Bulgarian utility holds tender to cover ERU shortfall
Bulgaria's biggest power generator, NEK, is looking to buy carbon credits, so it can honour a supply contract with Austria.
NEK is holding a tender for a maximum of 700,000 emission reduction units (ERUs) for delivery until 2012, according to public documents.
NEK would deliver these credits to Kommunalkredit Public Consulting, which buys carbon credits like ERUs on behalf of the Austrian government, a company spokeswoman confirmed.
Kommunalkredit has struck a contract with NEK for ERU offtake from a planned joint implementation (JI) project in Bulgaria, the Tsankov Kamak hydropower plant.
But this project has run into difficulties, and will not be able to start generating ERUs as soon as expected.
"Until its commissioning, we have to purchase CERs [certified emission reductions] or ERUs in order to fulfil our current engagements under the emission reduction purchase agreement," the NEK spokeswoman said.
A contact closely involved in the deal told ICIS Heren that the tender might end up as a service transaction, rather than an outright sale/purchasing agreement.
NEK said it had received three bids, but did not name the companies. According to sources, two banks and one specialised emissions trading company took part. The main international project developer with an office in Bulgaria, Camco, confirmed that it had not participated.
NEK now has until March to announce the winner, although ICIS Heren understands participants are due to be informed of how their prices compare sooner than that.
The tender, which closed in early January, called for at least three batches of credits.
The first, for 100,000 credits, was originally supposed to be delivered by 31 December 2009, but delays to the tender procedure rendered that impossible. The December 2009 delivery is now understood to be deferred to a later date during this year.
The tender also sets out that two more batches (of 120,000 each) should be delivered to NEK in April 2010 and 2011 respectively.
NEK could then chose to buy a further 360,000 credits before end of 2012.
Neither NEK nor Kommunalkredit wanted to comment on the total number of ERUs to be delivered under their current contract.
Project documents on NEK's website pegs estimated emission reductions from Tsankov Kamak at 230,000 tonnes of carbon dioxide equivalent (tCO2e) each year, however. Over a three-year period - from 2020 to a cut-off point in 2012, when JI projects have to stop delivering credits - this would equate to 690,000 tCO2e. This is close to the maximum amount NEK would tender for.
ERUs or CERs?
The tender documents posted by NEK state that it would be prepared to buy either CERs or ERUs - as long as the ERUs were priced at a discount.
A Kommunalkredit official declined to say whether Austria would be willing to accept CERs as well as ERUs. IS
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