Electricity and natural gas market in Bulgaria

Electricity market in Bulgaria

  The electricity market in Bulgaria is in the process of gradual liberalization, launched in 2004 and continuing to this day. It consists of two segments - segment with regulated prices and segment with freely negotiated prices or so called free market.
  Both segments are monitored by the Energy and Water Regulatory Commission ("EWRC"). The main functions of EWRC are licensing and supervision of producers and traders of electricity, consumer protection and the creation of regulated electricity prices.
  Unified operational planning, coordination and management of the electricity system of the Republic of Bulgaria is carried out by the Electricity System Operator EAD (ESO). ESO organizes joint operation of the electricity system of Bulgaria with the electricity systems of other countries and provides operation, maintenance and reliable functioning of the electricity transmission network. The company carries out transit of electricity on the national grid and organizes electricity market in Bulgaria.

    Licensing for electricity trading - regulatory conditions

   Electricity trading is subject to the acquisition of a license for electricity trading issued by EWRC as stipulated in Art. 39, para. 1, p. 5 of the EA. The license for electricity trading can be extended for activities "Coordinator of standard balancing group" and / or "Coordinator of combined balancing group".

The license for electricity trading allows the licensed company:

to purchase electricity from power plants or other traders;
to sell to other traders and end customers (industrial and households);
to export and import electricity from and to Bulgaria and to participate in auctions for the allocation of transmission capacities on the interconnections between Bulgaria and its neighboring countries.

The license for electricity trading can be issued to resident legal entity registered under the Commercial Law in Bulgaria and / or to foreign legal entity with a registration equivalent of the latter, under the law of each Member State of the European Union, if the company possesses technical and financial resources, material and human resources and organizational structure in accordance with the mandatory requirements for engaging in electricity trading.

Legal entities from third countries (non-EU) can not directly obtain a license for electricity trading. For this purpose, they must register a local subsidiary.

Natural gas market in Bulgaria

  The free natural gas market in Bulgaria is an important aspect in the energy sector. As of 2020, Bulgaria has a free natural gas market, which is operated by the Balkan Gas Hub. Natural gas traders play an important role in this context. They are companies that buy, sell and distribute natural gas. Licensing of natural gas trade in Bulgaria is regulated by the Energy and Water Regulatory Commission (EWRC). According to the adopted amendments and additions to the Energy Act, from October 1, 2021, the activity "natural gas trading" can be performed only on the basis of an issued license.
   The activities "transmission of natural gas" and "storage of natural gas" are carried out by "Bulgartransgaz" EAD - a combined gas operator. The transmission of natural gas is carried out through the national gas transmission network and on the gas transmission network for transit transmission. "Bulgartransgaz" EAD is the operator of: national gas transmission network for transmission of natural gas on the territory of Bulgaria to gas distribution networks and non-domestic customers of natural gas; gas transmission network for transit transmission of natural gas for the transmission of natural gas through the territory of Bulgaria to the neighboring countries of Romania, Turkey, Greece and North Macedonia and underground gas storage "Chiren" ("Chiren" UGS).

    Licensing for natural gas trading - regulatory conditions

   Natural gas trading is subject to the acquisition of a license for natural gas trading, issued by EWRC, as provided in art. 39, para. 1, item 5 of EA and art. 9, para. 1, item 10a of Ordinance № 3 for licensing of activities in the energy sector.

The license for natural gas trading allows the licensed company:

to purchase natural gas from various sources, including importers, producers and other traders;
to sell natural gas to other traders and end customers (industrial and households);
to export and import natural gas from and to Bulgaria.

The license for natural gas trading can be issued to resident legal entity registered under the Commercial Law in Bulgaria and / or to foreign legal entity with a registration equivalent of the latter, under the law of each Member State of the European Union, if the company possesses technical and financial resources, material and human resources and organizational structure in accordance with the mandatory requirements for engaging in electricity trading.

Legal entities from third countries (non-EU) can not directly obtain a license for natural gas trading. For this purpose, they must register a local subsidiary.

Laws and regulations governing the electricity and natural gas market in Bulgaria:

Energy Act (EA);
Excise Duties and Tax Warehouses Act (EDTWA);
Ordinance № 3 of March 21, 2013 for licensing of activities in the energy sector;
Ordinance № 1 of 14 March 2017 for regulating the prices of electricity;
Ordinance № 2 of 19 March 2013 for regulating the prices of natural gas;
Rules for trading electricity;
Rules for access to the electricity transmission network and distribution grids;
Rules for measuring the amount of electricity;
Auction rules for allocation of transmission capacities on the interconnections between Bulgaria and its neighboring countries;
Rules for trading natural gas;
Rules for balancing the natural gas market;
Rules for granting access to gas transmission and/or gas distribution networks and for access to natural gas storage facilities;
Tariff for taxes collected by EWRC under the Energy Act.

We offer you:

Preparation of a full set of documents necessary for the acquisition of a license for electricity trading (Analysis of the electricity market, business plan, projected financial statements, SWOT analysis, etc.);
Preparation of a full set of documents necessary for the acquisition of a license for natural gas trading (Analysis of the natural gas market, business plan, projected financial statements, SWOT analysis, etc.);
Corporate tax and VAT consultations of companies trading with energy products (electricity, gas, coal) and cross-border capacity rights;
Consultations regarding excise duty legislation of energy products;
Performing registrations under EDTWA in cases stipulated by law in the Customs Agency;
Representation in front of the tax authorities and Customs agency;
Reporting of the import, export and transit of electricity to Non EU countries according to the European customs legislation (simplified procedures for clearance);
Consultations regarding the Intrastat legislation and submission of Intrastat declarations on companies trading with energy products;

For more information, please contact us.