The week: To leave or not to leave, that’s Lukoil’s question

The saga, which we already described last week, has been going in circles since then, with MRF and GERB trying to be more Catholic than the Pope in their attempts to withdraw the derogation as early as possible. This week, they tried once again to pressure the cabinet to immediately halt Russian oil imports, but it seems that WCC-DB managed to convince them to stick to the 1 March deadline agreed two weeks ago.

Not that it matters too much - the news of Lukoil planning the sale of the Neftochim refinery arrived at the same time as the last tanker loaded with Russian oil - according to industry sources, the deliveries of Russian crude for December had been canceled, with the refinery switching to non-Russian feedstocks, including some Brazilian oil.

Nevertheless, Lukoil has been present here for decades. Its local figures have been known to influence political decisions, while its Russian masters have acquired real estate in Bulgaria.

And while the prospect of eliminating Russia's main money machine in the country might seem exhilarating, it is too early to jump for joy. Optimistic liberal economists already call for the invitation of a strategic Western investor to take over the Neftochim refinery, but one should never forget that it is Bulgaria that we are talking about.

So far, it appears that the potential buyers are Azeri SOCAR, the US Global Oil Management Group, the Cerberus Capital Management Fund based in New York or the front-runner - a still unnamed Qatari fund, the industry sources claim.

Yet another possibility that is not to be discounted is the appetites of certain influential Bulgarian oligarchs with a proven lust for others' businesses. You know who we are talking about.

In the current political environment, dominated by a growingly unaccountable "assemblage" of political forces, everything is possible. And the results might be at least as bad as the status quo.

1. Politics this week:

The never-ending dramas in the "assemblage" of the non-coalition parties that form the parliamentary majority extended beyond the Lukoil dramas. This week, the main reason for bickering between GERB, WCC-DB and MRF was high-level appointments - something that the parties were supposed to do openly, based on merit and not on political affiliations.

Well, this was not what GERB parliamentary head Dessislava Atanassova said in a bTV interview earlier this week, when she announced that each of the three factions will get exactly one third of appointments in regulators. This implicitly meant that all pledges for transparency and meritocracy had gone down the drain and that things are exactly as they used to be during any attempt for a coalition in previous parliaments - each faction is becoming a feudal overlord of a number of institutions and can do whatever it wants with it. Not exactly the change anyone hoped for

The Bulgarian PISA tower is crumbling

This week, the OECD published its biannual educational systems evaluations, known as the international PISA assessments. To no one's surprise, Bulgaria fared very poorly, which caused moral panic and a public outcry over the imminent collapse of the Bulgarian education system.

It is true that the scores of 15-year-old students in the three main subjects: reading literacy, mathematics and science, are again extremely low - roughly at the 2006 level. Thus, it seems that 15 years of alleged efforts to improve and modernize the system not only failed to yield any results, but might have actually made things worse.

Of course, the picture is much more complicated than it seems: first of all, scores have fallen all over the developing world, likely as an after-effect of the pandemic. Secondly, rather than overall collapse, the Bulgarian PISA scores show the growing gap between the top performing schools and the worst ones, which are often segregated and totally left to their own devices. And last, but not least, the results might actually show how little teachers and their students care for yet another test that is thrown at them, despite its importance for policymakers and experts. Of course, this does not mean that the continuous imitation of reform that does not actually care about the needs and interests of students is any good. But we did not need PISA to tell us that.

2. Economy:

Just a month before the end of the year, government finances are behind plans on almost all indicators. The news, however, may not be so bad - spending is so far running further behind target than revenue. And thanks to this, the budget deficit at the end of November is about four times smaller than planned. It amounts to 1 billion levs, or approximately 0.6% of the estimated GDP according to preliminary data of the Ministry of Finance, against the planned 2.5% for the year. The deficit even shrinks compared to October, when it was 1.4 billion levs. The reason is that revenues exceed expenditures by 400 million in November alone. This is thanks to corporate tax paid in advance, the ministry explains.

If you missed our piece on the planned state spending for next year, catch up here.

