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Bulgaria - Power Generation

SUMMARY

Bulgaria, a former communist country poised to enter the European Union, has experienced macroeconomic stability and strong growth since a major economic downturn in 1996 led to the fall of the then socialist government. As a result, the government became committed to economic reform and responsible fiscal planning. Low inflation and steady progress on structural reforms improved the business environment; Bulgaria has averaged 5% growth since 2000 and has begun to attract significant amounts of foreign direct investment.

EU Pre-accession Financial Assistance to Bulgaria

The European Council of June 2004 expressed the hope that Bulgaria is ready, and accession talks started in October. Accession negotiations with Bulgaria have now been completed in all subject areas. It is anticipated that Bulgaria will be welcomed into the European Union in 2007 as a new member state. In its 2004 Regular Report, the European Commission reiterated its recognition of Bulgaria as being a functioning market economy (first recognised as market economy in 2002). Furthermore, the 2004 report concludes that Bulgaria should be able to cope with competitive pressure and market forces within the Union.

The EU Financial assistance remains significant in supporting Bulgaria’s accession process. It helps Bulgaria to prepare for membership and is also a key indicator of Bulgaria’s readiness for membership and for handling the increased volumes of EU funding that come with it. The EU raised the amount of financial assistance to Bulgaria by an average of 30% in the period 2004- 2006. Bulgaria receives around € 400 million per year reaching 2% of its GDP. The EU pre-accession aid to Bulgaria is mainly provided by three instruments: The PHARE Programme, ISPA and SAPARD.

The other EU institution that is actively involved in Bulgaria is the European Investment Bank (EIB), whose action is co-ordinated with the PHARE programme, as well as with EU Member States’ financing institutions and with the European Bank for Reconstruction and Development (EBRD). The activities of the European Investment Bank in Bulgaria started in 1991, and since then the EIB has granted over € 1 billion to priority projects in the country. The European Bank for Reconstruction and Development (EBRD) is investing in a considerable number of projects in Bulgaria supporting private sector development in energy, telecommunications, banking, agriculture and general industry with cumulative net commitments to Bulgaria for the period 1991 to 2003 totalling € 848 million. In 2003, EBRD commitments to Bulgaria in support of private sector development amounted to € 240 million.

Bulgaria Energy Market

Bulgaria is the largest electricity producer among the South East European countries and a net exporter of electricity. The maintenance of the power generating systems has deteriorated over the past years and some generating units have ceased operation. Much of the equipment in generation, transmission and distribution systems is outdated and extremely inefficient.

Rehabilitation and renovation of the electricity generating capacities have become a priority task for the government of Bulgaria. This strategy reflects the changes in the following aspects: transformation of the energy sector into a part of dynamically integrating energy market, increase of the Bulgaria’s energy competitiveness on the regional Balkan market, as well as the regulatory body takes its dominating position among the energy institutions. The overall energy policy includes: demonopolisation and deregulation, privatization and incorporation of energy enterprises, and a significant ten-year plan for the reconstruction and development of energy generating and transmission capacities of the country with estimated cost of over € 7.4 billion. It is important to note that all receipts from privatization of energy enterprises will be reinvested into the sector.

Bulgaria's economy is currently in transition moving from central planning to a market driven economy. At present, the energy sector is characterized by:

• Problematic, highly inefficient power supply units
• Inefficient and ineffective system of subsidies for heating and electricity
• Outdated power generation assets that consist of previously imported equipment
• Intensive use of indigenous coal in thermal power plants
• High energy consumption level per capita

Bulgaria is the main exporter of electricity in the region (46%), followed by Romania (28%) and Serbia (22%).

Bulgaria initiated the restructuring of its power sector in 2000. It was reorganized into seven independent power generators (six thermal power plants and Kozloduy NPP), seven distribution companies, and a transformed National Electricity Company (NEK). NEK retains some hydropower stations, and is the primary grid operator and only supplier of power to distributions companies. NEK is responsible for electricity transmission, and being the system and market operator, it’s monopoly as a buyer and seller will end in 2007. Starting in July 2003, the domestic power market was partially opened to competition (10 % of total demand).

