site.btaAssociation of Electrical Engineering and Electronics Calls for Public Procurement Changes amid Record Metal Price Surge

The Bulgarian Association of Electrical Engineering and Electronics (BASEL) has warned that record-high metal prices on international markets, combined with growing competition from companies outside the European Union (EU), are threatening the maintenance of Bulgaria’s thermal and hydropower plants, as well as the country’s electricity transmission network. In a position statement sent to the Bulgarian News Agency, the association also called for urgent changes to public procurement rules.

According to data from the National Statistical Institute, producer prices in the manufacture of basic metals recorded double-digit annual growth, rising by 19.8% in April and 21.5% in May. Copper has been the main driver of the increase, with prices on the London Metal Exchange exceeding USD 12,000–13,000 per tonne. Since copper accounts for up to 60% of the cost of materials used in repairs of generators and transformers, the price surge is making pre-planned budgets impossible to meet.

According to BASEL, the problem is that prices in Bulgarian tenders are set in advance, with no mechanism for adjustments when market prices change. As a result, the entire risk of rising costs is transferred to contractors.

“There is no way for a Bulgarian company to win a tender at one set of prices and then, six months later, buy copper at 30% higher prices and complete the contract without facing the risk of bankruptcy,” BASEL Chair Dimitar Beleliev was quoted as saying. Neighbouring countries such as Greece, Serbia and Montenegro have already introduced formulas for indexing the prices of key materials in line with market prices, while Bulgaria still lacks such a mechanism, the association noted.

The market shock is compounded by competition from companies outside the EU, mainly from China, India and Turkiye. According to BASEL, more than 60% of electrical engineering tenders in Bulgaria are won by non-EU companies, which benefit from state subsidies in their home countries, can absorb higher raw material costs and offer lower prices than Bulgarian competitors. “The requirement for more than 50% European participation is not a new practice for Bulgaria and simply needs to be restored,” Beleliev said.

BASEL is calling for two specific changes to public procurement procedures in the energy sector. The first is mandatory price indexation, that is ending the practice of “fixed prices” and introducing a formula for adjustments based on LME copper prices and the prices of other key metals in all contracts. The second is a requirement for at least 50% European and Bulgarian participation in projects financed with public funds.

“The issue requires urgent action. Without changes to the rules, we risk leaving the maintenance of critical energy facilities in the country without contractors, while the security of the energy system could be compromised,” Beleliev concluded.

In May, aluminum prices reached their highest level in four years amid concerns that China could restrict production, while ongoing disruptions in the Middle East put pressure on supplies.