The year: 2025 is here with open borders, electricity cuts, gas shortages, and a hope for peace

Bulgaria, however, will be crucial for more than one reason in the next few months for Central Europe. As of 1st of January, the Ukraine gas transit was stopped, meaning Austria, Hungary and Slovakia were cut off from Russian gas. One would have thought after almost 3 years of war they would have seen it coming, yet nerves were shown all over the place - Slovak PM Fico was seen in Moscow almost comically pretending not to understand why war-torn Ukraine wants to shun deals with the aggressor.

Leaving political absurdity aside, Bulgarian gas-transit through the TurkStream will be one available option to those countries. This might prove lucrative to the Bulgarian gas operator - yet judging from the way the energy "experts" do deals around here (e.g. Botas), we should not overestimate this option.

Another thing we entered the new year (and the winter) with, was electricity cuts. Hundreds, if not thousands of families, were left without electricity over the holiday season due to the heavy snowfall, proving once again that underinvesting in infrastructure is the name of the game for any operator here - be it electrical, water or roads.

This leads me to the curious finding by leading pollster Alpha research: on optimism and pessimism. It found out that vastly more people believe 2024 was either better or the same for them and their families, than for the country, or the world. While over 70% of Bulgarians believe their own situation got better or remains the same, over 74% believe the situation in the world got worse and over 90% believe the situation in Bulgaria got worse.

That's astonishing.

It means that we either don't care about our surroundings, or think we can do better while everything falls apart. That's a delusion, of course, as people left without power in several provinces found out the hard way. But it surely explains a lot of market anomalies around here - like the real estate market, for example.

Yet look at the word most Bulgarians think will be defining for the year ahead: peace. After spending decades in economic and political turmoil and finally feeling they're on a path to some normality, most of the people around here are acutely aware it can all fall apart pretty quickly. So a collective finger crossing for 2025 seems in order.

This newsletter is co-written by

@Martin Dimitrov

Politics this week:

And speaking of new beginnings, something's up in Parliament. On the penultimate day of 2024, the biggest party GERB surprisingly announced that it had exchanged draft coalition agreements with the small Democratic Bulgaria (DB). This seems to spell the end of the "change coalition" with WCC that was supposed to rejuvenate Bulgarian politics.

The info came despite no indication of negotiations between the two parties over the Christmas holidays. According to Capital weekly sources, the situation is as follows: DB sent their draft coalition agreement in which they focused on its two most important topics: judiciary and anti-corruption measures, on 29 December. On the next day, GERB returned their version of the text, which excluded WCC from the possible coalition.

And, dare we say, a government?

And while it was speculated that the absence of WCC from the negotiations signals their potential futility, a joint meeting between GERB, DB, TISP and BSP on the first working day of the new year hinted at something else - the potential for a new, stranger than ever four-member coalition. According to the press release published by the four formations, they discussed their proposals on the draft governance agreement. The discussion touched upon the priorities for future governance and the decision-making mechanisms of the coalition.

So, what about We Continue the Change?

So is Kiril Petkov and Assen Vassilev's party getting sidelined by everyone, including their coalition partners? At the moment, this seems to be the case. There are additional signs of that coming from the State Prosecution. On the last working day of the year, acting Prosecutor General Borislav Sarafov demanded WCC's Lena Borislava's parliamentary immunity, after already demanding the immunity of WCC leader Kiril Petkov, and initiated the arrest of Assen Vassilev's driver, Lachezar Stavrev. Seems someone, somewhere really doesn't want them to enter government again.

ECONOMY:

Christmas snowstorms and power cuts

The days after Christmas were marked by severe snowstorms in mountainous central regions, hitting especially hard the Troyan, Lovech, Gabrovo and Tarnovo regions. The electricity outages in hundreds of villages in this area for over a week remained in the spotlight because it exposed a chain of problems with the grid that start with the local energy supplier Electrohold, the body that is supposed to regulate it, KEVR and their combined negligence.

It's not us, it's the green guys

While the crisis caused protests and demands that the supplier should be controlled more tightly, the company blamed environmentalists who prevented the cutting of trees that endanger electricity poles and on the reluctance of KEVR to recognize capital investments out of fear that prices will have to rise.

So, higher prices, right?

Against this background, it is interesting what will happen with the planned 9% increase in electricity prices for households from the new year. The always-active and expedient power-broker Delyan Peevski has already demanded the cancellation of the increase as well as the dismissal of the regulator. KEVR chairman Ivan Ivanov reminded him that his term of office has expired for five years and he has been waiting for the parliament to elect a new regulator. But he confirmed that the commission will approve the new higher prices because the law requires it.

Not exactly

However, this does not mean that the new tariffs cannot be temporarily blocked by a moratorium in parliament. Even before the snow drama, BSP (which is now getting ready to govern) announced that it would table such a request. So, 35 years after the end of communism and 11 years after the first Borissov cabinet fell because of protests against high electricity bills, this still continues to dictate public discussions in the country.

Figures:

30 billion levs

The amount of money contracted in public procurements in 2024 according to a Capital weekly calculation.

1,077 levs

The new, raised minimum wage in Bulgaria from 1 January, which represents an increase of 15% from 933 levs.

BUSINESS

MOL

Hungarian Prime Minister Viktor Orban confirmed that his country's state oil company is interested in buying Lukoil Neftochim Burgas' refinery - something Capital Weekly wrote in early November. Orban said the company had submitted a bid and was one of seven candidates.

ENERGY

As we already mentioned, TurkStream, which has now become the main route for Russian imports into Europe, has been operating at 80% capacity in recent months, as evidenced by European gas flow data from ENTSOG. Bulgaria has transported about 16.2 bcm against a maximum capacity of 20.2 bcm. This means there is some space left for bargains. Hungary and Slovakia seem to be the obvious candidates, yet nothing official has been stated yet.

Watch out for:

Grigor Dimitrov

Will start the new year in Australia as usual, amid the perennial high hopes. This might be one of his last seasons, though.

Trend

Housing market

Think that the house price bubble in Sofia has peaked? Think again. According to Eurostat data for the third quarter of 2024, the price rise in the city has reached 5.4% compared to the previous three months. And it's not only the capital - the annual appreciation rate of real estate for the country is 16.5%, which is almost at the top of the ranking for Europe. And it comes on the back of two previous years of double-digit price growth

Date

2028

Is when Unit 6 of Kozloduy Nuclear Power Plant (NPP) should start replacing Russian cartridges with American ones. The plant and the US-Canadian Westinghouse company have signed an agreement for licensing new fuel assemblies. So far, the replacement of Russian fuel has been done only in Unit 5, where already a quarter of the fuel assemblies have American nuclear fuel and work on par with the others. However, there have been no real steps yet to license and replace the cartridges in Unit 6 as well, because it is due for 3 more refuels after one with Russian fuel was done last November.

Word of the week

Source: Viza Academy

Отказ - Denial

The Ministry of Foreign Affairs started a "Visa Academy" to teach Bulgarians what to do in order to not get denied a US visa. The campaign aims to bring down rejections under 3% so that Bulgaria can enter the visa-waiver list. The campaign uses the face of Maria Bakalova - probably the most successful export we have to the US right now. If the Romanians can do it, so can we. Hopefully next year.