments and assumptions used in the valuation,
with the participation of our internal experts -
appraisers;
- discussions with the independent valuation expert
who performed the valuation on the overall approach,
the sources of information and the key factors that
influenced the results of the valuation process;
- reconciliation of the results from the valuation report
with the accounting records and the items disclosed in
the consolidated financial statements that are affected
by the valuation;
- assessment of the completeness and adequacy of
the disclosures in the consolidated financial
statements related to the revaluation of property, plant
and equipment.
4
Other Matter
The Group's annual consolidated financial statements for the year ended 31 December 2020 were audited by another
auditor, who expressed a qualified opinion on those financial statements on 16 June 2021.
Information Other than the Consolidated Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the annual consolidated
management report, including the consolidated corporate governance statement, the consolidated non-financial
declaration, and the consolidated report on payments to governments, prepared in accordance with Bulgarian
Accountancy Act, but does not include the consolidated financial statements and our auditors’ report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or whether our knowledge obtained in the audit may indicate
that there is a material misstatement or otherwise the other information appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
As described in the “Basis for Qualified Opinion” section above, we were unable to obtain sufficient and appropriate
audit evidence about the matters described in that section. Accordingly, we were unable to conclude whether or not
the other information is materially misstated with regard to these matters.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
In accordance with International Financial Reporting Standards (IFRS), as adopted by the EU and Bulgarian
legislation, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs and Bulgarian Independent Financial Audit Act will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of our audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
− identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
− obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control;
− evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management;
− conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or
conditions may cause the Group to cease to continue as a going concern;
5
− evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation;
− We obtain sufficient appropriate audit evidence about the financial information of the entities or entities within
the Group to express an opinion on the consolidated financial statements. We are responsible for instructing,
overseeing and performing the Group's audit. We are solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
We are jointly liable for the performance of our audit and for the audit opinion expressed by us, in accordance with
the requirements of the Independent Financial Audit Act applicable in Bulgaria. In undertaking and fulfilling the
commitment for joint audit, in connection with which we report, we have been guided by the Guidelines for
implementation of joint audit, issued on 13.06.2017 by the Institute of Certified Public Accountants in Bulgaria and the
Commission for Public supervision of Registered Auditors in Bulgaria.
Report on Other Legal and Regulatory Requirements
In addition to our responsibilities and reporting under ISA, described above in the section "Information other than the
Consolidated Financial Statements and the Auditors’ Report Thereon" in relation to the annual consolidated
management report, including the consolidated corporate governance statement, the consolidated non-financial
declaration, and the consolidated report on payments to governments, we have performed the additional procedures
contained in the Guidelines of the professional organisation of certified public accountants and registered auditors in
Bulgaria - Institute of Certified Public Accountants (ICPA). The procedures on the existence, form and contents of the
other information have been carried out in order to state whether the other information includes the elements and
disclosures in accordance with Chapter Seven of Bulgarian Accountancy Act and Art. 100n, para. 10 in connection
with Art. 100n, para. 8, items 3 and 4 of Bulgarian Public Offering of Securities Act.
Statement Pursuant to Article 37, Paragraph (6) of Bulgarian Accountancy Act
Based on the procedures performed, we describe the outcome of our work:
a) the information in the consolidated management report is consistent with the consolidated financial statements
for the same reporting period, on which we have issued qualified opinion in the section “Report on the Audit of
the Consolidated Financial Statements” above;
b) the consolidated management report is prepared in accordance with the applicable legal requirements;
c) as a result of the acquired knowledge and understanding of the activities of the Group and the environment in
which it operates, we have found no cases of material misrepresentation in the consolidated management
report, except for the possible effect of the matters described in section “Information Other than the
Consolidated Financial Statements and Auditors’ Report Thereon” of “Report on the Audit of the Consolidated
Financial Statements”;
d) the consolidated corporate governance statement for the financial year contains the required information in
accordance with the applicable legal requirements, including Article 100n, paragraph (8) of Bulgarian Public
Offering of Securities Act;
e) (e) the consolidated non-financial declaration is prepared and made available in accordance with the
requirements of Bulgarian Accountancy Act;
f) (f) the consolidated report on payments to governments is prepared and made available in accordance with the
requirements of Bulgarian Accountancy Act.
Statement Pursuant to Art. 100 (n), para. 10 of the Public Offering of Securities Act
Based on the procedures performed and the acquired knowledge and understanding of the Group's activities and the
environment in which it operates, in our opinion, there is no material misstatement in the description of the main
features of the Group's internal control and risk management systems. connection with the process of financial
reporting and in the information under Art. 10 (1) (c), (d), (e), (h) and (i) of Directive 2004/25 / EC of the European
Parliament and of the Council of 21 April 2004 on takeover bids are included in the consolidated corporate
governance statement of the Group.
6
Reporting on compliance of the electronic format of the consolidated financial statements included in the
annual consolidated financial report on the activity under Art. 100n, paragraph 5 of Bulgarian Public Offering
of Securities Act with the requirements of ESEF Regulation
We have undertaken a reasonable assurance engagement on the compliance of the electronic format of the
consolidated financial statements of Bulgarian Energy Holding EAD for the year ended on 31 December 2021
included in the digital file „635400E1RWKJXPSBCV07-20211231-BG-CON.zip“, with the requirements of
Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the
European Parliament and of the Council with regard to regulatory technical standards on the specification of a single
electronic reporting format (“ESEF Regulation”). Our opinion is only regarding the electronic format of the
consolidated financial statements and does not include the other information contained in the annual consolidated
financial report on the activity under art. 100n, para. 5 of Bulgarian Public Offering of Securities Act.
Description of Subject Matter Information and Applicable Criteria
Management has prepared the electronic format of Group’s consolidated financial statements for the year
ended 31 December 2021 in accordance with ESEF Regulation in order to comply with Bulgarian Public
Offering of Securities Act. The rules for preparation of the consolidated financial statements in this electronic
format are described in the ESEF Regulation and in our opinion, they are applicable criteria for providing
reasonable assurance.
Responsibilities of Management and Those Charged with Governance
Group’s management is responsible for the application of the requirements of ESEF Regulation in preparing
the electronic XHTML format of the consolidated financial statements. These responsibilities include the
selection and application of suitable iXBRL tags in accordance with the taxonomy of ESEF Regulation, as well
as the application of such internal controls, which are necessary for the preparation of the electronic format of
Group’s annual consolidated financial statements, that are free from material misstatements in accordance
with ESEF Regulation.
Those charged with governance are responsible for overseeing the process for preparation of Group’s annual
consolidated financial statements and application of ESEF Regulation.
Auditors‘ Responsibilities
Our responsibility is to obtain reasonable assurance about whether the electronic format of the consolidated
financial statements complies with ESEF Regulation. We applied the “Guidance on issuing an opinion on the
application of ESEF Regulation by issuers whose securities are admitted to trading on a regulated market in
the European Union” and conducted our reasonable assurance engagement in accordance with International
Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other than Audits or Reviews
of Historical Financial Information (ISAE 3000 (Revised))”. The standard requires that we comply with ethical
requirements, design and perform audit procedures to obtain reasonable assurance whether the electronic
format of Group’s consolidated financial statements have been prepared in accordance with the applicable
criteria described above. The nature, timing and extent of our procedures depend on our professional
judgement, including the risk of material misstatements whether due to fraud or error, in applying the
requirements of ESEF Regulation.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAE 3000 (Revised) will always detect a material misstatement when it exists.
Quality Control Requirements
We have applied the requirements of International Standard on Quality Control (ISQC) 1 and accordingly,
maintain a comprehensive system of quality control, including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory requirements
of the registered auditors in Bulgaria. We have complied with the independence and other ethical requirements
of the International Code of Ethics for Professional Accountants (including International Independent
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and adopted by
BICPA, together with the ethical requirements of Bulgarian Independent Financial Audit Act.
Summary of the Work Performed
The purpose of the designed and performed procedures was to obtain reasonable assurance whether the
electronic format of the consolidated financial statements has been prepared in all material aspects in
compliance with the requirements of ESEF Regulation. In performing procedures for assessing compliance
7
with the requirements of ESEF Regulation on electronic (XHTML) format of Group’s consolidated financial
statements, we used professional judgement and applied professional skepticism. We also:
− obtained an understanding of the internal control and processes, related to the application of ESEF
Regulation in preparing Groups’ consolidated financial statements in XHTM format with iXBRL tags;
− checked that the enclosed XHTML format is valid;
− reconciling the data in the electronic format of the consolidated financial statements with the audited
consolidated financial statements;
− evaluated the completeness of Group’s tagging of the consolidated financial statements using the XBRL
markup language;
− evaluated the appropriateness of the use of iXBRL elements selected from the ESEF taxonomy and the
creation of extension elements where no suitable element in the ESEF taxonomy has been identified; and
− evaluated the use of anchoring in relation to the extension elements in accordance with ESEF Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion on compliance of the electronic format of the consolidated financial statements with ESEF Regulation
Based on the performed procedures, our opinion is that the electronic format of the consolidated financial
statements of the Group for the year ended 31 December 2021, contained in the attached electronic file
„635400E1RWKJXPSBCV07-20211231-BG-CON.zip“, on which we are issuing a qualified audit opinion, has
been prepared in all material respects in accordance with the requirements of the ESEF Regulation.
Reporting Pursuant to Article 59 of Bulgarian Independent Financial Audit Act in relation to Article 10
of Regulation (ЕС) № 537/2014
In accordance with the requirements of Bulgarian Independent Financial Audit Act and in relation with Article
10 of Regulation (ЕС) № 537/2014, we report additionally the information as follows:
‒ Grant Thornton OOD and Zaharinova Nexia EOOD, as participants in the consortium DZZD AUDIT BEH were
appointed as statutory auditors of the consolidated financial statements of Bulgarian Energy Holding EAD for
the year ended 31 December 2021 via Decision № Е-RD-21-22 issued by the Minister of Energy on 4
December 2020 for a period of three years.
‒ The audit of the consolidated financial statements for the year ended 31 December 2021 of the Group is the
first consecutive year of continuous commitment for mandatory audit of this Group, performed by each of the
joint auditors Grant Thornton OOD and Zaharinova Nexia EOOD.
‒ In support of our audit opinion, we have provided a description of the most significant assessed risks of material
misstatement, a summary of the auditors’ response and where relevant, key observations arising with respect to
those risks in the section „Key audit matters“ of this report.
‒ We confirm that our audit opinion is consistent with the additional report to the audit committee of the Group,
which was provided in accordance with Article 60 of Bulgarian Independent Financial Audit Act.
‒ We declare that prohibited non-audit services referred to in Article 64 of Bulgarian Independent Financial Audit
Act were not provided.
‒ We confirm that we remained independent of the Group in conducting the audit.
‒ For the period covered by our statutory audit, in addition to the audit, we have not provided other services to
Bulgarian Energy Holding EAD and its controlled undertakings, except for the procedures performed by Grant
Thornton OOD for the issuance of Comfort Letter in relation to initial public offering of new bond in July 2021.
9 June 2022
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit Firm, registry № 032
Audit Firm, registry № 138
Silvia Dinova
Stoicho Milev
Registered auditor, responsible for the audit
Registered auditor, responsible for the audit
Mariy Apostolov, Managing Partner
Dimitrina Zaharinova, Manager
Bulgaria, Sofia, 1421
Bulgaria, Sofia, 1309
№26, Cherni Vrah Blvd.
№ 157–159 Konstantin Velichkov Blvd., floor 1, office 3
Consolidated Financial Statements
Bulgarian Energy Holding EAD
31 December 2021
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 31 December 2021
1
Notes
2021
2020
BGN` 000
BGN` 000
Revenue from sales
6
Other operating income
7
Cost of natural gas, electricity and other current assets sold
8
(4,765,634 )
(2,439,580 )
Change in finished goods and work in progress
Cost of acquisition of property, plant and equipment
9
Cost of materials
10
(364,754 )
(294,561 )
Hired services expenses
11
(314,741 )
(286,945 )
Depreciation, amortisation and impairment of non - financial assets
19, 20
(720,505 )
(628,273 )
Employee benefits expenses
13
(1,032,971 )
(951,019 )
Expenses for impairment of financial assets, net
12
(442,369 )
(30,378 )
Costs for greenhouse gas emissions and other provisions
33
(906,110 )
(393,988 )
Other operating expenses
14
(1,108,878 )
(362,953 )
Operating profit
Share of profit from associates and joint ventures
21
Finance income
15
Finance costs
16
(138,100 )
(150,733 )
Profit before tax
Income tax expenses
17
(207,084 )
(31,546 )
Profit for the year from continuing operations
Loss for the year from discontinued operations
(7,262 )
(6,523 )
Profit for the year
Profit/(loss) for the year attributable to:
The shareholder of the parent company
Non-controlling interest
(53 )
Earnings / (loss) per share
BGN
BGN
From continuing operations
From discontinued operations
(0.002 )
(0.002 )
Total
18.1
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2
Notes
2021
2020
BGN` 000
BGN` 000
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of property, plant and equipment
19
(107,788 )
Revaluation of liabilities under defined benefit plans
32
(16,127 )
(12,739 )
Net change in the fair value of financial assets (equity instruments)
23
(127 )
(193 )
Income tax, relating to items that will not be reclassified to profit
or loss
23
(180,689 )
(108,646 )
Items that will be reclassified to profit or loss:
Exchange differences from recalculation of foreign activities
(4 )
(4 )
Share of other comprehensive income of associates
Items that will be reclassified to profit or loss:
Cash flow hedges, net of tax
Income tax related to items that will be reclassified to profit or loss
23
(128 )
(173 )
Items that will not be reclassified to profit or loss:
Revaluation of liabilities under defined benefit plans
(180 )
Net change in the fair value of financial assets (equity instruments)
(547 )
(195 )
Income tax, related to items that will not be reclassified to profit or
loss
23
(654 )
(91 )
Other comprehensive income for the year, net of tax
23
(107,181 )
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
The shareholder of the parent company
Non-controlling interest
(53 )
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2021
3
Notes
31 December
2021
31 December
2020
1 January
2020
BGN` 000
BGN` 000
BGN` 000
Restated
Restated
Assets
Non-current assets
Property, plant and equipment
19
Intangible assets
20
Investments in joint ventures, associates
and other enterprises
21
Non-current receivables from related parties
36
Trade and other receivables
22
Financial assets at fair value through other
comprehensive income
Deferred tax assets
23
Total non-current assets
Current assets
Inventories
24
Trade and other receivables
22
Related party receivables
36
Overpaid income tax
Financial assets at fair value through other
comprehensive income
25
Cash and short-term deposits
26
Assets of a group classified as held for
distribution to owners
27
Assets of a group classified as held for sale
28
Total current assets
Total assets
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(CONTINUED)
For the year ended 31 December 2021
4
Notes
31 December
2021
31 December
2020
1 January
2020
BGN`000
BGN` 000
BGN`000
Equity and liabilities
Restated
Restated
Equity
Share capital
29 .1
Other reserves
29 .2
Reserves from revaluation to fair value of financial instruments
29 .3
Revaluation reserve of non-financial assets
29 .4
Reserve from translation of foreign operations
29 .5
(9 )
(5 )
Reserve from revaluation of defined benefit plans
29 .6
(202,064 )
(187,393 )
(176,014 )
Hedge reserve
(556 )
(1,710 )
(3,270 )
Retained earnings / (accumulated loss)
(1,102,743 )
(1,217,373 )
Equity of the shareholder of the parent company
Non-controlling interest
(98 )
(45 )
Total equity
Non-current liabilities
Loans and lease liabilities
30
Deferred tax liabilities
23
Deferred financing
31
Retirement employee benefit obligation
32
Provisions
33
Deferred income
34
Trade and other payables
35
Liabilities to related parties
36
Amount of non-current liabilities
Current liabilities
Trade and other payables
35
Liabilities to related parties
36
Loans and lease liabilities
30
Retirement employee benefit obligation
32
Provisions
33
Deferred income
34
Deferred financing
31
Income tax liabilities
Liabilities of a group classified as held for distribution to
owners
27
Liabilities of a group classified as held for sale
28
Amount of current liabilities
Total liabilities
Total equity and liabilities
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
5
Share
capital
Other
reserves
Reserves
from
revaluation
to fair value
of financial
instruments
Hedge
reserve
Revaluation
reserve of
non-financial
assets
Reserve
from
translation
of foreign
operations
Reserve
from
revaluation
of defined
benefit plans
(Accumulated
loss) /
Retained
earnings
Total equity
of the parent
company's
shareholder
Non-
controlling
interest
Total
equity
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Balance on 1 January 2021
(1,710 )
(9 )
(187,393 )
(1,102,743 )
(98 )
Profit for the year
Other comprehensive income
(606 )
(14,671 )
Total comprehensive income for the year
(606 )
(14,671 )
Written-off revaluation reserve
(8,242 )
Other changes in equity
Balance as at 31 December 2021
(556 )
(202,064 )
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the year ended 31 December 2021
6
Share
capital
Other
reserves
Reserves from
revaluation to
fair value of
financial
instruments
Hedge
reserve
Revaluation
reserve of
non-
financial
assets
Reserve
from
translation
of foreign
operations
Reserve
from
revaluation
of defined
benefit plans
(Accumulated
loss) /
Retained
earnings
Total equity
of the parent
company's
shareholder
Non-
controlling
interest
Total
equity
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Balance on 1 January 2020
(3,270 )
(5 )
(168,849 )
(1,268,047 )
(45 )
Correction of errors (note 4.30)
(567,358 )
(7,165 )
(9,177 )
(9,177 )
Balance on 1 January 2020 (restated)
(3,270 )
(5 )
(176,014 )
(1,217,373 )
(45 )
Profit / (loss) for the year
(53 )
Other comprehensive income
(349 )
(97,009 )
(4 )
(11,379 )
(107,181 )
(107,181 )
Total comprehensive income for the year
(349 )
(97,009 )
(4 )
(11,379 )
(53 )
Written-off revaluation reserve
(9,079 )
Distribution of profit to reserves
(51,705 )
Other changes in equity
(52 )
(50 )
(50 )
Balance at 31 December 2020
(1,710 )
(9 )
(187,393 )
(1,102,743 )
(98 )
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
7
Notes
2021
2020
BGN` 000
BGN`000
Cash flows from operating activities
Proceeds from sales, including:
Proceeds from electricity sales
Proceeds from sales of natural gas and related services
Proceeds from sale of lignite coal
Proceeds from other sales
Proceeds from the Security of the Electricity System Fund
Cash receipts from financing the activity (measure 60/40)
Payments to suppliers
(7,234,150 )
(3,715,350 )
Payments to staff and social security institutions
(1,005,519 )
(937,455 )
Payments to State funds
(370,231 )
(188,969 )
Interest paid
(129,581 )
(98,795 )
Payments of fees, commissions and others
(16,604 )
(13,458 )
Other payments, net, including:
(1,285,201 )
(309,899 )
Income tax paid
(181,263 )
(72,094 )
Payments to the State budget
(608,437 )
(138,156 )
Other payments for operating activities
(45,501 )
(99,649 )
Other extraordinary payments
(450,000 )
Net cash flows from continuing operations
Net cash flows from discontinued operations
(5,869 )
(5,603 )
Net cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment and intangible assets
(1,700,101 )
(1,595,399 )
Acquisition of investments accounted by the equity method
(3,207 )
(48 )
Proceeds from sale of property, plant and equipment
Loans provided
(117,350 )
(58,675 )
Interest received
Dividends received and other proceeds from equity accounted investments
Non-current asset financing
Reimbursed funding
(6,303 )
Cash provided as collateral
(124,577 )
(355,302 )
Cash provided as deposits
(117,350 )
Proceeds from cash provided as collateral and deposits
Proceeds from interest on deposits and cash provided as collateral
Net cash flows from investing activities from continuing operations
(1,897,503 )
(1,547,611 )
Net cash flow from discontinued operations
(49 )
Net cash flows from investing activities
(1,897,552 )
(1,547,430 )
Bulgarian Energy Holding EAD
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the year ended 31 December 2021
8
Cash flows from financing activities
Proceeds from bond issue by the parent company
30
Bond payments from the parent company
30
(1,075,707 )
Proceeds from loans
30
Loans repaid
30
(367,847 )
(301,476 )
Lease payments
30
(548 )
(850 )
Payments for issued bank guarantee
(1,044 )
(1,320 )
Other payments for financial activities
(920 )
Net cash flows from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents as of 1 January
Gross amount of cash and cash equivalents at the end of the year
Effect from impairment expenses for expected credit losses
(6,644 )
(3,506 )
Cash and cash equivalents as of 31 December
26
Including cash held by a group classified as held for sale
(195 )
Cash and cash equivalents from continuing operations as of 31 December
26
Ivan Andreev Marieta Velikova
Executive Director Chief Accountant
Date of preparation: 31 May 2022
The consolidated financial statements were authorised for issue via Decision of the Board of Directors dated 9 June 2022.
The accompanying notes from pages 9 to 130 are an integral part of these consolidated financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD, audit firm with registration № 032
Zaharinova Nexia EOOD, audit firm with registration № 138
Mariy Apostolov, manager
Dimitrina Zaharinova, manager
Stoicho Milev, registered auditor, responsible for the audit
Silvia Dinova, registered auditor responsible for the audit
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
9
1. Corporate information
These consolidated financial statements of Bulgarian Energy Holding EAD (BEH EAD, the parent company) and its
subsidiaries (the Group) for the year ended 31 December 2021 were approved for issue in accordance with Decision
by the Board of Directors with Protocol №37-2022 / 09.06.2022.
The Group`s main activities comprise:
- production, extraction, transmission, storage, management, distribution, sale and / or purchase of natural gas,
electricity, heat, coal, as well as all types of energy and raw materials for production;
- organization of power exchange market for trading in the field of energy and energy consumption;
- investment activity in the field of energy.
The number of employees in the system of Bulgarian Energy Holding EAD as of 31 December 2021 is 20,092
employees (31 December 2020: 20,386 employees).
The parent company Bulgarian Energy Holding EAD is a sole proprietorship joint stock company established in the
in December 1975 to "Gas Supply". At the beginning of 1990 the enterprise was renamed Bulgargaz according to the
Business Decree. By order of the Council of Ministers of May 12, 1993, Bulgargaz was transformed into a sole
proprietorship. With a transformation plan of October 27, 2006 and annexes to it, Bulgargaz EAD was transformed
into Bulgargaz Holding EAD by separating two sole proprietorships - Bulgartransgaz EAD and Bulgargaz EAD under
the terms of Article 262 (d). of the Commercial Code. Bulgartransgaz EAD and Bulgargaz EAD are the legal
successors of the respective part of the property (rights and obligations) of Bulgargaz Holding EAD. The
transformation was registered in the court with decision №45 of 15 January 2007 of the Sofia City Court. In 2021 the
Protocol № 21-305 of September 18, 2008 of the Minister of Economy and Energy changed the company name from
Bulgargaz Holding EAD to Bulgarian Energy Holding EAD and increased the capital through in- kind contribution at
nominal value of all shares of the capital of Natsionalna Electricheska Kompania EAD, NPP Kozloduy EAD, TPP
Maritsa East 2 EAD and Mini Maritsa East EAD.
Bulgarian Energy Holding EAD is headquartered in Bulgaria , Sofia-1000, Oborishte district, 16 Veslets Str.
The address of management is the same, Bulgaria, city of Sofia-1000, Oborishte region, 16 Veslets Str. The main
place of business of the parent company is in Sofia .
As of 31 December 2021, Bulgarian Energy Holding EAD is managed by a Board of Directors (BD), which consists
of the following members: Veselina Lachezarova Kanatova -Buchkova - Chairman of the Board of Directors, Plamen
Dilkov Dilkov - Deputy Chairman of the Board of Directors, Ivan Todorov Andreev - Executive Member, Valentin
Alexiev Nikolov - Member of the Board of Directors, Diyan Stanimirov Dimitrov - Member of the Board of Directors,
Alexander Plamenov Tsarnorechky - Member of the Board of Directors, Anton Georgiev Simeonov - Member of the
Board of Directors, Zheko Mihailov Zhekov - Member of the Board of Directors and Stelian Penchev Koev - Member
of the Board of Directors.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
10
As at 31 December 2021, the subsidiaries, joint ventures and associates included in the consolidated annual financial
statements are the following:
Enterprise
Country of
incorporation
Main activity
31 December
2021
31 December
2020
%
%
Subsidiaries
Natsionalna Electricheska
Kompania EAD
Bulgaria
production and public supplier of
electricity
100%
100%
Bulgargaz EAD
Bulgaria
public supply of natural gas
100%
100%
Bulgartransgaz EAD
Bulgaria
natural gas storage and transmission
100%
100%
Bulgartel EAD
Bulgaria
implementation of telecommunications
100%
100%
NPP Kozloduy EAD
Bulgaria
production of electricity and heat
100%
100%
TPP Maritsa East 2 EAD
Bulgaria
production of electricity and heat
100%
100%
Mini Maritsa - East EAD
Bulgaria
extraction and sale of coal
100%
100%
Electricity System Operator EAD
Bulgaria
transmission of electricity
100%
100%
Bulgartel Skopje DOOEL
North
Macedonia
implementation of telecommunications
100%
100%
Kozloduy HPP EAD
Bulgaria
production and distribution of
electricity from a hydroelectric power
plant
100%
100%
Interpriborservice OOD
Bulgaria
installation and maintenance of
automated systems
63.96%
63.96%
PFC Beroe - Stara Zagora EAD
Bulgaria
football club
100%
100%
Kozloduy NPP - New Build EAD
Capacities
Bulgaria
operation of a nuclear power plant
100%
100%
Balkan Gas Hub EAD
Bulgaria
construction and operation of an
electronic platform for trade in natural
gas, energy products, green and white
certificates, carbon emissions
100%
100%
ESO Engineering EOOD
Bulgaria
construction of technologies and
projects for energy sites and project
management
100%
-
Joint ventures
ICGB AD
Bulgaria
construction and operation of a gas
transmission system
50%
50%
South Stream Bulgaria AD
Bulgaria
construction and operation of a gas
transmission system
50%
50%
Transbalkan Electric Power
Trading SA - NECO S.A.
Greece
sale of electricity
50%
50%
Southeast Electricity Network
Coordination Center ( SeleNe
CC)
Greece
the regional security coordinator in
South East Europe to maintain the
electricity system
25%
25%
Associates
ContourGlobal Maritsa East 3 AD
Bulgaria
electricity production
27%
27%
ContourGlobal Operations
Bulgaria AD
Bulgaria
operation and maintenance of a thermal
power plant
27%
27%
ZAD Energy AD
Bulgaria
insurance and reinsurance
48.08%
48.08%
POD Allianz Bulgaria AD
Bulgaria
Pensions
34%
34%
HEK Gorna Arda AD
Bulgaria
construction of hydropower plants
24%
24%
Gastrade S.A.
Greece
development, operation, operation and
management of natural gas systems
20%
-
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
11
2. Basis for preparation of the consolidated financial statements
These consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) as developed and published by the International Accounting Standards Board (IASB) and
adopted by the European Union (EU). Within the meaning of paragraph 1, item 8 of the Additional Provisions of the
Accounting Act applicable in Bulgaria, the term "IFRS adopted by the EU" means International Accounting Standards
(IAS) adopted in accordance with Regulation (EC) 1606/2002 of the European Parliament and the Council, include
International Accounting Standards, International Financial Reporting Standards and related interpretations,
subsequent amendments to those standards and related interpretations, future standards and related interpretations
issued or adopted by the International Accounting Standards Board.
These consolidated financial statements are presented in Bulgarian Leva (BGN), which is the functional currency of
the parent company. All amounts are presented in thousands of BGN (including comparative information for 2020),
unless otherwise stated.
The parent company- Bulgarian Energy Holding EAD has prepared and presented an individual financial statement
for the year ended 31 December 2021, where investments in subsidiaries, associates and joint ventures are presented
at the relevant acquisition cost. The separate financial statements of Bulgarian Energy Holding EAD were approved
for issue by Decision of the Board of Directors dated 29 April 2022.
These consolidated financial statements have been prepared in accordance with the going concern principle, taking
into account the possible effects of the continuing impact of the long-term impact of the COVID-19 pandemic, the
military conflict between the Russian Federation and the Republic of Ukraine, the Bulgaria Recovery and Resilience
Plan approved by EC and the dynamics of the energy market worldwide and in Bulgaria. The functioning and future
development of the Group is related to the implementation of the energy strategy of the country to increase and ensure
security of energy supply, the implementation of priority energy projects and ensuring the financial participation of
our country in them. Management has analysed the validity of the going concern principle, taking into account the
plans, forecasts and business programs of the companies within the Group. As a result, they have concluded that the
application of the going concern principle is appropriate.
3. Changes in accounting policy
3.1. General
For the current financial year, the Group has adopted all new and / or revised standards and interpretations issued by
the International Accounting Standards Board (IASB) and adopted by the EU and the International Interpretations
Committee of IFRS (IFRIC), respectively, which enter into force on 1 January 2021, but they do not have a material
effect on Group’s financial statements. The Group has not adopted any standards, interpretations or amendments that
have been published but have not yet entered into force.
Below is a summary of new standards and amendments that enter into force for the first time for periods beginning
on or after 1 January 2021 and forthcoming requirements, such as standards and amendments that will enter into force
on or after 1 January 2021.
3.2. New standards , amendments and interpretations to IFRS, which came into force on 1 January 2021
The Group applies the following new standards, amendments and interpretations to IFRS, developed and published
by the International Accounting Standards Board, are mandatory for the financial year beginning on 1 January 2021,
but they have no effect on the consolidated financial statements:
- IFRS 4 Insurance Contracts - Postponement of IFRS 9 effective from 1 January 2021, adopted by the EU
- IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reform of the Reference Interest Rate - Phase 2 effective from 1
January 2021, adopted by the EU
- IFRS 16 Leasing: Reduction of Covid-19 Rents after 30 June 2021, effective from 1 April 2021, adopted by the
EU
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
12
3.3. Standards, amendments and clarifications that have not yet came into force and have not been applied by
the Group on earlier date
The following standards and interpretations have been issued but are not mandatory for the financial year beginning
on 1 January 2021:
- Amendments to IFRS 3 Business Combinations, IAS 16 Property, Plant and Equipment, IAS 37 Provisions,
Contingent Liabilities and Contingent Assets effective from 1 January 2022, adopted by the EU
- Annual improvements 2018-2020 in force from 1 January 2022, adopted by the EU
- Amendments to IFRS 17 Insurance Contracts effective from 1 January 2013, adopted by the EU
- Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current and Non-
Current, effective from 1 January 2023, not yet adopted by the EU
- Amendments to IAS 1 Presentation of Financial Statements, IFRS Statements of Application 2: Disclosures of
Accounting Policies, effective from 1 January 2023, not yet adopted by the EU
- Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates, effective from 1 January 2023, not yet adopted by the EU
- Amendments to IAS 12 Income Taxes: Deferred Taxes on Assets and Liabilities Arising from Single
Transactions Effective 1 January 2023 Not yet Adopted by the EU
- Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative
Information effective from 1 January 2023, not yet adopted by the EU.
- Amendments to IFRS 14 “Deferred Accounts at Regulated Prices” effective from 1 January 2016 have not yet
been adopted by the EU.
They are not expected to have a material impact on Group’s consolidated financial statements. Management expects
all standards and amendments to be adopted in Group’s accounting policy in the first period beginning after the
effective date.
The presentation of financial statements in accordance with International Financial Reporting Standards requires
management to make the best estimates, accruals and reasonable assumptions that affect the carrying values of assets
and liabilities, income and expenses, and the disclosure of contingent receivables and payables. at the end of the
reporting period. These estimates, accruals and assumptions are based on information available at the end of the
reporting period, so future actual results may differ. Items that involve a higher degree of subjective judgment or
complexity of calculations, or where assumptions and estimates are material to these consolidated financial statements
are disclosed in note 4.29.
4. Accounting policy
4.1 General
The most significant accounting policies applied in the preparation of these consolidated financial statements are set
out below.
These consolidated financial statements have been prepared in accordance with the principles for valuing certain types
of assets, liabilities, income and expenses, in accordance with IFRS. The measurement bases are disclosed in detail
further in the accounting policy to the consolidated financial statements.
It should be noted that accounting estimates and assumptions have been used in preparing the consolidated financial
statements. Although they are based on information provided to management at the date of preparation of the
consolidated financial statements, actual results may differ from estimates and assumptions made.
4.2 Presentation of the consolidated financial statements
These consolidated financial statements have been presented in accordance with ICC 1 “Presentation of Financial
Statements”.
The consolidated statement of financial position presents two comparative periods when the Group applies accounting
policies retrospectively , recalculates retrospectively positions in these consolidated financial statements or reclassifies
positions in the consolidated financial statements.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
13
4.3 Basis of consolidation
The financial statements of the Group consolidate the financial statements of the parent and all subsidiaries as at 31
December 2021. Subsidiaries are all entities that are controlled by the parent. There is control when the parent
company is exposed to, or is entitled to, variable returns from its participation in the investee and is able to influence
those returns through its powers over the investee. All subsidiaries prepare their financial statements for the reporting
period ended 31 December.
All intragroup transactions and balances are eliminated, including unrealized gains and losses from transactions
between the companies in the Group. When unrealized losses on intragroup sales of assets are eliminated, the related
assets are tested for impairment from Group’s point of view. The amounts presented in the financial statements of the
subsidiaries have been adjusted where necessary to ensure compliance with the accounting policies applied by the
Group.
Profit or loss and other comprehensive income of subsidiaries that are acquired or disposed of during the year are
recognized from the date of acquisition or until the date of disposal.
Non -controlling interests as part of equity represent the share of profit or loss and net assets of the subsidiary that are
not held by the Group. The total comprehensive income or loss of the subsidiary relates to the owners of the parent
and the non- controlling interests based on their relative share in the equity of the subsidiary.
If the Group loses control of a subsidiary, any investment retained in that entity is recognized at fair value at the date
that control is lost, and the change in carrying value is recognized in profit or loss. The fair value of any investment
retained in the entity at the date of loss of control is considered fair value on initial recognition of a financial asset in
accordance with IFRS 9 “Financial Instruments” or, where applicable, on the cost of initial recognition of an
investment in an associate. or a jointly controlled entity. In addition, any amounts recognized in other comprehensive
income in respect of that subsidiary are reported on the same basis as if the Group had directly disposed of the related
assets or liabilities (e.g. reclassified to profit or loss or carried directly to retained earnings . in accordance with the
requirements of the relevant IFRS).
The profit or loss from derecognition of an investment in a subsidiary is the difference between the fair value of the
consideration received and the fair value of any retained investment in the former subsidiary and the carrying value
of the subsidiary's assets (including goodwill) and any non- controlling interest.
4.4 Business combinations
All business combinations are accounted for by using the purchase method. The consideration transferred in a business
combination is measured at fair value calculated as the sum of the acquisition-date fair values of the assets, transferred
by the acquirer, the liabilities to former owners of the acquiree assumed by the acquirer and the equity interests issued
by the Group. The transferred consideration includes the fair value of assets and liabilities, arising as a result of the
contingent considerations. The acquisition-related costs are accounted for in profit or loss, in the period in which the
costs are incurred.
The purchase method includes the recognition of the acquiree's identifiable assets and liabilities, including contingent
liabilities, whether or not they were recognized in the acquiree's financial statements prior to the business combination.
Upon initial recognition, the assets and liabilities of the acquired subsidiary are included in the consolidated statement
of financial position at their fair value, which serves as a basis for subsequent measurement in accordance with
Group’s accounting policies.
For each business combination, the Group measures each non- controlling interest in the acquiree, which represents a
share of its equity and entitles it to a liquidation share, either at fair value or in proportion to the non- controlling
interest in the acquiree's identifiable net assets. Other types of non- controlling interests are measured at fair value or,
if applicable, on a basis specified in another IFRS.
Goodwill is recognized after all identifiable intangible assets have been identified. It represents the excess of the fair
value of the consideration transferred at the acquisition date and the amount of each non- controlling interest in the
acquiree, and in a business combination achieved in stages, the fair value at the acquisition date of Group’s previously
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
14
held interest in the acquiree., above the fair value of the identifiable net assets of the acquiree at the acquisition date.
Any excess of the fair value of the identifiable net assets over the amount calculated above is recognized in profit or
loss immediately upon acquisition.
In a business combination achieved in stages, the Group revalues the previously held equity interest in the acquiree at
fair value at the acquisition date (i.e. at the acquisition date) and recognizes the resulting gain or loss, if any, in profit
or loss. the loss. Amounts recognized in other comprehensive income from equity participation in the acquiree before
the date of acquisition are recognized on the same basis as if the Group had disposed of directly from the previously
held equity interest.
If the initial accounting of the business combination is not completed by the end of the reporting period in which the
combination is performed, the Group reports provisional amounts for items for which the reporting has not been
completed. During the measurement period, which may not exceed one year from the date of acquisition, the Group
retrospectively adjusts these provisional amounts or recognizes additional assets or liabilities to reflect new
information received about the facts and circumstances that existed at the acquisition date and, if known, would have
affected the estimate of the amounts recognized at that date.
Any contingent consideration due from the acquirer is recognized at fair value at the acquisition date and is included
as part of the consideration transferred in exchange for the acquiree. Subsequent changes in the fair value of
remuneration under a condition classified as an asset or liability are recognized in accordance with IAS 39 Financial
Instruments: Recognition and Measurement either in profit or loss or as a change in other comprehensive income. If
the contingent consideration is classified as equity, it is not revalued until it is settled in equity. Changes in the fair
value of contingent consideration that represent provisional amounts during the measurement period are recognized
retrospectively at the expense of goodwill.
In a commitment to sell a plan involving a loss of control of a subsidiary, the Group classifies all consolidated assets
and liabilities of that subsidiary as held for sale, whether or not it will retain a non- controlling interest in its former
subsidiary after the sale. Assets (and disposal groups) classified as held for sale are presented separately in the
consolidated statement of financial position and are measured at the lower of their carrying value (initially, cost of
acquisition) and their fair value less direct expectations. selling expenses (net selling price). Any impairment loss is
allocated to these assets of an exemption group.
4.5 Transactions with non-controlling interests
Changes in Group’s share in the equity of a subsidiary that do not result in loss of control are treated as transactions
with owners of the Group. The carrying values of Group’s interests and non-controlling interests are adjusted to reflect
changes in their relative interest in the subsidiary. Any difference between the amount by which the non- controlling
interests are changed and the fair value of the consideration received or paid is recognized directly in equity and relates
to the owners of the parent.
4.6 Segment reporting
The management defines the operating segments on the basis of the main products and services offered by the Group:
- Electricity segment
- Natural Gas segment
- Coal segment
- segment "Administrative activity".
The Administrative segment comprises segments (Administrative and Telecommunications) that meet the aggregation
criteria under IFRS 8 Operating Segments and do not exceed the quantitative thresholds for separate reporting.
Each of these operating segments is managed separately, as different technologies, resources and distribution
approaches are used for each product or service. All transactions between the segments are carried out at prices
corresponding to transactions between independent countries, where applicable, and in the Electricity and Natural Gas
segments transactions are reported at prices determined by the regulatory body Energy and Water Regulatory
Commission (EWRC). In segment reporting, the Group applies a valuation policy consistent with the valuation policy
used in the consolidated financial statements.
Finance income and expenses are not included in the results of operating segments, which are regularly reviewed by
those responsible for making operational decisions.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
15
4.7 Investments in joint ventures and associates
A joint venture is a contractual arrangement whereby the Group and other independent parties engage in joint ventures
and the parties to the joint venture are entitled to the net assets of the entity. Investments in joint ventures are accounted
for using the equity method.
Associates are those entities over which the Group has significant influence, but which are neither subsidiaries nor
joint ventures. Investments in associates are initially recognized at cost and subsequently accounted for using the
equity method. The cost of the investment includes the cost of its acquisition.
Goodwill or adjustments to the fair value of Group’s interest in the associate are included in the cost of the investment.
All subsequent changes in the amount of Group’s interest in the equity of the associate are recognized in the carrying
value of the investment. Changes due to the profit or loss realized by the associate are reflected in the consolidated
statement of profit or loss of the line "Share of profit in associates and jointly controlled entities". These changes
include the subsequent depreciation or impairment of the fair value of the assets and liabilities of the associate
determined on acquisition.
Changes in the other comprehensive income of the associate, as well as in items recognized directly in the equity of
the associate, are recognized in the other comprehensive income or in the equity of the Group, respectively. In cases
where Group’s share of the associate's realized losses exceeds the amount of its interest in the associate, including
unsecured receivables, the Group does not recognize its share of the associate's further losses unless the Group has
entered into contractual or actual liabilities or has made payments on behalf of the associate. If the associate
subsequently makes a profit, the Group recognizes its share to the extent that the share of the profit exceeds the
cumulative share of losses that were not previously recognized.
Unrealized gains and losses on transactions between the Group and its associates and joint ventures are eliminated to
the extent of Group’s interest in those entities. When unrealized losses on the sale of assets are eliminated, the related
assets are tested for impairment from Group’s point of view.
The amounts recognized in the financial statements of associates and joint ventures have been restated, where
necessary, to ensure compliance with Group’s accounting policies.
Upon loss of significant influence over an associate, the Group measures and recognizes any retained investment in
the fair value at its fair value. Any difference between the carrying value of the investment in the associate in the event
of a loss of significant influence and the amount of the fair value of the retained interest and the proceeds of the write-
off is recognized in profit or loss.
If the shareholding in the associate is reduced but without loss of significant influence, only a proportionate part of
the amounts recognized in other comprehensive income is reclassified to profit or loss.
4.8 Foreign currency transactions
Transactions in foreign currency are reported in the functional currency of the respective company by the Group at
the official exchange rate as of the date of the transaction (announced fixing of the Bulgarian National Bank). Foreign
exchange profit and losses resulting from the settlement of such transactions and the revaluation of foreign currency
positions at the end of the reporting period are recognized in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the transactions. Non-monetary items measured at fair value in a foreign currency are
translated at the exchange rate at the date that the fair value was determined.
The functional currency of the individual companies of the Group has not changed during the reporting period.
Upon consolidation, all assets and liabilities are translated into BGN at the closing rate as of the date of the
consolidated financial statements. Income and expenses are translated into the presentation currency of the Group at
the average exchange rate for the reporting period. Foreign exchange differences lead to an increase or decrease in
other comprehensive income and are recognized in the allowance for translation into equity. Upon disposal of a net
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
16
investment in a foreign operation, the accumulated foreign exchange differences from restatements recognized in
equity are reclassified to profit or loss and recognized as part of the gain or loss on sale. Goodwill and adjustments
related to the determination of fair values at the acquisition date are treated as assets and liabilities of the foreign
enterprise and are translated into BGN at the closing rate.
4.9 Revenue recognition
4.9.1. Revenues from contracts with clients
Recognition of revenue under contracts with customers
Revenue from contracts with customers is recognized when control of the goods and / or services promised in the
contract is transferred to the customer in an amount that reflects the consideration to which the Group expects to be
entitled in exchange for those goods or services.
The control is transferred to the client when (or as) he satisfies the obligation to perform, according to the terms of the
contract, by transferring the promised goods or services to the client. An asset (good or service) is transferred when
(or as) the customer gains control of that asset.
Evaluation of a contract with a client
A contract with a client is available only when it enters into force: a) it has a commercial nature and motive, b) the
parties have approved it (orally, in writing or on the basis of "established and generally accepted business practice")
and have committed to perform it, (c) the rights of each party can be identified; and (d) the terms of payment can be
identified; and (e) the remuneration to which the Group is entitled in the performance of its obligations is likely to be
received.
In the initial evaluation of its contracts with customers, the Group assesses whether two or more contracts should be
considered in their combination and accounted for as one, and whether the promised goods and / or services in each
individual and / or combined contract should be accounted for. as one and / or more performance obligations.
Any promise to transfer goods and / or services that are distinguishable (in themselves and in the context of the
contract) is accounted for as a single performance obligation.
The Group recognizes revenue for each individual obligation to perform at the level of an individual contract with a
client by analysing the type, term and conditions for each specific contract. In the case of contracts with similar
characteristics, revenue is recognized on a portfolio basis only if grouping it in a portfolio would not have a materially
different effect on the financial statements.
Contracts with customers usually involve a single obligation to perform.
When another (third) party is involved in the performance of the obligations, the Group determines whether it acts as
a principal or agent by assessing the nature of its promise to the client: to provide the self-defined goods or services (
principal ) or arrange for another party to provides (agent). The Group is the principal and recognizes as income the
gross amount of remuneration if it controls the promised goods and / or services before transferring them to the client.
If the Group does not have control over the promised goods and / or services and its only obligation is to arrange for
a third party to provide those goods and / or services, the Group is an agent and recognizes the proceeds of the
transaction in the amount of the net amount it retains as provided. agent services.
The group has come to the conclusion that it is the principal of its main contracts with clients.
Estimation of revenues under contracts with clients
Revenue is measured on the basis of the transaction price determined for each contract.
In determining the transaction price, the Group takes into account the terms of the contract and its usual business
practices.
The transaction price is the amount of remuneration that the Group expects to be entitled to in exchange for the transfer
of the promised goods or services to the customer, except for amounts collected on behalf of third parties (e.g. value
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
17
added tax). The remuneration promised in the contract with the client may include fixed amounts, variable amounts,
or both.
When (or as) a performance obligation is satisfied, the Group recognizes as revenue the value of the transaction price
(which excludes estimates of variable remuneration containing restrictions) that is attributed to that performance
obligation.
The Group considers whether there are other promises in the contract, which are separate performance obligations, to
which part of the transaction price must be allocated.
In determining the transaction price, the impact of variable remuneration, the existence of significant Items of
financing, non-monetary remuneration and the remuneration due to the client are taken into account.
Implementation obligations and approach to the recognition of major types of revenue under contracts with
customers
Sale of electricity
Revenues from the sale of electricity include the following:
‒ public procurement, including a special balancing group coordinator;
‒ electricity trade;
‒ supply of electricity as a supplier of last resort, including the coordinator of a special balancing group
Revenues from the sale of electricity are recognized over time, as deliveries are a series of separate goods, which is a
promise to supply electricity that is essentially the same and has a uniform pattern of transfer to the customer.
Revenue is recognized in the consolidated income statement when electricity is supplied through the transmission and
distribution networks of final suppliers, electricity distribution companies, the transmission system operator (ESO
EAD), the supplier of last resort, customers of the supplier of last resort. and on the free market. Revenues from sales
are recognized on the basis of electricity meter readings for consumed electricity or on registered schedules.
The selling prices of the electricity sold by the Group can be: sale at a regulated price, sale at a fixed price under a
contract, sale on power exchange (fixed price under a certain transaction). The transaction price can be defined as a
fixed remuneration for the delivery of individual quantities of the series of goods (electricity).
Allocation of the transaction price to the performance obligations is made on the basis of unit selling prices (regulatory,
contractual or market).
At the end of each charging period, the Group measures its progress towards full settlement of the performance
obligation, which has been satisfied over time. The measurement is performed by confirming the trading schedules,
i.e. an assessment is made of the quantities of energy delivered, for which the Group recognizes revenues from
electricity supply, except for situations in which the company operates as an agent.
Sales prices are fixed (regulated price, fixed contract price, fixed price per transaction). The usual credit period is from
10 to 30 days. In certain cases, the Group collects short-term advance payments from customers that do not have a
significant component of funding. The collected advance payments from the clients are presented in the consolidated
statement of financial position as liabilities under contracts with customers.
