KRIB's position on the open letter "Natural gas prices in Bulgaria - a threat to the economic security of the country March 18, 2015

                         KRIB BFIEK

BEFORE

MINISTER OF ENERGY

MINISTER OF THE ECONOMY

THE CHAIRMAN OF KEVR

THE EXECUTIVE DIRECTOR OF BULGARGAZ EAD

OPEN LETTER

NATURAL GAS PRICES IN BULGARIA – A THREAT TO THE ECONOMIC SECURITY OF THE COUNTRY

The business: "There is no way we can be competitive and expect foreign and Bulgarian investors to prefer Bulgaria over the neighboring countries in the region, with similar prices for electricity and natural gas."

In an open letter from February, KRIB and BFIEK expressed business expectations for a significant reduction in the price of natural gas from the beginning of April, at least by 22,7%. No correction was made by Bulgargaz EAD in the application and the indication is for a proposed reduction of 13%, which in no way reflects the expectations of the business in the context of price developments in the region. Since the beginning of March, the price of natural gas in neighboring Greece has fallen by as much as 24%. Ukraine buys natural gas at a price of 265 USD/1000 cubic meters, while the current price in our country is 325 USD/1000 cubic meters. It is expected that in Bulgaria after April 1, 2015, as a result of the 13% price reduction proposal, the price will be established at 283 USD/1000 cubic meters, which will be significantly above the price levels in the region.

We demand an immediate review of the policy of regulating natural gas prices.

In addition, we would like to remind you that oil prices have reached the lowest levels for the last 5 years, and there is still no effective reduction in the price of natural gas in Bulgaria. In Europe, the practice of spot prices for natural gas, which are market-based and not directly linked to fuel prices, has become established. At the end of February, KRIB and BFIEK sent an open letter to the Ministry of Energy, the Ministry of Economy, KEVR and "Bulgargaz" EAD (in attachment), but the problem did not enter the political agenda.

For another regulatory period, the following questions remain unanswered:

Why does the regulated price of natural gas in Bulgaria not react to the drop in the price of oil?

Why does Bulgargaz EAD not take advantage of the opportunities for hedging the currency risk?

How long will we pay the highest natural gas prices and all deficits (of management, of contracts, of the regulatory framework) will be at the expense of business?

Why six years after the gas crisis have the interconnectors not been implemented and we have no access to alternative supplies?

Against the background of the huge differences in natural gas prices in neighboring countries and on a global scale, it becomes impossible for the Bulgarian economy to reinvest, create jobs and be competitive.

We expect a significant reduction in the price of natural gas from the beginning of April, which will reflect the development of prices in neighboring countries.

We are losing the race for markets and investments. Business in the country cannot afford a lack of an adequate pricing policy in accordance with regional realities.

18.03.2015 year.

With respect,

Kiril Domuschiev

Chairman of the Board of KRIB

Konstantin Stamenov

Chairman of the Board of BFIEK