Decommissioning of old capacities and renovation will continue to fall behind the modernization requirements and will be based on specific regional allocation of fuel and energy resources. In the long-term the share of nuclear power generation will decrease, while fossil thermal generation's share will increase significantly and hydroelectric generation will face a somewhat higher increase.

The electricity sector in Bulgaria is under a process of transition from a monopolist structure to a competitive energy market in order to ensure safety in electricity supply, quality of electricity supply, efficient use of fuel, direct market relations between producers, energy/services suppliers and customers. The energy strategy envisages financial restructuring of the state-owned energy companies and their speedier privatization. (There are a total of 104 state-owned energy enterprises, of which 77 will be privatized).

Bulgaria’s electricity market will be introduced gradually by granting electricity generators free access to the transmission and distribution network (so called third party access) and to contract freely with eligible end-users. The first stage of restructuring is to introduce competition among generation companies (suppliers) and give eligible consumers the rights to choose their supplier. In the next stage, a spot market will be set up as well.

The Introducing an open electricity market in Bulgaria will have the following objectives:

• Cost reduction and limited future price increases
• High reliability and quality of electricity supply
• Transparent and fair allocation of market benefits

Bulgarian demand for equipment and services that are related to the energy sector is expected to witness a significant increase over the next years. Some of these increases will be linked to the above-mentioned restructuring/privatization programs.

Market Profile

Bulgaria is part of the United Energy System of Europe. The available installed capacity of the country in 2003 was 9,515 MW. Bulgaria had a total installed generation capacity of 12,331 MW, consisting of thermal power plants – 6613MW (53.6%), nuclear plant – 2880 MW (23.4%), hydro-power plants –1974 MW (16%) and pumped-storage hydro power plant – 864 MW (7%). The available capacity of the existing power generating sources is considerably lower than the installed capacity. For the period 1990-2003 the electric power demand varied with an upward trend observed in the country after 1998. Industry was the major consumer with relative share of 56% in the net electricity demand in 2003 and it showed a trend of growth. The relative share of nuclear power plant in the total net electricity output is 41.9%. The share of thermal power plants is 49.6% and that of hydro power stations is 8.5%. There is one nuclear power plant in Kozloduy. The most significant coal-powered facilities are 2,940 MW Maritsa East 1, 2 and 3 power plants in the vicinity of the Maritsa East mines.

In 2004 Bulgaria produced 41,586 GWh of electricity. About 5,449 GWh of electricity were exported to the neighbouring countries (Macedonia, Albania, Romania, Moldova, Greece, Serbia, Kosovo). For decades, it has been very common for Bulgaria to export electricity to Turkey and Greece for hard currency.

Bulgaria is a member of the Union for Coordination for Transition of Electricity (UCTE), which allowed the electric systems of Romania and Bulgaria to be fully integrated into the largest synchronously operating power system of Europe. Approximately 450 million people in Europe take advantage from the high reliability and the security standards of such a wide synchronously linked power grid.

Most of the equipment for power generation in Bulgaria was produced in Russia, other parts of the former Soviet Union and by Soviet trading partners in Central and Eastern Europe. The physical condition of the thermo and hydro power plants, as well as the district heating utilities have deteriorated to an extent that makes it difficult to maintain reliable operation and develop a responsive regional wholesale power market without significant investment to rehabilitate the infrastructure. The current technical state is inadequate for modern metering and measuring, telecommunications, instrumentation and frequency control, information systems and management, and supervisory control and data acquisition.

The facilities require rehabilitation with more efficient and environment-friendly equipment, so that they can operate at their design capacities. There are currently no manufacturing facilities in the country for the production of equipment used in power generation and transmission.