Revenues from access to the electricity transmission network
The performance obligation is to provide access to the transmission network. Revenue is recognized in the
consolidated statement of profit or loss in the event of access of electricity through the electricity transmission network
to customers' sites.
The performance obligation is met over time by the Group measuring the progress of the promised performance using
the practical facility in paragraph B16 of IFRS 15. This practical facility allows the Group to recognize revenue equal
to the amount it is entitled to invoice. As the transaction price is determined by access prices approved by the regulator
multiplied by the amount of energy received, which is measured with commercial metering devices, entered in the
state register of approved for the country types of commercial metering devices, the Group can prove that the invoiced
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
18
amount directly corresponds to the value the client receives. The latter is a prerequisite for the practical "invoicing"
facility to be used.
Revenues from transmission of electricity through the electricity transmission network
The performance obligation is to ensure the transmission of electricity. Revenue from the electricity transmission
service is recognized in the consolidated income statement for the transmission of electricity via the electricity
transmission network to the customers' sites.
The performance obligation is met over time by the Group measuring the progress of the promised performance using
the practical facility in paragraph B16 of IFRS 15. This practical facility allows the Group to recognize revenue equal
to the amount it is entitled to invoice. As the transaction price is determined by the transmission price approved by
the regulator multiplied by the amount of transmitted electricity, which is measured with commercial metering
devices, entered in the state register of approved for the country types of commercial metering devices, the Group can
prove that invoiced amount corresponds directly to the value the customer receives. The latter is a prerequisite for the
practical "invoicing" facility to be used.
Revenues from the sale of electricity from the balancing market
The performance obligation is to provide a balancing service. The performance obligation is met over time, and the
aggregated settlement statements for the relevant reporting period are recognized each month at the time the Group
receives confirmation from market participants. The Group measures the progress of the implementation of the
promise, using the practical facilitation under paragraph B16 of IFRS 15.
Revenues from connection of sites to the electricity transmission network
Revenue from the grid connection service provided to customers in exchange for the transfer of sites built by them
and recognized as transmission grid assets is recognized in the current financial result for the year in which the
connection fee is invoiced.
Natural gas sales
Sales of natural gas are carried out throughout the year in a continuous mode of operation.
Revenue from sales is recognized on each transfer of control over the assets sold when they are delivered to the buyer
and there are no outstanding liabilities that could affect the buyer's acceptance of natural gas. Delivery occurs for each
shipment of assets to the specific place (acceptance point), the risks of potential losses are transferred to the buyer and
he has accepted the assets in accordance with the contract of sale.
The quantity of natural gas delivered to the customer during each of the days of the respective month is reflected in
the Monthly Act, containing information about the obligations of Bulgargaz EAD for delivery and the obligations of
the customer for acceptance.
The client's remuneration for the sale of natural gas includes fixed and variable amounts.
The fixed amount is the selling price of natural gas for each month of the year and is formed in accordance with the
Ordinance on the regulation of natural gas prices. It is cost-oriented and consists of the following Items: delivery price,
public supply allowance (Art. 17, para. 6 of the NRCPG) and “obligation to society” (Art. 11a, para. 2 of the NRCPG).
The fee for capacity and transmission of natural gas is determined in accordance with the Methodology for determining
the price for access and transmission published by EWRC in accordance with the tariffs of the combined operator, in
whose favour it is collected at the expense of the client.
Variable remuneration is related to: a) deviations between the declared and actually delivered minimum annual amount
of gas; b) deviations in the daily agreed amount of gas; c) delivered natural gas of deteriorating quality.
Payment for sales is due within 12 days from the issuance of the final invoice for the supply of natural gas.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
19
Upon delivery of the assets, a receivable is recognized, as this is the moment when the right to remuneration becomes
unconditional and only the expiration of the time before the payment is due is required.
Revenues from sale of natural gas for balancing
Balancing is continuous and the client receives and consumes the benefits at the same time. Revenue is recognized
over time as in the sale of natural gas described above.
The remuneration from the client for the sale of natural gas for balancing includes fixed amounts and is based on the
price for the sale of natural gas for the current month plus the cost component for balancing, determined and fixed by
the EWRC for the gas year.
There is no financing component for the sales of natural gas for balancing, as the payment for the sales is due within
20 - 25 days from the issuance of the invoice, which is in line with market practice.
Access to and transmission of natural gas, balancing of the natural gas market, storage of natural gas, provision
of access to and use of an electronic platform for natural gas trading
Transit of natural gas to third countries, access and transmission of natural gas
Revenues from the transit of natural gas to third countries include the transmission of natural gas from the border with
Turkey to the borders with Greece, Northern Macedonia and Serbia .
Revenues from access and transmission of natural gas include access and transmission of natural gas at entry and exit
points / zones on the national gas transmission network in the country, as well as exit and entry points / zones on the
transit gas transmission network.
Balancing the natural gas market
In connection with the Rules for balancing the natural gas market in force since 01.10.2017, the Group, in its capacity
as a balancer, performs commercial balancing on the natural gas market, which is compensation for differences
between the amount of natural gas submitted by a given user of the gas transmission network at the entry points, and
the amount of natural gas withdrawn by this user through the exit points of the network. The obligation of the balancer
is to cover the individual imbalances of the users of the gas transmission networks. The price for the balancing service
is determined by the terms and conditions of the Methodology for determining the daily imbalance fee and the
balancing neutrality fee, approved by the EWRC. The price-forming elements - the price of natural gas set by the
public supplier, the price for sale of natural gas to final suppliers of natural gas and to customers connected to the gas
transmission network, "small adjustment", which is a correction in the price of natural gas for balancing, expressed as
a percentage, applied with a positive or negative sign, depending on the sign of the imbalance in order to determine
the daily imbalance charges and imbalance charges calculated on a daily basis which the network user pays or receives
depending on the amount of his daily imbalance. In order to achieve neutrality from the balancing activity, the Group
charges a balancing neutrality fee, which can be a positive or negative value, depending on the distributed quantities
of natural gas at each entry / exit point / zone of the gas transmission system owned by the Group.
Natural gas storage
The activity "Natural gas storage" is carried out in the only underground gas storage facility in the country - Chiren
(UGS Chiren), owned by Bulgartransgaz EAD. UGS Chiren is a complex of underground and aboveground facilities
- production wells, gas pipelines (loops) to them, compressor station with a total installed capacity of 10 MW, facilities
for preparation, processing, control and measurement of gas and other associated facilities. The technological process
related to the natural gas storage service is seasonal (cyclical) and is expressed in the extraction and injection of gas
from / into the underground gas storage.
All revenues from the transmission of natural gas to third countries, access and transmission, balancing and storage
of natural gas are recognized over time as deliveries are a sequence of separate service, which is a promise to supply
natural gas, which is essentially uniform and has a homogeneous pattern of transfer to the customer.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
20
Revenue is recognized in the consolidated statement of profit or loss when natural gas is transferred through the
transmission network to the relevant point of the customer. Revenue from sales is recognized on the basis of quantities
reported through measuring instruments or registered schedules.
The selling prices of the access and transmission service, realized by the Group, can be on the basis of a regulated
price and on the basis of a fixed price under a contract. The transaction price can be defined as a fixed remuneration
for the transfer of individual quantities of the series of goods (quantities of transferred natural gas).
The selling prices of the storage service are based on a regulated price. The transaction price can be defined as a fixed
remuneration for the storage of individual quantities of the series of goods (quantities of stored natural gas).
Allocation of the transaction price to the performance obligations is made on the basis of unit selling prices (regulatory,
contractual or market).
At the end of each charging period, the Group measures its progress towards full settlement of the performance
obligation, which has been satisfied over time. The measurement is performed by confirming the transferred quantities
and / or the requested quantities according to the schedule, i.e. an assessment is made of the transferred quantities of
natural gas for which the Group recognizes revenues from access and transmission of natural gas.
Sales prices are fixed (regulated price, fixed price under contract). The usual credit period is from 10 to 30 days. In
certain cases, the Group collects short-term advance payments from customers who do not have a significant
component of funding. Advance payments collected from the clients are presented in the consolidated statement of
financial position as liabilities under contracts with customers.
Revenue from the service of providing access to and use of an electronic platform for natural gas trading
Gas Hub Balkan EAD was established as an operator of a natural gas trading platform in accordance with the Bulgarian
Energy Law. In 2021, Gas Hub Balkan EAD offers the following services for access to its e-commerce platform:
• Segment for offering quantities under the gas release program (Gas Release Program) provides the public
provider with a software and commercial environment for the release of quantities, in accordance with the amended
and supplemented Energy Law of the Republic of Bulgaria.
• Short-term (spot) segment of the platform, which offers short-term standardized products "within the day",
"day ahead", as well as time and local products for the needs of balancing the network of the transmission system
operator. Trade is carried out on an anonymous basis, in accordance with the provisions of Regulation (EU) №
312/2014.
• Long-term segment of the trading platform, which offers products traded on a medium-term and long-term
basis - weekly, monthly, quarterly and annual.
Revenue from the provision of the service for access to and use of an electronic platform for natural gas trading is
recognized in the period during which the services are provided. The Group transfers control of the services over time
and therefore satisfies the performance obligation and recognizes revenue over time. In recognizing revenue from the
service provided, the Group applies a method of measuring progress that takes into account the resources invested.
In 2020, Gas Hub Balkan (HCB) started active operation. In order to be able to participate in the platform, GHB
customers initially pay a registration fee of BGN 5,000. GHB enters into perpetual contracts with its customers to
provide services for access to and use of the electronic natural gas trading platform. Contracts have standard terms
that are the same for all customers. The contract requires the client to pay an advance fee for the initial registration of
the client in the platform. The fee is non-refundable. The initial administrative activities of the Registration Group do
not transfer a good or service to the client and therefore do not give rise to an obligation to perform.
The advance fee is an advance payment for future services for access to and use of the electronic platform for natural
gas trading . Therefore, the Group determines the transaction price, which includes a non -refundable advance fee,
and recognizes revenue for services to access and use the electronic natural gas trading platform in the course of
providing them.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
21
The management of the Group has assessed that the revenues from the registration fee should be rescheduled for the
period until 30.06.2021 and from 01.07.2021 to 31.12.2022, taking into account all the facts and circumstances such
as: development of the gas market , the presence of competitors after the issuance of licenses for an organized stock
market, changes in the provision of services and the implementation of a clearing mechanism.
Revenue from the use of additional screens
In addition to the main contracts, the Group provides its customers with the option to use more than one screen to
access and operate the natural gas trading platform.
The Group determines that the option to use additional screens does not provide a material right that the customer
would not have received without concluding these basic contracts. The prices for the use of additional screens reflect
the unit selling prices for these services. To the extent that the option to use additional screens does not provide the
client with a substantive right, the Group concludes that this is not an obligation to perform in the contract. As a result,
the Group does not allocate any part of the transaction price to the option to use additional screens. The Group
recognizes revenue from the use of additional screens if and when it provides these services.
Revenue from the use of an additional screen is recognized in the period in which the services are provided. The
Group transfers control of the services over time and therefore satisfies the performance obligation and recognizes
revenue over time. In recognizing revenue from the service provided, the Group applies a method of measuring
progress that takes into account the resources invested.
Revenues from the provision of data services
The Group offers a service for reporting data on transactions concluded or registered through the Balkan Hub Balkan
platform in connection with the requirements of Regulation (EU) 1227/2011 on the integrity and transparency of the
wholesale energy market.
Revenue from data reporting services is recognized in the period in which the services are provided. The Group
transfers control of the services over time and therefore satisfies the performance obligation and recognizes revenue
over time. In recognizing revenue from the service provided, the Group applies a method of measuring progress that
takes into account the resources invested.
Revenue from services provided to the Group for a fixed amount is recognized when the Group transfers control of
the client's assets. Invoices for transferred services are issued monthly, which reflects the linear method of recognition,
i.e. upon receipt of the assets from the client.
Invoices are due for payment by the tenth day of the month following the transaction.
Coal sales
Lignite supplies are made year-round under continuous operation. The customer receives and consumes the benefits
at the same time, the Group transfers control of the coal over time and therefore satisfies the performance obligation
and recognizes revenue over time.
Control over the assets sold is transferred when they are delivered to customers and there are no outstanding
commitments that could affect the buyer's acceptance of the coal. Delivery occurs for each shipment of coal to a
specific point determined by the customer (plant) when the risks of potential losses are transferred to the customer
and he has accepted the assets in accordance with the contract of sale.
For each performance obligation (delivery accepted by the customer), the Group recognizes revenue, by measuring
the progress made, to fully meet the performance obligation.
The quantity of coal delivered for a certain period of time (according to the contractual terms), for which control has
been transferred to the client, has been accepted by the management as an appropriate measure of the fulfilment of the
obligation and reporting of the progress. Revenue is recognized for the relevant quantity delivered for the relevant
period and accepted by the customer.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
22
Sales prices are fixed (fixed price under contract). The usual credit period is from 10 to 30 days. In certain cases, the
Group collects short-term advance payments from customers who do not have a significant component of funding.
Advance payments collected from the clients are presented in the consolidated statement of financial position as
liabilities under contracts with customers.
Revenues from other services
Revenue from the provision of services is recognized in the period in which the services are provided. The Group
transfers control of the services over time and therefore satisfies the performance obligation and recognizes revenue
over time. If at the end of the reporting period the service under the contract is not fully performed, revenue is
recognized on the basis of the actual service provided by the end of the reporting period, as a proportion of the total
services to be provided because the customer receives and consumes benefits simultaneously. This is determined on
the basis of the actual time spent on work performed, relative to the total expected time to perform the service.
The client pays for the services provided on the basis of the clauses set out in the specific contract. The usual credit
period is from 10 to 30 days after the provision of services. In the event that the services provided by the Group exceed
the payment, an asset is recognized under the contract. If the payments exceed the services provided, a liability under
the contract is recognized.
Revenues from sales of goods
Revenue from sales of goods and materials is recognized when control of the assets sold is transferred. Delivery occurs
when the assets have been sent to the customer, the risks of potential losses have been transferred to the buyer and
either he has accepted the assets in accordance with the contract of sale. The usual payment term is up to 30 days after
delivery.
Expenses under contracts with clients
The Group recognizes as client contract costs the additional and directly related costs that are incurred in concluding
a contract with a client and which would not have arisen if the contract had not been concluded and expects these
costs to be reimbursed for a period longer than twelve months;
In its usual practice, the Group does not bear direct and specifically incurred costs for obtaining contracts with
customers and costs for the performance of such contracts, which would not have arisen if the relevant contracts had
not been concluded.
Balances on contracts with customers
Trade receivables and assets under contracts
The receivable represents Group’s right to receive remuneration in a certain amount, which is unconditional (i.e.,
before the payment of remuneration becomes due, it is only necessary that a certain period of time has elapsed).
The contractual asset is the right of the Group to receive remuneration in exchange for goods or services that it has
transferred to the customer, but which is not unconditional (accrual charge). If by transferring the goods and / or
providing the services the Group fulfils its obligation before the client pays the respective remuneration and / or before
the payment becomes due, an asset under the contract is recognized as earned remuneration (which is conditional).
Recognized assets under a contract are reclassified as a trade receivable when the right to remuneration becomes
unconditional.
Liabilities under contracts
As a liability under the contract, the Group presents the payments received from the client and / or an unconditional
right to receive payment before it has fulfilled its obligations to perform under the contract. Liabilities under a contract
are recognized as income when (or as) it satisfies performance obligations.
Assets and liabilities arising from a contract are presented net in the consolidated statement of financial position, even
if they result from different contractual obligations under the contract.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
23
Subsequent to initial recognition, trade receivables and contract assets are reviewed for impairment in accordance
with the rules of IFRS 9 Financial Instruments.
4.9.2. Other income
Other income includes transactions that are incidental to the principal activities of the Group and are income or income
that is recognized under other standards and is outside the scope of IFRS 15.
Other income
Recognition approach
Revenues from
the Security of
the Electricity
System Fund
The amount of payments to the public provider is determined in accordance with the decisions of the EWRC
on the costs of the public provider, which should be reimbursed by the Fund, within the costs approved by
the EWRC and the budget adopted by the Board. The funds provided by the SESF are recognized in the profit
or loss on a systematic basis during the periods during which the enterprise recognizes as an expense the
relevant costs that the funds are intended to compensate until the approved EWRC budget for the relevant
price period.
Net profit from
sale of property,
plant and
equipment
Profit or losses arising on the derecognition of an item of property, plant and equipment or an intangible asset
as a result of a sale are included in profit or loss when the asset is derecognised. The asset is derecognised
when control of the asset sold is transferred.
Rental income
Lease income from operating leases is recognized as income on a straight-line basis over the term of the lease,
except when Group’s management determines that another system basis reflects more accurately the timing
model that reduces the benefit derived from the lease. leased asset.
Revenue from
financing
Where the grant (financing) is related to a cost item, it is recognized as income for the periods necessary to
reconcile it on a systematic basis with the costs it is intended to offset. When the donation (financing) is
related to an asset, it is presented as a liability and is included in income over the useful life of the related
asset.
Revenue from
insurance events
Revenue is recognized when Group’s right to receive payment is established.
Revenue from
penalties
Revenue is recognized when Group’s right to receive payment is established.
Revenue from
write-off of
liabilities
Revenue from the write-off of a liability is recognized when the liability expires or the creditor waives its
rights.
4.9. 3. Financial income
Group’s financial income includes interest income on debt instruments, dividend income, changes in the fair value of
financial assets measured at fair value through profit or loss, foreign exchange profits, net profits on transactions in
financial instruments.
Recognition of interest income
Interest income is calculated by applying the effective interest rate to the gross carrying value of financial assets,
except for financial assets that are credit impaired (Phase 3), for which interest income is calculated by applying the
effective interest rate to their amortized value (gross carrying value adjusted for the provision for expected credit
losses).
Dividend income
Dividend income from equity instruments (minority interests) is recognized in the consolidated income statement in the period in
which the right to receive payment is established.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
24
4.10 Operating expenses
Expenses are recognized when they are incurred and on the basis of accrual and comparability principles and to the
extent that it would not lead to the recognition of assets / liabilities that do not meet the definitions of such, according
to IFRS. Prepaid expenses are deferred as an expense in the period to which they relate.
4.11 Interest expenses and loan expenses
Interest expense is recognized on an accrual basis for the periods to which it relates, using the effective interest method.
Borrowing costs mainly represent interest on Group’s bank loans and bonds. All borrowing costs that are directly
attributable to the purchase, construction or production of a qualifying asset are capitalized during the period in which
the asset is expected to be completed and ready for use or sale by applying a percentage of capitalization to the cost
of this asset. The percentage of capitalization is the weighted average of the costs of loans attributable to loans of the
Group that are outstanding during the period, excluding loans received specifically for the purpose of acquiring one
eligible asset.
Other borrowing costs are recognized as an expense in the period in which they are incurred in the consolidated
statement of profit or loss under section Financial expenses.
4.12 Profit or loss from discontinued operations
Discontinued operations are components of the Group that either have been disposed or were classified as held-for-
sale or as held-for-distribution to the sole-shareholder, and:
• Represent a separate major line of business or cover operations in a particular geographical area;
• Are part of a separate coordinated plan to sell a particular major line of business or operations in a particular
geographical area; or
• Are a subsidiary acquired exclusively with a view to resale.
Profit or loss from discontinued operations, as well as Items of profit or loss from prior periods, are presented as a
single amount in the consolidated statement of profit or loss.
The disclosure of discontinued operations from the previous year relates to all activities that were discontinued at the
date of these consolidated financial statements for the last presented period. If operations that were presented as
discontinued in the previous period are renewed during the current year, the relevant disclosures for the previous
period should be changed .
4.13 Property, plant and equipment
Items of property, plant and equipment are initially measured at cost, including the cost of acquisition, as well as any
direct costs of bringing the asset to working condition. Their subsequent valuation after initial recognition applies to
a whole class of similar assets as follows:
№
Class of property, plant and equipment
Model of subsequent evaluation
1
Lands
Revaluation model
2
Improvements on land and terrain
Revaluation model
3
Buildings and constructions
• massive
Revaluation model
• non-massive
Cost model
4
Property, plants and equipment
Revaluation model
5
Computer Systems
Cost model
6
Vehicles
• freight vehicles
Revaluation model
• cars
Cost model
• special vehicles
Revaluation model
7
Furniture, fixtures and fittings
Cost model
8
Spare parts reported as property, plant and equipment
Revaluation model
9
Other property, plant and equipment
Cost model
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
25
Property, plant and equipment that are accounted for using the revaluation model are subsequently measured at
revalued amount, which is equal to the fair value at the date of revaluation, less any accumulated depreciation and
impairment losses. Revaluations are presented in the consolidated statement of comprehensive income and are
reported at the expense of equity (revaluation reserve), if not preceded by previously accrued expenses. Upon sale or
write-off of the revalued asset, the remaining revaluation reserve is recorded at the expense of retained earnings.
Revaluations are performed in compliance with the following periodicity of the revaluation:
• when the fair value of assets undergoes only minor changes, the revaluation is performed every three years;
• when the fair value of property, plant and equipment changes significantly at shorter intervals, their revaluation is
performed at shorter intervals so that the carrying value of the asset does not differ materially from its fair value.
When applying the revaluation model, the frequency of subsequent revaluations of property, plant and equipment
depends on whether the carrying value materially differs from the fair value of the revaluated asset as of end of the
reporting period.
In this regard, when performing the annual inventory at the end of the reporting period (end of the financial year), the
Group reviews property, plant and equipment to indicate whether their carrying value differs significantly from their
fair value.
A significant deviation is the deviation of the carrying value from the fair value of the asset at the date of preparation
of the financial statements by more than 5%. The deviation is significant even if it is less than 5%, but the difference
between the carrying value and fair value as a cumulative amount of property, plant and equipment is significant for
the purposes of preparing the consolidated financial statements.
Property, plant and equipment that are accounted for using the cost model are subsequently measured at cost less
accumulated depreciation and impairment losses. Impairment losses are recognized as an expense and recognized in
the consolidated statement of comprehensive income for the period.
Subsequent expenditure on an asset of property, plant and equipment is added to the carrying value of the asset when
it is probable that the economic benefits associated with the item will flow to the Group. All other subsequent
expenditure is recognized as an expense in the period in which it is incurred.
The residual value and useful life of property, plant and equipment are assessed by management at each reporting
date.
Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful
lives of the individual asset groups, as follows:
Buildings
5-80 years
Property, plant and equipment
2-50 years
Vehicles
2-30 years
Furniture
2-30 years
Other property, plant and equipment
3-30 years
Depreciable buffer gas
60 years
The annual depreciation rate for the depreciable lands for coal mining is calculated as a coefficient and can be
presented as follows:
K =
CP
SCR + BR + CRIP
where:
CP
Coal Production, in tones
SCR
Stripped Coal Reserves
BR
Blocked Reserves
CRIP
Coal Reserves in Progress
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
26
Depreciation expenses are included in the consolidated statement of profit or loss in line “Depreciation expenses” and
as part of “Profit / (Loss) for the year from discontinued operations”.
Buffer gas
The buffer gas of the Group is a specific non-current asset, a significant part of which is gas in the underground gas
storage Chiren (UGS Chiren), and the rest is in the gas transmission system.
The natural gas available in the underground gas storage Chiren (UGS Chiren) includes operating gas and buffer gas.
The natural gas located in the UGS Chiren is inventoried by tank simulation using specialized ECLIPSE software. An
analysis of the change in the pressures in the individual boreholes during tank simulation for the operation of the
underground part is performed in relation to the actually measured pressures.
The buffer gas maintains the formation pressure required to extract the working gas. Buffer gas located in an
underground gas storage is reported as a fixed asset.
The amount of buffer gas was estimated by technical specialists in the Group, based on the formation pressures of the
boreholes and the outlet pressure of UGS Chiren, i.e. at the point of supply of natural gas in the gas pipeline.
Buffer gas includes physically extractable and non-extractable natural gas. The amount of physically extractable
natural gas is estimated. The extracted buffer gas is the possible amount of natural gas that could be extracted on the
surface at a pipeline pressure of 35 bar at the existing facilities . The extractable buffer gas is non-depreciable . Non-
extractable buffer gas is depreciated.
The buffer gas in the transit and main gas pipelines (quantities of natural gas required for the operation of the main
and transit gas pipelines) is also categorized as depreciable and non-depreciable as the depreciable part of the gas is
the one, which can be extracted in the liquidation of the gas pipelines.
Group’s technical experts have estimated the unrecoverable quantity of natural gas which would be irretrievably lost
in case of dismantling the transmission and transit gas pipelines. This quantity is considered as depreciable gas. The
rest of the estimated minimum quantity of natural gas required for the normal functioning of the gas transmission
network is non-depreciable. This natural gas could be extracted in case of dismantling.
The profit or loss on the sale of property, plant and equipment is determined as the difference between the proceeds
from the sale and the carrying value of the asset.
4.14 Intangible assets
Intangible assets acquired separately are initially measured at cost, including all duties paid, non-refundable taxes and
direct costs incurred in preparing the asset for operation, with capitalized costs amortized on a straight-line basis over
the estimated asset`s useful life as it is considered to be limited.
The subsequent measurement is based on the cost of acquisition less the accumulated depreciation and impairment
losses. The impairments are reported as an expense and are recognized in the consolidated statement of profit or loss
for the respective period.
Intangible assets with finite useful lives are amortized over their useful lives and tested for impairment whenever there
is any indication that they may be impaired. The amortization period and the method of amortization of intangible
assets with finite useful lives are reviewed at least at the end of each financial year. Changes in the expected useful
life or pattern of consumption of the future economic benefits of the intangible asset are accounted for by changing
the amortization period or method and are treated as a change in accounting estimates.
Subsequent costs incurred in respect of intangible assets after their initial recognition are recognized in the
consolidated income statement for the period in which they are incurred, unless the asset can generate more than the
initially anticipated future economic benefits and when those costs can be reliably valued and attributed to the asset.
If these conditions are met, the cost is added to the cost of the asset.
The residual value and useful life of intangible assets are assessed by management at each reporting date.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
27
Amortization of intangible assets is calculated on a straight-line basis over the estimated useful lives of the assets. The
useful lives of intangible assets are defined as limited as follows:
Software products
2-10 years
Licenses
the term of the license
Development products
5-20 years
Other intangible assets
3-10 years
Amortization expenses are included in the consolidated statement of profit or loss in the line “Depreciation expenses”
and as part of “Profit / (Loss) for the year from discontinued operations”.
Profit or losses arising from the disposal of intangible asset that represent the difference between the net disposal
proceeds and the carrying value of the asset are included in the consolidated income statement when the asset is
disposed.
The intangible assets created in the Group for the purposes of internal users of the group, as a result of development
activities, are recognized as assets by an expert commission appointed by Group’s management, according to the
intangible asset creation phase, if the following conditions are met:
− it is probable that the enterprise will receive the expected future economic benefits associated with the asset;
− availability of technical capacity to complete the asset;
− intention to complete the asset;
− the ability to use or sell the asset, including market availability or utility in Group’s internal use;
− the availability of adequate technical, financial and other resources for the completion of the development
activity and for the use or sale of the intangible asset;
− the value of the asset can be reliably determined.
Research activity
Research costs incurred in acquiring new scientific or technical knowledge are recognized in profit or loss when
incurred.
Research and development expenses incurred in respect of external orders under signed contracts with customers are
recognized as assets for sale.
The indirect technological production costs are distributed on the basis of labor and together with the direct costs form
the prime cost of the created asset.
Development activity
Development includes a plan or project for the production of new or significantly improved products and processes.
Development costs are capitalized only if these costs can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are probable and the Group intends and has sufficient resources
to complete the development and use or sell the asset. Capitalized costs include materials, labor, overheads that are
directly relevant to the preparation of the asset for its use, and capitalized interest costs. Other development costs are
recognized in profit or loss when incurred. Capitalized development costs are measured at cost less accumulated
amortization and impairment losses.
Expenses for the development of intangible assets that do not meet these capitalization criteria are recognized when
incurred.
4.15 Reporting of leasing contracts
The group as a lessee
For all new contracts, the Group assesses whether the contract is or contains a lease. A lease is defined as "a contract
or part of a contract that gives the right to use an asset (the underlying asset) for a period of time in return for payment".
To implement this definition, the Group assesses whether the contract meets three key assessments, which provided:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
28
- the contract contains a specific asset that is either explicitly identified in the contract or is implicitly identified
by being identified at the time the asset is made available to the Group;
- The Group is entitled to receive substantially all the economic benefits from the use of the specified asset
throughout the period of use, taking into account its rights within the defined scope of the contract;
- The Group has the right to direct the use of the specified asset throughout the period of use. The Company
assesses whether it has the right to direct "how and for what purpose" the asset to be used throughout the period
of use.
Valuation and recognition of a lease as a lessee
At the commencement date of the lease, the Group recognizes an asset for use and a lease liability in the balance sheet.
The asset with the right of use is measured at cost, which consists of the initial assessment of the lease liability, all
initial direct costs incurred by the Group, assessment of all costs for dismantling and disposal of the asset at the end
of the lease and any lease payments made before the start date of the lease (without any incentives received).
The Group depreciates the assets with the right to use on a linear basis from the date of the beginning of the lease to
the earlier from the end of the useful life of the asset with the right to use or the end of the lease term. The Group also
reviews the impairment of the asset with the right of use when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the unpaid lease payments,
discounted at that date , using the interest rate included in the lease. If this percentage cannot be determined directly,
the Group uses the interest rate it would have to pay to borrow for a similar period of time, with similar collateral, the
funds needed to obtain an asset of similar value in a similar economic environment.
Lease payments included in the measurement of a lease liability consist of fixed payments, variable payments based
on an index or percentage, amounts expected to be payable under a residual guarantee and payments arising from
options reasonably certain to are exercised.
After the effective date, the Group measures the lease liability by increasing the carrying amount to reflect the interest
on the lease liability and decreasing the carrying amount to reflect the lease payments made, and revalues the carrying
amount of the liability to reflect revaluations or changes in the lease. to reflect adjusted substantially fixed lease
payments.
The Group is exposed to potential future increases in variable lease payments based on an index or interest rate that
are not included in the lease liability until it enters into force. When adjustments to lease payments, based on an index
or interest rate, become effective, the lease liability is revalued and adjusted for the asset to be used.
When the lease liability is revalued, the corresponding adjustment is reflected in the asset with the right of use or in
the profit and loss, if the asset with the right of use is already reduced to zero.
The Group has chosen to account for short-term leases and leases for which the underlying asset is of low value, using
exemptions from recognition requirements. Instead of recognizing an asset with a right of use and a lease obligation,
payments in respect of them are recognized as an expense in the profit or loss on a line during the lease term.
In the consolidated statement of financial position, usable assets are included in property, plant and equipment, and
lease liabilities are included in trade and other payables.
The group as a lessor
As a lessor, the Group classifies its leases as operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of
the underlying asset and is classified as an operating lease if it does not.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
29
4.16 Tests for impairment of non-financial assets
In calculating the amount of impairment, the Group defines the smallest identifiable group of assets for which separate
cash flows (a cash-generating unit) can be determined. As a result, some assets are tested for impairment on an
individual basis and others on a cash-generating unit basis.
At each reporting date, the Group assesses whether there is any indication that an asset or cash-generating unit is
impaired. In the event of such indications or when an annual impairment test for an asset is required, the Group
determines the recoverable amount of that asset. The recoverable amount of an asset is the higher of its fair value less
costs to sell and the asset's cash-generating unit's value in use. The recoverable amount is determined for an individual
asset, except when the use of the asset does not generate cash flows that are substantially independent of the cash
flows generated by other assets or groups of assets. When the carrying amount of an asset or cash-generating unit is
higher than its recoverable amount, those cash-generating assets or units are considered impaired and their carrying
amount is reduced to its recoverable amount.
In determining the value in use of an asset, the expected future cash flows are discounted to their present value using
a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. Fair value less costs to sell is determined using an appropriate valuation model. The calculations are
confirmed by using other valuation models or other available sources of information about the fair value of a cash-
generating asset or entity.
Impairment losses are recognized as an expense in the consolidated statement of profit or loss, except for non-current
assets that are revalued prior to prior periods and the increase in revaluation is recognized in other comprehensive
income. In this case, the impairment loss also relates to other comprehensive income to the amount of the previously
recognized revaluation of the asset.
At each reporting date, the Group assesses whether there is any indication that an impairment loss recognized in prior
periods may no longer exist or may have decreased. If any such indication exists, the Group determines the recoverable
amount of the asset or cash-generating unit . An impairment loss is reversed only when there has been a change in the
estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. Recovery
of an impairment loss is limited so that the carrying amount of the asset does not exceed its recoverable amount and
does not exceed the carrying amount (after deduction of depreciation) that would have been determined if no
impairment loss had been recognized. assets in previous years. The reversal of an impairment loss is recognized in the
consolidated income statement unless the asset is measured at revalued amount, in which case it is reported as an
increase in revaluation.
4.17 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
A financial asset is any asset that represents: cash, an equity instrument of another entity, a contractual right to receive
or exchange cash or financial instruments with another entity under potentially favourable conditions, and a contract
to be settled with instruments of the entity. Group’s equity is a non-derivative in which it can or will receive a variable
number of its equity instruments, or a derivative that can or will be settled by exchanging a fixed amount of cash or
other financial assets for a fixed number of equity instruments. .
A financial liability is any liability that represents: a contractual right to provide or exchange cash or financial
instruments with another entity under potentially adverse conditions, and a contract that will be settled with the issuer's
equity instruments and is a non-derivative in which The Group may or will not receive a variable number of the entity's
equity instruments or a derivative that can or will be settled, other than the exchange of a fixed amount of cash or
other financial assets, for a fixed number of the entity's equity instruments.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
30
4.17.1. Financial actives
Initial recognition and classification
The Group initially recognizes a financial asset when it becomes a party to the contractual arrangement and classifies
it according to the financial asset management business model and the characteristics of the agreed cash flows.
The Group classifies its financial assets according to their subsequent measurement in three categories: "financial
assets measured at amortized cost", "financial assets measured at fair value through other comprehensive income", or
"financial assets measured at fair value through profit or loss" or loss', as appropriate, in accordance with the
contractual terms of the instruments and the business models established in the Group, in accordance with IFRS 9.
The Financial Asset Management Group's business model refers to the way it manages its financial assets to generate
cash flows. The business model determines whether cash flows will result from the collection of contractual cash
flows, the sale of financial assets, or both.
Initial evaluation
Initially, all financial assets, with the exception of trade receivables, are measured at fair value, plus direct transaction
costs, if they are not carried at fair value through profit or loss when the net of transaction costs are initially recognized.
Trade receivables that do not contain a significant component of financing and for which the Group applies the
practical measure under IFRS 15 in this regard are initially measured at the respective transaction price, in accordance
with IFRS 15.
Subsequent evaluation and presentation
For the purposes of subsequent measurement and presentation, financial assets are classified into one of the following
categories: "financial assets measured at amortized cost" (debt instruments), "financial assets measured at fair value
through other comprehensive income by reclassifying accumulated gains and losses (debt instruments), “Financial
assets at fair value in other comprehensive income, excluding reclassification of accumulated gains and losses on
write-offs” (equity instruments) or “financial assets at fair value through profit or loss” tools).
Classification groups
Financial assets at amortized cost (debt instruments)
Group’s management has determined that the financial assets representing cash in banks, trade receivables, other
receivables, court and assigned receivables and receivables from related parties are held by the Group in order to
receive the agreed cash flows and are expected to lead to cash flows. representing only principal and interest payments
(business model applied). These financial assets are subsequently classified and measured at amortized cost.
This category includes cash in banks, trade receivables, other receivables, court and award receivables and receivables
from related parties and loans. This category of financial assets is the most significant for the Group.
The Group measures and measures financial assets at amortized cost if both of the following conditions are met:
• The financial asset is held within a business model in order to hold financial assets in order to collect
contractual cash flows;
• The agreed terms of the financial asset lead to certain cash flow dates, which are only principal payments
and interest on the outstanding principal.
The subsequent valuation is performed using the 'effective interest rate' method, which calculates interest income by
applying the effective interest rate to the gross carrying amount of the instruments. For purchased or created assets,
with initial credit impairment and those with subsequently recognized credit impairment, the effective interest rate
and the effective interest rate adjusted for credit losses are applied, respectively, but at the amortized cost of the asset.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
31
Financial assets in this category are reviewed for impairment at the date of each of Group’s financial statements, with
changes in profit or loss.
Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.
Financial assets at fair value in other comprehensive income (equity instruments)
Upon initial recognition, the Group may make an irrevocable choice to classify certain equity instruments as those at
fair value through other comprehensive income, but only when they meet the definition of equity under IAS 32
Financial Instruments: Presentation and do not hold for trading purposes. The classification is determined on the basis
of individual level, instrument by instrument.
Subsequent measurement of this instrument is carried at fair value and changes are recognized in other comprehensive
income. Fair values are determined based on quoted prices in an active market, and when there are none based on
valuation techniques, usually an analysis of discounted cash flows.
Gains and losses on these financial assets are never reclassified to profit or loss. Dividends are recognized in the item
"financial income" in the consolidated income statement when the right to pay is established.
The Group has made an irrevocable choice to classify in this category its minority capital investments, which it holds
in the long term and in connection with its business interests in these companies. They are traded on capital markets.
Financial assets at fair value through profit or loss
The Group measures all other financial assets other than those designated at amortized cost or at fair value through
other comprehensive income, at fair value through profit or loss.
If this eliminates or significantly reduces a discrepancy in the measurement or recognition of a financial asset that
would result from recognizing results and changes on a different basis, the Group may apply the exceptions in
accordance with IFRS 9 and in initial recognition irrevocably to determine a financial asset as measured at fair value
through profit or loss, incl. contracts for the supply of a non-financial position. Such financial assets are presented in
the notes to the financial statements separately from other instruments to which this valuation approach is mandatory.
Derecognition
A financial asset (or, where applicable, part of a financial asset or part of a group of similar financial assets) is
derecognised when the contractual rights to the cash flows from the asset have expired or the Group has transferred
its rights to receive cash flows from the asset or undertook to pay in full the cash flows received without significant
delay to a third party under a "transfer" agreement.
When a financial asset is derecognised in its entirety, the difference between 1) the carrying amount (measured at the
date of derecognition) and 2) the consideration received (including any new asset received without the new assumption
of a new liability) is recognized in profit or loss.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a transfer agreement,
it assesses whether and to what extent the risks and rewards of ownership are retained. When it neither transfers nor
retains substantially all the risks and rewards of the asset, nor does it transfer control of the asset, the Group continues
to recognize the transferred asset to the extent of its continuing involvement. In this case, the Group recognizes a
related liability. The transferred asset and the related liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Impairment of financial assets
The Group recognizes provisions for expected credit losses for all debt instruments that are not reported at fair value
through profit or loss, using the approach presented in the table below:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
32
Type of financial asset
Category under IFRS 9
Impairment approach
1
Short-term trade receivables
Debt instruments measured at
amortized cost
Simplified approach
2
Trade receivables with financing
component
Debt instruments measured at
amortized cost
Standardized approach
3
Short-term receivables from related
parties
Debt instruments measured at
amortized cost
Simplified approach
4
Receivables from related parties
with a financing component
Debt instruments measured at
amortized cost
Standardized approach
5
Loan receivables
Debt instruments measured at
amortized cost
Standardized approach
6
Cash and cash equivalents
Debt instruments measured at
amortized cost
Standardized approach
7
Other financial, court and awarded
receivables
Debt instruments measured at
amortized cost
Simplified approach
Expected credit losses represent a probabilistic weighted estimate of credit losses (i.e. the present value of each
shortfall) for the expected maturity of the financial instrument. Cash deficit is the difference between the cash flows
due to the Group in accordance with the contract and the cash flows that the Group expects to receive. As expected
credit losses take into account the amount and timing of payments, expected credit loss is recognized even if the Group
expects the asset to be repaid in full, but later than the due date.
Impairment and losses on financial instruments are considered in three stages - the first two as expected credit losses
for losses that may arise as a result of default, and the third as credit impairment (loss), already based on evidence of
potential or actual default on instruments.
Expected credit losses for exposures for which there is no significant increase in credit risk compared to initial
recognition are recognized for credit losses that may arise as a result of default events over the next 12 months. For
credit exposures for which there is a significant increase in credit risk after initial recognition, an adjustment of the
loss for expected credit losses is required relative to the remaining life of the exposure, regardless of the default time
(CPA for the entire life of the instrument).
Receivables with financing element - To calculate the expected credit losses of long-term receivables with financing
element, the Group applies a standardized approach to impairment. Under this approach, the Group applies a “three-
step” impairment model based on changes from the initial recognition of the credit quality of the financial instrument
(asset).
Expected credit losses are recognized in three stages:
a. A financial asset that is not credit impaired when it is initially originated / acquired is classified in Phase 1. Since
its initial recognition, its credit risk and performance have been subject to continuous monitoring and analysis. The
expected credit losses of financial assets classified in Phase 1 are determined on the basis of credit losses resulting
from possible default events that could occur within the next 12 months of the life of the respective asset (12-month
expected credit losses). losses for the instrument).
B. In cases where, after the initial recognition of a financial asset, its credit risk increases significantly and as a result
its performance deteriorates, it is classified in Phase 2. The expected credit losses of financial assets classified in Phase
2 are determined for the entire remaining life (term) of the respective asset, regardless of the moment of occurrence
of the default (expected credit losses for the whole life (term) of the instrument).
C. In cases where the credit risk of a financial asset increases to a level that indicates that a default event has occurred,
the financial asset is considered impaired and is classified in Phase 3. At this stage, the losses incurred are determined
and calculated. asset for the rest of its life (term).
Group’s management has developed a policy and a set of criteria for analysis, establishment and assessment of the
occurrence of a state of "significant increase in credit risk".
For trade receivables and contractual assets arising from transactions within the scope of IFRS 15 that do not
contain a significant component of financing, the Group applies a simplified approach in accordance with IFRS 9,
recognizing an impairment loss for expected credit losses based on expected credit loss for the entire term of the
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
33
receivables as of each reporting date. The Group applies a matrix, which is used to calculate the expected credit losses
on trade receivables. Receivables are categorized by arrears and are grouped by type and customer segments with
different models of credit losses.
For trade receivables, the Group uses its experience in the field of credit losses on such instruments to estimate
expected credit losses. The historical data used are for periods from 3 to 5 years ago, grouped by type and relevant
models of customer segments, and adjusted with forecast factors specific to debtors and industry.
For cash in banks, the Group recognizes impairment of expected credit losses by applying the standardized approach,
using the credit rating of the financial institutions in which the Group has deposited its cash to determine the loss from
default in the parameters of the model.
At each reporting date, the Group determines the amount of impairment for each instrument in the amount equal to
the expected lifelong losses, if the credit risk for this financial instrument has increased significantly since the initial
recognition.
If, at the reporting date, the credit risk on a financial instrument has not increased significantly compared to the initial
recognition, the impairment for this financial instrument is equal to the expected 12-month credit loss.
Additional disclosures related to the impairment of financial assets are also contained in the following notes:
‒ Disclosures of significant estimates and assumptions - note 4.29
‒ Trade and other receivables - note 22
‒ Cash and short - term deposits - note 26
‒ Credit risk - note 38
4.17.2. Financial liabilities
Initial recognition, classification and evaluation
The Group recognizes in the consolidated statement of financial position a financial liability only when it becomes a
party to the contractual provisions of the financial instrument.
Upon initial recognition, financial liabilities are classified as: "financial liabilities subsequently measured at amortized
cost" (loans and borrowings, trade and other payables) or as "financial liabilities measured at fair value through profit
or loss".
Initial recognition takes place at the settlement date and is carried at fair value plus, in the case of financial liabilities
that are not carried at fair value through profit or loss, directly attributable to the acquisition or issue of the financial
liability. Management fees for received loans are deferred over the period of use of the loans, using the effective
interest rate method and are included in the amortized cost of loans.
Group’s financial liabilities include bank loans, trade and other payables and lease liabilities.
According to their maturity, financial liabilities are classified into long-term and short-term.
Subsequent evaluation
The subsequent valuation of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities initially recognized at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are made for redemption in the near future.
Profits or losses on liabilities held for trading are recognized in the consolidated statement of profit or loss.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
34
Financial liabilities determined on initial recognition at fair value through profit or loss are determined on the initial
recognition date and only if the criteria in IFRS 9 are met.
The Group has not designated financial liabilities as at fair value through profit or loss.
Financial liabilities measured at amortized cost
The category 'financial liabilities carried at amortized cost' includes borrowings, trade payables and other liabilities to
which the Group has become a party to a contract or arrangement and which are to be settled net in cash. This category
has the most significant share for Group’s financial instruments.
The received loans are temporarily attracted funds against services from Bulgarian or foreign banks and other financial
institutions, commercial loans, etc.
The bank loans were taken for the purpose of long-term support of Group’s activities. They are reflected in the
consolidated statement of financial position of the Group, net of borrowing costs. Direct transaction costs are
recognized in the consolidated statement of profit or loss on an accrual basis using the effective interest method and
are added to the carrying amount of the financial liability to the extent that they are not settled at the end of the period,
in which they arose.
Financial liabilities are subsequently measured at amortized cost using the effective interest method. Amortized cost
is calculated by taking into account any discount or premium on acquisition, including fees or charges, which are an
integral part of the effective interest rate. Expenses (calculated using the effective interest method) are included as
financial expenses in the consolidated income statement and other comprehensive income in the line "Financial
expenses".
For financial liabilities that are carried at amortized cost, the gain or loss is recognized in profit or loss for the period
in which the financial asset or financial liability is derecognised or impaired through the amortization process.
Trade payables are initially recognized at nominal value and subsequently measured at amortized cost less settlement
payments.
Dividends payable to the sole shareholder are recognized when the dividends are approved by the General Meeting.
Derecognition
The Group writes off a financial liability only when it settles (fulfills) the obligation, the term of the obligation expires
or the creditor waives its rights.
When an existing financial liability is replaced by another from the same lender under significantly different conditions
or the terms of an existing liability are substantially changed, such exchange or change is treated as a write-off of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized
in the consolidated income statement.
The difference between the carrying amount of the financial liability settled or transferred to another party and the
consideration paid for the settlement, including cash and a transfer of non-monetary assets, is recognized in profit or
loss for the period.
4.18 Compensation of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the consolidated statement of
financial position when there is a legally enforceable right to reimburse the recognized amounts and the Group intends
to settle on a net basis or to realize assets and settle liabilities at the same time.
4.19 Fair value of financial instruments
At each reporting date, the fair value of financial instruments that are actively traded in the markets is determined on
the basis of quoted market prices or dealer quotations ("buy" prices for long positions and "sell" prices for short
positions), without deduct transaction costs.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
35
The fair value of financial instruments for which there is no active market is determined using valuation techniques.
These techniques include the use of recent direct market transactions; references to the current fair value of another
instrument that is substantially the same; discounted cash flow analysis and other valuation models.
4.20 Inventories
Inventories include materials, output, work in progress and goods. The cost of inventories includes direct costs of
purchase or production, processing and other direct costs associated with their delivery, as well as part of the total
production costs determined on the basis of normal production capacity. Financial expenses are not included in the
value of inventories. At the end of each reporting period inventories are valued at the lower of cost and net realizable
value. The amount of any impairment of inventories to their net realizable value is recognized as an expense in the
period of impairment.
