EU urges reform of Bulgaria troubled energy sector

(SOFIA) - Brussels recommended Tuesday far-reaching reforms to Bulgaria's troubled energy sector as well as measures like better insulation, as a solution to high electricity bills that have prompted public anger in the EU's poorest country.

The European Commission review, requested by Sofia in the aftermath of massive street rallies that ousted the conservative government in February, criticised the "complex and non-transparent structure and functioning" of the electricity sector.

This "creates distrust among system users and raises concerns of mismanagement, abuses and widespread allegations of corruption," it noted, adding that sector reforms that were started were "largely incomplete."

Power bills doubled in January from December, sending thousands of people into the streets.

Slumping demand and exports also exacerbated problems, prompting authorities to curtail production capacities.

To improve the system, the Commission recommended measures to facilitate exports, market liberalisation, more transparency, and the possible decommissioning of inefficient plants as well as the independence of the price regulatory commission.

It also advised Bulgarian authorities to seek ways to make production more efficient, improve building insulation and develop well-targeted, adequate and effective support for vulnerable customers.

In a separate assessment released Tuesday, the World Bank found that 61 percent of Bulgarian households were energy poor.

Only 12 percent benefited from social assistance to cover their heating costs, it also found, calling for more funding for heating aid programmes.

"Grossly distorted incentives" in the sector have hiked up electricity prices, the World Bank criticised.

Bulgaria's new technocrat cabinet, which must still be approved by parliament on Wednesday, is already under pressure to freeze electricity prices for households, while separate calls have been heard to nationalise of foreign-owned energy distribution companies.