Bulgaria's energy sector is dominated by nuclear power and imported fossil fuels. The energy balance for the country shows that more than 70 % of the energy consumption is based upon imported fuels. The rest of fuel consumption is mainly coming from low-grade coals and limited hydropower generation. Due to the geographic location and the geologic conditions, Bulgaria has a number of potential sources for renewable energy (solar, hydro, biomass, geothermal and wind energy). Low-grade coal deposits account for most of Bulgaria's currently exploited energy supplies. Large-scale hydropower accounts for nearly 7-8 % of all electricity generation. Bulgaria's nuclear plant accounts for between 40-45% of all electricity supplies, depending upon the availability of hydropower and on demand.

The Balance of Energy Resources in Bulgaria

KTOE - (thousand tons of oil equivalent)

Despite its sizeable fossil fuel reserves, Bulgaria has become a net-importer of crude oil and gas due to obsolete equipment and a slow-down of investment in exploration and production of coal.

Oil and gas exploration opportunities in Bulgaria are widespread since most of the present production is shallow and deeper horizons are under-explored even in the old producing areas. Modern technologies for exploration and field development are expected to make the Black Sea area an attractive exploration target.

The whole economic and technical operation and development of the electricity sector is regulated, ruled, supervised and monitored by the State Energy Regulatory Commission (SERC), set up by an Ordinance, in October 1998, as a public institution, independent and autonomous.

Electrical Power Generation and Transmission Equipment

The available capacity purchased by NEK in 2002 from independent producers amounted to 31222 GWh out of which: NPP Kozloduy – 18800 GWh, condensed type power plants - 9583 GWh, DH plants – 1538 GWh and HPP – 280 GWh.

NEK annual sales for 2002 were 35 114 GWh and grouped as categories as follows: electric distribution companies – 23777 GWh (67.43%); HV customers - 5269 GWh (15%); trade export – 6168 GWh (17.57%).

In the beginning of 2002, NEK EAD was the owner of 64 hydro power plants with 2 729 MW total installed capacity. During the period 2002 – 2003 twenty-one hydro power plants were privatized. The fourteen largest of these hydro power plants operate within four cascades: Belmeken-Sestrimo-Chaira, Batak, Vacha and Arda, all used to generate electricity, cover peak loads and regulate the parameters of the electric power system.

The Ministry of Energy recognizes the national priority of preserving and increasing the market presence on Bulgaria in the regional electricity market as well as the general trend of emerging European market -moving from opening of individual markets towards trading between and among open markets.

Bulgaria’s electric power transmission network consists of transmission lines of 750 kilovolt (kV), 400 kV and 110 kV, step-down substations, medium and low voltage distribution networks that supply the industrial, public and residential customers; transformer stations, and nodal substations, and installed medium voltage transformer capacity. The system of 400, 220 and 110 kV lines, which have a total length of about 12,269 kilometres, operates in a ring mode. The inter-system transmission line of 750 kV from Varna to Isakcha to Yujnoukrainskaya nuclear power plant and the inter-system transmission line of 400 kV from Dobrudja to Vulkanesht are presently in a reserve status.

In May 2001, Bulgaria moved to increase the linkage of its electric system to Turkey's by starting the construction of a second 400 kV cable to Turkey. It is estimated that the 42-mile link will cost € 35 million.

Bulgaria’s nuclear power plant is based on Russian technology. The national power plant Kozloduy is in charge with nuclear electricity generation. Nuclear electricity generation will remain state owned. For the past decade, Kozloduy NPP has been providing 44-46% of the total average annual generation of electricity in of Bulgaria.

The Bulgarian energy covers about 45% of the constant deficit in the overall energy balance of the Balkan region, which is assessed as a significant contribution to the economic stabilization of the region.

Nuclear power has a major contribution in satisfying the needs for electricity of the economy and population on the national and regional level. It guarantees a minimum risk in terms of the supply of energy sources and maximum economic effect in the long run. Its reliability is very high and is not affected by meteorological conditions.