The net realizable value is the expected selling price of inventories, less the expected costs of completion of the
production cycle and selling expenses. If inventories have already been impaired to their net realizable value and in a
subsequent reporting period it turns out that the conditions leading to the impairment are no longer present, their new
net realizable value is accepted. The amount of the recovery can only be up to the carrying amount of inventories
before impairment. The amount of the reimbursement of inventories is reported as a reduction in the cost of materials
for the period in which the reversal occurs.
The Group determines the cost of inventories using the weighted average method .
When inventories are sold, their carrying amount is recognized as an expense in the period in which the related revenue
is recognized.
Nuclear fuel
The fuel charged to the reactors represents the residual value (residual resource) of the nuclear fuel located in the
reactors at the reporting date. The calculations are based on the approved Methodology for reporting the supply,
refuelling and consumption of fresh nuclear fuel in NPP Kozloduy EAD, taking into account the value of refueled
fresh nuclear fuel during the fuel campaign and the estimated fuel component, which is determined by dividing the
value of the charged nuclear fuel in the reactor by the estimated calculation for electricity production for the period in
kWh . The multiplication of the gross energy produced by the respective unit for the fuel campaign and the fuel
component represents the consumption of nuclear fuel during the respective period.
Operating gas
Operating quantities of natural gas are reported as inventories. Initially, natural gas is valued at purchase price plus
transportation costs. In consumption, operating natural gas is reported at a weighted average price. Operating gas is
valued at the lower of cost and net realizable value. Net realizable value is the price determined by the Energy and
Water Regulatory Commission, applicable for the period following the balance sheet date.
Expense costs
Costs are the costs of discovering coal deposits. These costs include surveying, exploration, mine development and
other direct costs related to the preparation for coal seizure. The costs are deferred on the basis of the quantities of
coal prepared for seizure at the end of the year and are presented as part of the work in progress.
4.21 Income taxes
Current income tax
Current tax assets and liabilities for the current and prior periods are recognized at the amount expected to be recovered
from or paid to the tax authorities. When calculating current taxes, the tax rates and tax laws that are in force or have
been largely adopted at the reporting date are applied. Management analyses the individual items in the tax return for
which the applicable tax provisions are interpreted and recognizes provisions when appropriate.
Current taxes are recognized directly in equity (not in profit or loss) when the tax relates to items that have been
recognized directly in equity .
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
36
Deferred income tax
Deferred tax is provided using the balance sheet method, providing for temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax liabilities are recognized for all taxable temporary differences:
- except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability of a
transaction that is not a business combination and affects neither accounting profit nor tax profit or loss at the
time of the transaction; and
- for taxable temporary differences related to investments in subsidiaries, associates and participations in joint
ventures, except to the extent that the Group is able to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, unused tax credits carried forward and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, deferred tax credits carried forward and unused tax credits can be utilized losses:
- unless the deferred tax asset arises from the initial recognition of an asset or liability of a transaction that is not a
business combination and does not affect either the accounting profit or the tax profit or loss at the time of the
transaction; and
- for deductible temporary differences related to investments in subsidiaries, associates and interests in joint
ventures, a deferred tax asset is recognized only to the extent that the temporary difference is likely to reverse in
the foreseeable future and to generate taxable profit, against to take advantage of the temporary difference.
The Group reviews the carrying amount of deferred tax assets at each reporting date and reduces it to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be recovered. Unrecognized deferred tax assets are reviewed at each reporting date and are recognized to the extent
that it is probable that future taxable profits will be available against which the deferred tax asset can be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
asset is realized or the liability is settled, based on tax rates (and tax laws) that are enacted or substantively enacted.
degree, as of the reporting date.
Deferred tax relating to items recognized out of profit or loss is recognized out of profit or loss. Deferred taxes are
recognized in accordance with the related transaction, either in other comprehensive income or directly in equity.
The Group only offsets deferred tax assets and liabilities when it has a legal right to deduct current tax assets against
current tax liabilities and deferred tax assets and liabilities relate to income taxes levied by the same tax authority on
the same taxable entity.
4.22 Trade receivables
Trade receivables represent an unconditional right of the Group to receive remuneration under contracts with
customers and other counterparties (ie it is subject only to the expiration of time before the payment of remuneration).
Initial evaluation
Trade receivables are presented and reported initially at fair value based on the transaction price, which value is usually
equal to their invoice value, unless they contain a significant financing component, which is charged additionally. In
this case, they are recognized at their present value, determined at a discount rate in the amount of interest rate deemed
inherent in the client - the debtor.
Subsequent evaluation
The Group holds trade receivables solely for the purpose of collecting contractual cash flows and subsequently
measures them at amortized cost less accumulated impairment losses.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
37
Impairment
The Group applies the expected credit loss model for the entire term of all trade receivables, using the simplified
approach allowed by IFRS 9 and based on a matrix model for the percentage of loss.
4.23 Cash and cash equivalents
Cash and short-term deposits in the consolidated statement of financial position include cash in bank accounts, cash
and short-term deposits with an original maturity of three months or less.
Subsequent evaluation
Cash and cash equivalents in banks are subsequently presented at amortized cost less accumulated impairment losses.
4.24 Non-current assets and liabilities classified as held for distribution to the owner or held for sale
Non-current assets and liabilities classified as held for distribution to the owner
When the Group has committed to distribute an asset (or disposal group) to the owner, the asset or disposal group is
classified as held for distribution to the owner and presented separately in the consolidated statement of financial
position. To this end, the assets must be available for immediate distribution in their current state and the distribution
must be very probable. In order for the allocation to be very likely, action must be taken to complete the allocation
and it must be expected to be completed within one year from the date of classification. The actions required to
complete the allocation should indicate that it is unlikely that significant changes will be made to the allocation or that
it will be withdrawn.
Liabilities are classified as held for allocation to the owner and are presented as such in the consolidated statement of
financial position only if they are directly attributable to the disposal group.
Assets classified as held for distribution to the owner are measured at the lower of their carrying amount immediately
after their determination as held for distribution to the owner and their fair value less costs to distribute. Assets
classified as held for distribution to the owner are not subject to depreciation after their classification as held for
distribution to the owner.
Non-current assets and liabilities classified as held for sale
When the Group intends to sell a non-current asset or group of assets (disposal group) and if the sale is very likely to
take place within 12 months, the asset or disposal group is classified as held for sale and presented separately in the
consolidated statement of financial position. condition.
Liabilities are classified as held for sale and presented as such in the consolidated statement of financial position only
if they are directly attributable to the disposal group.
Assets classified as held for sale are measured at the lower of their carrying amount immediately after they are
classified as held for sale and their fair value less costs to sell. Certain assets held for sale, such as financial assets or
deferred tax assets, continue to be measured in accordance with Group’s accounting policies for these assets. Assets
classified as held for sale are not depreciated after they are classified as held for sale.
Profits or losses arising from the sale or revaluation of discontinued operations are presented as described in note 4.12.
4.25 Equity, reserves and dividend payments
The share capital of the parent company reflects the nominal value of the issued shares.
Other reserves include general reserves and additional reserves.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
38
Revaluation reserves to fair value include revaluations of available-for-sale financial assets, as well as Group’s share
of results of operations and revaluation of financial assets / liabilities recognized directly in equity of associates or
joint ventures.
The revaluation reserve of non-financial assets is formed by the difference between the carrying amount and the fair
value of assets, property, plant and equipment at the date of revaluation, reduced by the corresponding deferred tax
liability.
The reserve from revaluation of foreign operations includes the foreign exchange differences on the revaluation of the
financial statements of subsidiaries whose functional currency is different from the presentation currency of the Group.
The revaluation reserve for defined benefit plans includes revaluations of staff defined benefit plans determined by
reports of independent actuarial valuers.
Retained earnings / (accumulated loss) includes the current financial result and the accumulated profits and uncovered
losses from previous years.
Liabilities for payment of dividends to the sole shareholder are included in the line “Liabilities to related parties” in
the consolidated statement of financial position, when the dividends are approved for distribution by the sole owner
before the end of the reporting period.
All transactions with the owner are presented separately in the consolidated statement of changes in equity.
4.26 Retirement and short - term employee benefits
Short-term income
Short-term employee benefits in the form of remuneration, bonuses and social benefits and allowances (due for
settlement within 12 months after the end of the period in which the staff worked for them or met the necessary
conditions) are recognized as an expense in the consolidated Profit or loss statement, unless an IFRS requires that
amount to be capitalized in the cost of an asset for the period in which the work is performed for them and / or the
requirements for their receipt as a current liability are met (after deducting all amounts already paid and deductions
due).
The Group reports short-term liabilities for compensable leaves arising from unused paid annual leave in cases where
it is expected to be used within 12 months after the date of the reporting period during which employees have
performed work related to these leaves. At the date of each financial statement, the companies in the Group estimate
the amount of the expected costs of the accumulated compensatory leave, which is expected to be paid as a result of
the unused right to accumulated leave. The assessment includes the approximate estimate of the amounts for the
remunerations themselves and of the contributions for the obligatory social and health insurance, which the employer
owes on these amounts.
Long-term retirement income
The Group owes pension benefits to its employees under defined benefit plans and defined contribution plans.
Defined contribution plans
Defined contribution plans are pension plans under which the Group pays fixed contributions to government funds.
The main obligation of the employer is to provide compulsory insurance of the hired staff for the Pension Fund,
Supplementary Compulsory Pension Insurance (SCPI), General Sickness and Maternity Fund (GSMF),
Unemployment Fund, Occupational Accident and Sickness Fund (OASF) and health insurance (HI).
The amounts of the social security contributions are approved specifically by the Social Security Budget Act and the
NHIF Budget Act for the respective year. The contributions are distributed between the employer and the insured
person in accordance with the rules of the Social Security Code (SSC).
These insurance pension plans, implemented by the Group as an employer, are defined contribution plans. In them,
the employer pays monthly certain contributions to state funds, as well as to universal and occupational pension funds
- on the basis of fixed percentages by law and has no legal or constructive obligation to pay future contributions to the
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
39
funds in cases where they do not have sufficient funds to pay persons the amounts earned by them for the period of
their work experience. The obligations regarding the health insurance are similar.
Contributions due from the Group to defined benefit plans are recognized as an expense in the consolidated income
statement unless an IFRS requires that amount to be capitalized in the cost of an asset and as a current liability.
Defined benefit plans
According to the Bulgarian labour legislation, the Group as an employer is obliged to pay two or six gross monthly
salaries to its employees upon retirement, depending on the time served. If the employee has worked for the same
employer in the last 10 years of service, he must receive six gross monthly salaries in retirement, and if he has worked
for less than 10 years with the same employer - two gross monthly salaries. According to the collective labour
agreements, some of the companies in the Group are paid larger amounts of benefits than those provided by law. The
staff retirement plan is not funded.
The Group determines its retirement benefit obligations using the actuarial valuation method. Group’s management
assesses the obligation to pay defined benefits once a year with the help of an independent actuary . The assessment
of liabilities is based on standard inflation rates, expected changes in health care costs and mortality. Future wage
increases are also taken into account. The discount factors are determined at the end of each year, taking into account
the yield on high-quality corporate bonds, which are denominated in the currency in which the income will be paid
and have a maturity close to that of the respective pension liabilities.
Expenses for pension benefits of employees related to current service are included in "Staff expenses", and the amount
of discounting liabilities is included as interest expense in "Financial expenses". Actuarial profits/ losses are
recognized in other comprehensive income and relate to Group’s reserves.
The retirement benefit obligation presented in the consolidated statement of financial position consists of the present
value of the obligation to pay that benefit.
4.27 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of past events, it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate of the value of the obligation can be made. When the Group expects that some or all of the costs
necessary to settle the provision will be reimbursed, for example under an insurance contract, the reimbursement is
recognized as a separate asset, but only when it is reasonably certain that those costs will be reimbursed. Provision
expenses are presented in the consolidated statement of profit or loss, net of the amount of recovered expenses. When
the effect of time differences in the value of money is significant, provisions are discounted using the current pre- tax
discount rate , which reflects, where appropriate, the specific risks of the obligation. When discounting is used , the
increase in the provision as a result of the elapsed time is presented as a financial expense.
Provision for environmental protection costs
Provision for environmental protection costs is recognized when it is probable that costs or restoration activities will
be incurred and the Group is obliged, by law or contractual obligation, to take such action. When expenses are expected
to be incurred over a long period, the present value of expected future expenses is recognized as a provision, and the
effects of discounting are reported as Finance income and expenses. At the reporting date, the current consolidated
annual financial statement recognizes a provision for environmental costs relating to costs that are legally required to
be incurred in connection with the disposal of fluorescent and other mercury-containing lamps, disposal and recycling
of rechargeable batteries, disposal, recycling and replacement of capacitor batteries containing PCBs with new ones
and utilization of bleaching soil used in the base for oil regeneration.
Provision for reclamation
Provision for the expected costs for reclamation of the lands disturbed by coal mining in Mini Maritza Iztok EAD has
been accrued, taking into account the requirements of the current environmental legislation, the forthcoming land for
seizure, the seized uncultivated lands, the value of reclamation per 1 decare of land. and the expected quantities of
coal reserves by 2043. The provision is not discounted and is therefore not presented in these consolidated financial
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
40
statements at present value, due to significant uncertainty about the volume of land reclamation activities performed
over time.
Provision for reclamation of disturbed terrains for disposal of gypsum from desulfurization plants
Pursuant to Ordinance 26 on reclamation of disturbed terrains, improvement of low-yielding lands, removal and
utilization of the humus layer, the Group is obliged to carry out technological and biological reclamation of the landfill
after its filling with gypsum from desulfurization plants. The value of the technological and biological reclamation
under the project amounts to BGN 5,488 thousand. According to IAS 16 “Property, Plant and Equipment”, item 17
(c) the value of the asset includes the initial estimate of the expected cost of site restoration (land reclamation), where
the asset was located after it was taken out of use.
Provision for decommissioning of nuclear facilities
According to the regulatory requirements, when the implementation of the decommissioning project proves to be more
expensive than the estimates approved by the NFDF Management Board, the necessary additional costs are borne by
the person who last operated the nuclear facility (in this case Kozloduy NPP). As at the date of approval of these
consolidated financial statements there is no clear National strategy for the decommissioning of nuclear facilities and
no estimate of the estimated costs of the project has been made by the NFDF Fund, the Group cannot reliably estimate
the liability and has not recognized provision for decommissioning of nuclear facilities as of 31 December 2021 and
31 December 2020
Provision for transport, processing and storage of spent nuclear fuel
According to the current Strategy for Management of Spent Nuclear Fuel and Radioactive Waste until 2030, adopted
by a decision of the Council of Ministers on 02.09.2015, NPP Kozloduy EAD has a legal obligation to transport at
least 50 tons of heavy metal annually spent nuclear fuel (SNF) for processing and storage in Russia, in the presence
of favourable financial and economic conditions.
Greenhouse gas emission allowances
Greenhouse gas emission allowances (tonnes of carbon dioxide equivalent) are accounted for using the "net passive
method", according to which the Group recognizes a liability for carbon dioxide emissions when emissions are emitted
and exceeded (according to the national allocation plan). allowances for greenhouse gas emissions trading) and
additional allowances purchased. The amount of emissions that is above the allowances allocated to the Group for the
year is purchased from the free market. The Group currently recognizes an expense and a corresponding liability for
emissions that are in excess of the allocated allowances. Estimating these emissions is the best possible estimate of
the future resources that will be needed to purchase them, i.e. the market price at the end of the reporting period.
4.28 Government grants and deferred funding
Government grants and deferred funding are recognized when there is reasonable assurance that the grant / funding
will be received and that all conditions attached to it will be met. Where the grant / financing is related to an expense
item, it is recognized as revenue for the periods necessary to match the grant / financing on a systematic basis with
the costs it is intended to offset. When the grants / financing is related to the acquisition of a non-current asset, it is
presented as income for a future period and is recognized in profit or loss in equal amounts for the expected useful
life of the related asset.
When the Group receives non-monetary government grants, the grant and the asset are carried at nominal value, and
the grant/financing is recognized as income in profit or loss in equal parts each year for the useful life of the asset.
4.29 Significant judgments of management in applying accounting policies. Uncertainty of accounting
estimates
The preparation of these consolidated financial statements requires management to make estimates, estimates and
assumptions that affect the value of recognized assets and liabilities and the disclosure of contingent liabilities at the
reporting date, as well as the reported income and expenses for the period. Uncertainty related to assumptions and
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
41
estimates could lead to actual results that require significant adjustments to the carrying amounts of the related assets
or liabilities in subsequent reporting periods.
Estimates of accounting and relevant material assumptions are reviewed on an ongoing basis. The results of a change
in accounting estimates are recognized in the period in which the change is made, as well as in each future period
affected.
Information on significant assumptions, estimates and assumptions, as well as the main sources of uncertainty in the
use of accounting estimates that have the most significant effect on the recognition and measurement of assets,
liabilities, income and expenses, is presented below.
Long-term electricity purchase contracts
The Group has concluded long-term contracts for the purchase of electricity with the following contractors operating
thermal power plants in the Maritsa Basin - AES -3C Maritza East 1 EOOD (for 15 years) and ContourGlobal Maritsa
East 3 AD (for 15 years). Based on the concluded long-term agreements, the Group has the right to request quantities
of electricity to be produced by each of the two thermal power plants for a certain period of time on the basis of
installed production capacities as the Group through the subsidiary NEK EAD is obliged to purchase the minimum
agreed quantities of produced electricity and its corresponding availability for the term of the contract. If necessary,
the Group has the opportunity to order larger quantities than the minimum agreed, by purchasing their corresponding
availability .
Group’s management believes that since all significant risks and benefits of using these thermal power plants are not
borne by the Group, through its subsidiary NEK EAD, they do not fall within the scope of IFRS 16. Additional
information on long-term electricity purchase agreements is presented in note 41.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilized. Determining the amount of deferred tax assets requires management
to make an assumption about the length of the period and an estimate of the amount of future taxable profits, including
an assessment of the future tax planning strategy. The Group has not recognized deferred tax assets for all tax losses.
Additional information is provided in note 23.
Fair value of property, plant and equipment
The Group subsequently reports major groups of property, plant and equipment at revalued amount, using reports
from independent external appraisers to determine their fair value. Detailed information on revaluation, valuation
methods used, assumptions and judgments in determining fair value is provided in note 19.
The specificity of Group’s assets and the dynamic economic environment in the energy sector in which it operates
could lead to variations in the assumptions and judgments used in determining the fair values of these properties,
machinery and equipment.
Provision for transport, processing and storage of spent nuclear fuel
According to the current Strategy for Spent Fuel and Radioactive Waste Management until 2030, adopted by a decision
of the Council of Ministers on September 2, 2015, the Group has a legal obligation to transport at least 50 tons of
heavy metal per year spent nuclear fuel (SNF). for processing and storage in Russia, in the presence of favourable
financial and economic conditions.
At the end of the reporting period ending on 31 December 2021 the amount of the recognized provision required to
cover the current obligation to manage SNF is BGN 24,908 thousand, including the value of unrealized transportation
of SNF from WWER-1000 for technological storage and processing for 2021
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
42
Provision for decommissioning of nuclear facilities
In accordance with the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, liabilities
whose value and occurrence over time are uncertain are provisions . Provisions are recognized only if the following
conditions are met:
‒ the entity has a present obligation as a result of a past event;
‒ it is possible that an outflow of resources embodying economic benefits will be required to settle the obligation;
and
‒ a reliable estimate of the value of the liability can be made.
Based on the requirements of the standard for the concept of "reliable forecast assessment", the Group has not charged
costs for provisions for "decommissioning of nuclear facilities" and for "safe storage of spent nuclear fuel" for the
following reasons:
‒ The Group is subject to special normative acts - the Law on the Safe Use of Nuclear Energy, Ordinances on
Pricing and Decrees adopted by the Council of Ministers for fundraising in the funds RAWF and NFDF. In
accordance with the requirements of these regulations, the consolidated statement of profit or loss accrues current
expenses for contributions due to these funds, which are transferred to budget accounts. Respecting the principle
of "comparability of revenues and expenditures" of the Accounting Act in the price of electricity for a regulated
market, determined by the EWRC, is recognized cost up to the amount of contributions due to the funds RAWF
and NFDF;
‒ In connection with the agreements with the European Commission for early closure of units 1 to 4 have been
agreed by the State, funded by external sources for the construction of a storage facility for dry storage of spent
nuclear fuel (SNF), to cover Personnel expenses and insurance from the third and fourth blocks and other
financing;
‒ The assets of Units 1 and 2 were gratuitously transferred in December 2008 in accordance with Decision №839
of the Council of Ministers of NPP Kozloduy EAD to SE RAW, Sofia with subject of activity
“decommissioning”. By Decision of the Council of Ministers № 1038 of 19 December 2012, Units 3 and 4 of
NPP Kozloduy EAD were declared as facilities for radioactive waste management and their provision for
management of SE RAW was determined. On March 1, 2013, the property belonging to Units 3 and 4, together
with the respective staff, were transferred to SE RAW.
According to the regulatory requirements, when the implementation of the decommissioning project proves to be more
expensive than the estimates approved by the Management Board, the necessary additional costs are borne by the
person who last operated the nuclear facility (in this case NPP Kozloduy). As no estimate of the estimated costs of the
project has been made by the NFDF as of the date of approval of the consolidated financial statements, the Group
cannot reliably estimate the liability and has not recognized a provision for decommissioning of nuclear facilities as
of 31 December 2021 and 31 December 2020.
Other provisions of the Group
The Group recognizes provisions for environmental protection, for reclamation, for exceeding the quotas for
greenhouse gas emissions, provisions for legal claims and others. The determination of provisions requires
management to make an assessment of the expected costs necessary to cover the relevant liabilities of the Group and
the time period. As at 31 December 2021, the best estimate of required provisions is presented in note 33.
Retirement benefits
Retirement benefit is determined by actuarial valuation. This assessment requires assumptions to be made about the
discount rate , future wage growth, staff turnover and mortality rates. Due to the long-term nature of staff income at
retirement, these assumptions are subject to significant uncertainty. As of 31 December 2021, the liability of the Group
for staff income upon retirement amounts to BGN 329,504 thousand (31 December 2020: BGN 302,946 thousand).
Additional information on Group’s liabilities for retirement benefits is provided in note 32.
Useful life of property, plant and equipment and intangible assets
Management reviews the useful lives of depreciable assets at the end of each reporting period. As at 31 December
2021, management determines the useful life of the assets, which is the expected useful life of Group’s assets.
Information on the useful life of property, plant and equipment and intangible assets is presented in note 4.13. The
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
43
carrying amounts of the assets are analysed in notes 19 and 20. Actual useful lives may differ from those made due to
technical and moral depreciation.
Impairment of inventories
The Group recognizes impairment of immovable and obsolete inventories to their net realizable value. Management
estimates annually the adequacy of this impairment and the cost of inventories is reduced to their expected net
realizable value. As of 31 December 2021, the best estimate of the required impairment of inventories is 18,702
thousand BGN (31 December 2020: BGN 24,039 thousand BGN). Additional information is provided in note 24.
Recognition and measurement of expected credit losses on debt instruments measured at amortized cost
Measuring the expected credit loss of financial assets carried at amortized cost (loans, receivables, cash and cash
equivalents) requires the use of models and significant assumptions about future economic conditions and credit
behaviour of customers and debtors. To implement these requirements, Group’s management makes a number of
significant assessments, determining criteria for identifying and assessing significant increases in credit risk,
appropriate models and assumptions for measuring expected credit losses, establishing and assessing the relationship
between historical default rates and the behaviour of certain macro indicators to reflect future effects in the calculation
of expected credit losses.
Approach to impairment of cash in banks
Cash and cash equivalents are the most highly liquid financial instruments. They are not bearers of settlement risk,
and the liquidity risk they bear is limited to the technical possibility that an order with them will not be executed.
However, cash deposited with banks carries credit risk from the counterparty (default risk). Counterparty risk is the
probability that the counterparty to a financial transaction will fail to meet its contractual obligations. The Group
applies the standardized approach for calculating the expected credit losses of cash in banks, using the credit rating of
the financial institutions in which the Group has deposited its cash to determine the loss from default in the parameters
of the model. As of 31 December 2021, the best estimate of the management for the expected credit losses of cash in
banks amounts to BGN 6,644 thousand. (31 December 2020: BGN 3,686 thousand) (note 26).
Approach for impairment of short-term trade and other receivables and receivables from related parties
The Group applies a simplified approach to calculating expected credit losses for trade receivables that do not contain
a financing element.
For the purpose of determining the expected credit losses, modelling is performed at the client's industry level.
Modelling is the inherent derivation of the financial risk that customers bear to the companies in the Group.
The expected credit losses are calculated for each single receivable (invoice, interest sheet, etc.), adjusted on the basis
of the days in arrears and the standard payment cycle by the counterparty. The average number of days of delay per
customer is determined on the basis of historical information for the period of coverage of receivables by customers.
The retrospective review is performed for a period of 3 to 5 years.
The additional risk is identified on the basis of historical experience for the collection of receivables, including
deteriorating financial condition, liquidity problems and other difficulties.
The assessment of the ratio between the observed historical data on default, the forecast economic conditions, the
determination of the risk by industries and the amount of the expected credit losses is a significant assessment.
Information on the impairment of expected credit losses of the Group is presented in note 22 Trade and other
receivables, note 36 Related party disclosures, note 38 Financial risk management objectives and policies.
Approach for impairment of receivables with an element of financing
The Group applies an individual approach to impairment of receivables with an element of financing and loans. The
impairment model is based on the cash flows agreed in the terms of the financial instrument, as well as the assumptions
and estimates of expected cash flows and the feasibility of the financial asset adopted by management in preparing
the financial statements.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
44
Expected credit losses represent a probabilistic weighted estimate of credit losses (ie the present value of each
shortfall) for the expected maturity of the financial instrument. Cash deficit is the difference between the cash flows
due to the Group in accordance with the contract and the cash flows that the Group expects to receive. As expected
credit losses take into account the amount and timing of payments, expected credit loss is recognized even if the Group
expects the asset to be repaid in full, but later than the due date.
Depending on the characteristics of the asset and the counterparty, the expected future cash flows of the asset may
differ materially from the agreed ones. This would also lead to significant levels of expected credit losses on the asset.
A revision of the expected future cash flows of each specific asset is performed at each reporting date.
Approach to impairment of court and awarded receivables
In cases where the Group has taken legal action to satisfy its receivables, they are classified as “court receivables”.
This type of receivables is characterized by complete default - i.e. unwillingness or inability of the client to settle his
obligation. For this reason, regardless of the availability of decisions of the judicial authorities and the initiated
enforcement procedures, the collection of these receivables and resp. the expected future cash inflows are low and the
probability of default has already occurred relative to the original asset, i.e. is equal to 100%.
Expected credit losses represent the sum of expected credit losses for each lawsuit and award receivable based on the
historical recoverability of that asset class. Additional information is also provided in note 22 Trade and other
receivables and note 38 Financial risk management objectives and policies.
Revenues from contracts with clients
In recognizing revenue from contracts with customers, management makes various estimates, estimates and
assumptions that affect the reported revenue, expenses, assets and liabilities under contracts. The key estimates and
assumptions that have a material effect on the amount and timing of the recognition of revenue from customer
contracts are disclosed in note 4.9 Revenue recognition, performance obligations and the approach to the recognition
of major types of revenue from customer contracts.
Assets with the right of use and liabilities under leasing contracts
Management makes estimates based on its assessments of the elements of the lease in the contracts, the probable terms
of the leases, the options for extension and termination, the determination of the differential interest rate, etc. upon
recognition of “assets with the right of use” and liabilities under leasing contracts. These estimates affect the reported
income, expenses, assets and liabilities under leasing contracts and the corresponding disclosures.
As a result of uncertainty about these assumptions and estimates, changes in the carrying amount of usable assets,
lease liabilities and reported costs and income may arise as a result of changes in revaluations or changes in leases.
4.30 Correction of errors and reclassifications made in comparative information
Adjustments to the consolidated statement of financial position as at 31 December 2020
In 2021 the following adjustments and reclassifications were made concerning the comparative periods:
Note
Description of adjustments and reclassifications made as at 31 December 2020
(1)
Increase in inventories by BGN 48,722 thousand.
Decrease in property, plant and equipment by BGN 48,722 thousand
(2)
Increase in property, plant and equipment by BGN 61 thousand
Decrease in intangible assets by BGN 61 thousand
(3)
Increase of the non-current part of the Financial assets at fair value in other comprehensive income at the
expense of their current part by BGN 507 thousand.
(4)
Decrease of deferred tax assets by BGN 7,165 thousand.
Decrease of reserve from revaluations of defined benefit plans by BGN 7,165 thousand.
(5)
Decrease of other reserves by BGN 567,358 thousand
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
45
Note
Description of adjustments and reclassifications made as at 31 December 2020
Increase in revaluation reserve of non-financial assets by BGN 567,358 thousand.
(6)
Decrease of revaluation reserves by BGN 52,686 thousand.
Decrease of accumulated loss by BGN 52,686 thousand.
(7)
Increase in deferred tax liabilities by BGN 2,015 thousand.
Decrease of retained earnings by BGN 2,010 thousand
Increase of deferred tax assets by BGN 3 thousand.
(8)
Increase in investments in joint ventures by BGN 99 thousand
Decrease in Financial assets at fair value in other comprehensive income by BGN 98 thousand.
Increase of the current financial result for 2020 by BGN 1 thousand.
(9)
Decrease of trade and other receivables by BGN 15,101 thousand.
Increase in Related party receivables by BGN 15,101 thousand.
(10)
Decrease of trade and other liabilities by BGN 20 thousand.
Increase in liabilities to related parties by BGN 20 thousand.
The adjustments made for errors from previous periods have no effect on the gains or losses for previous reporting
periods, incl. 2020 and no adjustments are required for the amounts reported as tax expenditures. Accordingly, there
is no significant change in net earnings for 2020 and earnings per share for 2020.
A more detailed description of the significant adjustments and reclassifications made is presented below:
Adjustment (1)
During the current period an analysis of the costs for acquisition of fixed assets in the part of the available spare parts
in the warehouses, acquired for the purpose of investment activity, was performed. As a result of the analysis it was
established that costs for acquisition of fixed assets on completed investment projects in the amount of BGN 48,722
thousand have been accumulated . stocks.
Adjustments (5) and (6)
During the current reporting period the Group has identified an error in the presentation of revaluation reserves from
previous periods, which are formed by subsequent valuations of property, plant and equipment in the period up to 31
December 2007, which are not related to the application of the revaluation model. of IAS 16 Property, Plant and
Equipment. Due to the lack of regulations, incl. administrative and / or case law, the amounts were presented as part
of the item Other reserves. During the current period, the Group has analysed the nature and amount of these reserves
and concluded that a reasonable professional approach is to treat such amounts in the same way as a revaluation
reserve under IAS 16, as they have a similar origin and purpose. The results of the analysis of amounts show that some
of them relate to fixed assets that were written off in previous reporting periods, but the amount of their corresponding
reserve was not transferred to retained earnings by analogy with the accounting policy applicable to write-off of
revaluation reserve for write-off of revalued assets.
As a result of the analysis, the management has decided to correct the error in:
‒ the presentation of the amount of reserves related to revaluation of non-current assets in previous reporting
periods in a similar way to reserves, which are formed in subsequent revaluation at revalued amount in
accordance with IAS 16 Property, Plant and Equipment, i.e. as Revaluation reserves instead of as Other reserves;
‒ write-off of amounts relating to non-current assets that have been revalued and written off.
Adjustment (8)
In 2020, the Group reported the investment in Southeast Electricity Network Coordination Center ( SeleNe CC ) based
in Thessaloniki, Greece, established on 22 May 2020, acquired through its subsidiary – ESO EAD. In 2021, the Group
performed an investment analysis, as a result of which the management came to the conclusion that the investment
should be accounted for as an investment in a joint venture using the equity method.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
46
31 December
2020
Adjustments
31 December
2020
31 December
2020
BGN`000
BGN`000
BGN`000
Assets
Before
adjustments
Adjustments
Restated
Non-current assets
Properties, plant and equipment
16,310,862
(1), (2)
(48,661)
16,262,201
Intangible assets
25,517
(2)
(61)
25,456
Investments in joint ventures, associates and other
enterprises
196,335
(8)
99
196,434
Non-current receivables other related parties
55,745
-
55,745
Trade and other receivables
382,374
-
382,374
Financial assets at fair value through DVD
-
(3)
507
507
Deferred tax assets
179,578
(4), (9)
(7,162)
172,416
Non-current assets
17,150,411
(55,278)
17,095,133
Current assets
Inventories
942,800
(1)
48,722
991,522
Trade and other receivables
754,383
(9)
(15,101)
739,282
Related party receivables
66,384
(9)
15,101
81,485
Overpaid income tax
4,973
-
4,973
Financial assets at fair value in other comprehensive
income
1,299
(3), (8)
(605)
694
Cash and short-term deposits
1,446,179
-
1,446,179
Assets of a group classified as held for sale
56,242
-
56,242
Current assets
3,272,260
48,117
3,320,377
Total assets
20,422,671
(7,161)
20,415,510
31 December
2020
Adjustments
31 December
2020
31 December
2020
BGN`000
BGN`000
BGN`000
Equity and liabilities
Before
adjustments
Adjustments
Recalculated
Equity
Share capital
3,462,942
-
3,462,942
Other reserves
2,626,924
(5)
(567,358)
2,059,566
Reserves from revaluation to fair value of financial
instruments
1,667
-
1,667
Revaluation reserve of non-financial assets
6,972,027
(5), (6)
514,672
7,486,699
Reserve from recalculation of foreign activity
(9)
-
(9)
Reserve from revaluations of defined benefit plans
(180,228)
(4)
(7,165)
(187,393)
Hedge reserve
(1,710)
-
(1,710)
Accumulated loss
(1,153,418)
(6), (7), (8)
50,675
(1,102,743)
Equity of the shareholder of the parent company
11,728,195
(9,176)
11,719,019
Non-controlling interest
(98)
-
(98)
Total equity
11,728,097
(9,176)
11,718,921
Non-current liabilities
Loans and leasing
2,046,289
-
2,046,289
Deferred tax liabilities
647,785
(7)
2,015
649,800
Other non-current liabilities
3,285,998
-
3,285,998
Amount of non-current liabilities
5,980,072
2,015
5,982,087
Current liabilities
Trade and other payables
826,113
(10)
(20)
826,093
Liabilities to related parties
55,045
(10)
20
55,065
Other current liabilities
1,833,344
-
1,833,344
Current liabilities
2,714,502
-
2,714,502
Total liabilities
8,694,574
2,015
8,696,589
Total equity and liabilities
20,422,671
(7,161)
20,415,510
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
47
Adjustments to the consolidated statement of financial position as of 1 January 2020
Similar adjustments were made in the earliest comparative period presented, as of 1 January 2020:
Note
Description of adjustments and reclassifications made as of 1 January 2020
(1)
Increase in inventories by BGN 48,722 thousand.
Decrease in property, plant and equipment by BGN 48,722 thousand
(2)
Increase in property, plant and equipment by BGN 303 thousand
Decrease in intangible assets by BGN 303 thousand
(3)
Increase of the non-current part of the Financial assets at fair value in other comprehensive
income at the expense of their current part by BGN 508 thousand.
(4)
Decrease of deferred tax assets by BGN 7,165 thousand.
Decrease of reserve from revaluations of defined benefit plans by BGN 7,165 thousand.
(5)
Decrease of other reserves by BGN 567,358 thousand
Increase in revaluation reserve of non-financial assets by BGN 567,358 thousand.
(6)
Decrease of revaluation reserves by BGN 52,686 thousand.
Decrease of accumulated loss by BGN 52,686 thousand.
(7)
Increase in deferred tax liabilities by BGN 2,012 thousand.
Decrease of retained earnings by BGN 2,012 thousand.
January 1
2020
Adjustments
January 1
2020
January 1
2020
BGN`000
BGN`000
BGN`000
Assets
Before
adjustments
Adjustments
Restated
Non-current assets
Properties, plant and equipment
14,258,572
(1), (2)
(48,419)
14,210,153
Intangible assets
29,158
(2)
(303)
28,855
Investments in joint ventures, associates and other
enterprises
372,189
-
372,189
Non-current receivables other related parties
-
-
-
Trade and other receivables
460,962
-
460,962
Financial assets at fair value through DVD
-
(3)
508
508
Deferred tax assets
156,621
(4)
(7,165)
149,456
Non-current assets
15,277,502
(55,379)
15,222,123
Current assets
Inventories
867,864
(1)
48,722
916,586
Financial assets at fair value in other comprehensive
income
1,392
(3)
(508)
884
Other current assets
2,556,489
-
2,556,489
Current assets
3,425,745
48,214
3,473,959
Total assets
18,703,247
(7,165)
18,696,082
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
48
January 1
2020
Adjustments
January 1
2020
January 1
2020
BGN`000
BGN`000
BGN`000
Equity and liabilities
Before
adjustments
Adjustments
Restated
Equity
Share capital
3,462,942
-
3,462,942
other reserves
2,575,271
(5)
(567,358)
2,007,913
Reserves from revaluation to fair value of financial
instruments
2,016
-
2,016
Revaluation reserve of non-financial assets
7,078,115
(5), (6)
514,672
7,592,787
Reserve from recalculation of foreign activity
(5)
-
(5)
Reserve from revaluations of defined benefit plans
(168,849)
(4)
(7,165)
(176,014)
Hedge reserve
(3,270)
-
(3,270)
Accumulated loss
(1,268,047)
(6), (7)
50,674
(1,217,373)
Equity of the shareholder of the parent company
11,678,173
(9,177)
11,668,996
Non-controlling interest
(45)
-
(45)
Total equity
11,678,128
(9,177)
11,668,951
Non-current liabilities
Loans and leasing
2,290,088
-
2,290,088
Deferred tax liabilities
673,675
(7)
2,012
675,687
Other non-current liabilities
2,048,893
-
2,048,893
Amount of non-current liabilities
5,012,656
2,012
5,014,668
Current liabilities
2,012,463
-
2,012,463
Total liabilities
7,025,119
2,012
7,027,131
Total equity and liabilities
18,703,247
(7,165)
18,696,082
Reclassification to the consolidated income statement and the consolidated statement of cash flows for 2020
In connection with the decision of the Group for sale of the subsidiary PFC Beroe - Stara Zagora EAD, taken in 2021,
the separation of profits and losses and cash flows concerning PFC Beroe - Stara Zagora EAD was performed and
presented as discontinued operations (note 28 ).
5. Segment reporting
The management currently defines the following products and services of the Group as operating segments, as
described in note 4.6 “electricity”, “natural gas”, “coal” and “administrative activities”. These operating segments are
monitored by management, which makes strategic decisions based on the adjusted operating results of the segments.
In addition, smaller operating segments that do not exceed the quantitative thresholds are grouped into the
“administrative activity” segment, whose activity and main source of revenue is the provision of services to companies
from other segments of the Group. The information for the individual segments can be analysed for the presented
reporting periods as follows:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
49
As of 31 December 2021
Electricity
Natural gas
Coal
Administrative
activity
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Revenue from sales and other operating income from:
- external clients
8,187,073
2,579,183
419,331
3,263
11,188,850
- other segments
902,621
140,017
182,707
766,821
1,992,166
Revenue per segment
9,089,694
2,719,200
602,038
770,084
13,181,016
Change in finished goods and work in progress
5,019
52
13,581
-
18,652
Expenses for acquisition of Properties, plant and equipment in a
business way
42,446
-
8,711
-
51,157
Book value of sold natural gas, electricity and other assets
(3,614,551)
(2,071,839)
(7,900)
-
(5,694,290)
Cost of materials
(1,515,346)
(5,831)
(163,485)
(129)
(1,684,791)
Hired services expenses
(307,641)
(24,368)
(42,149)
(4,394)
(378,552)
Depreciation costs
(436,717)
(182,005)
(95,334)
(1,219)
(715,275)
Personnel expenses
(654,234)
(77,121)
(295,683)
(5,955)
(1,032,993)
Reintegration of impairment / (net impairment) of receivables from
sales
3,605
(2,153)
(2,984)
(527,058)
(528,590)
Net impairment of property, plant and equipment
(4,874)
26
(2,468)
-
(7,316)
Provision costs
259,701
(1,508)
(5,829)
(754)
251,610
Other operating expenses
(1,055,396)
(35,744)
(28,443)
(402)
(1,119,985)
Technological cost of natural gas
-
(60,402)
-
-
(60,402)
Operating profit / (loss) of the segment of continuing activities
1,811,706
258,307
(19,945)
230,173
2,280,241
Operating loss of the segment from discontinued operations
(7,262)
-
-
-
(7,262)
Segment assets
15,280,740
7,059,699
1,195,469
6,778,525
30,314,433
Liabilities of the segment
7,366,183
3,169,737
387,602
2,682,979
13,606,501
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
50
As of 31 December 2020
Electricity
Natural gas
Coal
Administrative
activity
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Revenue from sales and other operating income from:
- external clients
4,128,963
1,120,031
341,844
3,857
5,594,695
- other segments
742,581
75,387
119,910
169,147
1,107,025
Revenue per segment
4,871,544
1,195,418
461,754
173,004
6,701,720
Change in finished goods and work in progress
1,607
(39)
22,642
-
24,210
Expenses for acquisition of Properties, plant and equipment in a
business way
34,729
-
9,543
-
44,272
Book value of sold natural gas, electricity and other assets
(2,420,509)
(759,496)
(3,478)
-
(3,183,483)
Cost of materials
(613,138)
(4,508)
(103,639)
(135)
(721,420)
Hired services expenses
(277,497)
(19,054)
(33,238)
(5,773)
(335,562)
Depreciation costs
(423,527)
(108,445)
(95,738)
(1,248)
(628,958)
Personnel expenses
(603,961)
(75,079)
(266,656)
(5,346)
(951,042)
Reintegration of impairment / (net impairment) of receivables from
sales
4,263
8,056
(5,961)
(217,709)
(211,351)
Net impairment of property, plant and equipment
(5)
-
-
-
(5)
Provision costs
(79,312)
(1,511)
(2,673)
(756)
(84,252)
Other operating expenses
(295,480)
(43,675)
(17,277)
(1,686)
(358,118)
Technological cost of natural gas
-
(27,712)
-
-
(27,712)
Operating profit / (loss) of the segment of continuing activities
198,714
163,955
(34,721)
(59,649)
268,299
Operating loss of the segment from discontinued operations
(6,523)
-
-
-
(6,523)
Segment assets
13,285,316
5,450,528
1,166,208
6,185,814
26,087,866
Liabilities of the segment
6,796,678
2,663,117
368,276
2,411,115
12,239,186
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
51
The total amount of income, operating profit, assets and liabilities of the individual segments are equal to the respective
items in these consolidated financial statements of the Group, as follows:
2021
2020
BGN`000
BGN`000
Income
Total segment revenue
13,181,016
6,701,720
Elimination of cross- segment revenues
(1,992,166)
(1,107,025)
Revenues of the Group
11,188,850
5,594,695
Profit
Operating profit / loss of segments
2,280,241
268,299
Elimination of profit from transactions between segments
(677,544)
7,182
Operating profit of the Group
1,602,697
275,481
Share of the financial result of investments accounted for using the equity
method
41,470
40,325
Financial expenses
(118,044)
(150,733)
Financial income
37,526
30,198
Profit of the Group before taxes from continuing operations
1,563,649
195,271
Loss of the Group before taxes from discontinued operations
(7,262)
(6,523)
Assets
Total assets of segments
30,314,433
26,087,866
Consolidation
(5,822,946)
(5,672,356)
Assets of the Group
24,491,487
20,415,510
Liabilities
Total liabilities of the segments
13,606,501
12,239,186
Consolidation
(3,810,008)
(3,542,597)
Liabilities of the Group
9,796,493
8,696,589
6. Revenue from sales
2021
2020
BGN`000
BGN`000
Revenues from sales of electricity
5,897,004
2,637,658
Revenues from sales of natural gas
2,123,087
780,810
Revenues from coal sales
324,764
267,509
Revenue from other sales, including:
975,075
776,376
Related to the sale of electricity
487,558
440,905
revenue from access price
67,461
57,749
revenues from reactive electricity
14,291
15,895
revenue from joining price
8,700
2,011
revenues related to transmission through the electricity transmission network
397,106
365,250
Related to natural gas
385,496
297,150
revenues from natural gas transmission
317,420
268,462
Revenues from natural gas transit
61,127
26,207
Revenues from natural gas storage
6,949
2,481
Revenues from water supply service
7,119
4,073
Revenues from the sale of heat
3,556
2,161
Revenues from transport services
6,967
5,823
Revenues from telecommunications services
3,275
3,028
Revenues from other services
63,104
22,391
9,301,930
4,461,508
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
52
6 .1. Revenues from contracts with clients
Segments
Electricity
Natural
gas
Coal
Administ
rative
activity
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
1. Types of goods or services
Revenues from sales of electricity
5,887,885
-
9,119
-
5,897,004
Revenues from sales of natural gas
-
2,123,087
-
-
2,123,087
Revenues from coal sales
-
-
324,764
-
324,764
Revenues related to the transmission and
management of the electricity transmission
network
487,558
-
-
-
487,558
Revenues from natural gas transmission
-
385,496
-
-
385,496
Revenues from water supply service
7,119
-
-
-
7,119
Revenues from the sale of heat
3,556
-
-
-
3,556
Revenues from transport services
-
-
6,967
-
6,967
Revenues from telecommunications
services
-
-
-
3,275
3,275
Other income from contracts with clients
4,178
49,964
8,935
27
63,104
Total revenue from contracts with
customers
6,390,296
2,558,547
349,785
3,302
9,301,930
2. Geographic markets
- Domestic market
6,390,296
2,193,405
349,785
3,302
8,936,788
- Foreign markets
-
365,142
-
-
365,142
Total revenue from contracts with
customers
6,390,296
2,558,547
349,785
3,302
9,301,930
3. Moment in time for revenue
recognition
Goods transferred at a certain point in time
-
-
340,666
-
340,666
Services transferred over time
6,390,296
2,558,547
9,119
3,302
8,961,264
Total revenue from contracts with
customers
6,390,296
2,558,547
349,785
3,302
9,301,930
Balances on contracts with customers are as follows:
31 December
2021
31 December
2020
BGN`000
BGN`000
Receivables from contracts with customers - third parties, net of
impairment
720 , 046
387 , 753
Receivables from contracts with customers - related parties, net of
impairment
361 , 461
136 , 561
Liabilities under contracts with clients
150 , 165
272
The main factors influencing the clearing prices, respectively the revenues from the sale of electricity by the Group
on the day-ahead market during the period are as follows:
- On January 19, 2021, the Commitment to the EC of BEH EAD and the manufacturing companies in its
composition in connection with case AT-39767-BEH-Electricity for mandatory offering on the Day Ahead
market of certain volumes with a marginal price for a period ended for five years. Since mid-2019, this
commitment has been fulfilled mainly by NPP Kozloduy EAD due to difficulties of various kinds (financial
difficulties, dependence on climatic factors) of the other two companies - TPP Maritza East 2 EAD and NEK
EAD.
