The week: Some good vibes for Christmas; Lukoil suddenly is very cooperative; The curious case of Bulsatcom

The week: Some good vibes for Christmas; Lukoil suddenly is very cooperative; The curious case of Bulsatcom

Last K Insights newsletter for 2022

© Manol Peykov

I know. It's the pre-festive season, which is the most hectic time of the year.

Which means you're probably head deep into the almighty rush for presents, deadlines and traffic jams. So I won't bore you with anything work-related. I just wanted to use our last newsletter of the year to remind you it's also the season of light.

And since this is a business feed (or at least we try to be, most of the time), I will be concise and to the point in bringing you some of that light.

Amongst all the deadweight-talk about how awful things are going and what a horrible situation we're in, let me offer some clues why I actually think we're doing rather OK. Think of them as small Christmas presents to keep your spirits up.

  • We're actually good people.

    Manol Peykov, a burly Plovdiv businessman and his small band of cooperators, will probably manage to top 1 million levs in their campaign to send electricity generators to Ukraine. They had acquired more than 220 generators (some of them pictured above) which are going to keep the lights and heat on in tens of Ukrainian homes, schools and hospitals. This is all done through the FB profile of Peykov and to put it in perspective: the official financial help the Bulgarian state offered last month was 200 thousand levs. So, one more reminder that we're better than we think and what the media tell us we are.
  • The year was not as half bad as they say
It was predicted to be a hell of a year. War, inflation, people freezing in their homes and Bulgaria going to be brought down to its knees. There are people in this country who need help and we definitely need to do more in this regard. But hell on earth? It surely isn't. Gas keeps on coming, energy prices are going down, inflation is slowing and unemployment is record low. None of the indicators is flashing red. As you can see below, the report from the biggest company on the market - Aurubis Bulgaria, actually shows the economy has been gaining pace, rather than slowing. There is still time for that to take hold but we should be careful in our use of words. The one exception I'd like to underline, are the restaurants - especially in Sofia and Plovdiv. Their prices have gone completely mad and nothing can justify them. And despite that, they are still packed to the limit.
  • There are good ideas on the ground
  • Citylovers competition, which we do for a second year in a row, provided plenty of examples. Take the case Petar Parchevich technical school in Rakovski, which is going to build a wind generator with the help of its students and motivate them to think and work towards energy-generation ideas. Or the landscape architect in Plovdiv producing a guide on how to take care of trees in a city environment - the first such book in more than 30 years, crucial to any municipality. Plenty more are waiting to be discovered and supported (if you feel like doing so, contact me on [email protected] as I'm looking for more partners for the competition for next year - to try and give more money & support to active local groups in their effort to fix their cities).
  • Kids are alright (mostly)

    I know, every generation thinks the next one is stupid, uncaring and mainly lazy. But just look at the scores Bulgarian students achieved in STEM-disciplines in international competitions (the link is to an FB profile but I think it is legit)

  • I'll stop here. My point is, of course, there are plenty of things going wrong in this country. Believe me, I still think the prosecution service should be closed, reformed and opened anew. I still think (most of) the politicians are a useless bunch of name-screamers and do-nothings.

    But life is bigger than that. As a Romanian friend told me this year "I want my country to start dreaming of other things, instead of how to deal with corruption". I couldn't agree more.

    I wish you a wonderful holiday season, warmth & joy with your families, and stay safe and optimistic. See you in 2023.

    This newsletter is helped by

    Martin Dimitrov & Monika Varbanova

    POLITICS this week:

    New Year, new mandate

    The other thing we will return to next year will be the fact that we still don't have an elected cabinet. President Rumen Radev announced this week that he is planning to give the second exploratory mandate to form a government to the premier-designate of We Continue the Change, Prof. Nikolay Denkov, in the week starting 2 January.

    It seems like all hopes for a better luck with the second attempt to pass a cabinet through the National Assembly would be vain. WCC and their "natural" partners from Democratic Bulgaria only have 73 MPs and they can hardly rely on their ex-partners from the Socialist Party of Kornelia Ninova. Even with her help, getting a cabinet approved would be impossible - and WCC's leaders Assen Vassilev and Kiril Petkov know that.

    New elections, most likely

    And while there might be some wild speculation about the way the third mandate could be used to form a coalition between GERB, MRF, BSP and Bulgarian Rise, it looks like science fiction now. So strap on for yet another early election next year or maybe even two, who knows? You can read KInsights' musings about the next year in politics on the first working day of next year.