Implementation of the planned arrangements for safety upgrading within the declared timeframe, the achievements made in bringing the operational safety of the existing nuclear facilities into compliance with the internationally accepted standards, assessment of the safety level by the regulatory body of Bulgaria and international verification on the part of the IAEA with regard to the meeting of the recommendations made for the solution to the safety problems encountered in 1991-1992 provide grounds for the conclusion that VVER-440/V-230 units are subject to modernization at an acceptable cost.

Accordingly, the market of this natural resources poor country has significant potential for the EU firms with the advanced business experience in the energy sector industries. The best prospects list of equipment needed in Bulgaria consists of steam generating boilers; central heat boilers, auxiliary plant used with boilers, condensers steam turbines and other vapour turbines, gas turbines, valves, pumps for liquids, parts of electric motors, generators, sets, electric generating sets and rotary converters, electric motors and generators.

Oil & Gas Industry and Equipment Market

Production of natural gas in Bulgaria is negligible (less than 1 percent of total consumption, although due to rise to 7 percent when Galata offshore field comes on stream). Natural gas accounts for less than 20 percent of energy consumption.

There have been considerable efforts in Bulgaria over the years to explore for oil and gas, but Bulgaria still lacks modern exploration and production technologies, especially equipment for seismic testing and offshore drilling. To encourage exploration, the government has signed agreements for large tracts both in and around the Black Sea.

Over the past decade, average oil production in Bulgaria has been 1,000 barrels per day (b/d). Crude oil imports have been more than 90,000 b/d while imports of refined petroleum products are more than 13,000 b/d.

The underground gas storage capacity will continuously increase and after 2000 the gas quantities extracted from deposits during winter represent about 10% of the consumption.

The Galata deposits on the northern Black Sea coast are the only known gas reserves in Bulgaria. They are estimated at 1,44 bcm and provide 0,4 bcm annually, or 13 % of the annual domestic consumption. The utilization of natural gas has been traditionally very low in Bulgaria and low-pressure supplies and household gas consumption facilities are practically non-existent. Only 28 companies represent 78 % of the gas consumption in Bulgaria.

There are currently two pipeline projects in Bulgaria, intended to serve as by-pass conduits to carry Caspian oil to the Mediterranean without having to transit the Bosporus. Both projects originate at Burgas, but one will transverse the Balkan Peninsula across Bulgaria, Macedonia, and Albania to the Adriatic port of Vlore. The other project will go southward to the Greek port of Alexandropolis. Bulgaria and Greece signed an agreement for this project in January 2003.

The market for oil and gas equipment, tools and services is entirely supplied by foreign firms. In this environment, the total value of required trunk pipeline material and equipment, compressor stations, telecommunications equipment and technology, computer and communications hardware installations and related to them services will be significant.

The medium-term government priorities in the gas sector should be focused on:

• Expanding the facilities for transit transmission to Bulgaria’s neighbouring countries
• Development of the emerging market for low-pressure natural gas as a way of mitigating the impact of coal heating
• Prospecting and developing the local hydrocarbon reserves.

Refineries

Neftochim is the refining company which operates the large 134,000 b/d oil refinery near Burgas and has 85% of the market for refined products in Bulgaria. Since October 1999, Neftochim refinery at Burgas has been 58% owned by the Russian giant Lukoil, which paid €101 million for its share. As part of the deal, Lukoil committed to upgrade the refinery and meet environmental standards. A parallel investment in petrol station chain worth around €18-20 billion has been launched in 2000.

Coal

Twenty–two enterprises currently exist in the coal sector. Thirteen operate in coal production, reprocessing and sale; six are in the process of liquidation; and three are in bankruptcy. The thirteen coal producers utilize twenty-on coal mines, with three on the ground and the rest underground. The coal is used for electricity generation and for production of briquettes in the TPPs and a briquette factory next to the mines. These mines produce over 80 percent of the coal produced in Bulgaria, which in turn, is used to generate almost 40 percent of the country’s power.