- As of May 11, 2021, the Bulgarian Independent Energy Exchange AD successfully started the unification of
the Day Ahead market between Bulgaria and Greece. This led to an increase in the liquidity of the segment,
an improvement in the competitive environment, but also to an increase in the energy clearing prices. At the
end of the year, such a merger with the Romanian market is forthcoming.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
53
- A lasting and sustainable trend in the European markets to increase the price of electricity, which was significantly
felt in our country in view of the increasingly advanced processes of market integration. This trend is mainly
influenced by the desire of European economies for rapid recovery after the crisis with Covid 19, as well as global
policy on decarbonisation and orientation to "green" energy. During the second half of the reporting period,
electricity prices increased many times.
In 2021, the Group through Gas Hub Balkan EAD offers services for reporting transactions concluded or registered
through the system of Gas Hub Balkan EAD in connection with the requirements of Regulation (EU) № 1227/2011
on market integrity and transparency for wholesale energy, through developed and implemented functionality of the
company's information system. This type of service is divided into two subtypes: (1) Reporting service in which Gas
Hub Balkan sends to the "European Union Agency for the Cooperation of Energy Regulators" (ACER) data on
transactions of the relevant market participant in energy products wholesale, executed on the organized market of Gas
Hub Balkan, including agreed and uncoordinated orders and (2) Service for providing access to data for self-reporting
- for customers using another reporting organization. Gas Hub Balkan EAD also offers access to ready-to-report XML
documents containing data on the transactions of the respective market participant in the organized natural gas market,
prepared in the form and according to the requirements of ACER. Each member of the platform has the right to submit
a Declaration for refusal to use the reporting services, which releases "Gas Hub Balkan" EAD from the obligation to
provide and / or report data and this remains the responsibility of the member of the platform in his capacity of a
participant in the energy market for wholesale.
Obligations to perform
The Group, through its subsidiary Mini Maritsa Iztok EAD, has concluded long-term contracts for the sale of coal
with its main customers.
According to a long-term contract for the sale of coal with AES -3C Maritza East 1 EOOD (AES), the Group has an
obligation to supply a minimum annual quantity of 5,184 thousand standard tons of lignite coal. During the current
period, 5,541 thousand standard tons were delivered (for 2020: 4,812 thousand standard tons).
Pursuant to a long-term contract for the sale of coal with Contour Global Maritsa East 3 AD (Contour Global), the
Group has an obligation to supply a minimum annual quantity of 6,187 thousand standard tons of lignite coal. During
the current period, 8,778 thousand standard tons were delivered (for 2020: 7,295 thousand standard tons).
7. Other operating income
Other income includes transactions that are incidental to the principal activities of the Group and are income or income
that is recognized under other standards and is outside the scope of IFRS 15.
2021
2020
BGN`000
BGN`000
Revenues from the Security of the Electricity System Fund
1,629,781
980,431
Proceeds from penalties
17,085
27,955
Financing income (note 30)
182,997
76,389
Rental income
1,630
1,856
Income from sale of current assets
3,886
2,838
Income from insurance benefits
6,156
7,281
Income from surplus assets
868
519
Profit from sale of property, plant and equipment
23
426
Other incomes
44,494
35,492
1,886,920
1,133,187
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
54
Revenues from the Security of the Electricity System Fund
With the amendments to the Energy Act (EA), SG, no. 56 of 2015, the Security of the Electricity System Fund (SES
Fund) was established, which is a legal entity based in Sofia. The provisions regulating the activity of the fund are set
out in Art. 36b to Art. 36k of the Energy Act.
One of the objectives of the fund is to manage the funds to cover the costs incurred by the public provider arising from
its obligations to purchase electricity from producers connected to the electricity grid, under contracts for long-term
purchase of availability and electricity, as well as produced from renewable sources, from highly efficient combined
production of electricity and heat and the amount of electricity from producers using local primary energy sources
(fuel), up to 15 percent of all primary energy needed for electricity production. Other costs of the public provider that
may be covered by the fund are those determined by a decision of the commission, including for past regulatory
periods. Payment to the public provider to cover the costs with funds from the fund is made monthly.
For the price period from July 1, 2020 to June 30, 2021, the costs of the public provider, which are covered by the
fund, according to decision №Ц-29 of July 1, 2020 of the EWRC are estimated at a total of BGN 881,500 thousand
and include compensation of expenses for the previous period in the amount of BGN 16,697 thousand. The revenues
in the SES Fund for the current period compensate expenses between the estimated market price and the preferential
prices under long-term contracts in the amount of BGN 612,710 thousand, BGN 88,923 thousand. for price access of
producers and due instalment under Art. 36f of the Energy Act, RES in the amount of BGN 66,448 thousand (up to 1
MW of installed capacity) and CHP up to 1 MW of installed capacity in the amount of BGN 1,113 thousand or a total
of BGN 769,194 thousand. 95,609 are also compensated
thousand BGN of TPP "Maritsa East 2". With decision №Ц-
10 of February 24, 2021 EWRC determined costs in the amount of BGN 247,027 thousand for compensation of the
public supplier from the SES Fund, arising from the higher reported and expected price of carbon emissions by the
end of the regulatory period compared to projected in Decision №C-29 of 1 July 2020. Thus, for the price period from
1 July 2020 to 30 June 2021, the costs of the public provider to be covered by the Fund, according to Decision №C-
29 of 1 July 2020 and Decision № Ц-10 of 24.02.2021 of the EWRC are estimated at a total of BGN 1,128,527
thousand.
For the price period from July 1, 2021 to June 30, 2022, the costs of the public provider, which are covered by the
fund, according to decision №Ц-27 of July 1, 2021 of the EWRC are estimated at a total of BGN 1,335,421 thousand
and include compensation of expenses for the previous period in the amount of BGN 161,675 thousand. These
expenses for the previous period include: compensation of the public supplier costs for purchase of electricity from
power plants with long-term contracts in connection with increased prices of greenhouse gas allowances compared to
№Ц-29 of 1 July 2020 and Decision №Ц-10 of 24.02.2021 of the EWRC in the amount of BGN 18,653 thousand,
compensation of the public supplier for the purchase of electricity from renewable energy producers in the amount of
17,558 thousand BGN (in the decision are determined funds in the amount of BGN 19,000 thousand, but according
to the report they amount to BGN 17,558 thousand), the public provider receives as an intermediary funds in the
amount of BGN 106 thousand for reimbursement of arrears assistance under Ordinance E-RD-04 -06 of 28.09.2016
in connection with letter № Е-Е-ДП-132 of 28.01.2021 from the Ministry of Energy, the public provider receives as
an intermediary funds for recovery in the amount of BGN 223 thousand as a result of change of preferential prices of
electricity purchased from CHP, in implementation of court decisions that have entered into force; Reimbursement of
expenses of the public provider as an intermediary in connection with Order №Е-РЗ-16-377 of 05.05.2021 of the
Minister of Energy regarding an additional obligation for public service imposed on TPP “Maritsa East 2” in the
amount of 14,118 thousand BGN, compensation of expenses of the public provider as an intermediary in connection
with a request under Art. 35 para. 2 item 2 of the Energy Act of TPP “Maritsa East 2” for quantities of electricity
under Decision CC-19 of 01.07.2019 and Decision CC-29 of 01.07.2020 in the amount of BGN 111,017 thousand.
The revenues in the SES Fund for the current period compensate expenses between the estimated market price and
the preferential prices under long-term contracts in the amount of BGN 926,213 thousand and BGN 104,464 thousand
for access price of producers and due instalment under Art. 36f of the Energy Act, RES in the amount of BGN 47,894
thousand (up to 500 kW installed capacity) and CHP up to 500 kW installed capacity in the amount of BGN 959
thousand or a total of BGN 1,079,531 thousand. Also compensated is 94,214
BGN thousands of TPP Maritsa East 2
through the public supplier. Thus, for the price period from July 1, 2021 to June 30, 2022, the costs of the public
provider, which are covered by the Fund, according to Decision № Ц-27 of July 1, 2021 of the EWRC are estimated
at a total of BGN 1,173,745 thousand.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
55
In essence, the funds provided by the SES Fund are government grants that fall within the scope of IAS 20, Accounting
for Government Grants and Disclosure of State Aid. Funds provided by the SES Fund are recognized in profit or loss
on a systematic basis (monthly) during the periods in which the entity recognizes as an expense the related costs that
the grant is intended to offset until the Fund's budget is exhausted. In the process of filing claims for compensation, if
the costs of the Group exceed those specified in the EWRC price decision for the regulatory period, even if they meet
the condition for reimbursement, the excess should be recognized as income from financing after receipt of funds.
This is due to the fact that the moment of their recovery cannot be determined due to the exhaustion of the budget for
compensations of the Fund.
For the period from 1 January 2021 to 31 December 2021, revenues for offsetting the expenses of the public provider
in the amount of BGN 1,628,038 thousand (for 2020: BGN 978,293 thousand) are recognized, disclosed in note 22.2
Receivables from Electricity System Security Fund.
Revenue under Regulation (EU) 2019/943 of the European Parliament and of the Council of the European Union
Possessing the license for transmission of electricity and assets from the electricity system, the Group is obliged to
apply the requirements of Regulation (EU) 2019/943 (old №714 / 2009) of the European Parliament and of the Council
of 5 June 2019. According to item 2, art. 19 of the same all revenues from the distribution of interconnectors are used
for the following purposes:
(a) ensuring the actual availability of allocated capacity, including guarantee compensation, or
(b) maintaining or increasing interconnection capacity by optimizing the use of existing interconnectors through
coordinated corrective action, where applicable; or to cover costs arising from network investments related to the
reduction of congestion in interconnectors .
If the revenue cannot be used effectively for the purposes of points (a) and / or (b) of the first subparagraph, it may be
used subject to the approval of the regulatory authorities of the Member States concerned up to a maximum amount
to be determined by those regulatory authorities as revenue to be taken into account by regulatory authorities when
approving the methodology for calculating network tariffs and / or fixing network tariffs.
In 2021, the Group, through the subsidiary Electricity System Operator EAD, reported a total of BGN 4,176 thousand
in revenues under the Regulation (2020: BGN 4,253 thousand).
Revenues related to the payment of funds for maintaining employment (measure 60/40)
In connection with the state of emergency and subsequent epidemic situation in the country and the Government of
the Republic of Bulgaria has taken measures to maintain employment, employers from almost all sectors of the
economy are provided with funds amounting to 60% of insurance income of their workers and employees for a certain
period of time. The Group, through the subsidiary Mini Maritsa Iztok EAD, has been approved for the payment of
compensation for maintaining employment, respectively as follows:
• by the Decree of the Council of Ministers 151 / 03.07.2020, as amended. With CMD 416 / 30.12.2020 - for the
months of January, February and March 2021 in the amount of 60 percent of the amount of insurance income of
each employee under Article 1, paragraph 1 of the decree and the due insurance contributions at the expense of
the employer;
• by the Decree of the Council of Ministers 151 / 03.07.2020, as amended. With CMD 93 / 18.03.2021 - for the
months of April and May 2021 in the amount of 60 percent of the amount of the insurance income of each employee
under Article 1, paragraph 1 of the decree and of the due insurance contributions for employer's account;
• by the Decree of the Council of Ministers 151 / 03.07.2020, as amended. With CMD 213 / 01.07.2021 - for the
month of June 2021 in the amount of 60 percent of the amount of the insurance income of each employee under
Article 1, paragraph 1 of the decree and of the due insurance contributions at the expense of employer.
The reported income from financing in 2021 in connection with these measures amounts to BGN 60,175 thousand
(2020: BGN 56,216 thousand).
In 2021, the Group recognized the approved grant in profit or loss in the part Financing income.
In 2021 the Group is compensated for electricity, according to CMD 739 / 26.10.2021 and CMD 777 / 06.11.2021 as
income in the amount of BGN 101,103 thousand.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
56
8. Cost of natural gas, electricity and other current assets sold
2021
2020
BGN`000
BGN`000
Electricity
(2,781,081)
(1,735,050)
Natural gas
(1,975,273)
(703,110)
Other current assets
(9,280)
(1,420)
(4,765,634)
(2,439,580)
9. Cost of acquisition of property, plant and equipment
During the current period, expenses in the amount of BGN 51,157 thousand (2020: BGN 44,272 thousand) were
incurred for construction or creation of assets from real estate machinery and equipment in an economic way by the
companies in the Group. These costs include Cost of materials, including fuels and lubricants, external services,
Personnel expenses and other costs.
10. Cost of materials
2021
2020
BGN`000
BGN`000
Fuel
(140,675)
(134,149)
Spare parts
(47,100)
(40,567)
Electricity
(112,152)
(55,625)
Reagents, limestone and other basic materials
(16,876)
(12,819)
Repair and maintenance materials
(26,462)
(23,452)
Other materials and raw materials
(21,489)
(27,949)
(364,754)
(294,561)
11. Hired services expenses
2021
2020
BGN`000
BGN`000
Repairs
(105,052)
(100,614)
Insurance services
(54,596)
(53,774)
Security
(61,073)
(56,009)
Concession fees and licenses
(22,193)
(18,508)
Other fees
(4,021)
(4,322)
Transport services
(15,136)
(13,787)
Consulting services
(11,825)
(13,105)
Communication services
(3,316)
(3,385)
Rent
(420)
(533)
Natural gas storage costs
(1,177)
-
Others
(35,932)
(22,908)
(314,741)
(286,945)
Audit services
These consolidated financial statements have been audited by consortium DZZD AUDIT BEH with participants in it
Grant Thornton OOD and Zaharinova Nexia EOOD, based on a contract concluded between Bulgarian Energy
Holding EAD and DZZD AUDIT BEH.
The remuneration of the registered auditors amounts to BGN 854,000 and includes an independent financial audit of
the annual and interim individual financial statements of BEH EAD, NEK EAD, NPP Kozloduy EAD, TPP Maritsa
East 2 EAD, Mini Maritsa Iztok EAD, Bulgargaz EAD, NPP Kozloduy - New Capacities EAD, HPP Kozloduy EAD,
Interpriborservice OOD, PFC Beroe - Stara Zagora EAD and the annual and interim consolidated financial statements
of BEH EAD, NPP Kozloduy EAD and TPP Maritsa East 2 EAD.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
57
In 2021, the registered auditors did not receive any other remuneration or provided other services, except for the
remuneration of BGN 256 thousand for audit procedures performed by Grant Thornton OOD in connection with the
prospectus for a new bond issue in July 2021.
12. Expenses for impairment of financial assets, net
2021
2020
BGN`000
BGN`000
Accrued impairment loss on trade receivables, net
(425,106)
(40,650)
Accrued impairment loss on trade receivables from related parties, net
(9,099)
9,989
Accrued impairment loss on other receivables, net
658
2,773
Accrued impairment loss on court and awarded receivables, net
3,342
(2,744)
Accrued impairment loss on cash in bank accounts, net
(2,605)
254
Accrued impairment loss on other current assets, net
(9,559)
-
Total impairment of trade and other receivables
(442,369)
(30,378)
13. Employee benefits expenses
2021
2020
BGN`000
BGN`000
Remuneration
(645,224)
(599,076)
Social Security
(174,309)
(166,523)
Social costs
(167,440)
(157,486)
Accrued expenses for long-term retirement benefits (note 32)
(27,790)
(28,805)
Expenses for unused annual leave and social security on it
(18,208)
871
(1,032,971)
(951,019)
14. Other operating expenses
2021
2020
BGN`000
BGN`000
Expenditure according to Decision №739 of 26 October 2021 of the Council of
Ministers
(450,000)
-
Contributions to the Decommissioning of Nuclear Facilities Fund and the
Radioactive Waste Fund
(283,783)
(131,860)
Contributions to the Security of the Electricity System Fund
(251,699)
(106,300)
Food and work clothes
(37,049)
(35,989)
Technological cost of natural gas
(24,651)
(12,524)
Expenses for local taxes and fees
(9,536)
(9,561)
Lack of inventories and property, machinery and equipment
(4,213)
(6,166)
Training and qualification
(3,388)
(661)
Business trips
(2,169)
(2,122)
Expense tax expense
(1,813)
(1,712)
Fines and penalties
(1,071)
(429)
Others
(39,506)
(15,104)
Impairment of inventories
-
(20,447)
Excise and other taxes
-
(20,078)
(1,108,878)
(362,953)
Expenditure according to Decision №739 of 26 October 2021 of the Council of Ministers
The drastic increase in electricity market prices has had a negative impact on end users and businesses in the country.
To solve the problem with Decision №739 of October 26, 2021, the Council of Ministers adopted a program to
compensate non-households end users of electricity. Pursuant to item 2 of the same, the Minister of Energy, as
exercising the rights of the state in the capital of Bulgarian Energy Holding EAD, undertakes to perform the necessary
actions for the provision of grants amounting to BGN 450,000 thousand from NPP Kozloduy EAD to the account of
the Ministry of Finance. The amount was transferred on 04.11.2021 and reported as an extraordinary expense in the
consolidated income statement.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
58
Contributions to the Security of the Electricity System Fund
According to the provisions of Art. 36f of the Energy Act, contributions to the Security of the Electricity System Fund
should be deducted and paid by the electricity producers from the revenues from the sold electricity without VAT; the
operators of the electricity and gas transmission networks from the revenues for access and transmission of electricity
and natural gas without VAT. Pursuant to this requirement, the companies
Natsionalna Electricheska Kompania EAD, TPP Maritza East 2 EAD, NPP Kozloduy EAD, Bulgartransgaz EAD and
Electricity System Operator EAD charge and pay their 5%
contributions to the Power System Security Fund.
Contributions to the Decommissioning of Nuclear Facilities Fund and the Radioactive Waste Fund
Pursuant to ordinances adopted by the Council of Ministers for establishing, collecting, spending and controlling funds
and the amount of contributions due to the Decommissioning of Nuclear Facilities Fund and the Radioactive Waste
Fund, the subsidiary NPP Kozloduy EAD makes contributions to the budget. fund accounts. The due instalments are
determined according to the rules established in the ordinances. The contributions are reported as current expenses
and participate as a pricing element in determining the price of electricity produced by NPP Kozloduy EAD.
15. Finance income
2021
2020
BGN`000
BGN`000
Interest income receivable from Toplofikatsia Sofia EAD
35,165
21,128
Interest income on bank deposits
-
358
Interest income on bank current accounts
151
115
Other interest income on financial instruments carried at amortized cost
2,179
8,547
Total interest income on financial instruments not carried at fair value
through profit or loss
37,495
30,148
Dividend income and liquidation share
19
42
Foreign exchange profits, net
20,056
-
Others
12
8
57 , 582
30,198
16. Finance costs
2021
2020
BGN`000
BGN`000
Interest expense on loans carried at amortized cost
(128,914)
(104,134)
Interest expense on trade payables carried at amortized cost
-
-
Interest expenses on leasing contracts
(36)
(46)
Total interest expense on financial instruments not carried at fair value
through profit or loss
(128,950)
(104,180)
Interest expense on staff retirement benefits (note 31)
(1,694)
(1,825)
Interest expense on tax liabilities, fees and government receivables
(17)
(20)
Bank charges
(7,356)
(1,937)
Foreign exchange losses, net
-
(42,736)
Other financial expenses
(83)
(35)
(138,100)
(150,733)
Bank fees include an amount for accrued costs under a bank guarantee issued in case COMP / AT.39849-BEH gaz in
the amount of BGN 1,043 thousand (2020: BGN 1,025 thousand)
17. Income tax expenses
The expected income tax expense based on the applicable tax rate for Bulgaria of 10% (2020: 10%) and the actual
recognized tax expense in profit or loss can be equated as follows:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
59
2021
2020
BGN`000
BGN`000
Profit before tax from continuing operations
1,563,649
195,271
Loss before tax from discontinued operations
(7,262)
(6,523)
Profit before tax
1,556,387
188,748
Tax rate
10%
10%
Expected income tax expense
(155,639)
(18,875)
Tax effect of:
Increases in the financial result for tax purposes:
(219,307)
(140,848)
Reductions in the financial result for tax purposes:
183,673
114,586
Carrying over a tax loss
-
14
Current income tax expense
(191,273)
(45,123)
Deferred tax (expenses) / income:
Unrecognized income tax revenue
(29,759)
(23,196)
Occurrence and reversal of temporary differences
13,948
36,773
Income tax expense
(207,084)
(31,546)
Deferred tax (expense) / income recognized in other
comprehensive income
(180,689)
12,074
Note 23 provides information on the values of deferred tax assets and liabilities recognized in profit or loss and
recognized directly in other comprehensive income.
18. Earnings per share and dividends
18.1. Earnings per share
The earnings / (loss) per share is calculated using the net profit / (loss), which is subject to distribution to the
shareholder of the parent company. The weighted average number of shares used to calculate earnings per share, as
well as the net profit to be distributed to the parent company's shareholder, are presented as follows:
2021
2020
BGN`000
BGN`000
Profit for the Group to be distributed from continuing operations
1,356,444
163,777
Weighted average number of shares
3,462,941,744
3,462,941,744
Earnings per share (in BGN per share) from continuing operations
0.392
0.047
Profit for the Group subject to distribution from discontinued
operations
(7,262)
(6,523)
Weighted average number of shares
3,462,941,744
3,462,941,744
Earnings per share (in BGN per share) from discontinued
operations
(0.002)
(0.002)
Earnings per share (in BGN per share)
0.390
0.045
18.2. Dividends
The distribution of the profit of the parent company "Bulgarian Energy Holding" EAD is made by decision of the sole
owner of the capital and in the following order:
• at least 10% of the profit is allocated to the Reserve Fund;
• at the proposal of the Board of Directors it is possible to set aside a part of the profit, subject to distribution
in certain funds of the company;
• dividends are paid from the rest.
Dividend liabilities are determined annually by the State Budget Act.
For 2021 and 2020, the Group has no obligation to distribute dividends to the sole owner.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
60
19. Property, plant and equipment
As of 31 December 2021
Lands and
buildings
Machinery
and
equipment
Vehicles
Business
inventory
and other
assets
Acquisition
costs
Right-of-use
assets
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Gross carrying value:
Balance as at 1 January 2021
1,187,405
13,199,698
114,733
107,446
3,320,649
4,006
17,933,937
Newly acquired assets
695
14,641
2,148
724
847,259
492
865,959
Derecognized assets
(729)
(46,360)
(683)
(676)
(139,737)
(546)
(188,731)
Elimination of depreciation upon revaluation
(77,681)
(1,613,943)
(17,920)
(164)
-
-
(1,709,708)
Revaluation
114,540
1,743,927
4,097
-
-
-
1,862,564
Recovered impairment in profit or loss
437
774
72
-
-
-
1,283
Impairment deducted from revaluation reserve
(3,864)
(35,505)
(4)
-
-
4
(39,369)
Impairment in profit or loss
(3,191)
(2,930)
12
-
-
-
(6,109)
Assets classified as held for sale
-
(15)
(308)
(846)
-
-
(1,169)
Transfers and reclassifications
19,433
922,288
4,944
1,399
(967,437)
-
(19,373)
Balance as at 31 December 2021
1,237,045
14,182,575
107,091
107,883
3,060,734
3,956
18,699,284
Depreciation:
Balance as at 1 January 2021
(74,276)
(1,452,904)
(59,312)
(83,064)
(225)
(1,955)
(1,671,736)
Depreciation charge
(26,926)
(661,826)
(10,411)
(6,112)
-
(711)
(705,986)
Derecognized assets
66
23,634
650
667
-
546
25,563
Elimination of depreciation upon revaluation
77,681
1,613,959
17,920
164
-
-
1,709,724
Other reclassifications
(74)
125
92
662
-
-
805
Balance as at 31 December 2021
(23,529)
(477,012)
(51,061)
(87,683)
(225)
(2,120)
(641,630)
Net carrying value as of 31 December 2021
1,213,516
13,705,563
56,030
20,200
3,060,509
1,836
18,057,654
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
61
As of 31 December 2020
Lands and
buildings
Machinery
and
equipment
Vehicles
Business
inventory
and other
assets
Acquisition
costs
Right-of-use
assets
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Gross carrying value:
Balance as at 1 January 2020
1,171,628
10,666,530
103,656
105,997
3,261,591
3,570
15,312,972
Newly acquired assets
1,328
20,041
3,520
645
3,160,291
428
3,186,253
Derecognized assets
(302)
(59,765)
(601)
(635)
(384,090)
8
(445,385)
Revaluation
-
(10,570)
(97)
(122)
-
-
(10,789)
Impairment
-
(107,717)
-
-
-
-
(107,717)
Revaluation at the expense of accumulated depreciation
-
-
-
-
(4)
-
(4)
Transfers and reclassifications
14,751
2,691,179
8,255
1,561
(2,717,139)
-
(1,393)
Balance as at 31 December 2020
1,187,405
13,199,698
114,733
107,446
3,320,649
4,006
17,933,937
Depreciation:
Balance as at 1 January 2020
(48,085)
(925,345)
(50,062)
(77,858)
(225)
(1,244)
(1,102,819)
Depreciation charge
(26,381)
(577,562)
(9,899)
(5,957)
-
(711)
(620,510)
Derecognized assets
190
50,006
646
751
-
-
51,593
Elimination of depreciation in revaluation
-
(3)
3
-
-
-
-
Balance as at 31 December 2020
(74,276)
(1,452,904)
(59,312)
(83,064)
(225)
(1,955)
(1,671,736)
Net carrying value as of 31 December 2020
1,113,129
11,746,794
55,421
24,382
3,320,424
2,051
16,262,201
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
62
Right-of-use assets are included in the net carrying amount of property, plant and equipment as follows:
31 December 2021
Optical cable
lines
Machinery and
equipment
Buildings
Total assets
eligible for use
BGN`000
BGN`000
BGN`000
BGN`000
Gross book value
Balance on 1 January 2021
1,866
1,165
975
4,006
Newly acquired assets
-
58
434
492
Derecognized / adjusted assets
-
-
(546)
(546)
Balance as at 31 December 2021
1,866
1,223
863
3,952
Depreciation and impairment
Balance as at 1 January 2021
(1,042)
(403)
(510)
(1,955)
Depreciated / adjusted assets
-
-
546
546
Depreciation
(127)
(294)
(290)
(711)
Balance as at 31 December 2021
(1,169)
(697)
(254)
(2,120)
Book value as of 31 December 2021
697
526
609
1,832
31 December 2020
Optical cable
lines
Machinery and
equipment
Buildings
Total assets
eligible for use
BGN`000
BGN`000
BGN`000
BGN`000
Balance on 1 January 2020
1,476
1,119
975
3,570
Newly acquired assets
382
46
-
428
Derecognized / adjusted assets
8
-
-
8
Balance as of 31 December 2020
1,866
1,165
975
4,006
Depreciation and impairment
Balance as at 1 January 2020
(849)
(127)
(268)
(1,244)
Depreciation
(2)
-
-
(2)
Depreciated / adjusted assets
(191)
(276)
(242)
(709)
Balance as at 31 December 2020
(1,042)
(403)
(510)
(1,955)
Book value as of 31 December 2020
824
762
465
2,051
The properties, machines and facilities include nuclear power plant NPP Kozloduy EAD, TPP Maritza East 2 EAD, Mini
Maritza Iztok EAD Coal Mining Facilities, main and transit pipelines, and Chiren Underground Gas Storage, as well as
the electricity transmission network in ESO, HPP and SHPP, owned by NEK EAD, etc.
Asset acquisition costs
The costs for the acquisition of property, plant and equipment as of 31 December 2021 are mainly related to:
- Project for construction of NPP Belene, Yadenitsa Project, Gorna Arda Cascade and others in NEK EAD;
- Rehabilitation, modernization and expansion of the gas transmission system, Transmission gas pipeline with
AGRS Panagyurishte - Pirdop, Transmission gas pipeline with AGRS Svishtov, Optical highway Dupnitsa-Kulata;
- Measures to extend the service life of Units 5 and 6 of NPP Kozloduy EAD;
- Projects for improving the efficiency of production at NPP Kozloduy EAD;
- Design, construction and equipment of a new electric house, medium, low voltage, construction and control in
Troyanovo 3 mine for the normal operation of the power supply in the mine.
- Design, construction supervision, renovation, construction and installation works of fuel and lubricants in mine
Troyanovo Sever.
- Construction of GLT 2313 with a length of 478 m. - A new rubber-belt conveyor is being built in connection with
the need for development of mining works in section "RTNK" 3 of the mine Troyanovo Sever. The asset will
provide a front for the operation of the As6300 №283 embankment in the section;
- Repair of traverse tamping machine № 9 - the machine is used for maintenance of permanent railways . lines on
the territory of the Troyanovo-North mine. As of the date of creation of the order, the machine is fully depreciated
and it is necessary to restore the lining units, electrical system and carriages in order to extend the service life of
the asset;
- Investment repair EL №141 - the machine serves the export of coal to TPP "Maritsa East 2".
- Measures related to the implementation of the projects included in the National Investment Plan of the Republic
of Bulgaria in connection with a request for derogation under Article 10 of Directive 2003/87 / EC of the European
Parliament and of the Council, as amended by Directive 2009/29 / EC, as well as construction and restoration of a
large part of facilities - absorber and chimney of a desulfurization installation, damaged or destroyed as a result of
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
63
a fire on June 24, 2019 in TPP Maritsa East 2 EAD;
- optical cable route on the territory of R.N. Macedonia in Bulgartel AD.
Properties, plant and equipment put into operation
The Group is the owner and operator of the infrastructure for transmission and storage of natural gas, part of the single
pan-European gas network. The group operates in a dynamically changing global and European energy sector,
respectively.
It is expected that in the coming years the number of entry and exit points of the gas transmission network and their
capacities will continue to increase. This is a result of the development of projects for interconnections with Greece
and Serbia, the reversal of existing interconnections and the implementation of the project to expand the infrastructure
between the Bulgarian-Turkish and Bulgarian-Serbian borders. They will provide an opportunity for natural gas
supplies from various sources, incl. from liquefied natural gas terminals in neighbouring countries, which in turn will
contribute to increased competition and have a positive effect on natural gas consumers in the country and the region.
This will also stimulate the demand for natural gas storage capacity.
The significant assets built and put into operation in 2021 are:
• Compressor Station Nova Provadia in the amount of BGN 174,945 thousand;
• Extension of the gas transmission infrastructure parallel to the north (main) gas pipeline to the Bulgarian-
Serbian border, linear part (Auxiliary part 1) in the amount of BGN 82,324 thousand;
• Reconstruction of Compressor Station Lozenets by construction of two new gas turbine compressor units
(second stage of modernization) in the amount of BGN 76,493 thousand;
• Replacement of the north (main) gas pipeline in the PF Beglezh – VA Dermantsi – VABatultsi – VA
Kalugerovo - Stage 2 Gas transmission pipeline from VA Dermantsi to VA Batultsi in the amount of BGN
36,473 thousand.;
• Reconstruction of Compressor Station Ihtiman by construction of one new gas turbine compressor unit
(second stage of modernization) in the amount of BGN 35,763 thousand;
• Reconstruction of Compressor Station Petrich by construction of one new gas turbine compressor unit
(second stage of modernization) in the amount of BGN 35,470 thousand;
• Transmission (main) gas pipeline in the section PF Beglezh – VA Dermantsi – VA Batultsi –VA Kalugerovo
- Stage 3 Gas transmission pipeline from VA Batultsi to VA Kalugerovo in the amount of BGN 22,243
thousand.
• Gas pipeline branch Targovishte - N250, PN 5.4 Mpa - gas transmission pipeline – pipeline network and
valve assembly (VA) and gas purification station (GPS) launch chamber and VA and GPS receiving chamber
in the amount of BGN 11,137 thousand;
• Main and local optic cables - north main line from junction point at Serviceable amplifying station (SAS)
Polski Senovets - an intermediate point of the route at valve assembly Miladinovtsi to junction point AGRS
Targovishte in the amount of BGN 4,956 thousand;
• Chiren Underground Gas Storage - replacement of pipes of gas motor compressors open cycle in the amount
of BGN 1,648 thousand.
• Compressor Station Polski Senovets - overhaul of the engine room at the Compressor Workshop worth BGN
1,465 thousand.
Projects whose implementation has been temporarily suspended
The assets under construction include project costs in the amount of BGN 38,114 thousand (31 December 2020: BGN
38,053 thousand), which due to the deteriorating financial condition of NEK EAD, in recent years, the management
of NEK EAD does not provide funding (Gorna Arda Cascade, Places and other smaller projects). They are not included
in the investment program of the Company for the next five years.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
64
Belene NPP project
Construction on a project to build the NPP Belene began in 1981. In 1991, funding for the project was suspended.
In May 2004, the Government of the Republic of Bulgaria decided to continue the activities for the construction of
the second Belene nuclear power plant, and on April 7, 2005 in accordance with the requirements of Art. 45 of the
Law on Safe Use of Nuclear Energy, a final decision has been made for the construction of NPP Belene.
On October 30, 2006 NEK EAD officially announced the contractor ZAO Atomstroyexport with option A92 for the
construction of two 1,000 megawatt units with light water reactors at the Belene site.
On November 29, 2006 in Sofia between ZAO Atomstroyexport and NEK EAD an Agreement for the construction
of Belene NPP was signed.
On March 29, 2012, the Government of the Republic of Bulgaria decided to terminate the construction of the Nuclear
Power Plant at the Belene site. By a decision of 27 February 2013, the 41st National Assembly supported the
government's decision to suspend the project for the construction of a new nuclear power plant at the Belene site and
insisted on its final termination.
On June 14, 2016, the Arbitration Tribunal of the International Chamber of Commerce - Paris issued a decision
ordering NEK EAD to pay Atomstroyexport (ACE) an amount of BGN 1,176,661 thousand (EUR 601,167 thousand).
On June 7, 2018, the National Assembly decided to resume actions to seek opportunities for the construction of NPP
Belene together with a strategic investor, on a market basis and without providing a state guarantee, by separating the
assets and liabilities for the project NPP Belene in a separate project company.
The Council of Ministers repeals Decision №250 of 2012 repealing Decision №259 of 2005 to terminate the
construction of the Belene Nuclear Power Plant and to designate the Belene Nuclear Power Plant as a site of national
importance and repealing Decision №260 of the Council of Ministers of 2005 on the construction of a nuclear power
plant at the Belene site.
Pursuant to decisions of the National Assembly of June 7, 2018 and the Council of Ministers of June 29, 2018,
Natsionalna Electricheska Kompania EAD has issued an invitation to select a strategic investor for the construction
of NPP Belene. The invitation also provides an opportunity to express interest in acquiring a minority stake in the
future project company, as well as / or to purchase electricity from the future power plant. The purpose of the invitation
is to provide certain information to the parties wishing to apply for the procedure. Thirteen applicants submitted
applications within the announced deadline.
The Ministry of Energy has sent letters to the five companies on the “short list” prepared by a working group, in
accordance with the provisions of the procedure for selection of a strategic investor for the implementation of Belene
NPP, to confirm the submission of binding bids for further participation in the procedure. By January 31, 2020, the
Ministry of Energy has received confirmation letters for the submission of binding offers from all five companies.
As an indicative deadline for submitting the binding offer, it is planned to do so until May 31, 2020, but in connection
with the current pandemic situation, the deadline for preparing binding offers will start from the date on which
candidates will have physical access. to the "information hall" for the project, located in the building of Natsionalna
Electricheska Kompania EAD.
The information memorandum for the NPP Belene project was sent to all potential candidates from the so-called
“short list". These are: China National Nuclear Corporation (CNNC), Atomenergoprom AD - Rosatom , Korean Hydro
-Nuclear Corporation, Framatom SAS (France) and General Electric (USA). The memorandum contains basic
information about the project, the legal framework in the country, as well as an analysis of the market situation in the
region. It was sent to the applicants after they signed the project's confidentiality agreement in April. It is binding on
them as well as on all their consultants, bankers, agents and others. Given the ongoing measures in many countries in
connection with the coronavirus pandemic , the information memorandum has been sent online. The aspiration of the
Bulgarian side is to create optimal conditions for the candidates to prepare their binding offer in the conditions of
emergency.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
65
In 2021, the change in the capitalized costs of the project is BGN 55,311 thousand, representing storage costs,
capitalized interest and others.
As of 31 December 2021, the value of the costs for the NPP Belene project, included in the balance of assets under
construction, amounts to BGN 2,380,330 thousand (31 December 2020: BGN 2,325,019 thousand), related to Belene
project also includes properties, machinery and equipment with the carrying amount of BGN 75,170 thousand as of
(31 December 2020: BGN 74,061 thousand).
As of 31 December 2021, the Group is unable to make a reliable estimate of the recoverable amount of project costs
included in the value of property, plant and equipment under construction due to the specific nature and lack of clarity
about the future implementation of the project, which is not entirely under the control of Group’s management.
Based on the above facts, Group’s management believes that as of 31 December 2021 there is significant uncertainty
about the future implementation of the project, the recoverable amount of assets related to the project for the
construction of Belene NPP.
Revaluation of property, plant and equipment
According to the accounting policy, property, plant and equipment are revalued every 3 years or shorter. As at 31
December 2021, a fair value measurement was performed in accordance with the requirements of IAS 16 and IFRS
13. The revaluation was performed on the basis of an assessment of their fair values by independent licensed
appraisers.
In accordance with IFRS 13 “Fair Value Measurement”, the measurement of the fair value of non-financial assets
takes into account the ability of a market participant to generate economic benefits by using the asset to maximize its
value or by selling it to another market participant. use it that way. The assets of the Group included in the revaluation
review are specific, strictly related to the activities of the Group and the alternative use of most of them is impossible
or difficult, i.e. other use by market participants would be unlikely to maximize the value of the assets, and it is
therefore accepted that their current use in the business maximizes value.
As of 31 December 2021, Group’s management has reviewed the carrying amounts, recoverable amounts and useful
lives of non-current assets. Management's judgments are based on a review by an independent valuer at the date of
the financial statements.
The review applied the approach and valuation methods for measuring the fair value of individual categories of
property, plant and equipment, using a combination of the three basic approaches based on economic principles of
equilibrium prices, expected benefits or substitutions:
• Market approach - derives an indicative value by comparing the asset subject to valuation with identical or
similar assets for which price information is available.
• Revenue approach - derives indicative value by bringing future cash flows to a single current capital value,
i.e. considers the income that the asset will generate during its useful life and derives indicative value through
a capitalization process.
• Cost approach - derives indicative value using the economic principle that a buyer would not pay for an asset
more than the cost of acquiring an asset of equivalent value through purchase or construction.
Within each approach, as well as in possible combinations between them, one or several assessment techniques
(methods) have been used:
• Land valuation - two methods were used - the market analogues method with adjustment of derived market
prices and the approach based on initial prices of agricultural land, depending on the category of land with
the introduction of appropriate adjustments.
• Valuation of buildings - in accordance with the requirements of IAS 16 for the purposes for which it is
intended, the main method is the cost through the method of "depreciated replacement value". Other valuation
methods and approaches are used depending on their applicability to the specific asset.
• Valuation of machinery, plant and equipment - due to the specialized nature, configuration and uniqueness
of machinery, plant and equipment owned by the Group and the absence of market evidence and analogues,
the "amortized replacement cost" method is applied. The value of an asset is measured by determining its
new value at the valuation date, reflecting the cost of its acquisition, less its physical wear and tear, functional
and economic impairment, as a result of its operation.
• Evaluation of specialized vehicles - a method of costs and a method of market analogues is applied.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
66
The measurement at fair value as at 31 December 2021 is based on observable and unobserved data, adjusted for
specific factors such as area, location and current use. Directly or indirectly observable inputs used in the assessment
are subject to adjustment. For this reason, the hypotheses used are categorized from level 3.
Impairment review
As of 31 December 2021, the Group performed a review for the presence of indications of impairment together with
licensed appraisers. The selected level for the impairment test of Group’s assets is a cash-generating unit. The
impairment test found that at the valuation date, the value in use is higher than the carrying amount of fixed assets as
of 31 December 2021, as well as the formed value of the smallest cash-generating unit (subsidiary level). company).
Public state property assets
As of 31 December 2021, assets, machinery and equipment include assets with a book value of BGN 872,920 thousand
(31 December 2020: BGN 882,950 thousand), which have been declared public property under the Water Act. NEK
EAD, through the enterprise “Dams and Cascades”, performs all activities for the maintenance and management of
the dam walls, their adjacent facilities and the collection derivations of some of the complex and significant dams -
public state property according to Art. 13, para. 1, item 1 of the Water Act. According to the requirements of the same
law, the functions of management and maintenance of the dam walls and their facilities should be performed by a
“dam wall operator”, which function as of the date of preparation of these financial statements has not yet been
assigned to NEK EAD by the competent authorities. . As of the date of these financial statements, there is no change
in the legislation regarding the ownership and operation of these assets .
Pending clarification of future changes regarding the above-mentioned water management facilities, they are managed
by NEK EAD, against which the company generates revenues.
Assets with unidentified property
NEK EAD
As of 31 December 2021, a procedure for issuing deeds of state ownership is underway for lands and buildings with
a book value of BGN 17,333 thousand (31 December 2020: BGN 17,001 thousand).
ESO EAD
As of 31 December 2021 the real estates without ownership documents have a book value of BGN 3,482 thousand
(31 December 2020: BGN 4,041 thousand).
Collateral for loans received from NEK EAD
To secure the export and trade loans from ING Bank NV - The Netherlands has registered a contractual mortgage on
the lands and buildings of HPP Studen Kladenets, HPP Ivaylovgrad and HPP Kardzhali (Cascade "Dolna Arda") with
a book value of BGN 16,118 thousand (31 December 2020: BGN 16,248 thousand). ) and a special pledge of
movables, pledging all current and future assets, including machinery and equipment, part of the cascade "Dolna
Arda", in favour of ING Bank NV Promissory notes have been issued in favour of the Bank. The loan was fully repaid
in November 2020 and the collateral is to be cancelled .
Collateral for loans received from Mini Maritza-Iztok EAD and other collateral
Assets of the class of machinery, equipment and facilities with carrying amounts of BGN 38,814 thousand,
respectively (31 December 2020: BGN 41,705 thousand) were provided as collateral to secure the company's liabilities
on loans to banks.
With a decree for imposition of precautionary measures of the Territorial Directorate of the National Revenue Agency
of the National Revenue Agency - Sofia, a lien was imposed on movable property of Mini Maritsa Iztok EAD, with a
total book value of BGN 2,310 thousand, securing the required public receivable .
Other disclosures
Due to the specifics of the accounting records of property, plant and equipment and changes in them in previous
periods, disclosure of the carrying amount of assets, if they would be measured after recognition at cost, requires
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
67
significant resources and time that outweigh the benefits to consumers. of the consolidated financial statements.
Therefore, Group’s management has decided not to make these announcements.
The specifics of Group's assets and the dynamic economic environment in the energy sector in which it operates could
lead to variations in the assumptions and judgments used in determining the fair values of these properties, machinery
and equipment.
All depreciation and impairment expenses are included in the consolidated statement of profit or loss in the line
"Depreciation, amortisation and impairment expenses".
20. Intangible assets
The carrying amounts of intangible assets for the reported periods can be analysed as follows:
As of 31 December 2021
Software
products
Patents and
licenses
Other
intangible
assets
Develop-
ment
costs
Usage
rights
Acquisition
costs
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Book value
Balance as at 1 January 2021
70,807
24,420
95,438
53,910
2,961
-
247,536
Newly acquired assets
3,817
281
-
-
33
7,820
11,951
Derecognized assets
(2,625)
(3,945)
(2,208)
-
-
-
(8,778)
Transfers and reclassifications
1,049
7,113
162
18,077
-
(7,820)
18,581
Assets classified as held for sale
-
-
(5,609)
-
-
-
(5,609)
Balance as at 31 December 2021
73,048
27,869
87,783
71,987
2,994
-
263,681
Depreciation
Balance as at 1 January 2021
(59,434)
(19,180)
(91,292)
(49,826)
(2,348)
-
(222,080)
Depreciation
(4,538)
(2,309)
(400)
(1,282)
(77)
-
(8,606)
Derecognized assets
2,278
4,292
2,208
-
-
-
8,778
Assets classified as held for sale
-
-
4,421
-
-
-
4,421
Balance as at 31 December 2021
(61,694)
(17,197)
(85,063)
(51,108)
(2,425)
-
(217,487)
Book value as of
31 December 2021
11,354
10,672
2,720
20,879
569
-
46,194
As of 31 December 2020
Software
products
Patents
and
licenses
Other
intangible
assets
Develop-
ment
costs
Usage
rights
Acquisition
costs
Total
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
BGN`000
Book value
Balance as at 1 January 2020
73,245
22,097
95,109
53,910
2,829
-
247,190
Newly acquired assets
921
25
213
-
132
2,523
3,814
Derecognized assets
(4,200)
(649)
(6)
-
-
(6)
(4,861)
Transfers and reclassifications
841
2,947
122
-
-
(2,517)
1,393
Balance as at 31 December 2020
70,807
24,420
95,438
53,910
2,961
-
247,536
Depreciation
Balance as at 1 January 2020
(60,480)
(16,541)
(90,115)
(48,925)
(2,274)
(218,335)
Depreciation
(3,126)
(3,315)
(1,183)
(901)
(74)
-
(8,599)
Derecognized assets
4,172
676
6
-
-
-
4,854
Transfers and reclassifications
-
-
-
-
-
-
-
Balance as at 31 December 2020
(59,434)
(19,180)
(91,292)
(49,826)
(2,348)
-
(222,080)
Book value as of
31 December 2020
11,373
5,240
4,146
4,084
613
-
25,456
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
68
Impairment of intangible assets
The Group performed an impairment review of intangible assets as at 31 December 2021. There are no indications
that the carrying amount of the assets exceeds their recoverable amount and as a result no impairment loss has been
recognized in the consolidated financial statements.
The Group has not pledged intangible assets as collateral for its liabilities.
All amortisation and impairment expenses are included in the consolidated statement of profit or loss in the line
"Depreciation, amortisation and impairment expenses".
21. Investments in joint ventures, associates and other enterprises
31 December
2021
31 December
2020
BGN`000
BGN`000
Country of
incorporation
Title
Value of
investments
Title
Value of
investments
Joint ventures
ICGB AD
Bulgaria
50.00%
51,252
50.00%
53,766
South Stream Bulgaria AD
Bulgaria
50.00%
10,460
50.00%
10,626
Transbalkan Electric Power Trading SA -
NECO S.A.
Greece
50.00%
812
50.00%
870
SeleNe CC
Greece
25.00%
119
25.00%
99
Gastrade S.A.
Greece
20.00%
26,220
-
-
88,863
65,361
Associates
ContourGlobal Maritsa East 3 AD
Bulgaria
27.00%
90,517
27.00%
91,391
ContourGlobal Operations Bulgaria AD
Bulgaria
27.00%
1,353
27.00%
1,387
ZAD Energy
Bulgaria
48.08%
16,474
48.08%
14,678
POD Allianz Bulgaria AD
Bulgaria
34.00%
25,613
34.00%
23,617
HEK Gorna Arda AD
Bulgaria
24.00%
-
24.00%
-
133,957
131,073
Total joint ventures and associates
222,820
196,434
The change in the carrying value of the investments for the presented reporting periods can be analysed as follows:
2021
2020
BGN`000
BGN`000
Book value of the investment on January 1
372,189
372,189
Share of profit / ( loss)
41,470
40,325
Share of other comprehensive income
500
1,469
Dividends received
(42,873)
(41,766)
Other changes
373
(188,863)
Impairment
-
12,982
Acquisitions
26,916
98
Book value of the investment on 31 December
222,820
196,335
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
69
Joint venture ICGB AD _
BEH EAD is a partner in ICGB AD - the joint venture with equal participation of BEH EAD and IGI Poseidon (joint
venture with equal participation of DEPA SA and Edison International Holding NV). The project company will build
an interconnection gas connection between Greece and Bulgaria with a capacity of up to 3 billion m3 / year from the
town of Komotini to the town of Stara Zagora with a length of 182 km. The implementation of the project is related
to the policy of the Republic of Bulgaria, aimed at providing infrastructure for access to alternative sources and routes
for natural gas imports and ensuring physical connectivity of the country with the Southern Gas Corridor.
