Sofia’s district heating company in dire financial straits over emissions taxes

The National Assembly called a meeting with Mayor Yordanka Fandakova and the executive director of Toplofikatsia Sofia over plans to tackle the problem

On 8 September, the Bulgarian National Assembly called in the mayor of Sofia, Yordanka Fandakova and Alexader Alexandrov, the executive director of Toplofikatsia Sofia (Sofia District Heating) for a meeting over the financial condition of the heating company.

Toplofikatsia Sofia is a public energy and heating company servicing 1.5 million people in Bulgaria’s capital, and it is facing financial liabilities of over 370 million euros. According to the company, the biggest contributor to the growing debt in recent years are polluting emissions taxes.

Winter is coming

To be more precise, Toplofikatsia Sofia is a publicly owned company and currently, the City of Sofia owns a majority of the shares with Mayor Fandakova acting as the principal. The company operates four Thermal Power Plants in the city and supplies over 430,000 households and businesses with electricity and heat.

Furthermore, the company is the biggest heating provider in Sofia but it has operated at a serious loss for the past four years. Toplofikatsiia Sofia runs its own thermal power plants that burn coal and natural gas. Thus, since the introduction of polluting emissions taxes in the European Union, it has racked up over 370 million euros in debt.

Since March 2021, the company has stopped paying the interest on the debt and this is cause for alarm as six months later, there are still no workable solutions on how to resolve the issue. This situation risks leaving Bulgaria’s biggest city without heating right before the arrival of the winter.

Rising cost for citizens

The representatives in the national parliament called the meeting to discuss the future plans of City Hall and Toplofikatsia Sofia. They wanted the municipality to ensure that investments will help the heating company meet the emissions norms of the European Union.

Maya Manolova, an elected representative from the “Stand up BG! We are coming“ party said that it is extremely abnormal for the executives of Toplofikatsia to neglect their responsibilities towards the citizens of Sofia in such a major way. She continued by explaining that this sort of neglect towards air pollution could lead to the eventual closure of the entity.

Currently, the only active strategy related to the heating company is the creation of a waste-incineration plant near the centre of Sofia. The project will retrofit one of the coal reactors on the Sofia Thermal Power Plant allowing it to burn RDF fuel. Several experts and activist groups have criticized the project as a potential source of even more massive pollution for the city.

At the same time, CEO Alexandrov offered a single solution to the mounting problems – to raise the price for consumers by 20%. Sadly, experts say that that would not be a sufficient measure to fix the problem in the long term as the carbon debts will continue to grow at an exponential rate.