    Bulgarian weapons on the way. To Ukraine

    The wind of change might have started blowing in the Bulgarian Presidency after Parliament decidedto send military aid to Ukraine, and the icy relations between Mr Radev's caretaker government and the Ukrainian authorities have started to thaw. On Tuesday, Bulgarian media learned that Defence Minister Dimitar Stoyanov had been on an official visit to Kyiv at the invitation of his Ukrainian counterpart Oleksiy Reznikov. And, as everybody probably guessed, the reason was our country's upcoming military aid to Ukraine.

    The visit has been a surprise to many familiar with the lackluster stance on the Russian invasion taken up by Mr Stoyanov's former boss, President Radev, who had said that the annexed Crimean peninsula "is Russian at the moment" and that "Russia will win this war, but it is very difficult for it to win the peace."

    Now, Mr Stoyanov has used a completely different rhetoric: "Bulgaria firmly supports the sovereignty, independence and territorial integrity of Ukraine within its internationally recognised borders. Our country does not recognise the annexation of sovereign Ukrainian territories." He added that since the beginning of the Russian aggression our country has given Ukraine humanitarian aid in the amount of 448 million levs (230 million euro) and the defense ministry has already provided the Ukrainian army with 2,000 helmets and 2,000 bulletproof vests, 350 medical kits, 5,000 pairs of winter boots and 5,000 winter uniforms.


    Lukoil pays 90 million levs of tax in advance

    Oil refinery Lukoil Neftochim Burgas has paid upront 90 million levs in tax on its windfall profit, Deputy Prime Minister Hristo Alexiev told public radio BNR on Wednesday. This happened after the National Assembly adopted a law that requires state-owned and private companies that have earned extraordinarily high revenues on the back of high energy prices to be taxed additionally.

    Until recently, the oil company paid no taxes in Bulgaria, reporting a loss, but since the beginning of 2021 it has been operating "offshore", which has put it into profit. At the beginning of this summer it was revealed that the company had paid profit tax for the first time in 15 years. There might be more presents from Lukoil, if the parliament approves 1 lev subsidy per liter of fuel at the pump. This is probably going to come from the refinery as well.

    Just a reminder: the ex-head of Russian oil company Lukoil, owns a 150-million-euro estate here

    Vagit Alekperov, a billionaire who is sanctioned in the UK and has resigned as head of the company, is the actual owner of Bulgaria Mall and the two adjacent office towers in Sofia, it has been revealed some time ago.

    Business wants the euro, people don't: poll

    Over half of Bulgarians disapprove of the country's pending accession to the euro area, while almost 65% of the representatives of the business are in favor of the single currency, according to a survey conducted by Alpha Research for the Ministry of Finance among 1,200 respondents and 500 companies. Only 32.8% of the surveyed citizens approve of Bulgaria joining the euro area, while a solid majority of 64.3% of business directors did so, of which 46.7% - strongly. Only 18% of company representatives said they do not approve of euro area membership at all.

    According to the survey, people mostly fear a potential rise in prices of commodities and utilities (68.7% of respondents), fraud or increase in inflation (about 55% of respondents) and 31% say the change of currency would result in a "loss of sovereignty."



    Thousand euros was the median salary in the EU in 2021, while in Bulgaria it was 10.3 thousand. It is still growing fast here, mind you.


    VAT will apply to newspapers and magazines, Parliament decided. This adds to another year of lower VAT for restaurants, sport venues and books. Bread and dough will get 0% VAT in 2023.



    Aurubis Bulgaria

    The Pirdop-based copper plant which was the biggest company by revenue in the country in 2021, had an amazing year, its financial report shows. The company added over 100 million euro to its profit, hittting the 232-million-euro mark in the nine months to end- September



    The newcomer in the field of honey-based power gels placed around 241 thousand shares in an IPO on the stock exchange in Sofia, raising a little over a million levs. This is only half of the target amount, but still above the half-million-levs mark the company put as a low bar.


    Bulgaria to sign a gas deal with Turkey

    By the end of the year Bulgaria will sign a long-term contract with Turkey for natural gas supply, caretaker Minister of Energy Rosen Hristov told Nova TV on Tuesday after meeting his Turkish counterpart over the weekend. He added that the contract would be for 1 bcm of natural gas, which represents about 30% of Bulgaria's annual consumption, and will be in force for 13 years. The energy minister also said that the prices were very favorable as they included the use of the liquefied gas terminals in Turkey as well as processing and transmission. Bulgaria receives another 30% of the natural gas it needs from Azerbaijan and buys the rest from Greece.