It is envisaged that the joint venture will build, own the pipeline, be licensed as its operator, allocate its capacity and
receive revenues from the transmission of natural gas.
In 2019, contracts were signed with the selected Consulting Engineer (TIBEI consortium), Contractor for the supply
of pipes ( Corinth Pipeworks Pipe Industry SA), Contractor for a working design, supply of materials and construction
- EPC (AVAX SA) and Contractor for construction supervision (DZZD Eco Bull Control) and the construction phase
of the project has started.
On October 10, 2019, the General Meeting of Shareholders of ICGB AD decided to increase the capital of ICGB AD
from BGN 33,053,560 to BGN 115,980,740 by issuing 8,292,718 shares new ordinary, registered Class A shares, with
a nominal value of BGN 10, to be subscribed by the shareholders holding Class A shares, in proportion to the shares
held by them before the increase.
On October 23, 2019, Bulgarian Energy Holding EAD made a cash contribution to the capital of ICGB AD in the
amount of BGN 41,463,590 , representing 50% of the contribution according to the decision of the General Meeting.
In 2020, construction and installation works are being carried out on the construction of the gas pipeline in the
conditions of a pandemic by COVID 19 and relevant restrictions imposed by the legislation in Bulgaria and Greece.
In 2021, the construction and installation activities are in an advanced phase. The linear part of the territory of the
Hellenic Republic has been completed, and hydro tests have been performed.
On the territory of the Republic of Bulgaria at the end of December 2021 the linear part is about 95% complete, and
three sections are hydraulically tested.
The construction and installation activities of ground facilities (2 GIS, Dispatch Center in Haskovo) are being carried
out, and the construction of the crane units has not started due to delays in material deliveries.
Due to the coincidence of the phase of active construction with the global pandemic of COVID-19, there are violations
in the planned rhythm of work activities and the expected delivery times of equipment, materials and machinery.
According to the second amendment of May 2021 of the Final Joint Decision of 2018 of the energy regulators in the
Republic of Bulgaria and the Hellenic Republic on the Application for exemption of ICGB AD under Art. 36 of
Directive 2009/73, the date of putting the facility into commercial operation is set no later than July 1, 2022.
In November 2021, with a decision of the Energy and Water Regulatory Commission, the project company ICGB AD
received a license for transmission of natural gas on the territory of Bulgaria for a period of 35 years.
South Stream Bulgaria Joint Venture AD
In June 2014, with the permission of the Minister of Economy and Energy, an agreement was signed to receive funds
from Gazprom EP International BV, which will be used to finance the participation of BEH EAD in the project
company South Stream Bulgaria AD. The return of the amounts under the agreement will be made only from the
receipts of BEH EAD from dividends from the project company. On August 11, 2014 a tranche in the amount of BGN
191,009 thousand was received, representing the contribution from BEH EAD, which on August 18, 2014 increased
the capital of the project company by BGN 382,018 thousand from the two shareholders BEH EAD and PJSC
Gazprom.
In December 2014, representatives of the Russian shareholder in South Stream Bulgaria AD, PJSC Gazprom, publicly
announced their intentions to terminate the project.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
70
In September 2015, the shareholder PJSC Gazprom notified BEH EAD that it considered the South Stream project to
be terminated, in connection with which the shareholders have started settling their relations under the project.
By agreement of 27 December 2019 ( Deed of settlement ) the overall settlement of the relations for the completion
of the project has been made. On May 11, 2020, a reduction of the capital of the project company South Stream
Bulgaria AD in the amount of BGN 377,726,000 was entered in the Commercial Register. With the amount of the
reduced capital due to Bulgarian Energy Holding EAD in the amount of BGN 188,863,000 ( 96,560,662.61 euros),
most of the holding's loan to Gazprom EP International BV has been repaid. The balance of the loan in the amount of
EUR 1,107,149.39 will be repaid by the liquidation quota of Bulgarian Energy Holding EAD upon liquidation of the
project company. The parties to the project will no longer have claims against each other.
In 2021, no further action was taken by the shareholders.
As of 31 December 2021 the impairment of the investment amounts to BGN 3 thousand (31 December 2020: BGN 3
thousand).
Transbolcan Electric Power Trading Joint Venture SA - NECO S.A.
The Group, through its subsidiary NEK EAD, owns 50% of the capital of NECO S.A., a jointly controlled company
whose main activity includes trade in electricity, as well as construction and reconstruction of thermal power plants.
ContourGlobal Maritsa East 3 AD
The Group, through its subsidiary NEK EAD, owns 27% of the capital of the thermal power plant ContourGlobal
Maritsa East 3 AD, whose main activity includes production, distribution and sale of electricity and heat.
ContourGlobal Operations Bulgaria AD
The Group through the subsidiary NEK EAD owns 27% of the capital of ContourGlobal Operations Bulgaria AD,
whose main activity includes operation and maintenance of TPP ContourGlobal Maritsa East 3 AD.
ZAD Energy
The Group owns 48.08% of the capital of ZAD Energy, which carries out insurance activities.
POD Allianz Bulgaria AD
The Group, through its subsidiary NEK EAD, owns 34% of the capital of POD Allianz Bulgaria AD, which carries
out pension insurance activities.
HEK Gorna Arda AD
The Group, through its subsidiary NEK EAD, owns 24% (31 December 2020: 24%) of the capital of HEK Gorna
Arda AD, which is registered to evaluate, structure and plan the construction of the Gorna Arda cascade, including
construction of hydropower plants with a total capacity of approximately 160 megawatts, providing financing and
construction of the Gorna Arda cascade and exercising the rights to operate the facility (after obtaining the relevant
licenses and permits). HEK Gorna Arda does not operate, does not generate revenues, has no budgets and forecasts
for future development, the investment in these consolidated financial statements has zero book value.
SeleNe CC Joint Undertaking , Greece
In May 2020, the Group, through the subsidiary Electricity System Operator EAD together with the transmission
operators of Greece, Romania and Italy established the Southeast Electricity Coordination Center SeleNe CC (
Southeast Electricity Network Coordination Center ) based in Thessaloniki, Greece, which will facilitate the efficient
management of regional energy systems and ensure security of electricity supply in the context of market mergers and
the integration of the Western Balkans. The value of the acquisition of the investment in the capital of SeleNe CC
amounts to BGN 98 thousand, which represents 25% of the total capital of the company.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
71
The Group did not receive any dividends during the reporting period and has no contingent liabilities or other
commitments related to the investment in the associate.
Associated company "Gastrade" SA, Greece
Pursuant to a decision of the Council of Ministers of January 8, 2020, the Group through the subsidiary Bulgartransgaz
EAD has acquired a shareholding in Gastrade S.A. amounting to 20% of its capital. The agreement for purchase and
sale of shares from the capital of Gastrade S.A. between the seller, who is a natural person, and Bulgartransgaz EAD
was signed on August 21, 2020.
On January 14, 2021, the Commission for Protection of Competition with its Decision №38 authorized the
concentration between enterprises, which will be realized through the acquisition by Bulgartransgaz EAD of joint
control over Gastrade S.A. together with DEPA TRADE AD, Greece, GAZLOG CYPRUS INVESTMENT LTD and
ASIMINA - ELENI KOPELUZU. In addition, the immediate implementation of this decision was ordered.
On January 28, 2021, the deal was finalized. Following the first payment under the Share Purchase Agreement (EUR
6,024 thousand), the Share Transfer Agreement was signed Transfer Agreement ) dated January 28, 2021. On the
same date the shares were endorsed in favour of Bulgartransgaz EAD and the company is registered as a shareholder
in the book of shareholders of Gastrade S.A.
The Group did not receive any dividends during the reporting period and has no contingent liabilities or other
commitments related to the investment in the associate.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
72
Summary financial information for joint ventures and associates
The table presents summarized financial information based on the financial statements of the joint ventures and associates of the Group as of 31 December of the respective year:
Joint ventures and associates
ICGB
AD _ _ _
South
Stream
Bulgaria
AD *
Transbolkan
Electric
Power
Trading SA -
NECO S.A.
**
Contour
Global
Maritsa
East 3
AD
Contour
Global
Operations
Bulgaria AD
ZAD
Energy
POD
Allianz
Bulgaria
AD
HEK
Gorna
Arda AD
*
SeleNe
CC *
Gastrade
S.A. *
Total
31 December 2021
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Non-current assets
346,340
18,368
8
361,690
6,304
39,675
73,409
129
3,086
849,009
Current assets (a)
81,328
2,724
3,698
899,355
11,474
13,431
10,187
140
1,741
4,696
1,028,774
Total assets
427,668
21,092
3,706
1,261,045
17,778
53,106
83,596
140
1,870
7,782
1,877,783
Non-current liabilities (b)
275,447
-
-
99,083
6,189
17,185
1,030
24
1,389
400,347
Current liabilities (c)
49,716
166
2,082
826,716
6,580
1,658
7,234
-
1,369
2,517
898,038
Total liabilities
325,163
166
2,082
925,799
12,769
18,843
8,264
-
1,393
3,906
1,298,385
(a) including cash and cash equivalents
71,562
2,651
482
47,415
33
13,431
4,577
140
1,345
1,241
142,877
(b) including non-current loans
174,910
-
-
60,491
-
-
-
-
-
-
235,401
(c) including current loans
149
-
-
58,448
-
-
-
-
-
-
58,597
Income
-
79
-
1,168,608
5,463
19,073
26,508
-
3,489
-
1,223,220
Depreciation costs
(156)
-
-
(76,432)
(40)
(663)
-
(62)
-
(77,353)
Income tax expense
1,281
-
-
(15,176)
(553)
(1,543)
(2,404)
-
(30)
5
(18,420)
Profit / (loss) for the year
(5,029)
(331)
(115)
106,054
4,943
13,741
24,168
-
80
(3,482)
140,029
Other comprehensive income for the year
-
-
-
3,707
(1,030)
(17)
-
2,660
Total comprehensive income / (loss) for the
year
(5,029)
(331)
(115)
109,761
4,943
12,711
24,151
-
80
(3,482)
142,689
Share of the profit / (loss) for the year due
to the Group
(2,515)
(166)
(58)
28,635
1,335
6,698
8,217
-
20
(696)
41,470
Share of other comprehensive income of
associates
-
-
-
1,001
-
(495)
(6)
-
-
-
500
Total net assets
102,505
20,926
1,624
335,246
5,009
34,263
75,332
140
477
3,876
579,398
Share participation of the Group
50%
50%
50%
27%
27%
48.08%
34%
24%
25%
20%
-
Impairment
-
(3)
-
-
-
-
-
-
-
-
(3)
Book value of the investment
51,252
10,460
812
90,517
1,353
16,474
25,613
-
119
26,220
222,820
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
73
Joint ventures and associates
ICGB AD
_ _ _
South
Stream
Bulgaria AD
Transbalkan
Electric
Power
Trading SA -
NECO S.A.
Contour
Global
Maritsa
East 3 AD
Contour
Global
Operations
Bulgaria AD
ZAD
Energy
POD
Allianz
Bulgaria
AD
HEK
Gorna
Arda AD
SeleNe
CC
Total
31 December 2020
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Non-current assets
203,213
18,368
10
422,790
5,694
43,047
59,099
-
49
752,270
Current assets (a)
15,142
3,084
3,839
486,186
12,392
7,938
13,945
141
467
543,134
Total assets
218,355
21,452
3,849
908,976
18,086
50,985
73,044
141
516
1,295,404
Non-current liabilities (b)
82,582
-
-
159,346
5,559
18,626
839
-
121
267,073
Current liabilities (c)
28,239
195
2,110
411,145
7,391
1,831
2,746
1
-
453,658
Total liabilities
110,821
195
2,110
570,491
12,950
20,457
3,585
1
121
720,731
(a) including cash and cash equivalents
12,056
3,022
608
58,753
635
7,938
-
141
246
83,399
(b) including non-current loans
-
-
-
118,197
-
-
-
-
-
118,197
(c) including current loans
-
-
-
55,761
-
-
-
-
-
55,761
Income
1,298
-
-
696,405
33,702
15,219
40,700
-
211
787,535
Depreciation costs
(189)
-
-
(73,446)
(125)
(578)
-
-
(74,338)
Income tax expense
(2)
-
-
(11,820)
(567)
(1,126)
(2,051)
-
(2)
(15,568)
Profit / (loss) for the year
(2,451)
(258)
(473)
106,279
5,072
9,737
21,253
(2)
4
139,161
Other comprehensive income for the year
-
-
-
6,120
-
(373)
(13)
-
-
5,734
Total comprehensive income / (loss) for the
year
(2,451)
(258)
(473)
112,399
5,072
9,364
21,240
(2)
4
144,895
Share of the profit / (loss) for the year due to
the Group
(1,226)
(192)
(303)
28,697
1,370
4,752
7,226
-
1
40,325
Share of other comprehensive income of
associates
-
-
-
1,652
-
(179)
(4)
-
-
1,469
Total net assets
107,534
21,257
1,739
338,485
5,136
30,528
69,459
140
395
574,673
Share participation of the Group
50%
50%
50%
27%
27%
48.08%
34%
24%
25%
-
Impairment
-
(3)
-
-
-
-
-
-
-
(3)
Book value of the investment
53,766
10,626
870
91,391
1,387
14,678
23,617
-
99
196,434
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
74
Investments in associates and joint ventures are accounted for using the equity method. The date of the financial
statements of the associates and joint ventures is 31 December. All cash transfers to the Group, such as dividend
payments, are made after the approval of at least 51% of all shareholders in the associates.
Presented financial information for Transbalkan Electric Power Trading SA - NECO S.A., South Stream Bulgaria
AD, SeleNe CC and Gastrade S.A. for the period ending 31 December 2021 is in accordance with unaudited financial
statements.
22. Trade and other receivables
31 December
2021
31 December
2020
BGN’000
BGN’000
Restated
Trade receivables, gross amount
662,609
713,956
Accumulated impairment of trade receivables
(611,163)
(332,040)
Trade receivables, net amount
51,446
381,916
Financial assets
51,446
381,916
Advances to suppliers
1
8
Prepaid services
410
450
Non-financial assets
411
458
Trade and other receivables - non-current part
51,857
382,374
Trade receivables, gross amount
984,760
517,144
Accumulated impairment of trade receivables
(264,714)
(129,391)
Trade receivables, net amount
720,046
387,753
Judicial and award receivables, gross amount
308,154
302,938
Accumulated impairment of court and awarded receivables
(293,061)
(281,534)
Judicial and award receivables, net amount
15,093
21,404
Receivables from the Electricity System Security Fund
266,185
93,043
Receivables from the Electricity System Security Fund - net
amount
266,185
93,043
Other receivables, gross amount
103,072
132,513
Accumulated impairment of other receivables
(91,924)
(97,580)
Other receivables, net amount
11,148
34,933
Financial actives
1,012,472
537,133
Advances to suppliers
331,153
49,942
Prepaid services
26,733
30,253
Tax recovery
1,839
121,954
Non-financial assets
359,725
202,149
Trade and other receivables - current part
1,372,197
739,282
Trade and other receivables
1,424,054
1,121,656
Trade receivables are not interest-bearing and usually have a payment period of 1 to 30 days.
The net carrying amount of trade and other receivables is considered a reasonable estimate of their fair value.
As at 31 December 2021, the Group has reviewed and accrued impairment for expected credit losses, in accordance
with the adopted accounting policy and the requirements of IFRS 9 Financial Instruments .
All trade and other financial receivables of the Group have been reviewed in respect of events of default. For all short-
term trade receivables, a simplified approach has been applied to determine the expected credit losses at the end of
the period. Long-term receivables are impaired on an individual basis.
The movement of the impairment for expected credit losses on trade and other receivables is presented below:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
75
Impairment of trade and other receivables
31 December
2021
31 December
2020
BGN’000
BGN’000
Restated
On January 1
840,545
800,457
Accrued during the year
445,429
75,836
Restored
(24,323)
(34,181)
Written off
(789)
(1,567)
Total impairment of trade and other receivables
1,260,862
840,545
22.1. Receivables from Toplofikatsia Sofia EAD
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current receivables from Toplofikatsia Sofia EAD, gross
amount
463,626
513,523
Impairment
(412,321)
(132,919)
Non-current receivables from Toplofikatsia Sofia EAD, net
amount
51,305
380,604
Current receivables from Toplofikatsia Sofia EAD, gross amount
517,358
267,553
Impairment
(234,752)
(90,489)
Current receivables from Toplofikatsia Sofia EAD, net
amount
282,606
177,064
333,911
557,668
Non-current receivables
On December 11, 2015, an agreement was concluded between Bulgarian Energy Holding EAD and Toplofikatsia
Sofia EAD, according to which the liabilities of the district heating plant to Bulgarian Energy Holding EAD are
merged and renewed . The debtor fully and unconditionally recognizes liabilities in the amount of BGN 500,465
thousand, as they are repaid over a period of twenty years, with a five-year grace period, and interest on the principal
in the amount of 3.25%. The agreement stipulates that upon concluding a concession agreement between Sofia
Municipality and a third party, the latter undertakes to pay BEH EAD an initial instalment of not less than BGN
200,000 thousand , within 120 days from the date of entry into force. of the concession contract, and the remainder
will be paid as agreed between the parties.
Liabilities in the amount of BGN 52,311 thousand were disputed by the debtor, for which in 2015 six claims were
filed. In 2019, the lawsuits ended and receivables in the amount of BGN 3,339 thousand were recognized. The
amounts due were paid by Toplofikatsia Sofia EAD according to an agreement from 2020. For the unrecognized
liabilities in the amount of BGN 48,972 thousand. acknowledged impairment in full.
As of 31 December 2021 from Toplofikatsia Sofia EAD under an agreement of December 11, 2015 are due amounts
due under a repayment schedule in the amount of BGN 35,917 thousand and default interest in the amount of BGN
709 thousand.
On April 1, 2019, an agreement was concluded between Bulgarian Energy Holding EAD and Toplofikatsia Sofia
EAD, whereby the debtor agrees to pay overdue debts for consumed natural gas in the amount of BGN 99,193
thousand by August 31, 2025, as he will not pay instalments on the principal until August 31, 2019. The agreed
interest on the principal is 4.66% as of August 28, 2018. In case of non- payment of any of the instalments, interest is
due from the debtor for each day overdue in the amount of the basic interest rate set by the Bulgarian National Bank,
plus a margin of ten points. The obligations under the agreement are serviced regularly according to the repayment
schedule.
As of 31 December 2021 from Toplofikatsia Sofia EAD under an agreement of April 1, 2019 are due amounts due
under a repayment plan in the amount of BGN 5,997 thousand and default interest in the amount of BGN 343
thousand.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
76
Current receivables
The current receivables include part of the long-term receivables of the Group from Toplofikatsia Sofia EAD maturing
up to 12 months after the reporting date , as well as receivables for sales of natural gas from enterprises in the group
to Toplofikatsia Sofia EAD.
Current receivables include overdue receivables from the Group of Toplofikatsia Sofia EAD with holder Bulgarian
Energy Holding EAD, as follows:
- for consumed natural gas at a total value as of December 23, 2020 in the amount of BGN 109,946 thousand,
including principal in the amount of BGN 104,639 thousand and interest in the amount of BGN 5,307
thousand. As of 31 December 2021 the amounts due from Toplofikatsia Sofia EAD are in the total amount
of BGN 120,788 thousand;
- for consumed natural gas at a total value as of October 28, 2021 in the amount of BGN 121,120 thousand,
including principal in the amount of BGN 119,407 thousand and interest in the amount of BGN 1,713
thousand. As of 31 December 2021 the amounts due from Toplofikatsia Sofia EAD amount to a total of BGN
123,276 thousand;
- for consumed natural gas at a total value as of December 18, 2021 in the amount of BGN 85,207 thousand,
including principal in the amount of BGN 85,066 thousand and interest in the amount of BGN 140 thousand.
As of 31 December 2021 The amounts due from Toplofikatsia Sofia EAD amount to a total of BGN 86,223
thousand.
The management is in the process of finalizing the negotiations with the debtor and negotiating a plan for repayment
of the amounts.
22.2. Receivables from the Security of the electricity system Fund
31 December
2021
31 December
2020
BGN’000
BGN’000
Receivables on January 1
93,043
124,862
Recognized revenue to offset the costs of the public provider
1,628,038
978,293
Expenses from TPP Maritza East 2 EAD, subject to reimbursement by the
SES Fund
(55,510)
-
Recognized amounts for reimbursement of beneficiaries in connection with
Ordinance № Е-РД-04-06 of 28 September 2016 on reducing the burden
related to the costs of energy from renewable sources.
106
41
Cash received
(1,399,492)
(1,010,153)
Receivables on 31 December
266,185
93,043
Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables are disclosed
in note 37 Financial risk management objectives and policies.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
77
23. Deferred tax assets and liabilities
Deferred tax assets / (liabilities)
Balance on
1 January
2021
Recognized
in profit or
loss
Recognized in
other
comprehensive
income
Part of
discontinued
operations and
assets held for
sale
Balance as
at 31
December
2021
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Property, plant and equipment and intangible
assets
(649,800)
(584)
(182,277)
64
(832,597)
Other temporary differences related to PPE
(e.g. depreciation)
7,590
6,979
(43)
-
14,526
Financing
10,075
10,241
-
20,316
Unused paid leave
3,831
585
(1)
4,415
Provisions
53,537
(383)
-
53,154
Other provisions (litigation, etc.)
-
1
-
-
1
Retirement employee benefit obligation
23,128
1,041
1,618
-
25,787
Provisions for environmental protection
-
(16)
-
-
(16)
Provision for spent nuclear fuel
-
(5,481)
-
-
(5,481)
Provision for reclamation
-
576
-
-
576
Provisions for emission allowances
-
(28,530)
-
-
(28,530)
Unpaid staff income
2,319
207
-
(1)
2,525
Financial assets at fair value in other
comprehensive income
3
-
13
-
16
Impairment of cash
201
(18)
-
-
183
Impairment of investments
148
-
-
148
Impairment of inventories
2,870
191
-
-
3,061
Impairment of trade and other receivables
61,661
23,273
-
-
84,934
Tax losses
533
2,637
-
-
3,170
Weak capitalization
6,520
3,229
-
(6)
9,743
(477,384)
13,948
(180,689)
56
(644,069)
Recognized as:
Deferred tax assets
172,416
222,555
Deferred tax liabilities
(649,800)
(866,624)
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
78
Deferred tax assets / (liabilities)
Balance to
January 1
2020
Recognized in
profit or loss
Recognized in other
comprehensive
income
Balance to
31 December
2020
BGN’000
BGN’000
BGN’000
BGN’000
Property, plant and equipment and
intangible assets
(675,670)
15,091
10,779
(649,800)
Other temporary differences related to PPE
(eg depreciation)
-
7,590
-
7,590
Financing
8,047
2,028
-
10,075
Unused paid leave
4,535
(704)
-
3,831
Provisions
49,504
4,033
-
53,537
Retirement employee benefit obligation
22,189
(336)
1,275
23,128
Unpaid staff income
1,233
1,086
-
2,319
Financial assets at fair value in other
comprehensive income
(17)
-
20
3
Derivatives
-
-
-
-
Impairment of cash
215
(14)
-
201
Impairment of investments
1,369
(1,221)
-
148
Impairment of inventories
1,596
1,274
-
2,870
Impairment of trade and other receivables
57,155
4,506
-
61,661
Tax losses
-
533
-
533
Weak capitalization
3,613
2,907
-
6,520
(526,231)
36,773
12,074
(477,384)
Recognized as:
Deferred tax assets
149,456
172,416
Deferred tax liabilities
(675,687)
(649,800)
The amount of income tax associated with each of the elements of other comprehensive income may be presented as
follows:
2021
Before
taxes
Tax (expense) /
income
Net of
taxes
BGN’000
BGN’000
BGN’000
Revaluation of property, plant and equipment
1,823,179
(182,320)
1,640,859
Revaluation of liabilities under defined benefit plans
(16,127)
1,618
(14,509)
Net change in the fair value of financial assets (equity
instruments)
(127)
13
(114)
Share of other comprehensive income of associates
555
(55)
500
Exchange differences from recalculation of foreign
activities
15
-
15
Other comprehensive income
1,807,495
(180,744)
1,626,751
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
79
2020
Before
taxes
Tax (expense) /
income
Net of
taxes
BGN’000
BGN’000
BGN’000
Revaluation of property, plant and equipment
(107,788)
10,779
(97,009)
Revaluation of liabilities under defined benefit plans
(12,739)
1,275
(11,464)
Net change in the fair value of financial assets (equity
instruments)
(193)
20
(173)
Share of other comprehensive income of associates
1,632
(163)
1,469
Exchange differences from recalculation of foreign
activities
(4)
-
(4)
Other comprehensive income
(119,092)
11,911
(107,181)
24. Inventories
31 December
2021
31 December
2020
BGN’000
BGN’000
Natural gas
165,535
122,224
Fuel
368,473
375,917
Spare parts
247,648
241,248
Other materials and consumables
141,239
100,565
Goods
605
625
Work in progress, including:
- charged unused fresh nuclear fuel
68,242
64,709
- coal
108,487
110,212
- others
59
61
Inventories, gross amount
1,100,288
1,051,561
Impairment to net realizable value
(18,702)
(24,039)
Inventories, net of impairment
1,081,586
991,522
The natural gas available at the reporting date mainly includes natural gas stored in the Chiren UGS. The fuels include
mainly uncharged fresh nuclear fuel, diesel and fuel oil.
The costs of accrued impairment of Group’s inventories are included in the line “Accrued / (recovered) impairment,
net” in the consolidated income statement.
The Group has no inventories provided as collateral for liabilities.
Bulgargaz EAD
In 2021, the value of sold natural gas in the amount of BGN 2,027,072 thousand was reported as an expense in profit
or loss (2020: BGN 644,430 thousand).
As of the date of the consolidated statement of financial position, Bulgargaz EAD has analysed the circumstances that
could lead to indications of impairment of the value of natural gas.
The main external source used as evidence of the existence of indications of impairment are the monthly decisions
for determining the price of natural gas of the EWRC.
The recovery of impairment losses on inventories is reported as an adjustment to the cost of natural gas sold during
the period. Accrued new impairment losses are presented as such in the consolidated income statement.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
80
Bulgartransgaz EAD
As of December 23, 2020, a new Emergency Action Plan is in force to ensure the security of natural gas supplies to
the Republic of Bulgaria, according to which Bulgartransgaz EAD stores quantities of natural gas in UGS Chiren,
with a maximum volume of up to 70 million cubic meters. meters in pursuance of an order of the Minister of Energy,
issued pursuant to Art. 70 of the EA for imposing additional obligations to society. The quantities specified in the
order constitute a reserve necessary to ensure continuity of supply in accordance with Annex VIII of Regulation
2017/1938.
In 2021, a total of BGN 58,332 thousand of inventories were reported as an expense in profit or loss (2020: BGN
50,121 thousand ), incl. revenues from reversal of impairment of inventories in the amount of BGN 5,654 thousand
(2020: expenses for impairment of inventories BGN 19,651 thousand).
The Group has recognized revenue from the reversal of impairment of inventories in the amount of BGN 5,654
thousand for 2021, according to a report by a licensed appraiser and the value of the available natural gas in the gas
transmission system and UGS "Chiren" is estimated until its net realizable value. The reverse manifestation of
impairment of inventories is a result of the increase in the market price of natural gas in 2021. The amount of
impairment of inventories recognized as an expense for the period is BGN 7,222 thousand.
TPP Maritsa East 2 EAD
In 2021, a total of BGN 208,643 thousand of inventories were reported as an expense in profit or loss (2020: BGN
140,718 thousand). This amount also includes impairment of inventories in the amount of BGN 7,161 thousand (2020:
BGN 247 thousand).
NPP Kozloduy EAD
As of 31 December 2021 an impairment of the obsolete inventories was made on the basis of a report by an
independent licensed appraiser, as well as impairments of inventories announced for sale during the year in the total
amount of BGN 6,105 thousand . (2020: BGN 241 thousand) and impairment from previous periods was restored in
the amount of BGN 17 thousand (2020: BGN 4 thousand).
During the second half of the reporting period, an analysis of the costs of acquisition of fixed assets in the part of the
available spare parts in the warehouses acquired for investment purposes was performed. As a result of the analysis
it was found that accumulated costs for acquisition of fixed assets on completed investment projects in the amount of
BGN 48,722 thousand. The same amount is reflected as a correction of error in the previous period by reclassifying
property, machinery t and equipment in inventories.
25. Financial assets at fair value in other comprehensive income
Investment in shares of Transgaz S.A., Romania
On December 17, 2007 the Group through the parent company Bulgarian Energy Holding EAD participated in the
initial public offering of securities of Transgaz S.A., Romania from an increase in the company's capital, acquiring
6,041 shares. The fair value of this investment as of 31 December 2021 is BGN 566 thousand (31 December 2020:
BGN 692 thousand) and is determined on the basis of published quotations of prices on an active market as of
December 30, 2021. All effects of revaluation of the investment for 2021 are reported in the reserve for revaluation
of Financial assets at fair value in other comprehensive income.
In 2021 a dividend of BGN 19,000 was received (for 2020: BGN 38,000)
Investment in shares of Balkangaz 2000 AD, Botevgrad
The group through the parent company "Bulgarian Energy Holding" EAD owns 10,000 units. registered shares of
Balkangaz 2000 AD, Botevgrad, with a nominal value of BGN 1 (one) per share. The company has subscribed and
paid-in capital in the amount of BGN 903 thousand. The Group has been a shareholder since the establishment of the
company in 2000. The investment of Balkangaz 2000 AD is impaired and written off from the financial statements
prepared before 2007 due to deteriorating financial condition of the company.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
81
The fair value of this investment as at 31 December 2021 is BGN 2 thousand (31 December 2020: BGN 2 thousand)
and is determined in accordance with IFRS 13 using level 3 of the fair value hierarchy.
In 2021 a dividend in the amount of BGN 441.15 was received (for 2020: BGN 4 thousand)
Investment in the auction office JAO SA
In 2019, the Group, through its subsidiary ESO EAD, is a shareholder in the auction office JAO SA, which acts as a
Single Platform for Allocation of Transmission Capabilities (EPR) under Regulation 2016/1719 establishing
guidelines for pre-allocation of transmission capacity. JAO SA distributes long-term transmission capacities (annual
and monthly) at all borders between EU member states. The value of the investment in the capital of JAO SA amounts
to BGN 507 thousand (31 December 2020: BGN 507 thousand)
Level 1
Level 3
Level 1 Level 3
31 December 2021
31 December 2020
BGN’000
BGN’000
BGN’000
BGN’000
Financial assets at fair value
through other comprehensive income
Exchcnge traded shares
566
-
692
-
Shares
-
509
-
509
26. Cash and short-term deposits
31 December
2021
31 December
2020
BGN’000
BGN’000
Cash in bank accounts
2,517,270
1,033,992
Cash
413
310
Deposits
117,231
-
Blocked special purpose funds
5,257
174,386
Cash provided as collateral
299,203
241,177
Gross value of cash and cash equivalents
2,939,374
1,449,865
Effect of expected credit losses
(6,644)
(3,686)
Cash and short-term deposits in the consolidated statement of
financial position
2,932,730
1,446,179
Cash provided as collateral
(299,501)
(241,177)
Effect of expected credit losses
298
180
Deposits
(117,350)
-
Effect of expected credit losses
119
-
Cash included in a group of assets held for sale
195
-
Cash in the consolidated statement of cash flows
2,516,491
1,205,182
Cash in bank accounts bears interest at floating interest rates based on daily interest rates on bank deposits.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
82
Deposits
In October 2021, the Group entered into a euro deposit agreement with International Bank for Economic Co -
Operation in the amount of BGN 117,350 thousand (EUR 60,000 thousand), with a deposit term of six months at an
interest rate of 0.02% on an annual basis.
Blocked special purpose funds
The amount of special purpose funds blocked for the Group as at 31 December 2021 is BGN 5,257 thousand (31
December 2020: BGN 174,386 thousand) and is due to the following reasons:
- BGN 4,937 thousand to a special account with CB Eurobank Bulgaria AD, opened under conditions approved
by the Ministry of Energy. The funds set aside from the available cash resources are blocked and are unavailable
for making other payments beyond their intended purpose. They are spent on purpose only to cover the costs of
spent fuel management, incl. for the activities for transportation, technological storage and processing of spent
fuel, which remained unfulfilled from previous years (31 December 2020: BGN 81,391 thousand);
- BGN 170 thousand on a special purpose current account with Allianz Bank Bulgaria AD in connection with a
contract with the EWRC (31 December 2020: BGN 170 thousand) ;
- BGN 150,000 in a special current account and serve as collateral within the meaning of Art. 19, para. 2 of
PURDEEM (31 December 2020: BGN 150 thousand).
- According to the requirements of Article 19 of Regulation 2019/943, as well as a decision of ACER and the
adopted Methodology for the use of overload income in accordance with Art. 19 (4) of Regulation 2019/943 of
the European Parliament and of the Council, funds are allocated to a special account. No interest is accrued on
the special accounts (31 December 2020: BGN 92,675 thousand);
Cash provided as collateral
The amount of cash presented as collateral as of 31 December 2021 amounts to BGN 299,501 thousand (31 December
2020: BGN 241,177 thousand) and is blocked on the following grounds:
- EUR 25,689 thousand represents an amount provided with a special purpose securing an obligation to pay a
property sanction in case AT.39849 BEH-GAZ. (31 December 2020: EUR 25,689 thousand);
- USD 150,351 thousand and EUR 6,504 thousand represent collateral in the form of deposits on loans received
for operating and investment expenses, which bear interest at an annual interest rate (31 December 2020: USD
106,010 thousand);
- BGN 13,738 thousand represents funds blocked on an escrow account in connection with the acquisition of 20%
of the capital of Gastrade S.A. (31 December 2020: BGN 25,520 thousand).
27. Assets and liabilities classified as held for distribution to owners
The processing, storage and disposal of RAW are activities of RAW management, which according to ASUNE should
be performed by SE RAW to ensure protection of the interests of the citizens of the Republic of Bulgaria and the
responsibility of the Bulgarian state and its competent authorities.
The Decision of the Ministry of Economy and Energy determines the RAW as the sole operator for Decommissioning
of Units 1 ÷ 4.
By Decision №1038 of 19.12.2012 of the Council of Ministers of the Republic of Bulgaria for declaring nuclear units
3 and 4 of NPP Kozloduy as facilities for RAW management and providing them for management of SE RAW, all
activities under the DNA of units 1 ÷ 4 and nuclear facilities, finally suspended for decommissioning, shall be
transferred for implementation and management to SE RAW.
As of 31 December 2021, together with the State Enterprise RAW, the necessary for declaring object of unfinished
construction “Facility for treatment and conditioning of solid RAW with high volume reduction factor” has been
undertaken for a facility for management of RAW and other assets in the process of acquisition. launched projects for
implementation of the activities for decommissioning of nuclear facilities for private state property and their provision
for management to SE RAW.
The book value of assets and liabilities intended for distribution to owners and which should be transferred to SE
RAW can be presented as follows:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
83
31 December
2021
31 December
2020
BGN’000
BGN’000
Assets
Lands and buildings
1 069
1 069
Machinery, equipment and facilities
8,600
8,600
Acquisition costs
46 573
46 573
Total assets
56 242
56 242
Liabilities
Amounts withheld under a construction contract
2 170
2 170
Financing
43 709
43 709
Total liabilities
45 879
45 879
As of 31 December 2021, there are no assets and liabilities that have been distributed to the owners and no cash flows
have been generated. In 2022, the Council of Ministers issued a decision to transfer the assets and liabilities of RAW
in 2022. More detailed information is disclosed in note 42 Events after the end of the reporting period.
28. Assets and liabilities classified as held for sale
In accordance with the government's policy to optimize the costs of state energy companies, the Group has decided
to take the necessary steps to transfer ownership of all 5,480,000 available, ordinary, registered shares, representing
100% of the capital of "Professional Football Club Beroe - Stara Zagora EAD, after obtaining the prior consent of the
Sole Owner of the capital. Pursuant to the above decisions, on 25 February 2022, in the city of Stara Zagora, a purchase
and sale agreement was concluded between the Group through the subsidiary TPP Maritsa East 2 EAD and the NGO
Association for Support of Football - Beroe, UIC 206794473 of 5,480,000 shares, representing 100% (one hundred
percent) of the capital of Professional Football Club Beroe - Stara Zagora EAD.
On March 10, 2022 in the Commercial Register were published the changes in the current state of "Professional
Football Club Beroe - Stara Zagora" EAD. As of this date, the sole owner of the capital of "Professional Football
Club Beroe - Stara Zagora" EAD is NGO "Association for Support of Football - Beroe".
Income and expenses, profit and losses related to this group are eliminated from the profit or loss from continuing
activities of the Group and are presented on a separate line in the consolidated statement of profit or loss in the line
"Loss for the year from discontinued operations". The operating loss of the disposal group up to the date of sale,
classified as held for sale, may be presented as follows:
2021
2020
BGN’000
BGN’000
Income
910
1,160
Cost of materials
(309)
(232)
Hired services expenses
(1,360)
(1,288)
Personnel expenses
(5,052)
(5,099)
Depreciation
(1,342)
(836)
Other expenses
(142)
(255)
Profit from operating activities
(7,295)
(6,550)
Financial expenses
(32)
(15)
Loss from discontinued operations before taxes
(7,327)
(6,565)
Tax expenses
65
42
Loss for the year
(7,262)
(6,523)
Loss for the year from discontinued operations
(7,262)
(6,523)
The exemption group classified as held for sale was sold for the total amount of BGN 1 in cash on February 25, 2022.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
84
The carrying amount of assets and liabilities held for sale may be presented as follows:
2021
BGN’000
Non-current assets
Properties, plant and equipment
235
Postponed taxes
10
Current assets
Inventories
101
Trade and other receivables
112
Cahs and cash equivalents
195
Assets classified as held for sale
653
Current liabilities
Obligations to staff
339
Trade and other payables
934
Liabilities classified as held for sale
1,273
The cash flows generated by the exemption group can be presented as follows:
2021
2020
BGN’000
BGN’000
Cash flows from operating activities
(5,869)
(5,603)
Cash flows from investing activities
(49)
181
Cash flows from discontinued operations
(5,918)
(5,422)
29. Share capital and reserves
29.1 Share capital
The registered capital of the Group consists of 3,462,941,744 ordinary shares with a nominal value of BGN 1 each as
at 31 December 2021 (31 December 2020: 3,462,941,744 shares). The shares of the Company are ordinary, registered,
unprivileged, with voting rights. All ordinary shares are fully paid. Each share entitles to one vote, the right to a
dividend and a liquidation share in Group’s assets. The sole shareholder in the capital is the Bulgarian state through
the Minister of Energy.
The issued and authorized shares for the reporting periods can be presented as follows:
2021
2020
Number of shares
Number of shares
Number of issued and fully paid shares:
In the beginning of the year
3,462,941,744
3,462,941,744
Total number of shares authorized at the end of the year
3,462,941,744
3,462,941,744
29.2 Other reserves
The other reserves are formed from the distribution of the profit according to the Commercial Law and the Articles
of Association of the companies of the Group or from other sources by decision of the sole shareholder. These include
legal reserves and other general provisions. Legal reserves are set aside until they reach one tenth or more of the
capital. Sources for the formation of legal reserves are at least one tenth of the net profit, premiums from issues of
shares and funds provided in the Articles of Association or by decision of the sole shareholder. Statutory reserves can
only be used to cover losses from the current and previous reporting periods. General reserves are formed on the
proposal of the board of directors and can be used to cover losses from previous years and for other purposes.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
85
29.3 Revaluation reserves to fair value
Revaluations to fair value of revaluation of financial assets at other comprehensive income are reported in revaluation
reserves.
29.4 Revaluation reserve of non-financial assets
The revaluation reserve is used to reflect increases in the fair value of property, plant and equipment and decreases to
the extent that those decreases relate to an increase in the same asset previously recognized in other comprehensive
income.
29.5 Reserve from recalculation of foreign activity
The Group has a subsidiary in the Republic of Northern Macedonia whose functional currency is the Macedonian
Denar. The translation reserve was formed as a result of exchange rate differences as of 31 December 2021.
29.6 Reserve from revaluation of defined benefit plans
Reserve for defined benefit plans includes actuarial gains and losses resulting from the revaluation of defined benefit
plans.
30. Loans and lease liabilities
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current portion
Bonds issued
2,340,556
1,169,530
Bank loans
1,246,869
875,540
Lease liabilities
721
1,219
3,588,146
2,046,289
Current portion
Bonds issued
243,878
1,115,398
Bank loans
33,691
146,296
Lease liabilities
822
734
Credit from EURATOM
-
11,170
278,391
1,273,598
3,866,537
3,319,887
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
86
Summary of the main terms and conditions for received loans and the attracted funds under lease contracts is provided
below:
Lender
Borrower / Issuer
Interest rate
Maturity
/ year
31 December
2021
31 December
2020
BGN’000
BGN’000
(1) Bond issue 2018
BEH EAD
3.5%
2025
1,191,292
1,190,460
(2) Bond issue 2021
BEH EAD
2.45%
2028
1,182,955
-
(3) Bond issue 2016
BEH EAD
4.875%
2021
-
1,094,468
(4) Investment loan in euro from the
European Investment Bank
BEH EAD
from 0.237% to
0.259%
2046
176,174
58,731
(5) Syndicated investment loan in euro
from the Bulgarian Development Bank
AD and the International Investment Bank
Bulgartransgaz EAD
EURIBOR + 2.00%
2026
215,448
219,053
(5) Syndicated investment loan in euro
from the Bulgarian Development Bank
AD and the International Investment Bank
Bulgartransgaz EAD
EURIBOR + 2.00%
2027
59,667
-
(5) Investment loan in EUR from
Unicredit Bulbank AD
Bulgartransgaz EAD
EURIBOR + 1.60%
2026
192,366
195,583
(5) Investment loan in EUR from
Unicredit Bulbank AD
Bulgartransgaz EAD
EURIBOR + 1.35%
2027
97,810
-
(5) Investment loan in euros from
Raiffeisenbank / Bulgaria / AD
Bulgartransgaz EAD
EURIBOR + 1.75%
2026
97,797
97,792
(5) Investment loan in EUR from DSK
Bank AD
Bulgartransgaz EAD
EURIBOR + 1.65%
2026
97,810
97,792
(5) Investment loan in EUR from DSK
Bank AD
Bulgartransgaz EAD
EURIBOR + 1.65%
2027
136,933
-
(5) Investment loan in euro from
International Bank for Economic Co-
Operation
Bulgartransgaz EAD
EURIBOR + 2.50%
2026
-
78,233
(5) Investment loan in euro from Eurobank
Bulgaria AD
Bulgartransgaz EAD
EURIBOR + 2.00%
2026
64,556
64,542
(5) Investment loan in euro from Eurobank
Bulgaria AD
Bulgartransgaz EAD
EURIBOR + 2.00%
2027
39,128
-
(5) Investment loan in EUR from ING
Bank NV
Bulgartransgaz EAD
BIR + 2.10%
2025
77,169
41,440
(5) Working capital loan in euros from
United Bulgarian Bank AD
Bulgartransgaz EAD
EURIBOR + 1.30%
2021
19,087
19,087
(5) Investment loan in EUR from United
Bulgarian Bank AD
Bulgartransgaz EAD
EURIBOR + 1.40%
2027
58,677
-
(5) Investment and working capital loan
from City Bank Europe AD
Bulgartransgaz EAD
BIR + 1.35%
2021
-
41,249
(5) Working capital loan from City Bank
Europe AD
Bulgartransgaz EAD
BIR + 1.70%
2026
63,610
-
(5) Working capital loan in euros from
Unicredit Bulbank AD
Bulgartransgaz EAD
BIR + 0.85%
2021
-
66,576
(5) Working capital loan in euros from
Investbank AD
Bulgartransgaz EAD
EURIBOR + 1.75%
2027
39,129
-
(5) Working capital loan in EUR from D
Commerce Bank AD
Bulgartransgaz EAD
EURIBOR + 1.75%
2027
30,322
-
(6) Investment loan from DSK Bank AD
Mini Maritsa - East EAD
BIR + 1.89%
2024
9,550
13,360
(7) Investment loan from DSK Bank AD
Mini Maritsa - East EAD
BIR + 1.89%
2024
2,595
3,637
(8) Investment loan from DSK Bank AD
Mini Maritsa - East EAD
BIR + 1.69%
2022
2,000
4,000
(9) Investment loan from DSK Bank AD
Mini Maritsa - East EAD
BIR + 1.69%
2022
2,000
4,000
(10) Investment loan from DSK Bank AD
Mini Maritsa - East EAD
BIR + 1.59%
2022
2,000
4,000
(11) Investment loan in euro from the
European Investment Bank
NEK EAD
from 4.026% to
4.844%
2022
4,316
12,761
(12) Overdraft from DSK Bank AD
Bulgargaz EAD
BIR + 0.4%
2022
2,603
-
(13) Investment non-bank loan from
EURATOM in euro
NPP Kozloduy EAD
EURIBOR + 0.079%
to 0.13%
2021
-
11,170
(14) Liabilities under leasing contracts in
BGN
1,543
1,953
3,866,537
3,319,887
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
87
Terms of loans received
(1) Bond issue 2018
On June 28, 2018 in the conditions of highly volatile financial markets due to a number of negative news from the
international political scene, Bulgarian Energy Holding EAD successfully placed its third issue of Eurobonds in the
amount of EUR 400 million on the Irish Stock Exchange. The parameters of the Eurobond are the following:
- amount of the bond issue EUR 400 million;
- due June 28, 2025;
- fixed interest rate 3.5% per annum;
- the interest is payable once a year on June 28, with the first payment due on June 28, 2019;
- ISIN code XS1839682116 of the bond issue, which is listed on the Irish Stock Exchange's main securities
market ( Euronext Dublin );
- BEH EAD should comply with certain covenants as follows:
• As long as there are obligations under issued bonds, the Issuer will not and will not allow the larger
subsidiaries, directly or indirectly, to assume financial obligations, unless the Issuer and one of the
larger subsidiaries may assume a financial obligation if after the assumption of such financial obligation
and the receipt and application of the income from it: (1) there is no or would not occur and does not
continue or would not continue Case of default; (2) the EBITDA coverage ratio is not less than 4.0 to
1.0; and (3) The consolidated leverage ratio is not more than 4.5 to 1.0.
• As long as there are obligations under issued bonds, in case NEK EAD is declared by a Bulgarian court
as over- indebted within the meaning of the Bulgarian Commercial Law, the Issuer will not and will
not allow (as permitted by law) its larger subsidiaries, directly or indirectly, to assume financial
obligations.
On July 31, 2018, Bulgarian Energy Holding EAD successfully increased the third issue of Eurobonds listed on the
Irish Stock Exchange ( Euronext Dublin ), from € 400 million to € 550 million.