Renewable Energy Sources (RES)

As a result of the last years of economic transition process to a market-based economy, the energy market is gradually opening up. Bulgaria is using the most electricity per capita among the EU pre-accession countries despite of its lowest GDP per capita. This process, in combination with the largely untapped potential for some renewable energy sources (biomass, solar, wind), offers some interesting perspectives for green energy. The government’s policy is towards ensuring rational use of indigenous and imported energy supplies, existing energy systems and other resources in the energy sector. Bulgaria is using least cost tools in order to set the priorities for future capacities for energy supply. With respect to the long-term potential of renewable energy in Bulgaria, the Ministry of Energy and Energy Resources estimates a potential supply of 5% from renewables (including hydropower). At the moment, it is only 0.4%. The total rural population, together with the urban population living in medium-sized towns will be considered as the primary market segment for RES applications.

The renewable energy sources (RES) theoretical potential in Bulgaria is considerable. According to the PHARE Project Report data, the RES potential is evaluated to 14387 J/year for geothermal energy; 77156,7 J/year for solid agricultural waste; 478,4 J/year – biomass from paper waste; 9605,2 J/year –biomass from wood for heating; 79,8 J/year –biomass from natural fibbers; 11381,83 J/year –liquid agricultural waste; 25766 GWh/year – big and small HPS; 1450-1500 kWh/m year – solar radiation.

The geothermal and wind energy sector’s potential is considered the highest, while larger-scale utilization of solar and biomass energy may also be attractive as soon as the government develops its subsidy program and conventional energy prices continue to increase. There are no wind farms in Bulgaria, although recent wind analysis shows that wind speeds at certain locations along the Black Sea would justify the use of wind turbines.

The national program on RES in Bulgaria for 2002-2010 includes best prospects for the following renewable energy equipment.

Hydropower

The total capacity of the current small-size hydroelectric power plants amounts to 63 MW and there is a tendency to increase the installed capacity due to the largely available hydro resources in Bulgaria. According to the draft National Program on RES for 2002-2010, there is a potential for small-size hydroelectric plants in the amount of 686 GWh/year. There are 87 hydroelectric power plants in operation in Bulgaria. The total installed capacity is in the amount of 1970 MW which is divided into regions as follows: 143 MW in the Danube region, 0.4 MW in the Black Sea region and 1826 in the Aegean region. These are mainly large-scale hydro power plants. There are opportunities for construction of some large scale hydro power plants along the Iskur River, the Maritza River and the Struma River. However, small scale units are considered more attractive. There are 20 reservoirs in Bulgaria which can also be used for utilization of hydro power.

The most promising application and priority under the current situation is the refurbishment of a number of small hydropower (SHP).

Wind Energy

Individual experiments revealed that there are regions in Eastern and South-Eastern Bulgaria (near Kavarna and Sliven) where wind speeds and the stability of wind directions can support the construction of wind farms. The wind energy potential of Bulgaria is not to ignore, a claim which is supported by the preliminary results of wind speeds. Bulgaria has no essential installed wind power capacity or local manufacturing capacity of wind turbines. All areas with good conditions for wind energy utilization can provide a potential wind energy capacity of 484 MW, which corresponds to 78 m toe per year. The most suitable parts for wind energy utilization are concentrated in Central Bulgaria, Kavarna, to the south of Vratza and the South-Eastern parts of Bulgaria. The most economically feasible option would be to construct wind farms in the plane parts of the country where the average wind velocity is more than 6 meter/second.

With regard to the wind energy there are two main fields of applications:

• Grid connected applications on a strictly commercial point of view. The future of these applications depends on the changes of the Romanian cost structure for conventional power generation and/or provision of subsidies.
• Supply of isolated remote area. If there is a political commitment to supply these isolated settlements (i.e. public funding) small wind turbines are an economically attractive alternative in connection with small diesel generators and PV system, where wind resources are sufficient.

