On 22 February Czech energy giant CEZ officially announced the sale of its Bulgarian assets to the absolutely unknown Bulgarian company “Inercom Bulgaria”. The price for the purchase of the shares is about 320 million euros, against which the buyer will acquire a business with an annual turnover of nearly 1 billion euros. The owner of “Inercom Bulgaria” is Ginka Varbakova from the town of Pazardzhik. She has no experience in managing such projects. The company was founded last year with a capital of 25,000 euros.
The deal has provoked a political quake in Bulgaria, which is not surprising. CEZ entered the Bulgarian market in 2004 and is responsible for the supply of electricity for 1/3 of the territory of the country, including the capital Sofia. Almost 40% of all Bulgarians, 3 million people, are customers of CEZ. The transaction directly affects the national security of the country. However, the purchase of assets is extremely opaque. The logic of the facts so far indicates that Ginka Varbakova is a stooge behind whom big political and business interests are hiding.
Over the past three days Prime Minister Boyko Borissov, the ruling party GERB and Varbakova herself are making serious efforts to lower the curtain on the deal. But not all traces can be deleted.
On Friday Energy Minister Temenuzhka Petkova resigned.
She explained that she had nothing to do with the purchase of CEZ’s assets, but she had been a personal friend for 20 years with Ginka Varbakova. Petkova announced she was leaving so there would be no speculation about this relationship.
On 22 January Czech Prime Minister Andrei Babiš made a surprising visit to Bulgaria. There was information at that time, that precisely CEZ would be the subject of his talks with Borissov.
At that time already Borissov requested information from his colleague about the intentions of the Czech state, which is the majority shareholder of the company. At that point it was already clear that the asset buyer favorite was “Inercom Bulgaria”.
Andrei Babiš is a Czech billionaire, a former finance minister of the country. It is the Czech Ministry of Finance that runs the CEZ business. In the Czech Republic, it is no secret that Babiš knows CEZ as well as he knows his own business. Days before the meeting with Borissov, Babiš’ newspaper Lidove News reported that the CEZ leadership was waiting for the meeting between the two prime ministers to give the green light to the deal with “Inercom Bulgaria”. Everything happened according to plan. On 22 February, one month after the Borissov-Babiš meeting in Sofia, CEZ announced the deal. Now Borissov denies having anything to do with it, and even knowing about the intentions of the Czech authorities, which cannot be true. The Bulgarian prime minister prefers to transfer all questions to the Czech Republic.
“I want to confirm that we have not influenced the CEZ deal in any way,there is no way we could control a transaction in the Czech Republic between private companies, nor could we prevent it”, said Borisov in Brussels, on the day of the announcement of the deal.
The opposition party BSP suspects that Borissov personally is behind the deal. The prime minister responded to suspicions on Saturday (24 February) and ordered counterintelligence (DANS) and tax officials to check the deal and the buyer company. Nevertheless Borissov’s actions continue to provoke suspicion. Bulgarian authorities could not know more about the deal than the prime minister himself. Borissov was informed by Babiš of the intentions of the Czech Republic one month earlier and if he had any desire to learn more, he would have ordered a check back then. However, this did not happen.
The buyer Ginka Varbakova became an active actor in the whole game, trying to protect the ruling party GERB as she was a member. It keeps repeating Borissov’s argument that this is a transaction between private entities, which is not true because CEZ is sate-owned. Varbakova described the BSP’s criticism of Borissov as a “political poisoning” directed against the ruling GERB party – an argument more appropriate for a parliamentary debate.
Doubts about the deal are fueled by the fact that it will happen with a bank loan against a stake of shares. Varbakova says she is negotiating with a large international bank to finance her initiative. But certainly no major financial institution would spend so much money in such a deal if there wasn’t a big player behind “Inercom Bulgaria”. The Bulgarian company is not a strategic investor, and CEZ – Bulgaria has a credit of over 116 million euros to the European Bank for Reconstruction and Development. The credit becomes immediately chargeable if CEZ’s assets are acquired by a non-strategic investor. So the price of the deal swells to 436 million euros. Here the trail again leads to Boyko Borissov. Today Borissov is in London for a meeting on the Western Balkans organised by EBRD.
Separately, “Inercom Bulgaria” will have to make a binding offer for the purchase of the shares of the minority shareholders, which inflates the deal to over half a billion euros. This is something impossible for a mid-sized Bulgarian company. Everything indicates that the deal has a strong political backing that somebody desperately tries to hide.
Article published under a special arrangement with Bulgarianpresidency.eu.