Bulgaria risks losing EU funds. Energy market remains unliberalized

Bulgaria faces a real risk of failing to secure EU funding for its National Recovery and Resilience Plan. As the country prepares for European and snap parliamentary elections, it is still hesitating over the necessary legislative decision because of coal miners’ opposition to liberalizing the energy market. Instead, the outgoing government approved a subsidy for the state-owned Maritsa Iztok coal mine, Euractiv reported.

Bulgaria is heading for its sixth snap election in the past three years, which may be indicative of many things. In the energy sector, the country has been unable to achieve full liberalization, due to the lack of a clear and stable consensus—a situation that became apparent last week. The Bulgarian parliament voted to delay liberalization by at least one year, leaving the country among the last EU states to liberalize their markets, along with Malta.

However, it cannot be said that the country has taken no steps toward liberalization. The independent Bulgarian Energy Exchange (IBEX) began operating in 2016, although Bulgaria was one of the last EU countries to take this step. The wholesale market changed to some extent when the role of the sole buyer—the Bulgarian National Electricity Company, which had purchased all the electricity generated and then sold it on the regulated market—was abolished.

As for the coal mine, it was decided that the Council of Ministers would provide 250 million leva a year from the state budget for technical reclamation. Specifically, this concerns the eastern part of the Maritsa Iztok complex, the largest energy complex in southeastern Europe. However, doubts have emerged that the funding is intended to subsidize miners’ wages rather than reclaim the land. Bulgarian miners have long protested against full liberalization of the energy market, fearing for their jobs.

Given the problems and shortcomings in Bulgaria’s energy sector described above, the country risks losing 4.4 billion euros in EU funding. Postponing the vote on the updated climate neutrality plan or failing to meet Green Deal commitments could block a payment under the recovery plan, which is intended to legally enshrine these requirements.