Biomass

Biomass, in the form of firewood, accounts for 80 percent of Bulgaria’s renewable energy production. The high share of firewood in the renewable energy balance reflects the relative under-development of the sector. The components of biomass as an energy resource are the following: wood waste, wood processing and timber industry waste, agricultural waste, animal waste and meat processing industry waste, as well as solid waste and certain species of plants. Bulgaria has serious amounts of biomass. Currently, the production of briquettes is developing very fast. This trend is fostered by the low price of the briquettes making. There are more than 10 facilities for briquettes production. They use mainly wood waste and very little agricultural waste for production of briquettes. The amount of agricultural waste in Bulgaria is estimated to 7.4 million tons per year of which 3.6 million tons of wheat waste, 0.8 million tons of barley waste, 2.4 million tons of corn waste, 0.6 million tons of sunflower stems). Wood waste amounts to 1.1 million tons per year. The experts believe that there are opportunities to build more facilities for production of briquettes with a capacity of 0.6 ton/hour. The EU SAPARD program and the National Environmental Fund cam provide financial assistance for such projects.

The applications for biomass can be grouped into the following main market segments:

• substitution of part of the fossil fuels in existing district heating schemes (wood chips)
• enhanced uses of biomass as industrial fuels (wood chips and logs as industrial fuel for steam or hot water boilers) instead of oil
• improved uses of biomass for new district heating schemes for small towns and villages near the resources, in the countryside, where the population has no access to central co-generation or gas supply
• uses of straw and other agricultural by-products in appropriate biomass boilers for heat supply of farms and small villages (in the medium term).

Geothermal Energy

Bulgaria has more than 137 geothermal sources. More than 50 geothermal sources, interesting from a thermal energy point of view, have been registered and the total thermal capacity freely flowing geo-thermal waters is estimated to about 488 MW. Currently, Bulgaria's geothermal waters are used mainly for health and recreative applications, though bottling and household heating use of some sources take place in Kyustendil, Sapareva Bania, Momin prohod, Velingrad and Varna.

The applications for geothermal energy can be grouped into three main market segments:

• market for district heating for urban areas and possibly for villages
• market for thermal applications within the primary, secondary and tertiary sectors
• market for power generation connected to the grid in case of high enthalpy sources.

According to the discussion on economic potentials, the top priority is the use of geothermal sources for thermal applications:

• mainly in existing district heating supply system in the cities nearby the geothermal fields and in new DH schemes for smaller towns and large villages
• thermal applications for industrial or agricultural uses.

Solar Energy

The geographical layout of Bulgaria makes the country suitable for solar energy utilization. Over 80% of the territory of Bulgaria is suitable for utilization of solar energy. Currently, mainly residential and smaller-size commercial solar energy heat collectors and very few photovoltaic modules utilize a symbolic percentage of the total potential. The main obstacle is the relatively high initial investment in solar energy utilization equipment.

There is a greater potential for the use of conventional thermal solar panels, which are available from several local manufacturers. Traditional solar panels are sold mainly for the construction of hotel and commercial building projects for hot-water supply.

Key Sectors

Key sectors are related to co-generation equipment, revamping of coal based power plants; revamping of Russian built 200 Mw boilers/turbines; commissioning of un-finished hydro power plants, Instrumentation, control devices, SCADA systems, software, services (such as ESCOs); equipment for electricity distribution; modernization of refineries, crude and gas pipelines as well as distribution of oil products and gas.

Energy products made by enterprises subordinated to the Ministry of Energy and Energy Resources account for a small proportion of them. This goes to show that Bulgaria is extremely energy dependent and has an extremely high-energy intensity, exceeding that of all countries of Central and Eastern Europe and all EU applicant countries. The perception of the quality imported products in general in Bulgaria is excellent.

Exporting companies could take advantage of the Bulgarian determination to rehabilitate the energy sector by selling licenses, know-how and special equipment to existing power equipment manufacturing facilities. These firms could also take advantage of Bulgaria's low wages and skilled labour force by forming joint ventures or signing other types of agreements with these plants to produce higher quality/lower priced equipment to be sold to local power facilities or third countries.

Well-qualified expertise and capability exists in Bulgaria for export of consulting and engineering services for all types of projects in the energy sector.

