Almost 0.5% of Bulgaria’s Gross Domestic Product Comes from TPP AES – Galabovo

March 24, 2015

TPP AES-Galabovo, among those blamed for the high price of electricity due to the long-term power purchase agreement, in fact ensured 0.44% of the Gross Domestic Product in Bulgaria and 0.51% of the gross added value in the country in 2013. These data are taken from the latest research made by the economist, Krasen Stanchev and his company КС 2 – a research that has been made every two years since the beginning of the project that replaced the old coal capacities of the state TPP Maritsa East 1 with new modern capacities complying with the new European environmental regulations to be implemented in 2016.

Referred to by Ataka Party leader, Volen Siderov, as “colonialists” and a “draining-Bulgarian-money-abroad”company, TPP AES Galabovo made contributions to the state budget, as profit taxes, excise duties, VATs, income taxes and social insurances amounting to over 30 million euros in 2013. The total fiscal effect exceeds 40 million euros and includes payments to 720 suppliers and subcontractors, to which the plant provides work. Besides this, the American power plant is a major customer of limestone suppliers and of Mini Maritsa East, purchasing about one fourth of the total extracted coal. The 15-year agreements signed with those suppliers ensure a long-term perspective for their businesses.

According to the research, the investment of 1.3 billion euros for the construction of the most modern coal-fired power plant is not only the biggest investment made in Bulgaria since 1989 but it continues to generate economic benefits for the country. After its commissioning in 2011, the project still maintains its significant contribution not only to the economy in the country and the state budget, but also for the employment and development of the local businesses.

Only during the construction stage, from 2006 until the end of 2009, the net investments of the company amounted to almost 980 million euros or 3.9% of the total foreign investments for the period. The project provided direct employment for 2000 people and 800 more jobs in affiliated activities. In total, 88.5 million euros were paid in the mentioned period for taxes and social insurances. The construction of the plant has a significant impact locally, forming almost one third of the direct foreign investments in Stara Zagora Region, ensuring employment of 1.8% of the local workforce and creating businesses for 400 Bulgarian suppliers of goods and services.

At the background of the total decline of direct foreign investments, which in 2012 and 2013 reached 2.9% of GDP, or hardly one tenth of their share in 2007, AES Galabovo contributed to the limitation of this negative trend and ensured approximately 0.5% of the economic growth during those two years. In a period of high unemployment rates, the company is a serious employment factor, and its significance even rose after the commissioning of the plant. This is due mainly to the jobs that the plant provides indirectly in the mining industry – over 3500 jobs in 2013 according to the latest and final statistics. Currently, the company employs over 450 people.

The data also show that despite the decline in investments and in direct employment following the completion of the construction, the contribution of AES to the budget even rises. The main reason for this is the significant growth of taxes and social insurances paid by suppliers due to the “economic cluster” formed around the power plant, which to a certain degree, includes activities with a large number of jobs.

TPP AES-Galabovo plays an important role in the energy stability of the country. The fact that the plant operates on locally produced lignite coal, reduces the energy dependence of the country by 1%, and its dependence on imported coal – by 4-5%. It is also one of the most efficient power plants in the country regarding balancing of the electricity grid.

After more than 30 years without any construction of new projects of this kind and with a limited implementation of innovations, the construction of TPP AES-Galabovo improved the age structure of the thermal power plants in Bulgaria and the environmental indicators. According to estimates made by NEK, prior to the realization of the project, 91% of the TPPs in the country were over 15 years of age and 28% – over 35 years old.

The employed new technologies and know-how make TPP AES-Galabovo the most modern plant in its class in South-East Europe, fully complying not only with the current environmental standards but with the requirements of Directive 2010/75/EU to be implemented in 2016.