PM Borissov’s Government, an embodiment of the Borisov-Dogan-Peevski triad of politician-oligarchs, is undertaking steps to legalise TurkStream via GERB-sponsored amendments to the Energy Act. Such moves seek to shield the project and preempt the EU level of regulations of the contentious TurkStream. The formal cause is the transposition of European Directive EU 2019/692, the deadline for which expired in February 2020. The Bulgarian government and the TSO management are coordinating their reaction with Gazprom’s legal team to obtain a belated derogation for Turk/Balkan stream from the EC. An exemption for Turk Stream covers 2 out of 3 preconditions – the TPA and the tariffs, which would be left at the operator’s discretion. Typically derogation procedures occur at a much earlier stage, before the final investment decision, and are meant to secure the project’s economics.
The EU has little practice granting derogations for projects that are not of common EU interest. The EC took out Balkan Stream of the EU PCI list four years ago.
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With signed contracts and investments already made, the Bulgarian Government expects the European Commission to rubber-stamp a fait accompli. The EC will neither be able to assess, nor change anything. As granting a derogation is unlikely, one should look for other possible motives.
One line of thought is to abscond liability and Kremlin’s “divine wrath”. The classic apology – “the EU is to blame” for refusing a derogation, will come into play, preceding the ‘news’ that Gazexport will need to limit itself to 50 per cent of the capacity of Balkan Stream.
The second motive is more existential and egoistic – to provide all politicians and oligarchs, involved in the grand corruption schemes with immunity by granting them Parliamentary cover.
These acts are a copy-paste of previous National Assembly decisions, which obliged the Government to appeal the EC DG COMP’s 77 million euro fine to BEH, BTG and Bulgargaz, before the European Court. The vote will transform bad or corrupt decisions, conspired by politicians and state corporate managers, into anonymous political ones.
The report of the Agency for Cooperation of Energy Regulators – ACER, lambasts Bulgartransgaz’s tariffs’ methodology, for favouring long-term contract in Balkan-Turk Stream by Gazexport, while discriminating all other traders and shippers. Particularly shocking are the differences between Bulgartransgaz’s LTC and short term tariffs (annual and monthly) at Marcoclar – Stranjata entry point.
The flawed procedure for capacity allocations comes back to haunt the project. The bidder Gazexport took control over the final stage of the binding offers in the “open season”, imposing its reading of the tariff’s level upon the TSO. Bulgartransgaz buckled, depriving the project of critical revenues for the project’s viability. BTG’s minimum tariff reflected revenue forecast in the business model. As the TSO management accepted Gazexport tariffs, which account for more than 70 per cent of revenues in its balance sheet, proceeds from all other clients using BTG’s services had to make up for the shortfall.
Thus the competitors of Gazexport and Bulgarian consumers have to pay for Borissov’s subservience over Turk Stream.
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