Domestic Production

Energy products, spare parts and equipment made by local private companies and enterprises subordinated to the Ministry of Energy and Energy Resources account for a very small proportion of resources. This goes to show that Bulgaria is extremely dependent on imported power equipment, devices and machinery and has an extremely high-energy intensity, exceeding that of all countries of Central and Eastern Europe and all EU applicant countries. Much of the equipment for the local power industry is manufactured in Russia. Bulgaria does not have its own domestic power generation equipment industry.

Another category of equipment manufactured locally is not up to international standards. These items will have to be imported anyway. Competition could come only from other western companies. The list of this equipment and materials is as follows: nuclear equipment; power plant control systems and instrumentation; installations for solid, liquid and gas fuel handling or parts of such installations (such as special pumps, special compressors and high pressure fittings); high and medium voltage breakers; special high voltage transformers and insulated cells as well as parts thereof; conductors and electric insulators; ionic masses; special high alloy steel plates and bars; Ferro-alloys and other special materials.

3rd Country Imports

Much of the equipment and technologies now in place in the Bulgarian factories is European origin, purchased in sixties and seventies. The Bulgarian import market for equipment related to the energy sector is dominated by German, French, Italian companies.

Investments and Projects

In 2002 and 2003, NEK invested in projects and sites of significant importance in order to ensure reliable and quality supply of electricity and reduction in power transmission and transformation losses. The investments made were mainly for rehabilitation and modernization of power transmission and hydropower facilities needed for the interconnection of the Bulgarian power system to UCTE. The investment policy of the National Electric Company renders priority to the construction of new interconnection lines in order to increase the export and transmission capabilities. NEK investments for 2002 totalled to € 60 million.

Bulgaria supports the development of significant energy projects under the EU initiatives and related to the regional energy market. In 2003, the National Energy Strategy was endorsed by the Council of Ministers having the following main priorities:

• Security of supply
• Competition in the energy sector
• Environmental protection
• Privatization and liberalization
• Establishment of a competitive energy market

The Bulgarian energy is to be regarded as a part of the rapidly integrating market and as a close system. Compatibility is to be regarded as a major mark in the energy policy and the regulatory body is to take its dominant place among the energy institutions through active measures in formulating market and administrative rules. The main principle of the strategy is Bulgaria to preserve its potential for exports of energy products through utilization and improved efficiency of the energy facilities. The strategy objectives are to curtail the role of the State as an administrator and to create transparent conditions for business in the energy sector, as well as to protect the public interest.

Distributor and Business Practices

A long-term strategy with a qualified Bulgarian partner is recommended, as are experienced country managers with Central European or other developing country experience. Also recommended is that contacts be made with industry and Government. Participation in Bulgarian trade shows, presence in demonstration projects is highly recommended. Other important strategies could be buying a local firm and using its projects as a base, committing to after-sales service.

The most effective way to enter and operate successfully in the Bulgarian market is to work through local distributors who provide quick customs clearance and have good knowledge of specific local conditions. Agents and distributors can contribute importantly to an EU company’s success on the Bulgarian market. Fortunately, well-qualified candidates exist in Bulgaria. Bulgarian specialists are educated, have a good understanding of technical matters, and, with a minimal training, can rapidly master new marketing techniques.

Another way of gaining access to the local market is by working through representative office located in Sofia. At the initial stage of market exploration it is not always practical for foreign companies to open additional offices in the major cities. It is a common practice to have sales representatives travelling throughout the region.

The Government of Bulgaria generally welcomes joint-venture initiatives. This form of doing business in Bulgaria can allow the foreign company to have a range of preferences, such as exclusivity, tax incentives and other benefits. Large investment projects, approved and guaranteed by the government, create great opportunities for the export of machinery, equipment, parts, materials, consumables as well as a technical assistance.

Government procurement is defined as use of central or municipal budgetary or other funds by the central governmental, municipal institution/ agency, or another entity. The intended contract can be for the purchase, supply, transportation, rent, lease, manufacturing, assembly or maintenance of personal property or real estate; for the provision of services; and for the study, design, construction, or improvement of property.