PM Glavchev’s Caretaker Cabinet Acts to Preserve Coal Power Plants Until 2038

The exact nature of these changes will be revealed by September 11, when the finance minister is expected to submit the proposals to the Council of Ministers. By July 31 the ministers of finance and energy are required to brief members of parliament on the proposed changes and the progress of negotiations with Brussels.

The decision for yet another change to the RRP comes amid Bulgaria's ongoing struggle to receive the second payment under the plan amounting to approximately 1.4 billion levs (715.8 billion euro). The request for this payment was submitted nearly a year ago, but progress has stalled due to the country's unfulfilled commitments. Bulgaria's pending tasks include completing key reforms in the judicial system, including changes in the energy sector related to the liberalization of the wholesale electricity market and the closure of coal-fired power plants.

Unfortunately, not only judicial reform seems unlikely to be completed soon amid the ongoing political crisis but what has been accomplished so far is likely to be overturned by the Constitutional Court. The changes now requested by the caretaker cabinet appear to be another nail in the coffin of the plan.

Smoke and coal

Over a year ago, the parliament mandated the government to renegotiate the RRP, with one of the main points being the continued operation of coal power plants until 2038. However, it is unclear how this change will be achieved, given that the electricity they generate is almost entirely uncompetitive due to high carbon quota prices. The only exception is during atypical consumption periods, such as when heatwaves and high consumption drive prices to their highest level, allowing otherwise costly coal-fired power plants to operate profitably.

At the end of last year, Bulgaria managed to secure 1.2 billion euro from the EU for the transformation of its coal mining regions. The fundingwas at risk due to significant delays in submitting transformation plans to the European Commission. With this funding, the country must provide alternatives for those employed in the coal mines and plants and attract investments in the green economy. However, there are currently no concrete measures, and most employees in the plants do not show a desire to change professions or even retrain.

Discussions about delaying the phase-out of coal are interesting against the backdrop of yet another snap parliamentary election in the fall. Just a few months ago, before the June general election, the parliament decided that state-owned Maritsa East TPP should receive subsidies totaling 1 billion levs over four years for "reclamation of affected areas." Meanwhile, the adoption of a Roadmap for Climate Neutrality, which outlines the intended reduction of coal capacities year by year and is required to unlock the second tranche of payment under the RRP, was postponed. Another key reform, essential for receiving RRP funds-the liberalization of the wholesale power market-was also frozen for a year.

Goodbye, EU funds

At the end of April, it became clear that Bulgaria was on the verge of forfeiting billions of euro from the EU due to uncompleted work on key reforms. The changes could unlock 5.7 billion euro under the RRP but the funds might never reach Sofia. The reasons are complex but mainly boil down to a lack of political will by a caretaker government to implement much needed comprehensive reforms across various sectors and a lack of understanding of the critical importance of RRP funds for the country's economy.