On October 12, 2018, Bulgarian Energy Holding EAD recorded a second increase in its third issue of Eurobonds
listed on the Irish Stock Exchange ( Euronext Dublin ), from 550 to 600 million euros.
The proceeds from the issue are intended for general corporate purposes and refinancing of Eurobonds issued by the
company in 2013, maturing in November 2018.
The first interest payment was made on June 27, 2019, the second interest payment was made on June 24, 2020, and
the third interest payment was made on June 25, 2021. The annual interest liability amounts to EUR 21,000 thousand
(BGN 41,072 thousand).
(2) Bond issue 2021
On July 15, 2021, BEH successfully placed its fourth bond issue in the amount of EUR 600 million at an annual
interest rate of 2.45%. Given the extremely strong interest from investors, the bond was re-subscribed 2.3 times, and
the interest rate is the lowest achieved by Bulgarian Energy Holding EAD since the company participated in
international financial markets. The parameters of the Eurobond are the following:
- amount of the bond issue EUR 600 million;
- due July 22, 2028;
- fixed interest rate 2.45% per annum;
- the interest is payable once a year on July 22, with the first payment due on July 22, 2022;
- ISIN code XS2367164576 of the bond issue, which is listed on the Irish Stock Exchange's main securities
market ( Euronext Dublin );
- BEH EAD should comply with certain covenants as follows:
• As long as there are obligations under issued bonds, the Issuer will not and will not allow the larger
subsidiaries, directly or indirectly, to assume financial obligations, unless the Issuer and one of the
larger subsidiaries may assume a financial obligation if after the assumption of such financial obligation
and the receipt and application of the income from it: (1) there is no or would not occur and does not
continue or would not continue Case of default; (2) the EBITDA coverage ratio is not less than 4.0 to
1.0; and (3) The consolidated leverage ratio is not more than 4.5 to 1.0.
• As long as there are obligations under issued bonds, in case NEK EAD is declared by a Bulgarian court
as over- indebted within the meaning of the Bulgarian Commercial Law, the Issuer will not and will
not allow (as permitted by law) its larger subsidiaries, directly or indirectly, to assume financial
obligations.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
88
Proceeds from the newly issued bonds were used to refinance the second bond issue of the Company with a nominal
value of EUR 550 million, placed in 2016 at an annual interest rate of 4.875%, maturing on August 2, 2021, as well
as for general corporate purposes, except of coal-related activities.
(3) Bond issue 2016
On August 2, 2016, Bulgarian Energy Holding EAD successfully placed its second issue of Eurobonds in the amount
of EUR 550 million. With increased investor interest, the issue was re-subscribed in the amount of over 2 billion
euros. The parameters of the second bond issue issued by Bulgarian Energy Holding EAD are the following:
- amount of the bond issue (nominal value) EUR 550 million;
- issue value - 98.921% ;
- fixed interest rate 4.875% per annum;
- the interest is payable once a year on August 2, with the first payment due on August 2, 2017;
- due on August 2, 2021;
- ISIN code XS1405778041 of the bond issue, which is listed on the Main Securities Market of the Irish Stock
Exchange;
- BEH EAD should comply with certain covenants as follows:
• The Issuer undertakes not to assume and does not allow its subsidiaries to assume directly or indirectly
financial liabilities, if after assessing the effects of such liabilities and receipts (1) there are, arises or there
are grounds for the occurrence of a case of default, (2) the EBITDA coverage ratio Ratio ), calculated as
the consolidated EBITDA for the last period before the date of the transactions for which the Issuer's
consolidated financial statements have been prepared, divided by the financial expenses for the same
period, is less than 4: 1 and (3) the consolidated debt ratio Consolidated Leverage Ratio ), calculated as
the consolidated debt of the Issuer for the last period before the date of transactions for which consolidated
financial statements have been prepared, reduced by the carrying amount of the Issuer's cash for the same
period divided by consolidated EBITDA for the same period is more than 4.5 : 1.
• In case NEK EAD is declared over- indebted by a Bulgarian court, the Issuer undertakes not to assume
and not to allow (to the extent permitted by law) its subsidiaries to assume direct or indirect financial
obligations.
Proceeds from the bond were used to repay a EUR 535 million bridge loan provided by Banca IMI SpA., London
Branch , Bank of China ( Luxembourg ) SA and JP Morgan Limited. According to the agreement signed on April 21,
2016. On July 30, 2021, the obligations under this bond were fully repaid.
(4) Investment loan in euro from the European Investment Bank
In October 2019, Bulgarian Energy Holding EAD and the European Investment Bank signed a Financing Agreement
for the construction of the IGB gas pipeline worth EUR 109.9 million with a state financial guarantee from the
Republic of Bulgaria, the Guarantee Agreement ratified by the National Assembly. The loan is provided to Bulgarian
Energy Holding EAD as a shareholder in ICGB AD. For its part, BEH EAD transfers the loan financing of the project
company through a Shareholder Loan Agreement in the same amount, under the same financial conditions set in the
agreement with the European Investment Bank and without additional margin for Bulgarian Energy Holding EAD.
The repayment of the loan from the European Investment Bank will be carried out using a grace period for repayment
of the principal of the disbursed tranches, which according to the Agreement concluded with the bank may last up to
7 years from the date of disbursement of the tranche.
On 17 August 2020, the first tranche of EUR 30 million was disbursed under the following conditions: payment of
interest twice a year in the amount of 0.259%, five-year grace period for principal payments, payment of principal
twice a year, as the last instalment is due on August 17, 2045.
On January 18, 2021, the second tranche of the Financing Agreement for the construction of the IGB gas pipeline
with the European Investment Bank in the amount of EUR 30 million was disbursed and the amount was provided to
ICGB AD under a Shareholder Loan Agreement. The interest is 0.237% payable twice a year, and the deadline for
repayment is January 18, 2046.
On December 1, 2021, the third tranche of the Financing Agreement for the construction of the IGB gas pipeline with
the European Investment Bank in the amount of EUR 30 million was disbursed and the amount was provided to ICGB
AD under a Shareholder Loan Agreement. The interest is 0.612% payable twice a year, and the deadline for repayment
is December 1, 2046.
As of 31 December 2021 the liability to the European Investment Bank amounts to BGN 176,174 thousand, including
BGN 176,025 thousand principal and BGN 149 thousand interest (31 December 2020: BGN 58,731 thousand total
principal and interest).
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
89
(5) Loan agreements for financing Balkan Stream and other large-scale investment projects
In 2020 and 2021, the subsidiary Bulgartransgaz EAD received loans for operating and investment costs from several
financial institutions. Long-term loan principals have a grace period ranging from 12 to 17 months for various loans,
and interest is paid each month. The funds are intended to cover the investment costs of the company in connection
with the implementation of the Balkan Stream project on the territory of the country and other large-scale investment
projects. The loans are secured by cash in the form of deposits of up to 20% of the utilized and outstanding part of the
loan.
The subsidiary Bulgartransgaz EAD has also concluded several short-term credit agreements related to the provision
of working capital to finance payments in connection with the purchase of a shareholding in the capital of Gastrade
S.A., as well as to other suppliers, related to the main activity of Bulgartransgaz EAD. Short-term loans are also
secured by cash in the form of deposits of up to 20% of the utilized and outstanding part of the loan.
(6) Investment loan from DSK Bank AD with a limit of BGN 19,100 thousand.
Investment loan with a limit of up to BGN 19,100,000 to finance the implementation of the Contract №: MME / BWE
relating to the design, manufacture, supply, construction and commissioning of SRs 2000 rotary excavators at Mini
Maritsa - Iztok EAD, Bulgaria . The agreed interest rate is the annual interest rate on the actually used loan amounts
in the amount of BIR + margin of 1.89% per annum. One-time management and processing fee of 0.29% on the loan
amount. The penalty interest for overdue instalments is in the amount of BIR + 6%. The collateral is a contract for a
special pledge of assets dated 24.11.2016, the value of which covers the amount of the loan. The term of the loan is
81 months, with a 21-month grace period and a 60-month period for repayment of the loan. With an Additional
Agreement dated 25.06.2018, the term of utilization has been extended to 31.07.2019, and the deadline for repayment
of all liabilities is 30.06.2024. During the grace period Mini Maritza - Iztok EAD owes interest every month, accrued
on the actually utilized part of the investment loan. As of 31.12.2021 the liability under the loan amounts to BGN
9,550 thousand, incl. long-term part BGN 5,730 thousand. There are no overdue obligations under the contract as of
31.12.2021.
(7) Investment loan from DSK Bank AD with a limit of up to BGN 5,200 thousand.
Investment loan with a limit of up to BGN 5,200,000 to finance the implementation of the Contract №: MME / BWE
relating to the design, manufacture, supply, construction and commissioning of SRs 200 rotary excavators in Mini
Maritsa - Iztok EAD, Bulgaria . The agreed interest rate is the annual interest rate on the actually used loan amounts
in the amount of BIR + margin of 1.89% per annum. One-time management and processing fee of 0.29% on the loan
amount. The penalty interest for overdue instalments is in the amount of BIR + 6%. Collateral is a contract for a
special pledge of assets dated 24.11.2016, the value of which covers the amount of the loan. The term of the loan is
81 months, with a 21-month grace period and a 60-month period for repayment of the loan. With an Additional
Agreement dated 25.06.2018, the term of utilization has been extended to 31.07.2019, and the deadline for repayment
of all liabilities is 30.06.2024. During the grace period Mini Maritsa - Iztok EAD owes interest every month, accrued
on the actually utilized part of the investment loan. As of 31.12.2021 the liability under the loan amounts to BGN
2,595 thousand, incl. long-term part BGN 1,555 thousand. There are no overdue obligations under the contract as of
31.12.2021.
(8) Investment loan from DSK Bank AD with a limit of BGN 8,000 thousand.
Investment loan with a limit of BGN 8,000 thousand to finance the implementation of Contract MT440 / 19.12.2017
for the supply of bulldozers for the implementation of technological activities. Contractual interest rate - annual
interest on the actually used loan amounts in the amount of BIR + margin of 1.69% per annum. One-time management
and processing fee of 0.50% on the loan amount. The penalty interest for overdue instalments is in the amount of BIR
+ 6%. The collateral is a special pledge agreement for assets dated 13.06.2018. The repayment of the loan principal
is provided in 48 equal monthly instalments on the principal and starts from January 2019. The deadline for repayment
of all liabilities is 31.12.2022. During the period of loan disbursement, Mini Maritza - Iztok EAD owes interest
accrued on the amounts actually used on the loan. The agreed loan amount has been fully utilized. As of 31.12.2021
the liability under the loan amounts to BGN 2,000 thousand. There are no overdue liabilities under the contract as of
31.12.2021.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
90
(9) Investment loan from DSK Bank AD with a limit of BGN 8,000 thousand.
Investment loan with a limit of BGN 8,000 thousand to finance the implementation of Contract MT448 / 21.12.2017
for the supply of bulldozers for work in the open horizons of the mines. Contractual interest rate - annual interest on
the actually used loan amounts in the amount of BIR + margin of 1.69% per annum. One-time management and
processing fee of 0.50% on the loan amount. The penalty interest for overdue instalments is in the amount of BIR +
6%. Collateral: Special Pledge of Assets Agreement dated 13.06.2018. The repayment of the loan principal is provided
in 48 equal monthly instalments on the principal and starts from January 2019. The deadline for repayment of all
liabilities is 31.12.2022. During the period of loan disbursement, Mini Maritza - East EAD owes interest accrued on
the amounts actually used on the loan. The agreed loan amount has been fully utilized. As of 31.12.2021 the liability
under the loan amounts to BGN 2,000 thousand. There are no overdue liabilities under the contract as of 31.12.2021.
(10) Investment loan from DSK Bank AD with a limit of BGN 8,000 thousand.
Investment loan with a limit of BGN 8,000 thousand to finance the implementation of Contract MT452 / 22.12.2017
for the supply of bulldozers for work in the embankment horizons of the mines. Contractual interest rate - annual
interest on the actually used loan amounts in the amount of BIR + margin of 1.59% per annum. One-time management
and processing fee of 0.49% on the loan amount. The penalty interest for overdue instalments is in the amount of BIR
+ 6%. The collateral is a special pledge agreement for assets dated 13.06.2018. The repayment of the loan principal
is provided in 48 equal monthly instalments on the principal and starts from January 2019. The deadline for repayment
of all liabilities is 31.12.2022. During the period of loan disbursement, Mini Maritza - Iztok EAD owes interest
accrued on the amounts actually used on the loan. The agreed loan amount has been fully utilized. As of 31.12.2021
the liability under the loan amounts to BGN 2,000 thousand. There are no overdue liabilities under the contract as of
31.12.2021.
(11) Investment loan from the European Investment Bank with an agreed amount of EUR 60,000 thousand (BGN
117,345 thousand)
In November 2002, the subsidiary NEK EAD signed a contract as a beneficiary of a state investment loan to finance
a project for rehabilitation in the electricity sector - Energy II. The approved amount of the loan amounts to EUR
60,000 thousand (BGN 117,345 thousand), and the entire amount has been used.
The nominal outstanding part of the principal as of 31 December 2021 amounts to EUR 2,195 thousand (BGN 4,293
thousand). The loan was granted to the Republic of Bulgaria with Final Beneficiary - NEK EAD. The loan was granted
in six tranches, each tranche with a fixed interest rate, as follows: 1 tranche - EUR 10 million on 07.06.2004 - 4.69%,
2 tranche - EUR 7 million on 19.05.2006 - 4.285%, 3 tranche - EUR 6 million on 13.11.2006 - 4.026%, 4th tranche -
EUR 13 million on 03.07.2007 - 4.844%, 5th tranche - EUR 18 million on 12.03.2008 - 4.341%, 6 tranche - EUR 6
million on 28.10.2008 - 4,555%. Principals and interest are paid on June 15 and December 15, and the final repayment
is on June 15, 2022.
(12) Overdraft from DSK Bank AD
As of 31 December 2021 the subsidiary Bulgargaz EAD has utilized and outstanding overdraft in the amount of BGN
2,603 thousand, under a contract with DSK Bank. The loan matures on December 23, 2022 and has a market interest
rate. The loan is not secured.
(13) Investment non-bank loan from EURATOM in euro.
The loan was granted by the European Atomic Energy Community (EURATOM) to finance the modernization of
Units 5 and 6 at NPP Kozloduy EAD. The loan agreement contains special clauses with restrictive conditions
regarding the changes in the ultimate owners of NPP Kozloduy EAD, as well as financial indicators requiring the
achievement of certain levels of indebtedness and coverage of debt service. The loan is irrevocably and
unconditionally guaranteed by the Government of the Republic of Bulgaria and by the Natsionalna Electricheska
Kompania EAD. The loan was repaid in May 2021.
(15) Overdraft from DSK Bank AD
In 2021 Interpriborservice OOD has concluded a contract with DSK Bank AD for a loan in the form of an overdraft
for working capital in servicing current payments related to and / or accompanying the ordinary activities of the
company. The annual interest rate on the loan is formed by a variable reference interest rate, representing the weighted
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
91
average deposit index (SDI) plus an agreed margin of 2.60%. The deadline for repayment of all amounts due
(principal, interest, expenses) is February 2, 2022. Upon request, the term may be extended by annexes, but not later
than November 1, 2023. As of 31 December 2021, the loan is repaid.
Government guaranteed loans
The loan of EUR 109.9 million provided to Bulgarian Energy Holding EAD by the European Investment Bank (4) is
secured by a state financial guarantee from the Republic of Bulgaria.
The loan (11) of EUR 60 million provided to NEK EAD as a final beneficiary, with a maturity date of 15 June 2022
for financing the Rehabilitation in Electricity - Energy 2 project, is state-guaranteed.
For loans received as at 31 December 2021 that are secured by a government guarantee, the Group is unable to
determine the effect of the government guarantee on the agreed interest rate and whether this guarantee would have a
material effect on their fair value at that date.
Undrawn loans
As of 31 December 2021, the Group has undrawn the following investment loans and overdrafts:
Contracts for overdrafts concluded by Bulgargaz EAD
As of 31 December 2021, the total amount of the agreed amounts for overdrafts of Bulgargaz EAD is BGN 110,000
thousand. The loans are unsecured and mature in the period October 2022 - December 2022.
Used long-term loan agreements and short-term loan agreements from Bulgartransgaz EAD
Bulgartransgaz EAD has concluded a short-term overdraft agreement with United Bulgarian Bank AD, the unused
part of which is EUR 10,241 thousand as of 31 December 2021.
30 .1 Reconciliation between opening and closing balances in the consolidated statement of financial position
as at 31 December 2021 of liabilities arising from financial activities
Liabilities arising from financial activities
Book value
as of 1
January
2021
Cash flows from financing
activities
Non-monetary
changes - non-
cash
Book value as
at 31
December
2021
Cash
received
Payments
Increases /
(decreases)
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
(1) Bond issue 2018
1,190,460
-
-
832
1,191,292
(2) Bond issue 2021
-
1,173,498
-
9,457
1,182,955
(3) Bond issue 2016
1,094,468
-
(1,075,707)
(18,761)
-
(4) Investment loan in euro from the European
Investment Bank
58,731
117,350
(221)
314
176,174
(5) Investment and working capital loans
granted to Bulgartransgaz EAD
921,347
676,644
(307,727)
(755)
1,289,509
(6) Investment loan from DSK Bank AD
13,360
-
(3,810)
-
9,550
(7) Investment loan from DSK Bank AD
3,637
-
(1,042)
-
2,595
(8) Investment loan from DSK Bank AD
4,000
-
(2,000)
-
2,000
(9) Investment loan from DSK Bank AD
4,000
-
(2,000)
-
2,000
(10) Investment loan from DSK Bank AD
4,000
-
(2,000)
-
2,000
(11) Investment loan in euro from the
European Investment Bank
12,761
-
(8,922)
477
4,316
(12) Overdraft from DSK Bank AD
-
29,999
(27,396)
-
2,603
(13) Investment non-bank loan from
EURATOM in euro
11,170
-
(11,170)
-
-
(14) Liabilities under leasing contracts in BGN
1,953
-
(548)
138
1,543
(15) Overdraft from DSK Bank AD
-
1,559
(1,559)
-
-
Total liabilities from financial activities:
3,319,887
1,999,050
(1,444,102)
(8,298)
3,866,537
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
92
31. Deferred financing
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current portion
581,035
490,976
Current portion
20,249
17,924
On 31 December
601,284
508,900
31 December
2021
31 December
2020
BGN’000
BGN’000
On January 1
508,900
392,282
Received during the year
205,927
137,663
Recognized in profit or loss:
- as a result of ongoing activities (note 8)
(113,462)
(20,845)
Deducted advances
(81)
(89)
Reimbursed financing
-
(111)
On 31 December
601,284
508,900
As of 31 December 2021, no unfulfilled conditions and violations have been identified in connection with the received
funding.
Funding is mainly related to the following significant projects:
The financing of TPP Maritsa East 2 EAD is related to the following projects:
- ISPA funding for the construction of desulphurization plants for Unit 5 and Unit 6. The assets have been
built and put into operation. The balance of financing as of 31 December 2021 includes the carrying amount of assets
in the amount of BGN 7,457 thousand (31 December 2020: BGN 8,326 thousand);
- Funding from the Kozloduy International Fund for the construction of an installation for dewatering of
gypsum and CPS. The assets have been built and put into operation. The balance of financing as of 31 December
2021 includes the book value of assets in the amount of BGN 12,782 thousand (31 December 2020: BGN 14,800
thousand);
- Funding from the Energy Resources Fund for the construction of a ash dump . The assets have been built
and put into operation. The balance of financing as of 31 December 2021 includes the book value of assets in the
amount of BGN 1,918 thousand (31 December 2020: BGN 2,112 thousand)
The financing of Mini Maritsa-Iztok EAD is related to the following projects:
- Financing for fixed assets related to the Kozloduy International Fund, as the administrator of the fund is the
European Bank for Reconstruction and Development, and the management of their absorption by the Bulgarian side
is carried out by the Ministry of Energy. Funding is related to energy efficiency through rehabilitation of heavy
industrial mining equipment and replacement of rotary multi- bucket excavators of the company and other activities.
The financing amounts to a total of EUR 30,150 thousand;
- Funding under the Connecting Europe Facility (CEF) - Telecommunications sector for the project "Data
Center for Cyber Security in" Mini Maritza-East "EAD". A grant agreement was concluded on 23 July 2020 between
the company and the European Commission in the person of the Executive Agency for Innovation and Networks
(INEA), Department C - Connecting Europe Facility. The project is worth 278,619 euros. Funding is provided by
75% of the European Commission and 25% of the company. The grant for the project amounts to a maximum amount
of 208,964 euros. The implementation of the Project is reported in stages. 14 stages of implementation are defined
with respective end dates for each stage. For each completed stage, the relevant proof of implementation is sent as a
means of verification by the Innovation and Networks Executive Agency. So far, 5 stages have been reported, the first
being on 01.12.2020, the second - on 01.02.2021, the third - on 01.10.2021, the fourth - on 01.11.2021, and the fifth
- on 13.12. 2021.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
93
The financing of NPP Kozloduy EAD is related to the following projects:
- Financing under programs and funds for construction of properties, machinery and equipment for
environmental purposes at NPP Kozloduy, financing for current research activities of NPP Kozloduy EAD and
received from the European Bank for Reconstruction and Development (EBRD), totaling 103.501 thousand BGN (31
December 2020: BGN 107,364 thousand).
The financing of NEK EAD is related to the following projects:
- Funding under programs of the Energy Resources Fund, the Swiss Government, the European Connectivity
Mechanism in NEK EAD for the rehabilitation of hydroelectric power plants and other assets in the amount of BGN
38,831 thousand (31 December 2020: BGN 27,618 thousand).
The financing of Bulgartransgaz EAD is related to the following projects:
- between Bulgartransgaz EAD and the European Bank for Reconstruction and Development (EBRD), granting
the Company a grant from the Kozloduy International Fund for the construction of transmission pipelines with automatic
gas control stations (AGRS). Svishtov, Panagyurishte, Pirdop and Bansko - Razlog ";
- Bulgartransgaz EAD has signed agreements with the financing institution INEA for gratuitous financing
"Conducting 3D field seismic surveys as part of the project for expansion of UGS Chiren 6.20.2", "Preparatory activities
in connection with the implementation of POI 6.8.2." Rehabilitation, modernization and expansion of the Bulgarian gas
transmission system "," Preparatory activities for rehabilitation of the section of Valchi Dol - Transylvania Transmission
System, POI 6.8.2. ","Rehabilitation, modernization and expansion of the Bulgarian gas transmission system","
Feasibility study for Balkan Gas Hub , as part of a project of "common interest" 6.25.4 "Infrastructure needed for the
development of a Bulgarian gas hub" , "Rehabilitation, modernization and expansion of the Bulgarian transmission
system - Phase 2 ", "Implementation and certification" of an information security management system in accordance
with the requirements of the ISO 27001 standard "Establishment of a cybersecurity laboratory and a secure
environment for critical data and information systems"; Bulgaria-Serbia Gas Interconnection (IBS) - construction
activities ”.
- Under the Operational Program "Innovation and Competitiveness" 2014-2020 (OPIC) an administrative
contract was signed for the direct provision of grants № BG16RFOP002-4.003-0001-C01 for a project entitled
"Completion of preparatory activities necessary for the start of construction of the Interconnection gas connection
Bulgaria - Serbia ";
- between the Ministry of Energy (ME) and Bulgartransgaz EAD, under which the ME transfers the right of
ownership, as well as the related intellectual and industrial property rights, including all its copyrights, to the extent
permitted by law and agreed with the authors, on a fixed tangible asset under construction, entered in the balance
sheet of the Ministry of Economy in connection with the implementation of: Project "Preparation, research and design
for construction of gas interconnection Bulgaria - Serbia" and Project " Interconnection gas Bulgaria-Serbia
connection ”, as well as all the documentation created during the implementation of the two projects.The carrying
value of the financing as of 31 December 2020 amounts to BGN 161,364 thousand (31 December 2020: BGN 134,790
thousand)
The financing of the Electricity System Operator EAD is related to the following projects:
The received financing is in connection with the National Investment Plan of the Republic of Bulgaria (NPI) 2013-
2020 for implementation of investment projects by ESO EAD. In 2021 there are no declared and reimbursed expenses
with funds from the NPI.
Reimbursed funding
A meeting of the Assembly of Donors of the Kozloduy International Fund was held on July 10, 2018 with the
participation of the European Bank for Reconstruction and Development (EBRD) and representatives of the European
Commission, at which donors and the bank raised the issue of presentation accurate information on how the Extension
- Stage 1a of the DSF will be used appropriately.
Despite the assurances of the Group through the subsidiary NPP Kozloduy EAD on the feasibility of the project and
its future purpose, for various reasons, the analyses presented so far for storage of spent fuel from WWER-440 were
not accepted by donors.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
94
In this regard, at the meeting of July 10, 2018, the Assembly adopted a decision of the Group through the subsidiary
NPP Kozloduy EAD to present a repayment plan for the recovery of 12,892,000 euros (25,214,560.36 BGN) for the
expansion of DSF - Stage 1a.
Pursuant to the decision and according to a meeting held at the Ministry of Economy on November 20, 2018, the
Group through the subsidiary NPP Kozloduy EAD offered the EBRD an option to implement the decision of the
Donors' Assembly by reimbursing four equal annual instalments, each amounting to EUR 3,223,000, payable in the
period 2019-2022, excluding interest, which plan was adopted by the EBRD.
In 2021, a payment of BGN 6,304 thousand was made (2020: BGN 6,304 thousand), bringing the company's total
debt to the EBRD to a total of BGN 6,304 thousand (31 December 2020). : BGN 12,607 thousand).
32. Retirement employee benefit obligation
According to the Bulgarian labour legislation and the collective labour agreements of the companies of the Group,
the Group is obliged to pay to its employees upon retirement a certain number of gross monthly salaries depending
on the length of service in the companies of the Group. The defined benefit plan for staff on retirement is not funded.
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current part
279,695
256,798
Current part
49,809
46,148
Present value of the employee benefit obligation at retirement:
329,504
302,946
The changes in the provisions for retirement benefits according to Bulgarian Labour Code during the year are
presented as follows:
31 December
2021
31 December
2020
BGN’000
BGN’000
Retirement employee benefit obligation at the beginning of the
year
302,946
293,611
Current internship expenses
42,552
28,783
Expenses for past work experience
(231)
-
Interest expenses
1,694
1,825
Payments made for the period
(33,990)
(34,034)
Actuarial gains / (losses)
16,533
12,761
Retirement benefit obligations at the end of the year
329,504
302,946
The main assumptions used in determining the retirement income of employees are set out below:
31 December
2021
31 December
2020
BGN’000
BGN’000
Discount rate
0.6% - 1%
0.6% - 1%
Future salary increase
0% - 9%
0% - 9%
Staff turnover: 18-30 years
4% - 36%
4% - 36%
31-40
3% - 26%
3% - 26%
41-50
1% - 15%
1% - 15%
51-60
1% - 6%
1% - 6%
Over 60
0% - 1%
0% - 1%
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
95
Group’s management has made these assumptions with the help of independent actuaries . These assumptions have
been used in determining the amount of employee benefit obligations in retirement for the reporting periods and are
considered to be management's best judgment.
The total amount of expenses under defined benefit plans of the Group recognized in profit or loss can be presented
as follows:
31 December
2021
31 December
2020
BGN’000
BGN’000
Current internship expenses
(42,552)
(28,783)
Expenses for past work experience
231
-
Interest expenses
(1,694)
(1,825)
Actuarial gains / (losses) recognized in profit or loss
(683)
(22)
Total expenses recognised in profit or loss
(44,698)
(30,630)
The total amount of expenses under defined benefit plans of the Group recognized in other comprehensive income
can be presented as follows:
31 December
2021
31 December
2020
BGN’000
BGN’000
Revaluation of liabilities under defined benefit plans - actuarial loss,
including:
- Losses as a result of changes in demographic assumptions
25
(339)
- Losses due to changes in financial assumptions
(9,985)
(8,001)
- Losses based on actual experience
(6,167)
(4,399)
Total expenses recognised in other comprehensive income
(16,127)
(12,739)
Significant actuarial assumptions in determining liabilities under defined benefit plans are related to the discount rate
and the expected percentage increase in salaries. The following table presents a sensitivity analysis and summarizes
the effects of changes in these actuarial assumptions on liabilities under defined benefit plans as of 31 December
2021:
2021
1% increase
1% decrease
BGN’000
BGN’000
Change in interest rate
(29,482)
31,892
Wage growth
30,822
(29,826)
Sensitivity analysis is based on a change in only two of the assumptions. It may differ from the actual change in
defined benefit obligations because changes in assumptions are often interrelated.
The plan exposes the Group to actuarial risks such as interest rate risk, life expectancy risk and inflation risk:
• Interest rate risk - the present value of liabilities under defined benefit plans is calculated at a discount rate
determined on the basis of the yield on government securities issues. A decline in the market yield of government
securities will lead to an increase in liabilities under defined benefit plans of the Group;
• Risk of change in life expectancy - an increase in the life expectancy of employees would lead to an increase in
liabilities under defined benefit plans;
• Inflation risk - an increase in inflation would lead to an increase in liabilities under defined benefit plans.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
96
33. Provisions
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-flowing part
Provision for reclamation
112,281
107,570
Provision for environmental protection
33
74
Other provisions
157,038
154,776
269,352
262,420
Current part
Provision for exceeding greenhouse gas emission allowances
49,313
334,724
Provision for environmental protection
482
541
Provision for reclamation
1,903
949
Provision for spent nuclear fuel
24,908
79,720
Other provisions
23,125
29,282
99,731
445,216
369,083
707,636
Provision for
environmental
protection
Provision
for
recultivation
Provision
for
greenhouse
gas
emissions
Provision
for spent
nuclear
fuel
Provisions
for
lawsuits
and other
provisions
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Balance as at 1 January 2020
356
105,921
307,416
81,652
271,550
766,895
Accrued
428
2,652
334,723
39,860
16,020
393,683
Used
(169)
(54)
(307,415)
(41,792)
(103,512)
(452,942)
Balance as at 31
December 2020
615
108,519
334,724
79,720
184,058
707,636
Accrued
373
5,765
49,313
24,908
2,778
83,137
Used
(473)
(100)
(334,724)
(79,720)
(6,673)
(421,690)
Book value of
31 December 2021
515
114,184
49,313
24,908
180,163
369,083
Provision costs
2021
2020
BGN’000
BGN’000
Expenditure on greenhouse gas emissions
(1,135,635)
(309,736)
Recognized provisions
229,525
(84,252)
(906,110)
(393,988)
Provision for transport, processing and storage of spent nuclear fuel
According to the current Strategy for spent fuel and radioactive waste management until 2030, adopted by a decision
of the Council of Ministers on 02.09.2015, the Group has a legal obligation to transport at least 50 tons of heavy metal
per year spent nuclear fuel (SNF) for processing and storage in Russia, in the presence of favourable financial and
economic conditions.
In 2018, NPP Kozloduy EAD and FSUE PO MAYAK, Russia, in coordination with the Euratom Supply Agency,
Luxembourg, signed Framework Addendum №19 to the Agreement on Transport, Temporary Technological Storage
and Processing in Russia of 414 SNF cartridges from WWER-1000 in the period 2019-2023. In 2019, in coordination
with the ESA, Supplement №19-1 to Appendix №19 to the Contract for Transport, Temporary Technological Storage
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
97
and Processing of 96 spent fuel assemblies from WWER-1000 in the period 2019-2020 was signed. the long-term
nature of the preparatory activities for the removal of spent fuel, including organizational and technical activities,
preparation of the necessary documentation, obtaining certificates and permits, a new transport scheme has been
developed for the transport of spent fuel from WWER-1000. The first transport under this scheme took place in
December 2020. The costs for its implementation are financed by the provided in 2018 targeted funds for spent fuel
management, incl. for the activities on transportation, technological storage and processing of spent fuel, which have
not been carried out in previous years. In 2021, two trips of spent fuel from WWER-1000 with a total of 192 cartridges
were performed and the set aside provision in the previous reporting period in the amount of BGN 79,720 thousand
was released. The expenses for transport of the spent fuel, exceeding the provisioned amounts, amount to BGN 1653
thousand and are reported as current expense.
In order to fulfill the obligations under the "Strategy for RAW and SNF Management until 2030" for transportation
of at least 50 tons of heavy metal per year SNF and provide the necessary funding in accordance with current
Accounting Policies and the requirements of International Accounting Standard 37 "Provisions, contingent liabilities
and contingent assets ”in the current expenses for 2021 is charged a provision for spent fuel management in the
amount of BGN 24,908 thousand . The calculations are based on the best estimate of the cost of 1 transport of spent
fuel from WWER-1000 (96 cartridges), needed to cover the current liability as of 31 December 2021.
At the end of the reporting period ending on 31 December 2021 the amount of the recognized provision required to
cover the current obligation to manage SNF is BGN 24,908 thousand, including the value of unrealized transportation
of SNF from WWER-1000 for technological storage and processing for 2021
Provision for environmental protection
As of the reporting date, a provision for environmental protection costs has been recognized, relating to costs expected
to be incurred in connection with disposal of fluorescent and other mercury-containing lamps, disposal and recycling
of batteries, construction waste management. As at 31 December 2021 the carrying amount of the recognized
provision is BGN 514 thousand (31 December 2020: BGN 615 thousand)
Provision for reclamation of disturbed terrains from the coal mining activity
In determining the provision for reclamation of Mini Maritza-Iztok EAD, the current environmental legislation, the
forthcoming land for seizure, the seized non- recultivated land, the value of reclamation per 1 decare of land, as well
as the expected quantities of coal reserves by 2043 are taken into account. when the coal mining concession granted
to Mini Maritsa Iztok EAD expires.
The amount of the accrued provision as of 31 December 2021 is BGN 108,643 thousand (31 December 2020: BGN
102,878 thousand), calculated on the basis of the following data:
2021
2020
Mined coal
27,084
20,600
Reclamation cost (BGN / ton of production)
0.14
0.14
As there is significant uncertainty about the timing of future land reclamation activities to be carried out by the Group,
management is unable to determine the present value of the reclamation costs, so the provision is presented at its
undiscounted value. In the future, the assessment of the reclamation provision could vary to varying degrees
depending on changes in environmental legislation and the aforementioned factors for its calculation.
Provision for reclamation of disturbed terrains - gypsum dump (depot) for disposal of gypsum from desulfurization
plants
Pursuant to Ordinance 26 on reclamation of disturbed terrains, improvement of unproductive lands, removal and
utilization of the humus layer, the Group has an obligation to carry out technological and biological reclamation of
the landfill after its filling with gypsum from desulfurization plants. According to the capacity of the landfill and the
amount of deposited gypsum, the landfill is expected to be filled in 5 years. The value of the technological and
biological reclamation under the project amounts to BGN 5,488 thousand. According to IAS 16 “Property, Machinery
and Equipment”, the value of one property, machinery and equipment includes the initial estimate of the expected
cost of site restoration (land reclamation), where the asset was located after it was taken out of use. Liabilities for
these expenses are treated as a provision and are accounted for in accordance with IAS 37 “Provisions, Contingent
Liabilities and Contingent Assets”. The present discounted value of the provision is capitalized to the value of the
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
98
facility ( Gypsum dump ) and will be recognized each year as a depreciation expense. As of 31 December, 2013,
initially the present value of the provision was calculated in the amount of BGN 4,607 thousand using a discount
factor of 3.56%. The discount factors are determined at the end of each year according to the interest rates on long-
term government securities. An effective annual interest rate of 3.56% was used for discounting purposes . It is based
on the yield on long-term government securities issues (with a 10-year maturity ). The remaining part of the value of
the reclamation in the amount of BGN 881 thousand will be shown each year as an interest expense, which will
increase the provision for provisions .
As of 31 December 2021, the best estimate of the required provision for landfill reclamation is BGN 5,488 thousand
(31 December 2020: BGN 488 thousand).
Provision for reclamation of disturbed terrains for construction of gas transmission system facilities
The Group has an obligation for technical and biological reclamation of terrains on which facilities of the gas
transmission system are built. In connection with this, in 2019 the Group recognized a provision in the amount of
BGN 254 thousand, which is included in the value of the constructed assets to which it relates. The obligation should
be settled within 5 years of the initial recognition on the basis of actual reclamation activities. For 2021 the released
provision amounts to BGN 100 thousand (2020: BGN 54 thousand) and amounts to BGN 53 thousand (31 December
2020: BGN 153 thousand)
Provision for greenhouse gas emissions
TPP Maritsa East 2 EAD
As of 31 December 2021 the Group has reported provisions for shortage of greenhouse gas emission allowances in
the amount of 306,369 t / CO2, amounting to BGN 49,313 thousand t/CO2. The amount of the shortage is the
difference between the actually emitted and verified 6 673 429 t/CO2 and the available 6 367 060 t/CO2 on the
account of TPP Maritza East 2 EAD in the National Register as of 31 December 2021. The value of provisions is
calculated in accordance with the achieved purchase prices of allowances after 31 December 2021.
As of 31 December 2020 the Group has reported provisions for shortage of greenhouse gas emission allowances in
the amount of 4,276,599 t / CO2, amounting to BGN 334,607 thousand. TPP Maritsa East 2 EAD in the National
Register after the fulfilment of the obligation for 2019.
Natsionalna Electricheska Compania EAD
The company recognizes a provision for the costs of carbon emissions, according to the terms of long-term contracts with the
plants AES 3C Maritza East 1 EOOD and ContourGlobal Maritza East 3 AD. As of the date of the consolidated report, no
recognized provision for carbon emissions has been accrued (31 December 2020: BGN 117 thousand).
Other provisions
Case COMP / B1 / AT.39849 - BEH gas
As of 31 December 2020, the Group has accrued provisions for legal obligations in the amount of BGN 157,038
thousand (2020: BGN 154,776 thousand) under Case AT.39849 BEH-gas, undertaken by the European Commission
(EC) in connection with a formal investigation into whether BEH EAD and its subsidiaries Bulgargaz EAD and
Bulgartransgaz EAD violate EU competition rules in the country's natural gas market.
On December 17, 2018, pursuant to the Decision on Case AT.39849 BEH-gas, the European Commission imposed a
property sanction on Bulgarian Energy Holding EAD (BEH), its gas supply subsidiary Bulgargaz EAD and its
subsidiary Gas Infrastructure Company Bulgartransgaz EAD (BEH Group) in the amount of EUR 77,068 thousand
for violation of EU antitrust rules, with the Parties accountable to the EC jointly and severally for the payment of the
property sanction. The decision was officially received on 19.12.2018, which determines the beginning of the deadline
for its appeal (two months and ten days from notification of the Decision to the Parties) and the deadline for payment
of the property sanction (three months from notification of the Decision to the Parties), defined in the same.
The pecuniary sanction should be paid in euros within three months from the date of notification of the Decision
(19.12.2018), and it is divided equally between the interested parties - Bulgartransgaz EAD, Bulgargaz EAD and
Bulgarian Energy Holding EAD. An appeal against the Decision does not delay the payment of the pecuniary sanction.
It should be borne in mind that the BEH Group has three options, according to the rules of the EC, regarding the
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
99
payment of the pecuniary sanction: (i) to pay the pecuniary sanction conditionally; (ii) provide a bank guarantee; or
(iii) conditionally pay part of the pecuniary sanction and provide a bank guarantee for the rest.
Pursuant to the Decision of the National Assembly of November 24, 2017 and the Decision of the National Assembly
of July 26, 2018 and after approval by their governing bodies, as well as in view of the letter ex. №С-26-Е-07 of
26.02.2019 by the Minister of Energy with instructions for taking action to implement the Decision of the 44th
National Assembly of the Republic of Bulgaria on the closure of case COMP / B1 / AT.39849 BEH- gas of 24
November 2017, the Parties have decided to appeal the Decision in Case AT.39849 BEH-gas of the EC before the
General Court of the European Union.
The appeal against the Decision was lodged with the General Court of the European Union on 28 February 2019 by
the legal representative of White & Case LLP.
On March 18, 2019, ING Bank NV issued two unsecured bank guarantees in favour of the EC for a total amount equal
to the amount of the fine of EUR 77,068,000, as follows:
- bank guarantee in the amount of EUR 51,379 thousand, covering 2/3 of the total amount of the fine,
securing the obligations of Bulgarian Energy Holding EAD and Bulgargaz EAD;
- bank guarantee in the amount of EUR 25,689 thousand, securing the obligation of Bulgartransgaz EAD
for the imposed sanction.
On July 4, 2019, the Bulgarian state, through the Ministry of Foreign Affairs, filed an application to intervene in the
case in support of BEH EAD and its subsidiaries gas companies. On August 26, 2019, the European Commission
presented its Defence before the General Court in response to a complaint filed by Bulgarian Energy Holding EAD,
Bulgargaz EAD and Bulgartransgaz EAD. On November 29, 2019, Bulgarian Energy Holding EAD, Bulgargaz EAD
and Bulgartransgaz EAD filed a Response against the Protection of the European Commission. On February 20, 2020,
within the specified period by the General Court of the European Union, the Republic of Bulgaria through the Ministry
of Foreign Affairs (MFA) filed the official position of the Republic of Bulgaria in case T-136/19, provided by the
Ministry of Energy. intervenes in support of Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz
EAD against the European Commission before the General Court of the European Union.
The General Court examined additional documents and requested information in order to clarify all the circumstances
attached to the case. By letter of 14 March 2022, the Court requested the European Commission to provide non-
confidential versions of the documents listed by the Court. A response from the European Commission is expected.
It should be borne in mind that if the General Court decides to open the oral procedure, the President of the General
Court of the EU sets the date of the hearing for the oral proceedings. As of 31 December 2021, there is no set date for
an oral hearing of the parties.
34. Deferred income
31 December 2021
31 December
2020
BGN’000
BGN’000
Deferred income - non-current
251,646
206,152
Deferred income - current
6,782
3,490
258,428
209,642
Deferred income as of 31 December includes:
31 December
2021
31 December
2020
BGN’000
BGN’000
Deferred income - long-term Regulation 943/2019
248,419
202,510
Deferred income - short-term Regulation 943/2019
5,355
2,853
Deferred income - long-term others
3,227
3,642
Deferred income - short-term others
1,427
637
258,428
209,642
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
100
Electricity System Operator EAD
Possessing the license for transmission of electricity and assets from the electricity system, ESO EAD is obliged to
apply the requirements of Regulation (EC) (943/2019 of the European Parliament and of the Council. As required by
Article 19 of the Regulation, regarding the allocation and use of all revenues resulting from the allocation of inter -
zone capacity, ESO EAD, as an independent transmission operator, aims to achieve the following long-term
objectives:
- secure guarantee of the actual availability of the allocated capacity;
- maintaining or increasing inter -zone capacity by optimizing the use of existing interconnectors through
coordinated corrective actions or covering costs arising from network investments related to reducing
congestion in interconnectors .
In 2021, in the accounting books of ESO EAD an amount in the credit of the Special Reserve account was separated
as per Regulation 943/2019 in the amount of 100,806 (2020: BGN 46,190 thousand) of the revenues for MMFs in
2021. In the debit of the same account 42,488 (2020: BGN 46,038 thousand) were accounted to cover the cost of
reducing the access price. From the Special Reserve account the same amount of BGN 181,259 thousand was
transferred to analytical sub-accounts of the respective sites for construction of specific fixed assets.
The non-depreciated value of the above objects as of 31 December 2021 amounts to BGN 253,758 thousand, including
the long-term part of BGN 248,402 thousand and the short-term part of BGN 5,355 thousand.
35. Trade and other payables
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-flowing part
Trade payables
608,354
1,046,812
Guarantees retained
845
17,134
Other obligations
-
5,780
Financial liabilities
609,199
1,069,726
Current part
Trade payables
824,992
505,977
Deposits received
16,017
20,337
Guarantees retained
102,097
49,619
Insurance liabilities
4,168
9,005
Other obligations
59,689
14,199
Financial liabilities
1,006,963
599,137
Liabilities on advances
150,165
272
Liabilities to the SES Fund
18,425
6,879
Obligations to staff
109,423
92,331
Social security obligations
23,206
30,123
Budget commitments
254,079
69,467
Liabilities for contributions to the IEAS Fund and the RAW Fund
68,728
21,682
Other obligations
11,602
6,202
Non-financial liabilities
635,628
226,956
1,642,591
826,093
The terms of the above commercial and other obligations are as follows:
‒ Trade obligations are not interest-bearing and are usually settled within ten to thirty days;
‒ The tax liabilities are not interest-bearing and are settled within the legally established terms;
‒ Other liabilities are not interest-bearing and are usually settled within ten days;
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
101
‒ According to contracts with subcontractors in connection with investment projects, the Group retains certain
amounts as a guarantee for quality execution of construction and installation works. Retained amounts are
determined as a percentage of the value of invoiced construction works. The amounts withheld are interest-free.
The amounts withheld should be paid in accordance with the contractual relationship with the subcontractors.
NPP Kozloduy EAD
As of 31 December 2021 other liabilities in the amount of BGN 6,304 thousand, current part (31 December 2020:
BGN 12,607 thousand, including current BGN 6,827 thousand and non-current BGN 5,780 thousand .) are in
connection with the obligation of the Group through the subsidiary NPP Kozloduy EAD to recover the received
financing.
Bulgartransgaz EAD
As of 31 December 2021, trade liabilities in the amount of BGN 457,172 thousand (31 December 2020: BGN
1,245,542 thousand) are due to the Consortium Arcade Association, related to the implemented activities under the
project "Expansion of the gas transmission infrastructure" of Bulgartransgaz EAD parallel to the northern (main) gas
pipeline to the Bulgarian -Serbian border, stage "Linear part" with a length of 474 km due . Of this amount, a liability
of BGN 31,541 thousand (31 December 2020: BGN 115,616 thousand) represents accrued amounts for completed
and accepted project activities, which are to be invoiced by the suppliers. Under the terms of the contract, the liabilities
will be repaid on the basis of a repayment schedule in equal monthly instalments until 1 January 2031. The annual
interest rate is 3% (2020: 4.10%). After analysis and review of deliveries and project activities, as well as in
accordance with all available documents, management expects that the accrued amount will be close to the final
amount subject to invoicing. This assessment of the management is based on the available up-to-date information as
of the date of preparation of the financial statements (agreed values, lack of data for non-performance of the contract
and the availability of legally required documents for commissioning). Accordingly, the amount is included as part
of the newly acquired assets for the construction of the project in accordance with the requirements of IAS 16
"Property, Plant and Equipment".
On July 26, 2021, Gazprom Export LLC made an advance payment of amounts due under a contract for capacity
reservation for the period from July 1, 2021 to June 30, 2023. The total amount due for the period, calculated at the
estimated annual indexation of the applicable tariffs under the current contract for gas years 2021/2022 and 2022/2023
in the amount of 1.70% amounts to BGN 704,477,888.26 without VAT. When applying the discount factor on an
annual basis, the amount for the advance payment amounts to BGN 683,302,760.39 without VAT. As of 31 December
2021, the advance payment is classified as long-term and short-term .
36. Related party disclosures
The related parties of the Group include the sole shareholder in the person of the Ministry of Energy, associates and
joint ventures, key management personnel, as well as all public sector enterprises that are under the general control
of the ministries of the Council of Ministers in Bulgaria. Information on the name, country of incorporation,
shareholding and voting rights of each subsidiary included in the consolidation is provided in note 1. Information on
the name, country of incorporation, shareholding and voting rights of each associate and joint venture, is provided in
note 21.
