BULGARIA and Market Structure in Thein Energy Sector Energy Charter Secretariat Charter Energy Follow-UP E V Ie 2011 W
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BULGARIA FOLLOw-UP IN-DEPTH REVieW of the Investment Climate and Market Structure in the Energy Sector Energy Charter Secretariat 2011 ENERGY CHARTER ENERGY Disclaimer Information contained in this work has been obtained from sources believed to be reliable. However, neither the Energy Charter Secretariat nor its authors guarantee the accuracy or completeness of any information published herein, and neither the Energy Charter Secretariat nor its authors shall be responsible for any losses or damages arising from the use of this information or from any errors or omissions therein. This work is published with the understanding that the Energy Charter Secretariat and its authors are supplying the information, but are not attempting to render legal or other professional services. © Energy Charter Secretariat, 2010 Boulevard de la Woluwe, 56 B-1200 Brussels, Belgium ISBN: 978-905948-090-2 (English, PDF) Reproduction of this work, save where otherwise stated, is authorised, provided the source is acknowledged. All rights otherwise reserved. Follow up Report of Investment Climate and Market Structure in the Energy Sector of Bulgaria TABLE OF CONTENTS I. Introduction ..................................................................................................................... 6 II. Policy Conclusions Adopted by еhe Energy Charter Conference .............................. 7 III. Summary of the Main Findings of The Secretariat ..................................................... 9 IV. Overview ........................................................................................................................ 11 1. General Information .................................................................................................. 11 2. Geography ................................................................................................................. 11 3. State Structure........................................................................................................... 12 4. Population and Employment ..................................................................................... 14 5. Economic Situation................................................................................................... 16 a) Performance of the Economy.............................................................................. 16 b) Foreign Direct Investment................................................................................... 18 c) Foreign Trade...................................................................................................... 21 d) Privatisation......................................................................................................... 22 e) Business Climate and Economic Outlook........................................................... 24 V. Legal Framework .......................................................................................................... 26 1. Constitutional Provisions .......................................................................................... 26 2. Establishment of Enterprises, Entrepreneurship and Corporate Law ....................... 26 3. Investment-Related Legislation................................................................................. 27 4. Legislation on Real Estate......................................................................................... 32 5. Competition-Related Legislation.............................................................................. 33 6. Taxation..................................................................................................................... 35 7. Legislation Regulating the Conditions of Admission to the Country, Residence and Work by Foreign Natural Persons..................................................... 37 8. Legislation Related to Currency Exchange, Securities and Banks ........................... 38 9. Legal Framework of Privatisation............................................................................. 40 10. Legislation Regulating the Conclusion of International Agreements and Promulgation of Laws ............................................................................................... 46 11. Legislation Related to Industrial and Intellectual Property Rights ........................... 49 12. Energy-Related Legislation....................................................................................... 53 VI. Energy Sector Development and Market Structure .................................................. 58 1. Physical Features, Key Institutions, Energy Strategy and Sector Restructuring ...... 58 2. Oil.............................................................................................................................. 62 3. Natural Gas................................................................................................................ 65 3 Follow up Report of Investment Climate and Market Structure in the Energy Sector of Bulgaria 4. Coal Mining...............................................................................................................70 5. Electricity Sector....................................................................................................... 71 6. Renewable Energy Sources....................................................................................... 77 7. Nuclear Power........................................................................................................... 79 8. Heat Supply............................................................................................................... 83 9. Investments................................................................................................................ 84 a) Completed Projects............................................................................................. 85 b) On-Going Projects............................................................................................... 87 c) Planned Projects.................................................................................................. 89 Annex 1: Blue Book Exceptions............................................................................................ 95 Annex 2: Key Legislation Related to the Energy Sector ....................................................... 97 Annex 3: Examples of Preferential Price Rates for Purchase of Electricity from RES......... 99 Annex 4: Key Steps and Approximate Financing of a Project for the Construction of 50 MW Wind Power Plant ......................................................... 100 LIST OF FIGURES Figure 1: General Map of Bulgaria .......................................................................................... 11 Figure 2: Map of the Administrative Territorial Division of Bulgaria .................................... 12 Figure 3: Population under, at and over Working Age ............................................................ 15 Figure 4: Unemployment Rate (%), 2003-2009....................................................................... 16 Figure 5: Record FDI Inflows in 2006-2008, MEUR .............................................................. 18 Figure 6: FDI Inflows by Sector in 1998-2008, MEUR .......................................................... 19 Figure 7: Exports – Bulgaria’s Main Trade Partners ............................................................... 21 Figure 8: Imports – Bulgaria’s Main Trade Partners ............................................................... 22 Figure 9: Doing Business in Bulgaria ...................................................................................... 24 Figure 10: Primary Energy Production and Consumption....................................................... 58 Figure 11: Energy Conversion – Share of Different Energy Sources (2008) .......................... 58 Figure 12: Final Energy Consumption – Share of Different Energy Sources (2008).............. 59 Figure 13: Net Imports of Crude Oil........................................................................................ 63 Figure 14: High-Pressure Gas Infrastructure in Bulgaria......................................................... 66 Figure 15: Chiren Underground Gas Storage........................................................................... 68 Figure 16: Bulgarian Gas Infrastructure................................................................................... 70 Figure 17: Structure of Coal Production in 2008 ..................................................................... 71 Figure 18: Map of the Grid System and Major Power Stations of Bulgaria............................ 73 4 Follow up Report of Investment Climate and Market Structure in the Energy Sector of Bulgaria Figure 19: Structure of Gross Electricity Generation in 2008 ................................................. 73 Figure 20: Electricity Market Structure ................................................................................... 77 Figure 21: Nabucco Pipeline Route ......................................................................................... 89 Figure 22: South Stream Pipeline Route.................................................................................. 91 Figure 23: Burgas-Alexandroupolis Pipeline Route ................................................................ 92 LIST OF TABLES Table 1: Key Information........................................................................................................