The Idea Behind
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01 September 2010, Cross News Agency

Chaos and red tape in Bulgaria’s regulations are believed to be a major obstacle to attracting large-scale foreign investments in renewable energy, according to analyst Zlatin Sarastov.

Sarastov, analyst from Amphora Capital, a Sofia-based consultancy, has argued, as cited by the Cross news agency, that the recently announced investment of Japanese company Toshiba in a Bulgarian solar plant should alert the Bulgarian government about the expectations of serious investors for predictability in state regulations in the sector.

In his words, the long period of return on investments and the price fluctuations of the equipment are combined with the lack of certainty and clarity with respect to the development of Bulgarian infrastructure and energy market regulations to chase away investors in renewable energy.

The current situation thus makes very likely delays in the putting into operation of the respective energy facilities and also creates conditions for blackmailing on part of state officials.

“While 2009 saw the realization of several relatively large renewable projects, 2010 is the year of the big wait. This was also caused by the irresponsible political rhetoric and mismanagement about the investors’ expectations. The messages coming from the state institutions were contradictory. The use of the word “moratorium” in past few months also did not help,” Sarastov believes.

In his words, this has generated suspicions that the “chaos” has been brought about deliberately in order to “preserve” the local potential for certain people and companies by chasing away large foreign investors.

“The Bulgarian Government, however, is running out of time. It urgently needs an improvement of its image as well as foreign investors and the respective income to the budget, and will be forced to do what it is necessary for that, and to be predictable. Against this backdrop, investors are standing still in expecting a validation of their plans by large and authoritative investors. The Toshiba investment has arrived at a time when it is most needed. Perhaps it will serve to dissipate the doubts of the others and to unclog the sector,” says the analyst.

He also points out that the capacity of the Bulgarian energy distribution infrastructure is limited, which means that investors should probably consider risking with a renewable energy project now in order to fit within that capacity.