    Bulgarian nuclear plant starts a transition from Russian fuel

    Kozloduy nuclear power plant signed an agreement with the Westinghouse Electric Sweden, for the supply of fresh nuclear
    fuel, thus diversifying away from Russia. The contract has a term of 10 years and will bring enough fuel to cover the needs of one of the two 1000-MW reactors at the plant. The contractor is the European subsidiary of U.S.-based Westinghouse. France's Framatome will probably sign the same agreement for the other reactor, in order to cover the whole amount of fuel for the NPP which Bulgaria imported from Russia until recently. The new fuel is supposed to arrive in 2024, when the current Russian supplies will run out.


    Energy crisis

    The long awaited cap on gas prices has finally been adopted by the EU energy ministers in Brussels this week. The deal includes setting a price cap at €180 per megawatt hour for a three-day period, versus what was initially proposed - €275 per megawatt for two weeks. The markets reacted immediately, with futures on the Dutch exchange TTF falling below €100/MWh for the first time in nearly two months. Meanwhile, the work advances slowly on the EU joint gas purchasing project, after a legislative proposal was agreed upon by energy ministers also this week.

    The EU corruption scandal

    MEP Eva Kaili spoke in the Belgian court on Thursday awaiting trial on corruption charges. The corruption scandal has actually exploded - European Commission President Ursula von der Leyen launched an urgent inquiry into her 26 commissioners' links to former EU migration chief Dimitris Avramopoulos, who has been caught up in Qatargate.

    War in Ukraine

    The European Commission has announced that it intends to issue up to €80 billion of long-term EU bonds in the first half of 2023 under its unified funding approach to support Ukraine in the next year. This initiative was made possible after the approval of the Hungarian Recovery Plan and the deal with Victor Orban on the amount of frozen cohesion money for the country. Before that, the Hungarian prime minister was threatening to veto the joint debt for Ukraine.


    The UK Home Office is acting unlawfully by removing residence rights from EU nationals if they fail to apply twice for the right to stay in the UK after Brexit, a senior judge has ruled. The initial decision was putting under risk the stay of millions of Europeans in the UK from 2023 onwards.

    Watch out for:

    People: Ivo Prokopiev

    After a decade-long legal battle, the businessman and co-owner of Economedia, KInsights' publishing house, won a case against the Prosecutor's Office for damages arising from the illegal accusation of money laundering in the case linked to the sale of the Kaolin mineral extracting and processing company.



    Here is a tricky story. Two of the main telecom groups in Bulgaria - A1 and Yettel - filed motions in the anti-monopoly committee, claiming that the third - Vivacom, is secretly establishing control over the largest pay-TV services provider in the country: Bulsatcom. The way this is happening, they point out, is through a loan that United Group (owner of Vivacom) provided to media mogul Spas Rouseff, who then bought Bulsatcom for more or less the same amount - a little under 127 million euro. Now Vivacom is establishing control over the network of Bulsatcom - a fact they admit. It's hardly fair competition if the biggest Internet services provider is controlling the biggest pay-TV services provider and the regulator fails to notice, say A1 and Yettel. United Group have not commented and Capital Weekly has told the story in length here.


    Frankfurt Bulgaria's ambassador to the U.S. Georgi Panayotov complained on Facebook that German airline Lufthansa refused to accompany his 12-year old kid from one gate to another at Frankfurt Airport, claiming that Bulgaria was part of the Russian Federation. Is Lufthansa operating on old maps, or do they know something we don't?

    Word of the week: exercise

    A few years ago, amidst the heat of an election day, a journalist asked a Roma man if he has voted. His answer made it into the annals of modern Bulgarian popular folklore: "Iskah, ama nyamah zhelanie", which translates as "I wanted to [vote], but I didn't have the desire."

    This attitude, absurd as it may sound, explains Bulgarians' view on various topics, and the most recent example is sport. According to a recent Trend survey, only 23% of Bulgarians said they do some form of exercise regularly, but a whopping 88% claimed doing sports is important. The main argument cited by 82% of non-exercising Bulgarians is that they have no free time, 26% say they lack motivation and 10% consider it very expensive to play sports. Apparently, Bulgarians are much busier than the Swedes, Danes and the Dutch, where half of the population does at least 150 minutes per week exercising.

    A much more plausible explanation is the awful infrastructure for mass sport, investment in which is still lagging behind in the cities. So that's a New Year resolution: changing city governments and making it easier to do sports. Not a small task.

    I know. It's the pre-festive season, which is the most hectic time of the year.

    Which means you're probably head deep into the almighty rush for presents, deadlines and traffic jams. So I won't bore you with anything work-related. I just wanted to use our last newsletter of the year to remind you it's also the season of light.

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