The total amount of related party transactions and outstanding balances for the current and previous reporting periods
are presented as follows:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
102
Sales to
related
parties, incl.
dividends
Purchases
from related
parties, incl.
dividends
Trade
receivables
from related
parties
Trade payables
to related
parties
BGN’000
BGN’000
BGN’000
BGN’000
Sole owner
Ministry of Energy
2021
-
9,945
72,226
1,061,848
Ministry of Energy
2020
2
7,581
-
1,003,755
Associates
ContourGlobal Maritsa East 3 AD
2021
189,090
1,241,270
10,584
88,818
ContourGlobal Maritsa East 3 AD
2020
164,828
723,861
7,056
39,175
Expected credit losses
2020
-
-
(81)
-
ContourGlobal Operations Bulgaria
AD
2021
1,434
-
7
-
ContourGlobal Operations Bulgaria
AD
2020
1,461
-
7
-
POD Allianz Bulgaria AD
2021
6,221
995
82
POD Allianz Bulgaria AD
2020
5,569
1,001
-
84
ZAD Energy
2021
5,454
43,213
704
10,965
ZAD Energy
2020
4,413
31,139
669
10,974
ICGB AD _ _ _
2021
-
-
164,086
-
ICGB AD
2020
59,485
-
58,731
-
Expected credit losses
2020
-
-
(2,932)
-
Other related parties under common
control
Public sector enterprises under the
general control of the Council of
Ministers in the Republic of Bulgaria
2021
3,553,466
175,717
186,784
952
Public sector enterprises under the
general control of the Council of
Ministers in the Republic of Bulgaria
2020
181,677
14,255
73,780
1,003
Trade receivables / payables to
related parties
2021
434,391
1,162,665
Trade receivables / payables to
related parties
2020
137,230
1,054,991
Terms of transactions with related parties
Sales and purchases by related parties are made under conditions regulated by the sole owner. Outstanding balances
at the end of the year are interest-free and are settled in cash. No guarantees or collateral have been provided or
received for receivables from or liabilities to related parties. An impairment review is performed each financial year
based on an analysis of the financial condition of the related party and the market in which it operates.
Disagreement in settlements with related parties
NEK EAD
The signed Agreement for amendment of the Energy Purchase Agreement (PPA) from 2016 between NEK EAD and
ContourGlobal Maritza Iztok 3 AD (head office) includes a commitment to repay the capital investment. It is part of
an investment to reduce emissions of sulfur dioxide (CO2) and nitrogen oxides ( NOx ) at the plant. As there is no
regulatory mechanism for reimbursement of this investment of the plant, according to the Agreement, there is no
regulatory mechanism for reimbursement of NEK EAD's costs, this would directly affect its financial condition. The
company has reflected this cost in the price application for the regulatory periods from 01.07.2020 and 01.07.2021.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
103
It should be borne in mind that ContourGlobal Maritsa East 3 AD has filed a complaint against the EWRC's tacit
refusal to rule on the approval of a tariff model. The reasons of the EWRC for the price decision of 01.07.2019 cite
the decision of the court, which set out reasons that as far as in the Agreement amending the Energy Purchase
Agreement of 07.03.2016 and in the Decision №R -236 of 22.04.2016 of the EWRC, there is no legal regulation and
procedure for approval of the tariff model, it concerns official proceedings, which begins at the initiative of the
EWRC, which can only decide when and in what order should be approved this model. At the moment, the
administrative proceedings in this regard have not been completed due to the need to analyse the model presented by
ContourGlobal Maritsa East 3 AD. In Decision C-29 / 01.07.2020 and Decision C-27 / 01.07.2021 it is noted that a
tariff model from ContourGlobal Maritza East 3 AD has been submitted to the Commission for approval , as the
administrative proceedings in this regard do not has ended with an explicit administrative act.
The approval by the EWRC of the application for prices of NEK EAD with such cost included will provide security
for taking actions to make payments to the plant.
On June 4, 2019, NEK EAD received a Notice of Arbitration for the commencement of arbitration proceedings from
ContourGlobal Maritza East 3 AD under Article 21.5 of the Energy Purchase Agreement.
In an Agreement dated 07.03.2016 with the PPAs, the parties have agreed that NEK EAD has the obligation to pay
the amount of the investment for modernization (calculated by ContourGlobal Maritza East 3 AD of approximately
EUR 17 million) plus the return on the investment thus established. norm defined in the new tariff model, approved
by EWRC. According to the Agreement, the total amount of the investment must be paid by NEK EAD as follows:
- EUR 10 million no later than 31 December 2017;
- the remaining amount of the total investment will be paid in four equal instalments due
every six months, and the first installment must be paid no later than June 30, 2018.
The claim of ContourGlobal Maritsa East 3 AD includes the following amounts:
1) EUR 12 million claimed as outstanding principal (including VAT) for the first instalment according to the
Agreement for amendment of 07.03.2016 to DDIE and invoice №2000003118 / 21.12.2017, together with legal
interest for delay for the first instalment from 01.01.2018, the day following the maturity of the claim
(31.12.2017), until the final repayment of the claim;
2) EUR 7,086,086.97, claimed as outstanding principal for the next four instalments according to the Agreement
for amendment of 07.03.2016 to DDIE, together with legal interest for delay from the day following the due date
of each instalment until the final repayment of the claim. ContourGlobal Maritsa East 3 AD states that until
January 25, 2021 the total amount of all interest is EUR 4,908,764.61;
3) the costs related to the arbitration proceedings.
On February 8, 2022, the Arbitration Court ruled a Partial Arbitration Award, according to which:
- orders NEK EAD to pay EUR 10 million to ContourGlobal Maritza Iztok 3 AD ;
- dismiss the applicant's action for EUR 7.1 million, without prejudice to its right to be re-presented when the
conditions for its recovery are due; and
- postpones the issues concerning VAT, interest and costs to be resolved in a further final decision.
The Parties shall have the opportunity to present their views on adjourned matters.
The amount of BGN 19,558 thousand is recognized in the financial statements of NEK EAD for 2021 as a corrective
event.
Obligation to the Ministry of Energy for received loan
Long-term liabilities to Ministry of Energy
Nominal
value
Book
value
BGN’000
BGN’000
31 December 2021
1,176,661
1,055,672
31 December 2020
1,176,661
999,926
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
104
On September 28, 2016, the Bulgarian Parliament adopted a Law on granting assistance for the payment of Group’s
liabilities through the subsidiary NEK EAD, by decision of arbitration case № ICC Case 18086 / GZ / MHM. The
law was promulgated in the State Gazette on September 30, 2016 and provides for the Council of Ministers to provide
under Art. 109, para. 4, item 2 of the Public Finance Act through the budget of the Ministry of Energy remunerated
financial assistance of the Group through the subsidiary NEK EAD for the payment of the awarded amounts to ACE.
Pursuant to Art. 3 of the Law for granting assistance for payment of NEK's obligations, on September 29, 2016 a
notification was sent to the European Commission pursuant to Art. 108, para. 3 of the Treaty on the Functioning of
the European Union. The decision of the European Commission is that in this case there is no state aid, respectively.
the grounds under Art. 108 of the Treaty on the Functioning of the European Union.
On December 5, 2016, an Agreement for the provision of remunerative financial assistance was signed between the
Ministry of Energy and the Group through the subsidiary NEK EAD, according to which:
- The Ministry of Energy will provide the Group through the subsidiary NEK EAD with a grant in the amount of
EUR 601,617,133 (BGN 1,176,660,837);
- The Group, through its subsidiary NEK EAD , undertakes to pay the amounts awarded in the arbitration case
№ICC Case 18086 / GZ / MHM by December 14, 2016 under the terms and conditions of the Agreement for
final settlement of relations with ACE;
- The Group, through its subsidiary NEK EAD , undertakes to reimburse the received grant within the budget of
the Ministry of Energy within 7 (seven) years. Repayment is made once at the maturity of the loan (December
2023);
- The Group through the subsidiary NEK EAD will not pay interest on the received financial assistance and does
not provide collateral.
Remuneration of key management personnel
2021
2020
BGN’000
BGN’000
Remuneration
3,384
3,082
Social Security
247
225
Social costs
160
110
Compensation upon termination of the contract
-
20
3,791
3,437
37. Categories of financial assets and liabilities
The carrying amounts of Group’s financial assets and liabilities can be presented in the following categories:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
105
Financial assets
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current financial assets
Debt instruments at amortized cost, including:
51,446
381,916
Trade and other receivables
51,446
381,916
51,446
381,916
Current financial assets
Debt instruments at amortized cost
4,379,593
2,120,542
Trade and other receivables
1,012,472
5 37 , 133
Receivables from related parties
434,391
1 37 , 230
Cash and cash equivalents
2,932,730
1,446,179
Financial assets at fair value through other comprehensive
income, including:
1, 075
1,201
Capital instruments
1, 075
1,201
4,380, 668
2,121,743
4,432, 114
2,503,659
Financial liabilities carried at amortized cost
Note
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current financial liabilities, including:
Loans and lease liabilities
30
3,588,146
2,046,289
Trade and other payables
3 5
609,199
1,069,726
Liabilities to related parties
36
1,055,672
999,926
5,253,017
4,115,941
Current financial liabilities, including:
Loans and lease liabilities
30
278,391
1,273,598
Trade and other payables
35
1,006,963
599,137
Liabilities to related parties
36
106,993
55,065
1,392,347
1,927,800
6,645,364
6,043,741
38. Financial Risk Management Objectives and Policy
The Group has financial assets consisting of trade receivables, cash and short-term deposits that arise directly from
operations.
Group’s financial liabilities include bond issues, loans and trade payables. The main purpose of the loans is to provide
financing for Group’s activities.
As at 31 December 2021 and 31 December 2020 the Group does not own or trade in derivative financial instruments.
The main risks arising from Group’s financial instruments are liquidity, currency, credit and regulatory risk. Ongoing
risks are identified, measured and monitored through various control mechanisms introduced to determine adequate
prices for the services offered by the Group, as well as to adequately assess the market circumstances of investments
and forms of maintaining free liquidity, without allowing undue concentration of a risk and others. The risk
management in the Group is carried out on an ongoing basis by the management and the respective structural units,
depending on the type and specifics of the different types of risk to which the Group is exposed in its activities. The
policy applied by Group’s management to manage these risks is summarized below.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
106
37.1. Liquidity risk
The Group applies an approach that provides the necessary liquidity resources to meet the incurred liabilities under
normal or stressful conditions without realizing unacceptable losses.
One of the goals of the parent company is to provide, if necessary, financial resources of the subsidiaries to maintain
the operational activity, as well as for the implementation of strategic projects.
The parent company finances the operational activities of the companies in the Group in two ways:
• Internal financing, within the economic group, through redistribution of free monetary resources. Bulgarian
Energy Holding EAD acts as an intermediary between the companies, coordinating the conditions between them
and monitoring the execution of transactions at market levels.
• Interest rates on cash loans and deposits are based on market levels. The interest rates on cash loans and foreign
currency deposits are linked to a rate that is the market rate for such transactions during the transaction period
(floating or fixed).
• External financing - in case of lack of funds in the economic group, Bulgarian Energy Holding EAD may take
actions for external financing. This is a preferred way to raise funds for investment projects. In July 2021, BEH
EAD issued a new bond issue, which repaid the issue on August 2, 2016 and the rest of the funds are used to
finance investment projects of the companies in the Group and general corporate goals.
As at 31 December, the maturity structure of Group’s financial liabilities, based on agreed undiscounted payments,
including trade liabilities, retained guarantees, liabilities to the Decommissioning of Nuclear Facilities Fund and the
Radioactive Waste Fund and other liabilities are presented below:
As of 31 December 2021
Book
value
Agreed
cash flows
6 months
or less
6 - 12
months
15 years
More
than 5
years
On request
(without
maturity )
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Bonds issued
2,374,247
2,856,295
41,072
28,751
1,584,223
1,202,249
-
Loans and lease liabilities
1,492,290
1,566,066
134,994
132,518
1,075,826
222,728
-
Trade and other payables
1,616,162
1,616,162
948,821
132,905
245,610
264,922
23,904
Liabilities to related parties
1,162,665
1,283,654
106,993
-
1,176,661
-
-
6,645,364
7,322,177
1,231,880
294,174
4,082,320
1,689,899
23,904
As of 31 December 2020
Book
value
Agreed
cash flows
6 months
or less
6 - 12
months
1-5 years
More
than 5
years
On request
(without
maturity )
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Bonds issued
2,284,928
2,507,005
41,072
1,128,147
41,072
1,296,714
-
Loans and lease liabilities
1,034,959
1,038,487
77,218
82,765
64,859
754,882
58,763
Trade and other payables
1,668,863
1,669,438
357,750
227,042
441,115
631,975
11,556
Liabilities to related parties
1,054,991
1,231,726
55,060
-
1,176,661
-
5
6,043,741
6,446,656
531,100
1,437,954
1,723,707
2,683,571
70,324
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
107
37.2.Interest rate risk
The Group is exposed to the risk of changes in market interest rates mainly with respect to financial assets and
liabilities with variable (floating) interest rates.
In the structure of Group’s assets, interest-bearing assets are represented by cash, bank deposits and loans, most of
which have a fixed interest rate. The Group also has received loans with a combined structure of the interest rates on
loans, which contains two Items - fixed and variable. The attracted funds of the Group are in the form of long-term
and short-term loans and are mainly with a fixed interest rate. This minimizes the likelihood of a change in the
unfavourable direction of cash flows.
The table below shows the sensitivity of the annual net financial result after taxes and equity to a likely change in
interest rates on loans with a floating interest rate based on EURIBOR of +/- 0.01% (for 2020: +/- 0.1%) and based
on BIR in Bulgaria, amounting to +/- 0.01% (for 2020: +/- 0.1%). These changes are determined to be likely based
on observations of current market conditions. In 2021, EURIBOR has a negative value, which is why the interest rate
can be considered fixed. This is the reason why, the Group is not exposed to significant interest rate risk.
The calculations are based on the change in the average market interest rate and on the financial instruments held by
the Group at the end of the reporting period, which are sensitive to changes in the interest rate. All other parameters
are assumed to be constant. There is no effect on the other Items of Group’s equity.
As of 31 December 2021
Increase /
decrease in
the interest
rate
Effect on net
financial
result
Effect on
equity
%
BGN’000
BGN’000
Receivables from Toplofikatsia Sofia EAD related to BIR
+ 0.01%
35
35
Receivables from Toplofikatsia Sofia EAD related to BIR
-0.01%
(35)
(35)
Loans in euros (EURIBOR)
+ 0.01%
-
-
Loans in euros (EURIBOR)
-0.01%
-
-
Loans in BGN (BIR)
+ 0.01%
(18)
(18)
Loans in BGN (BIR)
-0.01%
18
18
As of 31 December 2020
Increase /
decrease in
the interest
rate
Effect on net
financial
result
Effect on
equity
%
BGN’000
BGN’000
Receivables from Toplofikatsia Sofia EAD related to BIR
+ 0.1%
10
10
Receivables from Toplofikatsia Sofia EAD related to BIR
-0.1%
(10)
(10)
Loans in euros (EURIBOR)
+ 0.1%
(9)
(9)
Loans in euros (EURIBOR)
-0.1%
9
9
Loans in BGN (BIR)
+ 0.1%
(93)
(93)
Loans in BGN (BIR)
-0.1%
93
93
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
108
37.3. Currency risk
The Group buys, sells, lends and receives loans in foreign currencies - Euros, US Dollars, British Pounds, Swiss
Francs and Macedonian Denars. The main part of these operations is carried out in euros and US dollars. As the BGN
/ EUR exchange rate is fixed at 1.95583, the currency risk arising from Group’s euro exposures is minimal. The Group
makes payments for construction works and deliveries of assets under construction and goods in US dollars. In this
regard, there is a risk of changes in exchange rates. Therefore, Group’s exposure is exposed to the risk of changes in
the US dollar exchange rate. In the event of significant fluctuations in future exchange rates, the Group may hedge its
exposure through derivative instruments such as currency swaps.
As of 31 December 2021
Increase in the exchange rate of
the Bulgarian lev
Decrease in the exchange rate
of the Bulgarian lev
Net financial
result
Equity
Net financial
result
Equity
BGN’000
BGN’000
BGN’000
BGN’000
US dollars (+/- 3.8%)
(14,367)
(14,367)
14,367
14,367
As of 31 December 2020
Increase in the exchange rate of
the Bulgarian lev
Decrease in the exchange rate of
the Bulgarian lev
Net financial
result
Equity
Net financial
result
Equity
BGN’000
BGN’000
BGN’000
BGN’000
US dollars (+/- 6.5% -6.9%)
21,481
(21,481)
21,481
(21,481)
37.3.Credit risk
In carrying out its activities, the Group is exposed to credit risk, which is associated with the risk that some of the
counterparties will not be able to fulfil and within the usual time their obligations. The credit quality of customers is
assessed by taking into account financial condition, past experience and other factors.
Group’s receivables are presented in the consolidated statement of financial position in net amount, after deducting
the accrued impairment for expected credit loss.
In connection with the credit risk of uncollectability of receivables from counterparties, the Group takes the following
precautionary measures:
• for trade and other receivables that are overdue and have not been secured upon their occurrence, agreements
for deferred payment shall be concluded and security in the amount of not less than the initially recognized
amount of the receivable shall be agreed;
• under the other contracts, which are not secured in advance, the following usual actions are taken in cases of
overdue payment by the debtor company - offsetting liabilities to the Group against overdue receivables, and
if the amount of liabilities is not large enough to cover the receivable , then other out-of-court settlement
options are sought.
The Group currently monitors and analyses the servicing of receivables, the reasons for arrears and changes in the
financial capabilities of debtor companies and monitors the condition and quality of collateral received.
The Group has a significant concentration of credit risk with respect to receivables from Toplofikatsia Sofia EAD,
which accounts for 31% of the total net non-current and current receivables. As at 31 December 2021 the carrying
amount of receivables from Toplofikatsia Sofia EAD amounts to BGN 333,911 thousand (2020: BGN 557,668
thousand) (note 22.1).
Credit risk arising from Group’s other financial assets, such as cash and other financial assets, is Group’s credit
exposure arising from the ability of its counterparties to default.
The maximum credit exposure of the Group in respect of recognized financial assets amounts to their respective
carrying amount in the consolidated statement of financial position as at 31 December:
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
109
Note
31 December
2021
31 December
2020
BGN’000
BGN’000
Debt instruments at amortized cost, including:
Receivables from customers
22
771,492
769,669
Receivables from related parties
36
434,391
137,230
Litigation and claims
22
15,093
21,404
Other receivables
22
11,148
34,933
Receivables from the Electricity System Security Fund
22.2
266,185
93,043
Cash and short-term deposits
26
2,932,730
1,446,179
Capital instruments
25
1,075
1,201
4,432,114
2,503,659
Receivables from customers
The following table provides information on the age analysis and credit risk exposure of receivables from Group’s
third-party customers, using the matrix of provisions for expected credit losses as at 31 December:
31 December 2021
Expected
percentage of
credit loss
Gross value of
trade
receivables
Expected
credit loss
Net value of
trade
receivables
%
BGN’000
BGN’000
BGN’000
Not due yet
41%
1,225,272
(500,139)
725,133
From 0-30 days
0%
29,373
(89)
29,284
From 31 - 60 days
0%
67
-
67
From 61 to 90 days
18%
3,817
(684)
3,133
From 91 to 180 days
95%
246,210
(232,877)
13,333
From 181 - 360 days
98%
32,413
(31,907)
506
Over 360 days
100%
110,217
(110,181)
36
53%
1,647,369
(875,877)
771,492
31 December 2020
Expected
percentage of
credit loss
Gross value
of trade
receivables
Expected
credit loss
Net value
of trade
receivables
%
BGN’000
BGN’000
BGN’000
Not due yet
28%
779,932
(218,303)
561,629
Financing agreements
0%
5,278
5,278
From 0-30 days
3%
88,040
(2,797)
85,243
From 31 - 60 days
0%
86
-
86
From 61 to 90 days
36%
4,187
(1,525)
2,662
Over 90 days
65%
368,678
(238,806)
129,872
37%
1,246,201
(461,431)
784,770
Receivables from related parties
The following table provides information on the age analysis and credit risk exposure of receivables from related
parties of the Group, using the matrix of provisions for expected credit losses as of 31 December:
31 December 2021
Expected
percentage of
credit loss
Gross value
of trade
receivables
Expected
credit
loss
Net value
of trade
receivables
%
BGN’000
BGN’000
BGN’000
Non-matured
0%
434,391
-
434,391
434,391
-
434,391
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
110
31 December 2020
Expected
percentage of
credit loss
Gross value
of trade
receivables
Expected
credit
loss
Net value
of trade
receivables
%
BGN’000
BGN’000
BGN’000
non-matured
2%
125,142
(3,013)
122,129
125,142
(3,013)
122,129
37.5. Market risk
Market risk is related to the fact that changes in market prices, such as foreign currency, interest rates or equity
instruments, will affect Group’s income from financial instruments. The purpose of market risk management is to
exercise control over market exposure at acceptable parameters while optimizing returns.
The Group undertakes periodic analyses of the macroeconomic environment in the country and in-depth analysis of
specific macro-indicators, including information on interest rates, which are submitted to the Board of Directors. The
Board is responsible for assessing the future risks facing the Group. In the event of deteriorating market conditions,
hedging instruments may be used .
37.6. Regulatory risk
Regulatory risk is determined by the specifics of the activity. According to Art. 21, para 1, item 8a, item 8b, item 8c,
art. 30, para. 1 and Art. 33a of the Energy Act, the following are subject to regulation by the EWRC:
‒ under which the producers within the availability determined by the commission under Art. 21, para. 1, item 21
sell electricity to the public supplier;
‒ under which the producers sell thermal energy to the heat transmission company and to directly connected
customers;
‒ on which the heat transmission company sells thermal energy to customers;
‒ under which the public supplier sells to the final suppliers the purchased on the grounds of art. 21, para. 1, item
21 electricity;
‒ (Amended, SG No. 79/2019, effective 1.01.2020) under which the public supplier sells natural gas to the final
suppliers of natural gas and to a person to whom a license for production and transmission of thermal energy;
‒ on which the final suppliers sell natural gas to customers connected to the respective gas distribution networks;
‒ (amend. SG 57/20, in force from 01.10.2020) under which the final suppliers sell electricity to household end
customers for sites connected to the electricity distribution network, at low voltage level;
‒ for access and / or transmission through the electricity transmission network;
‒ to connect to the networks;
‒ for access and transmission of natural gas through transmission and / or distribution networks, except in the
cases when the commission at its discretion approves the methodology for determining the price for access and
transmission through the transmission network;
‒ for access and / or transmission through the electricity distribution networks;
‒ for access and storage of natural gas in a storage facility;
‒ for distribution of traction electricity on the distribution networks of the railway transport;
‒ of services provided to the clients, determined by the commission, related to the licensing activity;
‒ including the price or the price component through which all end customers connected to the electricity system,
including the electricity transmission network operator and the electricity distribution network operators, shall
participate in compensation of the costs under Art. 34 and Art. 35.
‒ determines for each price period a limit value of the costs of the electricity transmission network operator for
purchasing availability for additional services by the order of art. 105, para. 2;
‒ determines annually by June 30 premiums for electricity from renewable sources and from high-efficiency
combined production of electricity and heat produced by power plants with a total installed electrical capacity
of 500 kW and over 500 kW
‒ for the purposes of pricing, determine annually by June 30 an estimated market price of electricity to cover the
technological costs of the transmission system operator and the distribution system operators
Price regulation has a significant impact on revenues, expenses, and hence on the overall economic and financial
condition of the Group.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
111
37.7. Cash flow risk
Cash flow risk depends on fluctuations in the amount of future cash flows associated with a financial instrument. The
Group plans its cash flows and floating rate financial instruments are of a short-term nature of less than 1 year.
37.8. Credit rating
Credit rating of Bulgarian Energy Holding EAD
Moody's rating agency
On June 18, 2018, the rating agency Moody 's assigned a rating of "Ba1" with a stable outlook for the group of
"Bulgarian Energy Holding" EAD and "Ba2" for unsecured bonds issued by the company.
On July 12, 2021, a credit rating of “Ba2” was assigned to an unsecured and non-subordinated bond of “Bulgarian
Energy Holding” EAD , issued on July 15, 2021, maturing on July 22, 2028.
As of 31 December 2021 the assigned long-term credit rating remains unchanged - "Ba1" with a stable outlook for
the group of "Bulgarian Energy Holding" EAD and "Ba2" for unsecured bonds of the company maturing in 2025 and
2028.
Fitch rating agency Ratings
On December 22, 2020 the rating agency confirmed the long-term credit rating "BB" in foreign and local currency of
"Bulgarian Energy Holding" EAD with a stable outlook and "BV-" of the company's unsecured bonds maturing in
2021 and 2025
On February 26, 2021, the long-term credit rating "BB" in foreign and local currency was confirmed, raising the
outlook from stable to positive. The change is the result of the change from a stable perspective to a positive
perspective of the credit rating of the Republic of Bulgaria.
On May 10, 2021, the credit rating of the unsecured and non-subordinated bonds of Bulgarian Energy Holding EAD
was raised to the level of “BB” from “BB-”. The change reflects the application of the updated "Criteria for restoration
of the corporate rating and the rating of financial instruments" of Fitch to the unsecured and unsubordinated rating of
"Bulgarian Energy Holding" EAD, which was placed, together with the corporate rating of the Issuer, in "Supervisory
Criteria". after the publication of the updated criteria on April 9, 2021. Another factor that leads to increase of the
credit rating is the expected reduction of the liabilities of the subsidiaries in the structure of Bulgarian Energy Holding
EAD.
On July 12, 2021, the expected credit rating of BB (EXP) was assigned to an unsecured and unsubordinated bond of
Bulgarian Energy Holding EAD, issued on July 15, 2021, maturing on July 22, 2028. On July 23, 2021. The rating
agency has assigned a "BB" credit rating to the bond.
Credit rating of Natsionalna Electricheska Kompania EAD
On December 20, 2021, the rating agency Standard & Poor 's upgraded NEK EAD's credit rating from "B +" to "BB-
" with a stable outlook as a result of improved operational results and risk management by the parent company.
Rating of environmental, social and managerial aspects (ESG rating)
For a public company actively involved in raising funds through capital markets, such as Bulgarian Energy Holding
EAD, attracting investor interest is associated with strict compliance with of social, managerial and environmental
aspects of activities within the holding. ESG rating is awarded after an in-depth analysis of a company's rules and
policies related to the environmental, social, and management aspects of its business; after assessing the overall impact
and the environmental impact that the company remains in carrying out its business activities; as well as after a
thorough review of the available public information from the corporate website, articles and news about the company.
On December 16, 2021, BEH Group was assigned an ESG rating of 34.2 points ("high risk"). The rating was awarded
by Sustainalytics, a company within Morningstar that is a world-renowned provider of ESG research, ratings and data.
The corporate ESG assessment provided to Bulgarian Energy Holding EAD is a one-time assessment valid at the time
of its award and has been prepared on the basis of the information provided by Bulgarian Energy Holding EAD. The
ESG risk assessment report includes an overall ESG risk rating, an assessment of the Company's exposure and an
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
112
assessment of its management. Exposure refers to the extent to which a company is exposed to various material risks
related to environmental, social, and managerial aspects. The management assessment shows how well the company
manages these aspects. The BEH exposure rating is 54.3 points (“medium risk”) and the management rating is 39.9
points (“average performance”).
39. Fair value measurement
Group’s management groups assets and liabilities at fair value into three levels based on the significance of the inputs
used in determining the fair value of financial assets and liabilities. The fair value hierarchy includes the following
levels:
- Level 1: market prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than market prices included in level 1 that can be observed for an asset or liability, either
directly (i.e. as prices) or indirectly (i.e. based on prices); and
- Level 3: Input information about an asset or liability that is not based on observed market data.
An asset or liability is classified at the lowest level of significant inputs used to determine its fair value.
31 December 2021
Book value
Level 1
Level 3
Total
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Financial assets that are measured at
fair value
Financial assets at fair value through other
comprehensive income, including:
Capital instruments
1,075
566
509
1,075
Financial assets that are not measured
at fair value
Debt instruments at amortized cost
Non-current trade and other receivables
51,446
-
51,446
51,446
Current trade and other receivables
1,012,472
-
1,012,472
1,012,472
Receivables from related parties
434,391
-
434,391
434,391
Money and cash equivalents
2,932,730
-
2,932,730
2,932,730
Financial actives
4,432,114
566
4,431,548
4,432,114
Financial liabilities that are not
measured at fair value
Debt instruments at amortized cost
Loans and leasing
(3,866,537)
-
(3,866,537)
(3,866,537)
Trade and other payables
(1,616,162)
-
(1,616,162)
(1,616,162)
Liabilities to related parties
(1,162,665)
-
(1,162,665)
(1,162,665)
Financial liabilities
(6,645,364)
-
(6,645,364)
(6,645,364)
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
113
31 December 2020
Book value
Level 1
Level 3
Total
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Financial assets that are measured at fair
value
Financial assets at fair value through other
comprehensive income, including:
Capital instruments
1,201
566
509
1,201
Financial assets that are not measured at
fair value
Debt instruments at amortized cost
Non-current trade and other receivables
381,916
-
381,916
381,916
Current trade and other receivables
537,133
-
537,133
537,133
Receivables from related parties
137,230
-
137,230
137,230
Money and cash equivalents
1,446,179
-
1,446,179
1,446,179
Financial actives
2,503,649
566
2,503,083
2,503,649
Financial liabilities that are not measured
at fair value
Debt instruments at amortized cost
Loans and leasing
(3,319,887)
-
(3,319,887)
(3,319,887)
Trade and other payables
(1,668,863)
-
(1,668,863)
(1,668,863)
Liabilities to related parties
(1,054,991)
-
(1,054,991)
(1,054,991)
Financial liabilities
(6,043,741)
-
(6,043,741)
(6,043,741)
38.1 Fair value measurement of financial instruments
Financial assets and liabilities measured at fair value in the consolidated statement of financial position are grouped
into the following categories according to the fair value hierarchy. For more information on exchange-traded shares,
see note 2 5.
38.2 Fair value measurement of non-financial assets
The following table presents the levels in the hierarchy of non-financial assets as at 31 December, measured
periodically at fair value:
Level 3
Level 3
2021
2020
BGN‘000
BGN‘000
Property, plant and equipment
14,432,966
12,176,129
14,432,966
12,176,129
The fair value of the majority of Group’s property, plant and equipment is determined on the basis of reports from
independent licensed appraisers (see note 19). The table presents the carrying amount of the assets for which the
model for subsequent measurement at fair value has been selected.
40. Capital management policies and procedures
The policy of the Board of Directors is to maintain a strong capital base so as to maintain the trust of customers,
creditors and the market as a whole and to be able to provide conditions for business development in the future. The
purpose of management is to maintain a balance between the higher returns that may be possible with levels of
indebtedness and the benefits and security of a strong capital position. Group’s goal is to achieve a return on equity
of over 5%. As of 31 December 2021, the return on equity is 9.18% (31 December 2020: 1.34%). There were no
changes in Group’s capital management during the year.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
114
41. Commitments and contingent liabilities
41.1. Proceedings of the European Commission against Bulgarian Energy Holding EAD and its subsidiaries
Two proceedings have been instituted against Bulgarian Energy Holding EAD and its subsidiaries by the European
Commission for possible abuse of a dominant position - Case AT.39767 - BEH Electricity and Case AT.39849 - BEH
Gas .
Case COMP / B1 / AT.39767 BEH Electricity
The subject of the case is a possible violation of Art. 102 of the TFEU in connection with the inclusion of territorial
restrictions in the supply contracts concluded by subsidiaries of Bulgarian Energy Holding EAD - Natsionalna
Electricheska Kompania EAD, NPP Kozloduy EAD and TPP Maritza East 2 EAD, on the market for wholesale
electricity in Bulgaria, in the period September 2008 - March 2013.
The proceedings were instituted in 2012 with a view to the adoption of a decision under Chapter 3 (Articles 7 to 10)
of Council Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in
Articles 81 and 82 TEC. Articles 101 and 102 TFEU).
By Decision C (2015) 8860 of 10 December 2015 in case AT.39767 BEH-Electricity, the EC approved as legally
binding the Commitments for a period of five years from the starting date of day-ahead market operation, proposed
by the Bulgarian Energy Holding EAD, Natsionalna Electricheska Kompania EAD, TPP Maritsa East 2 EAD, NPP
Kozloduy EAD and Bulgarian Independent Energy Exchange EAD and terminated proceeding.
By Decision of the European Commission C (2016) 2246 of On April 12, 2016, the Controlling Manager - ADVOLIS
was approved, which performs functions of control over the current management of the Bulgarian Independent Energy
Exchange EAD and the operation of the day-ahead market platform, according to the conditions and obligations
related to the Decision of EC.
On April 22, 2016, a mandate for a Controlling Manager was concluded between Bulgarian Energy Holding EAD
and ADVOLIS in accordance with the Commitments under case AT.39767 BEH-electricity for a period of 5 years
from the launch date of the Day Ahead platform. (January 19, 2016).
Pursuant to the Commitments, Bulgarian Energy Holding EAD undertakes to separate the Bulgarian Independent
Energy Exchange EAD from its structure and to transfer the ownership of the capital to the Bulgarian Independent
Energy Exchange EAD. The deadline for the transfer of ownership of the Bulgarian Independent Energy Exchange
EAD has been extended by the EC until January 31, 2018.
The change of ownership of the Bulgarian Independent Energy Exchange EAD was entered in the Commercial
Register on February 15, 2018.
In the period from the establishment of the Bulgarian Independent Energy Exchange EAD to the transfer of its
ownership, the company has established itself as a key player in the electricity market in the country. The important
role of the electricity exchange, the trust of the Bulgarian government and market participants, as well as its effective
operation and management, laid the foundation for the reform to liberalize the electricity market in the country.
We are purposefully working on the integration of the Bulgarian stock market "day ahead" to the mechanism adopted
at European level of Price Unification of the Regions ( Price Coupling of the Regions ).
At the end of January 2021, the Supervisory Manager Advolis presented to the European Commission a final report
on the AT case. 39767 BEH-electricity, which states that the commitments in the case have been met by BEH and its
subsidiaries.
The European Commission has accepted the final report of the Supervising Governor without remark and has released
Advolis from his duties as Supervising Governor in the case by official letter dated 22 March 2021.
Case COMP / B1 / AT.39849 - BEH gas
The case concerns a possible violation of Article 102 of the TFEU in connection with alleged actions of BEH EAD
and its subsidiaries - Bulgargaz EAD and Bulgartransgaz EAD aimed at:
• preventing their competitors from gaining access to key gas infrastructure (gas transmission network and natural
gas storage facility) in Bulgaria, such as explicitly or implicitly denying third parties access or delays;
• preventing competitors from gaining access to the main import pipeline by reserving capacity that remains
unused.
The proceedings were instituted in 2013 with a view to adopting a decision under Chapter 3 (Articles 7 to 10) of
Regulation 1/2003.
On March 23, 2015, the EC issued a Statement of Objections ( Statement of Objections ). Bulgarian Energy Holding
EAD and its gas subsidiaries submitted their respective responses to the EC on July 9, 2015 (Bulgargaz EAD), July
10, 2015 (Bulgarian Energy Holding EAD) and July 17, 2015. Bulgartransgaz EAD ).
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
115
On November 24, 2017, a decision was adopted by the 44th National Assembly (NA) of the Republic of Bulgaria to
take the necessary actions to close Case COMP / B1 / AT.39849 - BEH Gas, whereby the NA supports the conclusion
of the case under Art. 7 of Regulation (EC) № 1/2003 without acknowledging the alleged infringements and without
taking responsibility for them, fulfilling the obligations arising from a possible prohibition decision, including a
possible financial penalty. To date, the European Commission has not taken a formal decision to close the case,
including on the possible amount of the financial penalty.
On July 26, 2018, a decision was adopted by the 44th National Assembly (NA) of the Republic of Bulgaria to take
action to close Case COMP / B1 / AT.39849 - BEH Gas under Art. 9 of Regulation (EC) №1 / 2003 by undertaking
commitments on the part of Bulgaria and reaching an agreement with the European Commission. The second decision
of the National Assembly is motivated by the development of case COMP / B1 / AT.39816 between the EC and
Gazprom, on which on May 24, 2018 the Commission announced that an agreement had been reached and the same
was concluded under Art. 9 of Regulation (EC) №1 / 2003 without financial penalty.
On December 17, 2018, the European Commission announced the adoption of Decision C (2018) 8806 in Case
AT.39849 BEH-Gas, whereby the European Commission imposed a fine on Bulgarian Energy Holding EAD (BEH),
its subsidiary for gas supply Bulgargaz EAD and its gas infrastructure subsidiary Bulgartransgaz EAD (BEH Group)
in the amount of EUR 77,068,000 to block competitors' access to key gas infrastructure in Bulgaria in violation of EU
antitrust rules. The decision was received in the offices of the three companies on December 19, 2018, which
determines the beginning of the period for appealing the EC Decision (two months and ten days from notification of
the Decision to the Parties) and payment of the fine (three months from the notification of Decision to the Parties),
set out therein. An appeal against the decision shall not delay payment of the fine.
On March 18, 2019, ING Bank NV issued two unsecured bank guarantees in favour of the EC for a total amount equal
to the amount of the fine of EUR 77,068,000, as follows:
- a bank guarantee in the amount of EUR 51,379 thousand, covering 2/3 of the total amount of the fine,
securing the liabilities of Bulgarian Energy Holding EAD and Bulgargaz EAD;
- a bank guarantee in the amount of EUR 25,689 thousand, securing the obligation of Bulgartransgaz EAD for
the imposed sanction.
On July 4, 2019, the Bulgarian state, through the Ministry of Foreign Affairs, filed an application to intervene in the
case in support of BEH EAD and its subsidiaries gas companies.
On August 26, 2019, the European Commission presented its Defence before the General Court in response to a
complaint filed by Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD.
On November 29, 2019, Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD filed a Response
against the Protection of the European Commission.
On February 20, 2020, within the specified period by the General Court of the European Union, the Republic of
Bulgaria through the Ministry of Foreign Affairs (MFA) filed the official position of the Republic of Bulgaria in case
T-136/19, provided by the Ministry of Energy. intervenes in support of Bulgarian Energy Holding EAD, Bulgargaz
EAD and Bulgartransgaz EAD against the European Commission before the General Court of the European Union.
The General Court examined additional documents and requested information in order to clarify all the circumstances
attached to the case. By letter of 14 March 2022, the Court requested the European Commission to provide non-
confidential versions of the documents listed by the Court. A response from the European Commission is expected.
It should be borne in mind that if the General Court decides to open the oral procedure, the President of the General
Court of the EU sets the date of the hearing for the oral proceedings. As of 31 December 2021, there is no set date for
an oral hearing of the parties.
In 2018, the Group recognized a provision in connection with the case COMP / B1 / AT.39849 - BEH gas in the
amount of BGN 150,732 thousand. In 2021, the additionally reported liability for provision in the case amounted to
BGN 2,262 thousand (for 2020: BGN 2,268 thousand). The total value of the liability under the accrued provision as
of 31 December 2021 is BGN 157,038 thousand (as of 31 December 2020: BGN 154,776 thousand).
41.2. Capital commitments
NPP Kozloduy EAD and its subsidiaries
As of 31 December 2021 the Group has capital commitments of BGN 120,910 thousand by the end of 2024, incl. for
2022 in the amount of BGN 14,515 thousand (31 December 2020: BGN 24,288 thousand), which are related to
commitments to acquire property, plant and equipment.
The Group has agreed commitments under a framework contract for the acquisition of nuclear fuel by the end of 2025.
As of 31 December 2021 the financial commitment for delivery for 2022 is BGN 54,684 thousand (31 December
2020: BGN 246,059 thousand). ).
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
116
TPP Maritsa Iztok 2 EAD and its subsidiary
According to the requirements of European directives, national norms and Complex permit, as well as in connection
with the implementation of projects set in the National Investment Plan 2013 - 2020 (NIP), National Investment
Framework for the period 2021 - 2030, Recovery Plan and sustainability The Group is obliged to achieve certain
environmental standards, which will be achieved through the construction and commissioning of environmental
assets.
As of 31 December 2021, the Group has capital engagements amounting to BGN 95,129 thousand. The projects under
the National Investment Plan 2013-2020 include Full engineering of low-emission burners and replacement of Worm
gear motors with ingoing and outgoing collectors of KA-11, manufacturing and installation of gas-tight screens of
KA-3 and KA-4; construction of an ignition installation with gas unit 2.
Conceptual projects under the Recovery and Sustainability Plan are Construction of a pilot installation of technology
for capture and utilization of carbon dioxide, construction of a steam -gas cycle increasing the efficiency of the
existing cycle.
Other activities included in the Investment Program of the Group are Replacement of the central distribution collectors
at nozzle levels, installation of 5 (fifth) nozzle level SOI 7, overhaul of unit 7 and medium repairs of all other units 1
to 6 and 8.
Electricity System Operator EAD and its subsidiaries
In 2021, the Group concluded contracts under the Public Procurement Act, according to which contractual obligations
for 2022 arise in the amount of BGN 613,489 thousand.
In 2020, the Group concluded contracts under the Public Procurement Act, according to which contractual obligations
for 2021 arise in the amount of BGN 634,730 thousand.
Mini Maritsa East EAD
In connection with the implementation of its investment program as of 31.12.2021, the Company has undertaken
commitments under contracts for construction, supply and installation of machinery and equipment ensuring its
implementation.
The company has contractual obligations for the purchase of assets co-financed by the Kozloduy Fund and the
Executive Agency for Innovation and Networks (INEA), Department C - Connecting Europe Facility.
As of 31 December 2021 the Company reports financing of fixed assets under five contracts with contractors:
- Contract with Ref . № MME / S Siemens EOOD for “Rehabilitation of the main transformer stations and
construction of new mobile ones together with the adjacent switchgear and connecting equipment for
increasing the power supply from 6 kV to 20 kV for district 2 and district 3” for contract price 12,557,535.97
euros. The financing is provided by 70% of the European Bank for Reconstruction and Development through
the Kozloduy Fund and 30% of the funds of Mini Maritza East EAD. The contract ended on 31.12.2015.
- Contract with Ref . № MME / A Risk Engineering AD for "Design, supply and installation of equipment and
facilities for online control of the load of belt conveyors and excavators in Mini Maritsa - East EAD" for a
contract price of 4,663,484.95 euros. The financing is provided by 70% of the European Bank for
Reconstruction and Development through the Kozloduy Fund and 30% of the funds of Mini Maritza East
EAD. The contract expired on 31.12.2016.
- Contract with Ref . № MME / D (Lot A): “Design, supply and installation of facilities and equipment for
compensation of the reactive power of the heavy industrial mining equipment of“ Mini Maritsa-East ”EAD,
Bulgaria”, with contractor Siemens EOOD, Bulgaria for contract price 951,954.13 euros. The financing is
provided by 70% of the European Bank for Reconstruction and Development through the Kozloduy Fund
and 30% of the funds of Mini Maritza East EAD. The contract is completed as of 31 December, 2018.
- Contract with Ref . № MME / D (Lot B): "Rehabilitation (design, supply and installation) of industrial
lighting by replacement with LED luminaires in" Mini Maritza-East "EAD, Bulgaria", with contractor
ETRALUX, Spain for a contract price of 2,446,767.04 euros. The financing is provided by 70% of the
European Bank for Reconstruction and Development through the Kozloduy Fund and 30% of the funds of
Mini Maritza East EAD. The contract was completed in August 2018.
- Contract with Ref . № MME / BWE Design, manufacture, supply, construction and commissioning of a
rotary excavator type SRs 2000 and a rotary excavator type SRs 200 in "Mini Maritsa-East" EAD, with
contractor consortium FAMUR-BULGARIAN ENERGY, for contract price EUR 25,848,663.00 (with
Amendment 6 to the Contract of 15.07.2020, the price increases by EUR 208,720.27 and amounts to EUR
26,057,383.27). The financing is provided by 50% of the European Bank for Reconstruction and
Development through the Kozloduy Fund and 50% of the funds of Mini Maritza East EAD. The contract
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
117
was signed on 20.05.2016 and started on 20.09.2016 (effective date for implementation). On 16.03.2020 a
certificate for acceptance into operation of the excavator KWK 2000 was issued, and on 6.04.2020 a
certificate for acceptance for operation of the excavator KWK 400L was issued, with which the Contract was
fulfilled. The assets are recorded in the balance sheet of the Company. Amendment 6 to the Contract of
15.07.2020 provides for the supply of recommended spare parts in the amount of EUR 208,720.27, which
extends the implementation period of the Contract by twelve weeks. As of 31.12.2021, all recommended
spare parts have been delivered.
NEK EAD
NPP Belene project
In connection with the Belene NPP project, on November 29, 2006 the company signed an Agreement for the
construction of the Belene NPP with CJSC Atomstroyexport as a contractor and on January 31, 2005 - with Worley
Parsons as an architect project engineer.
On March 29, 2012, the Government of the Republic of Bulgaria decided to terminate the construction of the Nuclear
Power Plant at the Belene site. By a decision of 27 February 2013, the 41st National Assembly supported the
government's decision to suspend the project for the construction of a new nuclear power plant at the Belene site and
demanded its final termination. By a decision of the Board of Directors of BEH EAD of October 3, 2013, it was
established that the contract with Worley Parsons was disrupted by law due to the termination of the project in 2012
and inability to implement.
On June 7, 2018, the National Assembly decided to resume actions to seek opportunities for the construction of Belene
NPP together with a strategic investor, on a market basis and without providing a state guarantee, by separating the
assets and liabilities for the NPP project " Belene ”in a separate project company.
The Council of Ministers repealed Decision №250 of 2012 repealing Decision №259 of 2005 to terminate the
construction of the Belene Nuclear Power Plant and to designate the Belene Nuclear Power Plant as a site of national
importance and of Decision №260 of the Council of Ministers of 2005 on the construction of a nuclear power plant
at the Belene site
Pursuant to decisions of the National Assembly of June 7, 2018 and the Council of Ministers of June 29, 2018,
Natsionalna Electricheska Kompania EAD issued an invitation for selection of a strategic investor for the construction
of Belene NPP. The invitation also provides an opportunity to express interest in acquiring a minority share in the
future project company, as well as / or to purchase electricity from the future power plant. The purpose of the invitation
is to provide certain information to the parties wishing to apply for the procedure.
Thirteen applicants submitted applications within the announced deadline.
The Ministry of Energy sent letters to the five companies on the "short list" prepared by a working group, in
accordance with the provisions of the procedure for selection of a strategic investor for the implementation of Belene
NPP, to confirm the submission of binding bids for further participation in the procedure.
By January 31, 2020, the Ministry of Energy has received confirmation letters for the submission of binding offers
from all five companies.
The indicative deadline for submitting the binding offer was expected to be 31 May 2020, but in connection with the
current pandemic situation, the deadline for preparing binding offers will start from the date on which candidates will
have physical access to the "information room". ”For the project, located in the building of the National Electric
Company.
