site.btaBill Concerning Special Commercial Administrator's Activity Adopted by Budget Committee on First Reading

A bill to amend and supplement the Act on Administrative Regulation of Economic Activities Associated with Oil and Petroleum Products was passed on first reading on Thursday by the parliamentary Ad Hoc Committee on Budget and Finance with 13 votes in favour, no votes against, and 4 abstentions. 

The bill was presented by Stefan Belchev MP of Progressive Bulgaria, who is one of the sponsors. The amendments aim to ensure the effective exercise of the supervisory powers assigned by law to the Minister of Economy, Investment, and Industry over critical infrastructure facilities, in particular the preliminary administrative control over the actions of the special commercial administrator (SCA), as well as the regulation of judicial oversight over transactions with the most significant impact carried out by the SCA, namely transactions involving the disposal of shares or equity interests and transactions involving the disposal of the assets of entities to which such a SCA has been appointed.

The proposed amendments are in line with the purpose of the law, namely to achieve certainty and predictability in trade in petroleum and petroleum products and to enhance the country’s energy security, while respecting the requirement of proportionality when affecting constitutional rights and freedoms, Belchev noted.

According to Belchev, the role of the special commercial administrator, who is tasked with taking over the operational management of an enterprise part of the country’s critical infrastructure, was legislatively established in early 2023 by the 48th National Assembly, with the law providing that the SCA be appointed under conditions of urgency in the event of a threat to national security, public order, the supply of critical resources, or other explicitly specified risks of a similar nature.

The bill proposes improvements to the preliminary administrative oversight of the SCA, who will be required to submit a report to the Minister of Economy, Investment, and Industry on the activities of each of the companies under his management within one week after the end of each month.

Judicial oversight is introduced over certain acts of disposition, with rules proposed for judicial oversight of the most significant transactions carried out by the SCA – transactions involving the disposal of shares or equity interests, or transactions involving the disposal of the company’s assets, which most significantly affect the property rights of the shareholders, partners, and sole proprietors of the affected entities.

As a result of the law’s implementation, it is expected that potential abuses and violations in the performance of the special commercial administrator’s duties will be curtailed, including reputational and significant financial damage to the State as a result of potentially affected enterprises demanding compensations.

Vladislav Panev MP of Democratic Bulgaria stated that the 2025 amendments to the law were problematic, so the current bill is a step in the right direction. He asked why Lukoil’s special commercial administrator in Bulgaria was not present at the Committee meeting, since, according to the latest data, the oil company is reporting a loss and it would be helpful to provide an explanation.

Martin Dimitrov MP of Democratic Bulgaria noted that he would not participate in the vote on the bill, but recommended that Committee Chair Konstantin Prodanov request a position from the Finance Ministry Legal Protection Directorate on whether the amendments to the law would worsen Bulgaria’s position in any potential arbitration cases against it.

Vladislav Goranov MP of GERB-UDF stated that his parliamentary group would abstain from supporting the proposed texts, even though they are legally sound. In his words, these amendments could be used by the owners of Lukoil’s assets in Bulgaria to file lawsuits. Goranov noted that the Lukoil case had been coordinated with the US government, as the refinery is subject to US sanctions, and added that it would have been advisable for the current amendments to the law to have been coordinated as well before being proposed.

According to Tsoncho Ganev MP of Vazrazhdane, the parliamentary group warned the previous parliament that appointing a special commercial administrator of Lukoil would result in Bulgaria being sued and having to pay billions of euro in damages. In his words, it would be more appropriate for Bulgaria to negotiate with Lukoil’s parent company to acquire the refinery rather than pay billions in damages.