From ban to quotas: what's next for Ukrainian grain imports to Bulgaria

Bulgaria will replace the ban on sunflower imports from Ukraine with an expanded list of ten agricultural and food products for which a maximum quantity will be introduced that can enter the country. The overall approach is that the ceiling will represent half of the total annual imports for each specific product. And on the most controversial issue, sales of Ukrainian sunflower to Bulgarian processors, the formula provides for a higher allowed amount of raw material - around 95%, but also limits on the previously free import of oil. This is broadly how the draft quotas proposed by the agriculture ministry, due to take effect in December, look. The decision for the ban came after the September protests of farmers that blocked the country for a week.

Figures:

The profit of the banking system continues to grow at an unprecedented pace and by the end of October 2023 already exceeded 3 billion levs, swelling by 306 million levs in just one month - a result that is 75% better than a year ago.

Snap

The amount of subsidies that Bulgarian farmers will receive until the end of 2023 is just the same as bank profits (above).

3. Business:

The Commission for Protection of Competition has authorized Vivacom to buy the infrastructure of the company it is also trying to acquire - Bulsatcom. The deal is unrelated to the controversial attempt for acquisition that sparked protests by the other two telecoms in the country.

IPO

The drought in the initial public offerings (IPO) market on the Bulgarian Stock Exchange will end with the listing of the metals company Bulmetal, which starts today and will run until next Friday. The registered capital of the company is over 6.225 million levs. The offering will be considered successful if at least 900,000 1 lev shares are subscribed, or at least 8 million levs is raised.

Real estate

Despite attempts by civic activists to block the construction, the project for a new 8-14 floor residential building of the Arteks real estate company in Dianabad received a building permit from Sofia's chief architect Zdravko Zdravkov.

4. Energy:

Data from the European Association of Transmission System Operators (ENTSO-E) for November show that against the backdrop of the cold snap and ongoing maintenance in the Kozloduy NPP, coal-fired electricity had made Bulgaria uncompetitive on the regional market and the country was a net importer of electricity for the second time this year - to the tune of nearly 60 thousand MWh. In practice, coal-fired electricity has failed to sell on the domestic market and in the region and it is more profitable for consumers to import electricity from Romania. With 3.1 million MWh of electricity produced, Bulgaria has imported or transited more than 300 thousand MWh of electricity from its northern neighbor.

Moving with the times: Bulgaria subscribes to two COP28 initiatives

At the final UN Climate Change Conference (COP28) Bulgaria became part of two global initiatives. Sofia has pledged to triple the capacity of nuclear energy by 2050 alongside 20 other states, while it also backed another initiative - to triple the capacity of renewable energy sources by 2030 and double the pace of energy efficiency improvements by the end of the decade.

5. Brussels:

• #EU-China meeting- High level meeting is organized for the first time since 2019. Chinese President Xi Jinping told EU leaders the two sides should step up cooperation, even as Brussels pushes Beijing to address its economic frustrations. "China and the EU should be partners in mutually beneficial cooperation, constantly enhance political mutual trust" and come to a strategic consensus, Xi said in a meeting in Beijing on Thursday with European Commission President Ursula von der Leyen and European Council President Charles Michel.
• #Bulgarian socialists under EU fire - To increase its political influence in the EU's poorest country, the Bulgarian Socialist Party (BSP), which is part of the EU Socialists (PES), announced last week an official move to form a 16-member broad coalition including pro-Russian and nationalist parties. PES, in the meantime, reacted, warning that BSP could face "consequential measures as it happened in other cases such as in Slovakia", referring to SMER, the party of Robert Fico, which was recently suspended from PES membership, reports Euractive.

6. Watch out for:

Place:

The new pedestrian zone will be right in front of the Balkan hotel and behind the St. Nedelya church, where now there is a metal fence.

Photographer: Nadezhda Chipeva

St Nedelya Square

In a symbolic move, the municipal authorities in the capital approved the long-standing plan of the Save Sofia movement to turn the emblematic St Nedelya church square in the heart of Sofia into a pedestrian zone after it served as a parking lot for the luxurious boutiques and the hotel nearby for over three decades.

Person:

The President never misses a chance to flex his opposition to the Ukrainian cause - even when he knows it is futile. This week he vetoed the decision of Parliament to send 100 old armored personnel carriers to the beleaguered country, despite there being an overwhelming majority in Parliament that will overturn the veto.