The information memorandum for the Belene NPP project was sent to all potential candidates from the so-called
"Short list". These are the China National Nuclear Corporation (CNNC), Atomenergoprom AD - Rosatom , the
Korean Hydro -Nuclear Corporation, Framatom SAS (France) and General Electric (USA).
The memorandum contains basic information about the project, the legal framework in the country, as well as an
analysis of the market situation in the region. It was sent to the candidates after they signed the project's confidentiality
agreement in April. It is binding on them as well as on all their consultants, bankers, agents and others.
Given the ongoing measures in many countries in connection with the coronavirus pandemic , the information
memorandum has been sent online. The aspiration of the Bulgarian side is to create optimal conditions for the
candidates to prepare their binding offer in the conditions of emergency.
The Company has agreed to report all amounts (paid and accrued) directly related to the terminated Belene NPP
project in accordance with the criteria for recognition of IAS 16 Machinery, Property and Equipment in compliance
with a consistent policy, such as property, plant and equipment assets. under construction, until a final decision on the
future of the project. At the moment there is uncertainty about the possible alternatives for the project, respectively
the equipment, a significant period of time is required for coordination, negotiations and approval of possible options,
which is not fully under the control of the company's management and is not able to assess on the possible
reclassification of reported values in accordance with IFRS and on their valuation.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
118
The investment activity plan of NEK EAD is focused mainly on rehabilitation, reconstruction and new construction
of hydropower sites and includes the following significant areas and capital sites.
Investment projects of NEK EAD
The investment activity plan of NEK EAD is focused mainly on rehabilitation, reconstruction and new construction
of hydropower sites and includes the following significant areas and capital sites.
1. Yadenitsa Project
The project is included in the National Investment Plan (NIP) for the period 2013 - 2020 with a Decision of the
Council of Ministers of the Republic of Bulgaria of September 28, 2011, in connection with the Application of the
Republic of Bulgaria for derogation under Art. 10c of Directive 2003/87 / EC of the European Commission (EC). By
Decision №707 of 30 August 2012 of the Council of Ministers of the Republic of Bulgaria, Yadenitsa Dam,
representing the main facility of the Yadenitsa Project, was declared a “national site” within the meaning of the State
Property Act, as well as site of national importance ”within the meaning of the Spatial Planning Act.
The Yadenitsa project is funded by preparatory works (procedures pending a Building Permit) from the Connecting
Europe Facility of the European Commission.
On April 24, 2015, the grant agreement signed between NEK EAD and the Innovation and Networks Executive
Agency of the European Commission entered into force. According to this agreement, the funds granted to NEK EAD
amount to EUR 3,213 thousand. They will cover 50% of the costs for the renewal of the EIA, design and obtaining a
permit for construction of Yadenitsa Dam. The remaining 50% are the company's own funds.
Under the agreement, all necessary preliminary activities necessary for obtaining a construction permit have been
assigned. As of the date of preparation of these financial statements NEK EAD has an effective EIA decision, updated
working design agreed with the competent authorities, positive compliance report on construction, financial analysis
and risk assessment, technical specifications for construction.
In 2018, the activities for approval of a detailed development plan (DDP) were completed and a contract for ensuring
publicity of the Yadenitsa site was implemented.
On January 25, 2019, a final technical and financial report was sent, according to the Agreement with INEA, reflecting
the implemented activities, the realized costs and the achieved project objectives. The reported costs amount to EUR
2,536 thousand.
On February 22, 2019, INEA informed NEK EAD that the evaluation of the submitted final report and financial
statements was completed, as a result of which all expenses declared by NEK EAD were considered eligible.
According to the Agreement of NEK EAD, 50% of the claimed costs are reimbursable, for which on February 27,
2019 NEK EAD received 304 thousand euros representing the difference between the received advance and the
amount due. On the part of INEA, the action is considered completed, for which no further notifications are foreseen.
The pre-financing guarantee of 22.07.2015 issued by Bulgarian Energy Holding EAD for the amount of EUR 963,900
was completely released, as a result of which INEA returned the original guarantee to the issuing institution.
The preparation of the necessary documents required by the procedure for issuing a construction permit for the
construction of the site in accordance with the current regulations is in progress.
NEK EAD has taken the necessary actions for the issuance of a Permit for water abstraction and use of a water body
by the East Aegean Basin Directorate (BDIBR). After the termination of the procedure by BDIR, a cassation
administrative case №88 / 2021 of the Supreme Administrative Court (SAC) was initiated. With the Decision of the
Supreme Administrative Court 12016/ 24.11.2021 in cassation administrative case №88 / 2021, the first instance
decision of the Administrative Court - Sofia City (ACCG) was confirmed as correct. The Decision of the ACCG sets
a one-month deadline for issuing an administrative act, which begins to run from the date of entry into force of the
court decision, ie. by December 24, 2021. To date, no Permit for water abstraction and use of a water body has been
issued by the East Aegean Basin Directorate .
On March 24, 2022, Decision №168 of the Council of Ministers (CoM) on declaring properties - private state property,
for properties - public state property, and for gratuitous provision for property management - public state property, to
the Ministry of Energy was issued. A procedure for granting a remunerative right to construction by the Council of
Ministers is forthcoming at the request of the Ministry of Energy. After receiving the above documents, NEK EAD
will submit the necessary documents required by the procedure for issuing a construction permit for the construction
of the site in accordance with applicable regulations.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
119
2. Rehabilitation of the hydropower complex "Belmeken - Sestrimo - Chaira" and rehabilitation of the 110 kv
switchyard of HPP "Vacha-1" and part of the systems of HPPs under common control "
The project is funded by the International Fund for Decommissioning of Units 1-4 of NPP Kozloduy (IFC). He has
signed a Grant Agreement - GRANT 049B with the European Bank for Reconstruction and Development (EBRD).
The total budget of the project is EUR 37 million (excluding consulting services), of which 70% is financed by IFC
and 30% by NEK EAD. Consulting services worth up to EUR 300,000 are fully funded by the IFC.
Three contracts have been signed for the implementation of the various subprojects, the total value currently
amounting to EUR 42,487,476, incl. a grant of EUR 26,580,000 and own funds of EUR 15,907,476.
In connection with the force majeure situation in March 2020 and the impact on the deadlines for the implementation
of the projects, which had the pandemic situation, NEK EAD requested and received approval to extend the deadlines
for individual contracts from the European Bank for Reconstruction and Development.
Contract No. GA049A-2A / 25.04.2019 Rehabilitation of Chaira SHPP, with contractor ABB AG & VOITH
HYDRO GmbH & Co. KG. The value of the contract is EUR 17,177,332.60. A building permit has been issued for
the site, effective as of February 25, 2020. Three of the four stages of the project are underway. In the first two stages
the installation works are completed and dry tests and finishing works are performed. Stage III is at the beginning of
the dismantling works.
Contract No. GA049A-3 / 18.05.2018 Rehabilitation of Belmeken PSHPP, Sestrimo HPP and Momina Klisura
HPP , with contractor KONČAR KET Consortium - ČKD BLANSKO - RUDIS. The value of the contract is
19,997,642.45 euros. Construction permits have been issued for all three power plants, effective from January 17,
2019.
The first stage has been completed, as three HAs have been put into operation and one is in 72-hour samples. The
second stage has been completed for one HA, which is in 72-hour samples and one HA is in rehabilitation with
finishing installation works. For the other three HA, rehabilitation will begin in 2022.
Contract No: GA049A-4 / 27.08.2019 Rehabilitation of 110 kV switchyards at Vacha-1 HPP and other systems
of HPPs under common control , with contractor KONČAR KET Consortium - ČKD BLANSKO for Vacha-1 HPP.
The value of the contract is EUR 4,955,557. A building permit has been issued, effective from 28.10.2020.
The installation works for the first stage have been completed with the rehabilitation of HA2, HA3, HA4 and the first
part of ORU110kV. At the beginning of 2022, 72-hour tests of the rehabilitated facilities are forthcoming.
41.3. Contingent liabilities
Significant lawsuits and claims
Natsionalna Electricheska Kompania EAD
Energy Financial Group AD (EFG)
Energy Financial Group AD (EFG) has filed two cases with a total principal amount of approximately 3,122 BGN
thousand and interest for delay with claims for payment of transferred receivables from WorleyParsons Nuclear
Services EAD of EFG on invoices for performed consulting services.
In one case, the claims in the amount of BGN 59,000 principal were rejected at first instance. The decision was
appealed by the EFG and the Sofia Court of Appeal overturned the decision of the Sofia City Court and upheld the
claims. The decision was appealed by NEK EAD before the Supreme Court of Cassation (SCC). The Supreme Court
of Cassation overturned the decision of the Sofia Court of Appeal and returned the case for a new hearing by the
Supreme Administrative Court . A decision of the SAPS is expected .
In the second case with a claim price of BGN 3,063 thousand, of which BGN 2,347 thousand principal and BGN 716
thousand interest for delay with a decision of the Sofia City Court of 13.03.2020, the claims were upheld. The decision
was upheld by the Sofia Court of Appeals, with NEK EAD filing a cassation appeal with the Supreme Court of
Cassation. In view of the security paid by NEK EAD to the account of the Supreme Court of Cassation, the execution
of the appellate decision has been suspended. The Supreme Court of Cassation is expected to rule on the admissibility
of the cassation appeal.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
120
Mechel Carbon AG
Mechel Carbon AG has filed a lawsuit with a principal amount of BGN 21.4 thousand and interest for delay. The
claims are for payment of principal for electricity supplied by Toplofikatsia Ruse EAD, paid by NEK EAD to
Toplofikacia Ruse EAD as a pledgor instead of the one determined by Mechel Carbon AG as a pledged depositary
creditor after receiving a notice of commencement of execution from Mechel Carbon AG by the order of the PPA
together with interest and expenses.
The Sofia City Court upheld the claims, and NEK EAD filed an appeal against the conviction before the Sofia Court
of Appeal.
Polymers AD (n)
Polymeri AD (n) has filed a lawsuit before the Sofia City Court against NEK EAD and ESO EAD under the conditions
of solidarity with claims for payment of compensation for unjust enrichment in the amount of BGN 8,307 thousand
for use of own electrical installation ECRU 110kV for the period from 12.2011 to 06.2017
The Sofia City Court rejected the claims. "Polymeri" AD (n) has filed an appeal to the Sofia Court of Appeal, and so
far there is no ruling of the second instance.
Chaos Invest 1 EAD
Chaos Invest 1 EAD has filed five lawsuits before the Sofia City Court against NEK EAD with claims for payment
of amounts for purchased electricity in the period January-February 2018 for principal in the amount of BGN 5,813
thousand with VAT principal and interest for fun.
The cases are at different stages in the first instance, two of which have been suspended until the end of preliminary
administrative proceedings.
Rhythm - 4 - TB OOD and Vidahim AD
Rhythm - 4 - TB OOD and Vidahim AD have filed a lawsuit before NEK EAD against NEK EAD for compensation
for non-performance of a contractual obligation by NEK EAD and a tort claim for compensation for damages suffered
on a non-contractual basis under Art. .49, in connection with Article 45 of the CPA in the alternative. The claims were
filed as partial for the amount of BGN 1,000 thousand of the total amounts claimed as due by NEK EAD in the amount
of BGN 48,000 thousand for unredeemed amount of electricity. Production is at an early stage.
As of 31 December 2021, other claims have been filed against the Company with different legal grounds: for payment
of amounts for purchased electricity over net specific production produced from RES, for unjust enrichment, for
receivables ceded by electricity producers and others. The proceedings on these claims have not ended with final court
decisions. Due to this circumstance, the management of the Company has decided not to charge additional provisions
on lawsuits.
NPP Kozloduy EAD and its subsidiaries
Legal claims have been filed against the Group in the amount of BGN 50,760 thousand (31 December 2020: BGN
50,736 thousand). None of the above claims are set out in detail here so as not to seriously affect Group’s position in
resolving disputes.
Mini Maritsa Iztok EAD
By Decision №2310 / 06.12.2017 of the Sofia City Court, VI-5 composition of the Commercial Department, a
statement for set-off between receivables of Mini Maritza-East EAD in amount of EUR 4,256,244.59, arising from
the Framework Agreement between CCB AD and Bulgarian Energy Holding EAD and the receivables of CCB AD
to Mini Maritsa East EAD under the Investment Loan Agreement.
The receivable of Mini Maritza-East EAD was acquired in accordance with the Assignment Agreement concluded on
30.10.2014 between Bulgarian Energy Holding EAD and Mini Maritza-East EAD.
The decision was appealed before the Court of Appeal - Sofia, and on the appeal was initiated a commercial case
№606 / 2018 on the list of the AC.
With decision №11786 / 04.08.2020 of the Court of Appeal - Sofia, ruled on appellate commercial case № 606/2018
on the list of the court confirmed the decision of the Sofia City Court, in the part which upheld the claim under Art.
59, para. 5 of the Bankruptcy Act.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
121
The decision of the Court of Appeal - Sofia was appealed to the Supreme Court of Cassation. On the filed cassation
appeal a commercial case №2317 / 2020 was initiated according to the list of the Supreme Court of Cassation. The
hearing on the admissibility of the cassation was held on 26.05.2021, and so far the court has not ruled on the
admissibility of the cassation appeal.
The company has performed an analysis of the available facts and circumstances. The legal consequences of the
decisions of the Sofia City Court and the Court of Appeal - Sofia, which have not yet entered into force:
− with regard to Mini Maritza-Iztok EAD - it is assumed that the set-off of counterpart liabilities has not been made
and the company should repay (repay) the balance of the investment loan to the account of CCB AD (n) in the
amount of EUR 4,256,244.59.
− with regard to BEH EAD and the concluded assignment agreement - according to the agreement between the
parties, the assignment agreement will be terminated by law, restoring the legal status of the parties before its
conclusion, without consequences for them, ie. BEH EAD will have a receivable from CCB AD (n) in the amount
of EUR 4,256,244.59 and should be included in the List of Creditors.
Mini Maritza-Iztok EAD is included in the “List of Creditors” of CCB AD, and at present the company has been
allocated for receiving monetary amounts in the total amount of BGN 4,500,690.36:
- On the first partial account for distribution of available amounts between the creditors of CCB in the amount
of BGN 2,000,007.
- On the second partial account for distribution of available amounts between the creditors of CCB in the
amount of BGN 1,573,038.46.
- On the fourth partial account for distribution of available amounts between the creditors of CCB in the
amount of BGN 927,644.90.
This receivable of Mini Maritsa East EAD will be offset by the liability of Mini Maritza East EAD for the balance of
the investment loan. The due difference will be repaid with subsequent payments due or again by offsetting (in case
new partial accounts are prepared for distribution).
Due to this circumstance, the creditor has not been reclassified and any potential losses that could arise in the event
of unfavourable development of the case of Mini Maritsa East EAD have not been recognized.
In 2021, a tax audit was completed by the TD of the National Revenue Agency Large Taxpayers and Insurers, Sofia.
Revision Act (RA) №Р-29002920007219-091-001 / 16.09.2021 was issued with a principal of BGN 2,526,435.24
and interest in the amount of BGN 1,422,679.17. The principal under the RA was paid in 2021 in order to suspend
the accrual of additional interest. The act was appealed before the Appeals and Tax Insurance Practice Directorate at
the National Revenue Agency in Sofia.
Bulgargaz EAD
According to a contract concluded in 2020 with a banking institution, Bulgargaz EAD was provided with a credit
product in the form of a bank guarantee. The guarantee is in favour of a natural gas supplier and is an obligation of
the bank to repay debts of Bulgargaz EAD in case liabilities arise. This commitment is a contingent asset for Bulgargaz
EAD. To secure the receivables of the bank, in connection with the loan, Bulgargaz EAD has established collateral
in its favour in the form of cash in a special account of the Company. This obligation is in the nature of a contingent
liability. As of 31 December 2021, the collateral is closed.
Bulgargaz EAD has concluded agreements with banking institutions for the provision of working capital financing in
the form of overdrafts and limits for credit lines in the amount of up to BGN 110,000 thousand.
41.4. Contingent assets
Bulgargaz EAD
In connection with a commercial dispute from previous periods, Bulgargaz EAD has filed a claim for return of natural
gas to fill the Transit 1 gas pipeline. The company failed to resolve the commercial dispute and its claims out of court
and initiated an international arbitration case № 78 / 2019 before the International Court of Arbitration at the
Romanian Chamber of Commerce and Industry against the National Gas Transmission Company Transgaz SA,
Romania. By Decision 120 of 09.12.2021 on the arbitration case filed before the International Commercial Arbitration
at the Romanian Chamber of Commerce and Industry, Transgaz SA, Romania was sentenced to reimburse Bulgargaz
EAD the quantity of natural gas in kind or its monetary equivalent. in the amount of USD 923 thousand e., as well as
the legal interest on the amount, together with the expenses incurred in connection with the arbitration. The respondent
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
122
requested the annulment of the effective arbitral award and the suspension of its execution before a Romanian court.
A lawsuit was filed and the request was rejected at the first hearing. On March 9, 2022, the sums were received in
favour of Bulgargaz EAD, but there is no termination of the case and a hearing is pending in 2022.
Due to the limited access to natural gas, the subject of the dispute in the Transit 1 gas pipeline, it was depreciated by
Bulgargaz during the reporting period.
Bulgartransgaz EAD
The Group reports as a contingent asset or contingent liability an operational balancing account (OBA). This is a joint
account in which the daily balance position of two Transmission System Operators at the point of interconnection is
recorded . The operator responsible for calculating the daily balance sheet item and the total balance sheet item,
respectively, shall update the OBA on a daily basis and send it to the other operator. The operational balancing account
is reported off-balance sheet .
41.5. Others
Natsionalna Electricheska Kompania EAD
Obligations of NEK EAD in connection with the development of the energy sector
In connection with the modernization of Units 5 and 6 of NPP Kozloduy EAD, a loan agreement was signed on May
29, 2000 between NPP Kozloduy EAD as Borrower, Natsionalna Electricheska Kompania EAD as Guarantor and the
European Atomic Energy Community (EURATOM). ) as a Lender for a loan of EUR 212.5 million to finance the
Energy Units Modernization Program. According to the contract, NEK EAD together with NPP Kozloduy is
responsible as the sole principal debtor. On the same date, a Guarantee Agreement was signed between the Republic
of Bulgaria as a Guarantor and the European Atomic Energy Community as a Lender (EURATOM), with which the
state also guarantees the repayment of the loan. Both agreements were ratified by law by the 38th National Assembly
of the Republic of Bulgaria on November 29, 2000. The loan was granted in 8 tranches with a variable interest rate
six-month EURIBOR with a margin of up to 0.13%, and one of the tranches with a fixed interest rate of 5.76% . The
repayment period of the loan principal for each tranche is different. The loan was fully repaid in May 2021.
Long-term electricity purchase agreements
On June 13, 2001 NEK EAD signed a long-term - 15-year contract with Consolidated Continental Commerce Limited,
currently AES - 3C Maritsa East 1 EOOD ( AES ) for the purchase of electricity. The contract enters into force
gradually when the new capacity is put into operation on June 2, 2011 and when AES Galabovo TPP reaches full net
capacity of 600 MW as of December 28, 2011. On August 14, 2015 an agreement was concluded to reduce the
availability price by 14%, which is effective from April 26, 2016, after payment of obligations to the plant.
Accordingly, NEK EAD has committed itself not to fall into arrears to the power plant in the future. If this condition
is not met by the company, the agreed reduction will not be applied until the overdue amounts are repaid by NEK
EAD to the power plant.
Pursuant to a special pledge agreement dated November 30, 2005 and an agreement amending the special pledge
agreement dated April 26, 2016, NEK EAD has pledged its receivables for electricity sold from EVN Bulgaria
Elektrosnabdyavane EAD and Energo-Pro Sales AD as a guarantee. against future electricity purchase obligations.
The amount of pledged receivables is equal to the expected maximum total payment for purchased electricity for any
month of the calendar year.
According to the concluded long-term energy purchase agreement, NEK EAD is obliged to purchase a minimum
quantity of 3,156,500 MWh of electricity per calendar year (or a proportional amount in an incomplete calendar year)
and the availability of the commercially agreed plan .
On June 13, 2001 a long-term 15-year contract for the purchase of electricity and availability was concluded between
NEK EAD and Energy Company Maritza Iztok 3 AD, currently ContourGlobal Maritza Iztok 3. The contract entered
into force in February 2009 upon completion of the agreed rehabilitation activities for the modernization of the
existing TPP Maritsa East 3, after which the installed capacity is 808 MW .
Pursuant to a special pledge agreement dated February 1, 2002 and the latest agreement to amend the special pledge
agreement dated April 26, 2016, NEK EAD has pledged its receivables for electricity sold from CEZ Electro Bulgaria
AD, Energo-Pro Sales AD, as a guarantee against future obligations to purchase electricity. The amount of pledged
receivables is equal to 1.25 times the expected maximum total payment for purchased electricity for any month in the
calendar year.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
123
Pursuant to the contract for purchase of electricity and availability , NEK EAD annually issues promissory notes in
favour of ContourGlobal Maritsa East 3 AD. According to the concluded long-term energy purchase agreement, NEK
EAD is obliged to purchase a minimum amount of 3,489,000 MWh of electricity per calendar year (or a proportional
amount in an incomplete calendar year) and the basic availability .
As of April 26, 2016, agreements came into force to reduce the availability price by 15% of ContourGlobal Maritza
Iztok 3 and by 14% of AES - 3S - 3C Maritza Iztok 1, after payment of the obligations of NEK EAD to both power
plants. Accordingly, NEK EAD has committed itself not to fall into arrears to power plants in the future.
The table below shows the obligations of NEK EAD regarding the minimum due payments for purchased electricity
and availability for the remaining term of the concluded long-term contracts for purchase of energy from thermal
power plants.
Total minimum amount due
BGN’000
Minimum payments due for purchased availability *
1,999,555
Minimum payments due for purchased electricity **
5,768,714
Total
7,768,269
* The indicated amount is the minimum due according to the concluded long-term contracts for energy purchase and
is formed on the basis of set fixed pricing elements and elements with fixed escalation.
** The indicated amount is calculated on the basis of the price for electricity and availability according to a price
application submitted by NEK EAD to the EWRC for the regulatory period 2021-2022.
The minimum payments for purchased availability under each of the long-term contracts for the purchase of electricity
from power plants are as follows:
Up to 1
year
From 1 to 5
years
Total
BGN’000
BGN’000
BGN’000
Minimum payments for purchased availability
568,397
1,431,158
1,999,555
In 2021 NEK EAD purchased from ContourGlobal Maritza Iztok 3 AD net electricity in the amount of 4,959 GWh ,
which is significantly more than the minimum agreed 3,489 GWh according to the PPA.
3,305 GWh of net electricity was purchased from AES Maritza East 1, which is also more than the mandatory
minimum amount of electricity to be purchased in the PPAs of 3,156 GWh.
Pursuant to the requirements of the Renewable Energy Act, NEK EAD as a public supplier until July 24, 2015 has an
obligation to purchase the entire amount of electricity produced from renewable or alternative energy sources, except
for energy produced from hydropower plants with power over 10 MW. With the change of art. 31, para. 5 of the same
law, the Public Supplier, respectively the final suppliers purchase the produced electricity from renewable sources at
a preferential price for the quantities of electricity up to the amount of the net specific electricity production, on the
basis of which preferential prices are determined in the respective EWRC decisions. The quantities of electricity above
the net specific production are purchased at the price of surplus on the balancing market or according to art. 31, para.
12 can be sold on the free market. The obligatory purchase of electricity is carried out under purchase contracts.
According to the Renewable Energy Act, amended on 3 May 2011, the contracts are 20 years for electricity produced
from geothermal and solar energy and for electricity produced from biomass, 12 years for electricity produced from
wind energy and 15 years for electricity produced from hydroelectric power plants with an installed capacity of up to
10 MW, as well as for electricity produced from other types of renewable energy sources. The terms for mandatory
redemption start running from the date of commissioning of the energy site, and for energy sites put into operation
after 31 December 2015, the terms are reduced from the date from that date to the date of commissioning of the energy
site.
With the entry into force of the EWRC price decision for the regulatory period 2020 - 2021 from 01.07.2020, the
obligations of NEK EAD for the purchase of electricity decreased and the company buys electricity only from RES
power plants with less than 1 MW of installed capacity. From 01.07.2021 with the entry into force of the last price
decision of the EWRC the company already buys electricity from RES only with an installed capacity of less than
500 kW.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
124
Pursuant to the provision of paragraph 34, para. 8 of the Transitional and Final Provisions of the Law for amendment
and supplement of the Energy Act ( SG, issue 41 of 21.05.2019) the contracts of the Company with producers of RES
with total installed capacity from 1 MW to 4 MW are terminated from on the entry into force of the contracts for
compensation with a premium for producers with the Electricity System Security Fund.
As of 31 December 2021, NEK EAD has not concluded long-term contracts for the purchase of electricity produced
from renewable or alternative energy sources.
Estimates with Irrigation Systems EAD
NEK EAD and Irrigation Systems EAD carry out activities for maintenance and operation of dams, dam walls,
hydrotechnical and hydro-ameliorative facilities, fulfilling the obligations set by the Ministry of Environment and
Water for water supply. NEK EAD through the company "Dams and Cascades" has provided the service " water
supply " to "Irrigation Systems" EAD, a similar service has provided a service "Irrigation Systems" EAD to NEK
EAD.
No agreement has been reached between the Company and Irrigation Systems EAD, as no protocols have been signed
for delivered quantities of water for the period from May 2003 to the date of issuance of these financial statements,
therefore additional liabilities to Irrigation Systems may arise. ”EAD, which at the moment cannot be reliably
determined.
In this regard, an agreement was concluded between NEK EAD and Irrigation Systems EAD, whereby both parties
have declared that each of them provides the " water supply " service to the other party. The agreement provides for
the signing of contracts to regulate the rights and obligations of each party related to the provision of the " water
supply " service.
NPP Kozloduy EAD and its subsidiaries
Assets and liabilities classified as held for distribution to owners
RAW processing, storage and disposal are RAW management activities that according to ASUNE should be
performed by RAW SE in order to ensure protection of the interests of the citizens of the Republic of Bulgaria and
the responsibility of the Bulgarian state and its competent authorities (note 27). .
Mini Maritsa Iztok EAD
Concession contract commitments
Pursuant to a concession agreement for the development and extraction of coal, Mini Maritza Iztok EAD undertakes
to set aside funds in favour of the Ministry of Energy, which can be used only for the purpose for which they are
intended (types of work for the final departure of the concession area) and after explicit permission of the Ministry of
Energy. With a letter ex. №Е-26-М-258 / 25.06.2018 a new updated schematic project for leaving the concession area
has been agreed with a total value for final departure of BGN 169,291 thousand. According to this project "Mini
Maritsa Iztok" EAD should pay annually in trust accounts an amount of BGN 4,385 thousand. The amount was
approved by the Ministry of Energy, and in October 2019 an annex was concluded. As of 31 December 2021, Mini
Maritsa Iztok EAD has no funds set aside in a trust guarantee account and has not issued a bank guarantee in favour
of the grantor , securing the activities under the contract. In 2021, Mini Maritsa Iztok EAD conducted a procedure for
awarding contracts for opening and servicing trust accounts to raise funds for the exit fund. As of the date of
preparation of the report, the procedure is completed, a bank has been selected. Approval and coordination of the
agreements with the bank by the Ministry of Energy, as a party to the concession agreement, is pending.
41.6. Insurance
NPP Kozloduy EAD and its subsidiaries
The Law for Safe Use of Nuclear Energy sets a maximum coverage limit of the operator for damages from nuclear
accidents. The law limits the operator's liability to BGN 96,000 thousand for each accident. According to the Vienna
Convention on Civil Liability for Nuclear Damage, the operator is obliged to maintain insurance or other financial
guarantee for nuclear damage for the period of operation of the nuclear installation. NPP Kozloduy EAD has
concluded an insurance policy covering the limits regulated by law on August 1, 2020 with the Bulgarian National
Insurance Nuclear Pool with a one-year coverage period from August 1, 2020 to July 31, 2021. The sum insured is in
the amount of BGN 822 thousand, of which BGN 806 thousand insurance premium and BGN 16 thousand premium
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
125
tax. On July 28, 2021 a new contract was concluded with the Bulgarian National Nuclear Insurance Pool with a one-
year coverage period from August 1, 2021 to July 31, 2022. The sum insured amounts to BGN 863 thousand, of which
846 BGN thousand insurance premium and BGN 17 thousand premium tax. NPP Kozloduy EAD has concluded
property insurance "Industrial Fire" with ZAD "Energy" with a coverage period of 1 January 2021 to 31 December
2021. The sum insured amounts to BGN 14,352 thousand (EUR 7,338 thousand). .
40.7. Guarantees
NPP Kozloduy EAD and its subsidiaries
Bank guarantees and cash collateral in the amount of BGN 11,611 thousand were opened in favour of the Group as
of 31 December 2021 (31 December 2020: BGN 16,254 thousand).
Bulgartransgaz EAD
Bank guarantees in the amount of BGN 63,955 thousand were issued in favour of the Group.
On July 1, 2019, a corporate guarantee was issued in favour of the Group under a Capacity Reservation Agreement
in the amount of BGN 1,085,313 thousand by a foreign legal entity.
Natsionalna Electricheska Kompania EAD
As of 31 December 2021 no bank guarantees have been issued by order of NEK EAD in favour of other companies /
third parties (as of 31 December 2020 it amounts to BGN 100 thousand to related parties of the BEH - ESO EAD
group ).
Bulgargaz EAD
According to a contract concluded in 2020 with a banking institution, Bulgargaz EAD has been granted a loan product
in the form of issuing a bank guarantee. The guarantee is in favour of a natural supplier gas and is an obligation of the
bank to repay liabilities of the Company in case they arise obligations. This commitment is a contingent asset for the
Company. To secure receivables of the Bank, in connection with the loan, the Company has established in its favour
collateral under the form of cash in a special account of the Company. This obligation is of a nature of contingent
liability. As of 31 December 2021, the collateral is closed.
40.8. Promissory note
Natsionalna Electricheska Kompania EAD
As of 31 December 2021 NEK EAD has issued promissory notes in the total amount of BGN 135,347 thousand to
related parties ContourGlobal Maritsa East 3. (As of 31 December 2020 NEK EAD has issued promissory notes in
the total amount of BGN 100,486 thousand BGN, including to related parties ContourGlobal Maritsa East 3 in the
amount of BGN 100,376 thousand to ESO EAD in the amount of BGN 110 thousand).
42. Events after the end of the reporting period
No corrective events or significant non- adjusting events have occurred since the reporting date to the date of approval
of the financial statements for publication, except for the following non- adjusting events:
Prolongation of the emergency epidemic situation in connection with the spread of Covid-19
In connection with the ongoing global pandemic of Covid-19, with the Decision of the Council of Ministers № 826
of November 25, 2021 the term of the emergency epidemic situation in Bulgaria was extended until March 31, 2022.
Based on Order RD-01-138 / 17.03. 2022 of the Minister of Health of the Republic of Bulgaria on the gradual easing
of temporary anti-epidemic measures in the country, the emergency epidemic situation in the country was finally
lifted.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
126
Military conflict between Russia and Ukraine
In the early hours of February 24, 2022, Russia took military action in neighbouring Ukraine. This conflict is growing
rapidly and is considered the most serious military situation in Europe since the end of World War II. Although the
Russian military may have planned the attack on Ukraine and mobilized in the year ending 31 December 2021, this
should not be considered a critical event to suggest that the conflict was obvious at the time. In view of this fact, the
Group does not consider it necessary to take into account additional adjustments to these consolidated financial
statements as of 31 December 2021 and the current conflict is considered a non- adjusting event.
Some countries have announced new packages of sanctions against the state debt of the Russian Federation and a
number of Russian banks, as well as personal sanctions against a number of individuals. At a later stage, sanctions
were imposed on Belarus as well. As of the date of the report, individual countries and the EU have imposed four
categories of sanctions on Russia and Belarus:
• sanctions against individuals and enterprises / organizations
• restrictions on business
• diplomatic measures
• restriction of economic cooperation
Due to the growing geopolitical tensions since February 2022, there has been a significant increase in the volatility of
securities and currency markets, fluctuations in energy and gasoline prices, a significant depreciation of the ruble
against the US dollar and the euro. The international situation related to the conflict between Russia and Ukraine has
led to changes in the economic aspect and market conditions associated with rising inflation, a dynamic rise in prices
for basic raw materials.
Moratorium on the price of electricity, plumbing and heat on a regulated market
By Decision of the 47th National Assembly of the Republic of Bulgaria ( Promulgated SG No. 108 of 17 December
2021, amended and supplemented, SG No. 108 of 17 December 2021, in force since 17.12.2021 d.) A moratorium
was imposed on the price of electricity, water and sewerage services and heat on a regulated market at the levels of
16 December 2021, valid until 31 March 2022.
Execution of orders of the Minister of Energy and conclusion of a credit line agreement with Bulgartransgaz EAD
By Order № Е-РД-16-113 / 24.02.2022 of the Minister of Energy on the grounds of Art. 70, para. 1, para. 2, item 1,
para. 3 and para. 4 and Art. 71 of the Energy Act, Bulgargaz EAD and Bulgartransgaz EAD imposed additional
obligations to serve the public in connection with the escalation of tensions on the border between the Russian
Federation and Ukraine. In connection with the need to ensure the continuity of natural gas supplies on the territory
of the Republic of Bulgaria by injecting additional quantities of natural gas in the underground gas storage Chiren,
Bulgartransgaz EAD should take all necessary actions to purchase natural gas in the amount of of 10 million cubic
meters (105,500 MWh ) in implementation of the Emergency Action Plan.
Order № Е-РД-16-129 / 28.02.2022 amended and supplemented the previous Order № Е-РД-16-113 / 24.02.2022, in
which additional obligations were imposed on Bulgargaz EAD for service to the public, for the purchase of additional
quantities of natural gas, in the period from 28.02.2022 to 31.03.2022, in the amount of 248 000 MWh , to be pumped
into the Chiren UGS.
Dividend paid to the sole owner of the capital
By order of the Council of Ministers of April 27, 2022, a dividend was determined for Bulgarian Energy Holding
EAD from the financial result for 2021 in the amount of BGN 190,710,764 thousand. The amount was paid to the
account of the national budget on May 16, 2022. .
Bulgarian Energy Holding EAD
Change in the management of Bulgarian Energy Holding EAD
With a protocol decision of 31 December 2021 of the Minister of Energy, the number of members of the Board of
Directors was reduced from 9 to 7 members, and Valentin Alexiev Nikolov and Alexander Plamenov Tsarnorechki
were released . The change was entered in the Commercial Register and the Register of Non-Profit Legal Entities on
January 7, 2022.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
127
Dilkov was released by a protocol decision of March 22, 2022 of the Minister of Energy Dilkov as a member of the
company's Board of Directors and Angel Emilov Yankov was elected a member of the Board of Directors until a new
tender procedure is held. The change was entered in the Commercial Register and the Register of Non-Profit Legal
Entities on March 28, 2022.
Natsionalna Electricheska Kompania EAD
Obligation to the Ministry of Energy for provided remunerated financial assistance
On March 10, 2022, the Council of Ministers decided by Decision №142 NEK EAD to reimburse from the budget of
the Ministry of Energy the remunerated financial aid received by March 31, 2022 once in full (BGN 1,176,661
thousand) under the bank budget BGN. account of the Ministry of Energy in the Bulgarian National Bank. The
company has not made additional adjustments to the financial statements as of 31.12.2021, as it is considered a non-
adjusting event.
On April 13, 2022, the Council of Ministers decided by Decree №52 that the deadline for restoration of April 15,
2022 was changed.
On April 14, 2022, NEK EAD entered into a loan agreement with BEH EAD in the amount of BGN 700,000 thousand
at an annual interest rate of 2.44% and a repayment period of 33 months from the date of concluding the agreement
according to the repayment plan.
The debt to the Ministry of Energy was repaid on April 15, 2022.
Technical malfunction during pre -commissioning tests of a hydraulic unit at Chaira SHPP
On March 22, 2022 Trial commissioning tests were carried out in accordance with a contract for rehabilitation of
Chaira PSHPP concluded between the Natsionalna Electricheska Kompania EAD and the ABB - Voith consortium .
During the tests a technical malfunction was found in the stationary (fixed) part of the turbine. Given the stage in
which the unit is located, namely pre -commissioning tests, the event does not qualify as an accident, but as
unsuccessful water tests. At present, the unit is taken out of availability until the cause is established and the
consequences are eliminated, and expert inspections are performed for the identified fault.
TPP Maritsa East 2 EAD
Actions taken by TPP Maritza East 2 EAD, sole owner of the capital of Professional Football Club Beroe - Stara
Zagora EAD for sale of shares of Professional Football Club Beroe - Stara Zagora EAD
On February 25, 2022, in the town of Stara Zagora, between TPP Maritsa East 2 EAD, UIC 123531939, with
registered office and address of management: the village of Kovachevo, PO Box 6265 , municipality. Radnevo , region
Stara Zagora, represented by Eng. Zhivko Dimitrov Dinchev - Executive Director, as the owner of 5,480,000 (five
million four hundred and eighty thousand) ordinary registered voting shares, with a nominal value of BGN 1 (one)
each, representing 100% of the capital of "Professional Football Club Beroe - Stara Zagora" EAD and NGO
"Association for Support of Football-Beroe", UIC 206794473, with registered office and address: Stara Zagora , p.k.
6000, 87 Hadji Dimitar Assenov Str., 6th floor, apt. Office 2, represented by Svetoslav Mitkov Minevski - Chairman
of the Board, a contract was concluded for the purchase and sale of 5,480,000 shares, representing 100% (one hundred
percent) of the capital of "Professional Football Club Beroe - Stara Zagora" EAD.
On March 10, 2022, the changes in the current state of the club were published in the Commercial Register .
NPP Kozloduy EAD
Provision of assets owned by NPP Kozloduy EAD to the State Enterprise “Radioactive Waste” (SE RAW), included
in Annex 1 to Decision №27 / 25.01.2022 of the Council of Ministers of the Republic of Bulgaria
By Decision №27 of 25.01.2022, the Council of Ministers of the Republic of Bulgaria announced the Site “Facility
for treatment and conditioning of solid RAW with a high volume reduction factor” together with movable and
immovable property, including assets under construction under launched projects for the implementation of the
activities for decommissioning of nuclear facilities for private state property. In this regard, NPP Kozloduy EAD
provides free of charge for management and administration of SE RAW assets included in Annex 1 of Decision №27
/ 25.01.2022 of the Council of Ministers. BEH EAD is obliged to reduce the capital of NPP Kozloduy EAD by the
value of assets and to increase the capital of NPP Kozloduy EAD by the same amount at the expense of retained
earnings from previous years and other reserves of NPP Kozloduy EAD. The assets transferred to SE RAW should
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
128
be written off from the balance sheet of NPP Kozloduy EAD at book value as of 31.12.2021. As of the date of
preparation of these financial statements, the decision is in progress and the assets are expected to be transferred.
Establishment of a new subsidiary
With Minutes №4 / 10.02.2022 at a meeting of the Board of Directors of NPP Kozloduy EAD a decision was made
to establish a new subsidiary NPP Service EOOD with sole owner of the capital NPP Kozloduy EAD. The subject of
activity of the new company is servicing of automation tools, software and technical complexes, automated technical
complexes and instrumentation , etc. and any other commercial activity not prohibited by law.
Approval of a draft loan agreement with Bulgarian Energy Holding EAD
With minutes № 11 / 29.03.2022 at a meeting of the Board of Directors of NPP Kozloduy EAD approved a draft
contract for a loan to its owner BEH EAD in the amount of BGN 350,000 thousand for up to 12 months. The contract
should be concluded after obtaining a permit from the EWRC in accordance with the requirements of Article 21,
paragraph 1, item 23 of the Energy Act.
Bulgargaz EAD
EWRC decisions determining the price at which the public supplier sells natural gas
The EWRC Decisions approved the price at which the public supplier sells natural gas to the final suppliers of natural
gas and to the persons to whom a license for production and transmission of heat energy has been issued, amounting
to BGN 133.41 / MWh (excluding excise duty and VAT) for January 2022, and subsequently - in the amount of BGN
142.59 / MWh (excluding excise and VAT) for April 2022.
Change in the Board of Directors of Bulgargaz EAD
By a protocol decision of January 28, 2022 of the Board of Directors of Bulgarian Energy Holding EAD, the following
new members of the Board of Directors of Bulgargaz EAD have been elected:
Ivan Topchiiski - Chairman and member of the Board of Directors of Bulgargaz EAD
Lyudmil Yotsov - Member of the Board of Directors and Executive Director of Bulgargaz EAD
Angela Slavova - Member of the Board of Directors
Anton Adamov - Member of the Board of Directors
Stefan Voinov - Member of the Board of Directors
The changes were entered in the Commercial Register and the Register of Non-Profit Legal Entities on February 3,
2022.
Compensation program for household customers on natural gas and district heating companies using natural gas as
their main fuel
In order to mitigate the economic consequences of the sudden instability of energy market prices, the Council of
Ministers developed and adopted by its Decision №31 of 25 January 2022 a Program for compensation of household
customers for natural gas and district heating companies using natural gas as their main fuel gas, to support with a
fixed amount per MWh. The program aims to protect and support businesses and consumers in general to deal with
the effects of fluctuations of the gas prices. Initially, the program covered a support period from 1 December 2021 to
31 January 2022 inclusive, but subsequently the period was extended until the end of the heating season, ie. until
April 30, 2022. According to the Program, the amount of compensation is calculated as 50% of the difference between
the price of the public supplier approved by the EWRC for the respective month and the estimated price of natural
gas for the first quarter or second quarter of 2022. A contract has been concluded between Bulgargaz EAD, in its
capacity of Supplier and the Ministry of Energy. The implementation of the compensation program has been
implemented by the Company by reducing the amount due for payment for natural gas supplies through the relevant
tax documents issued in March 2022.
Suspension of the supply of natural gas from OOO Gazprom Export to Bulgargaz EAD
On April 26, 2022, the Russian company Gazprom Export LLC notified its subsidiary Bulgargaz EAD that as of April
27, 2022, it will suspend gas supplies to Bulgaria.
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
129
Despite the existence of a valid, valid supply contract with a term until 31.12.2022 and strict compliance with the
terms of the contract by Bulgargaz EAD, the supply of natural gas to the Republic of Bulgaria was suspended. The
new two-stage payment procedure proposed by the Russian side is not in line with the existing agreement until the
end of 2022 and poses significant risks for the Bulgarian side, including making payments without receiving any gas
supplies from the Russian side. The proposed mechanism implies real risks for the Bulgarian side from unilateral and
uncontrolled suspension of supplies without providing the appropriate opportunity to seek liability from the Russian
supplier. The new method of payment is set as a process that includes control over the financial assets of Bulgargaz
EAD, intended for payment of supplies under the contract, to be controlled by a financial institution related to
Gazprom Export, and not by an independent third party . In order to limit the consequences of the actions of the
Russian company, Bulgargaz EAD has taken all necessary actions, not contrary to Bulgarian legislation, to ensure the
integrity of the country's gas transmission system and continuity of supply to Bulgarian domestic and industrial
consumers. At present, no restrictive measures are required for the consumption of natural gas in Bulgaria
Mini Maritsa East EAD
Approval of a new coal price
According to a letter from the Ministry of Energy with ref. № Е-26-Б-206 dated 14.02.12022 and decision of the
Board of Directors of Mini Maritsa East EAD, as of March 1, 2022, a new price for coal produced by the Company
in the amount of BGN 87.35 has been approved / TUG. All our lignite customers have been notified of the price
change. The price until March 1, 2022 is BGN 77.00 / TUG (effective from July 1, 2014). The increase is 13.44%.
Additional agreements with Brickel EAD
On February 14, 2022, an Additional Agreement to the Contract № 2-2015 / 09.09.2015 for the supply of lignite coal
was concluded with Brickel EAD, which regulates the amount of transport fees and extends the term of the Agreement
from 01.01.2022 to 31.12.2022, negotiating the quantities of lignite coal that Mini Maritza-East EAD will deliver to
Brickel EAD during this period.
On February 21, 2022, an Additional Agreement to the Contract № 2-2015 / 09.09.2015 for the supply of lignite coal
was concluded with Brickel EAD. The agreement is in force since March 1, 2022, and it changes the price of lignite
coal in the amount of BGN 87.34 / tCF without VAT.
Tax audits
With an act for set-off or recovery № P-29002922001140-004-001 of 12.01.2022 the unduly paid principal in the
amount of BGN 2,526,435.24 under Revision Act №Р-29002920007219-091-001 / 16.09.2021 together with the due
interests in the amount of BGN 1,422,679.17 on 13.01.2022
With a decree for revocation of imposed precautionary measures from 12.01.2022, issued by the main public executor
of the TD of the NRA GDO, on the grounds of art. 208 of the TSSPC, the precautionary measures under RA №
29002920007219-091-001 / 16.09.2021 have been revoked.
Change in the management of Mini Maritsa East EAD
Ilza Mitkova Chinkova was entered in the Commercial Register as an Executive Director and a member of the Board
of Directors of Mini Maritsa East EAD on February 4, 2022.
Bulgartransgaz EAD
Investment decision for construction of the liquefied natural gas terminal in Alexandroupolis, Greece
On January 27, 2022 at the General Meeting of Shareholders of Gastrade S.A. in Athens, a unanimous final investment
decision was approved for the construction of the liquefied natural gas terminal in Alexandroupolis, Greece, thus
starting the implementation of project. Bulgartransgaz EAD approved the above with decisions under item 6 of
Minutes of the Management Board 587 / 25.01.2022 of the Management Board of Bulgartransgaz EAD, approved by
a decision under item 1 of Minutes of the Supervisory Board 5 / 25.01.2022 of the Supervisory Board . Board of
Bulgartransgaz EAD and decision 14/2022 of the Board of Directors of Gastrade S.A. dated 26.01.2022, as well as
decisions under item 1 of Minutes of the Management Board 588 / 27.01.2022 of the Management Board of
Bulgartransgaz EAD, approved by a decision under item 1 of Minutes of the Supervisory Board 6 / 27.01.2022 of the
Bulgarian Energy Holding EAD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
130
Supervisory Board of Bulgartransgaz EAD. The expected term of construction of the terminal in Alexandroupolis,
Greece and the beginning of commercial operation is the end of 2023.
Energy System Operator EAD
Program for compensation of the costs of the transmission and distribution system operators for the purchase of
electricity required for technological costs
By decision of the Council of Ministers №893 of 30.12.2021, amended by Decision №92 of 25.02.2022, the
compensation of the network operators for their technological costs will continue until the end of March 2022. The
compensation for the period from 1 January 2022 - March 31, 2022 will be paid on the basis of a tripartite agreement
between the Ministry of Energy, the Power System Security Fund and ESO EAD. The maximum amount of
compensation for each month will be determined on the basis of the quantities of electricity for technological costs
for the respective month, confirmed by the Ministry of Energy by comparison with the quantities of active electricity,
according to the information and value each megawatt -hour , calculated as the difference between the average
monthly price of electricity for base load on the Day Ahead market, according to data provided by the Bulgarian
Independent Energy Exchange EAD (IBEX) and the forecast market price set by the EWRC. The funds will be paid
from the fund.
43. Approval of the consolidated financial statements
These consolidated financial statements as of 31 December 2021 (including comparative information) were approved
for issue by BEH EAD’s Board of Directors of on 9 June 2022.