site.btaCouncil of Ministers Approves New Ordinance on Concession Payments for Underground Resources

The Council of Ministers approved a draft Ordinance on determining concession payments for the extraction of underground natural resources under the Underground Resources Act, the Government’s press centre said on Wednesday. The ordinance currently in force was adopted in 1999 and last amended in 2007.

Under the newly approved provisions, the amount of concession payments due will be adjusted to reflect dynamic economic conditions related to the intensive development of the mining industry. The changes aim to ensure a fairer distribution of the economic benefits from resource extraction between the conceding authority and the concessionaire.

For the first time, concession payments for the extraction of deep geothermal resources are being regulated. The values of all concession payments will now be set in euro, in line with the Introduction of the Euro in the Republic of Bulgaria Act.

Regarding metallic minerals, the new ordinance introduces a minimum concession payment in cases where the concessionaire does not carry out extraction. Such a requirement did not previously exist. The "sliding scale" principle, under which concession payments are determined according to profitability, will be retained for this group.

For industrial minerals, construction materials, and dimension stone, the percentage rate of the concession payment remains unchanged. However, the price of the respective underground resource used in the calculation methodology will be increased.

The option for the conceding authority to choose whether concession payments for the extraction of oil, natural gas, and solid fuels are calculated as a percentage of gross production or total revenue from operations is being removed. In the future, payments will be determined solely as a percentage of total revenue from the activity.

The concession payment due for the extraction of deep geothermal resources will be set at 4% of net sales revenue for the respective period.

The new ordinance on concession payments was drafted by an interinstitutional working group including representatives of the Ministries of Energy and Finance, the Council of Ministers, the Bulgarian Chamber of Mining and Geology and the Bulgarian Association of Aggregates Producers.