Bulgaria: Wholesale Electricity Trading In Bulgaria: A Basic Primer To Electricity And Gas Wholesale Trading

A. Wholesale electricity trading

1. Background information

The Bulgarian energy market is regulated by the Energy Act 2003 (Закон за Енергетиката ) and several pieces of secondary legislation.

The Energy Act 2003 provides the regulatory regime for trading electricity on the Bulgarian market, which is further regulated in detail by the Electricity Trading Rules ( Правила за търговия с електрическа енергия). ).

The generation market is dominated by the national electricity company - NEK EAD (NEK), a wholly-owned subsidiary of the Bulgarian Energy Holding EAD (BEH). BEH is a 100% state-owned vertically integrated company currently covering the generation and transmission of electricity and gas.

At the beginning of 2007 NEK reorganised its business and operations in order to comply with the provisions of Second Energy Package and the Energy Act 2003. On this occasion the transmission and market operator and balancing services were allocated to a newly established company - ESO EAD (ESO), a fully owned subsidiary of NEK. NEK continues to vertically integrate generation and supply to final customers and is also active in wholesale trading.

The distribution sector has been privatised to several European utilities: E.ON (Germany), ÄREZ (Czech Republic), EVN (Austria). Generation, distribution and supply carried out by these utilities are legally unbundled, although ownership is shared between companies within the same group.

2. Licensing requirements

Under the Energy Act 2003 all Electricity Traders trading in electricity in Bulgaria or cross-border must hold a valid licence.

2.1. Conditions for licensing

Generally, the issuance of a licence is dependent upon numerous technical, organisational and financial criteria.

The licence is issued by the State Energy and Water Regulatory Commission, which is the Bulgarian NRA, for up to 35 years, with an option to be extended for further (up to) 35 years.

An Electricity Trader can be based anywhere in the EU or the Europe an Economic Area, without any requirements to set up a company or branch in Bulgaria.

2.2. Timetable for obtaining the licence

The statutory term for granting a licence is three months as of the submission of a complete set of application documentation.

2.3. Additional requirement

Electricity Traders have a statutory obligation to put aside and deposit 1/24 of their annual turnover derived from domestic electricity trading. The deposit should be a minimum of BGN 150,0001, regardless of the actual turnover.

3. Trading requirements

Currently there is no power or commodity exchange set in place. The wholesale electricity trading is exclusively based on bilateral contracts.

3.1. OTC trading

The Bulgarian electricity market has not yet been fully liberalised and therefore a large share of the market is still driven by regulated prices set by the Bulgarian NRA. Nevertheless, there is a wholesale competitive market set in place, which is liberalised, and pricing and other relevant provisions are based on the principle of contractual freedom and negotiation, without any regulated tariffs.

3.2. Balancing market

The balancing market is organised in balancing groups. A balancing group includes generators, Electricity Traders, suppliers and large final customers.

Currently the rules for participating in balancing groups are not yet fully effective for all participants.

The balancing market is run by the ESO acting as TSO.

Electricity Traders have to register for their participation on the balancing market by submitting a standardised application to the TSO.

4. Cross-border trading

The rules for the allocation of capacities at the interconnectors with other neighbouring countries are in line with the EU legislation and with the bilateral agreements and rules for cross-border exchange and trading with electricity. The latter also applies to the harmonisation of the interconnection between the Bulgarian TSO and the operations of the neighbouring TSOs.

The Bulgarian TSO allocates cross-border transfer capacity as commercial rights for transfer.

Bulgaria has 13 cross-border interconnectors: five with Romania, two with Turkey, two with Macedonia, three with Serbia and one with Greece. A new interconnector with Macedonia is under construction and an additional one with Greece is still in the project development phase.

5. Grid access

The Energy Act 2003 introduces the principle of third-party access to the grid for all users of the transmission and distribution networks. The right to access the grid can only be denied if such access could disrupt the technical conditions and the security of the networks, and trigger the deterioration of the conditions of supply to the final customers and other users of the network.

B. Wholesale gas trading

1. Background information

Bulgaria has a limited market for natural gas and is almost entirely dependent on imports from Russia to meet its domestic demand. Only a small part of Bulgaria's domestic consumption comes from domestic production (the offshore Galata field in the Black Sea operated by UK-based Melrose Resources).

Bulgaria holds an important position in the international gas transit.

The legal framework is the same as the one for electricity, as the Energy Act 2003 and the secondary legislation cover both the gas and electricity markets. The Bulgarian NRA is also in charge of the gas market.

The key market player is BEH EAD. As a result of restructuring, Bulgargaz EAD (one of the subsidiaries of BEH EAD) was transformed into Bulgargaz Holding EAD through a spin-off into newly established companies - Bulgartransgaz EAD and Bulgargaz EAD. Bulgartransgaz EAD is now licensed as TSO, and in this capacity enjoys a legal monopoly over the transmission, transit and storage of natural gas. Bulgargaz EAD enjoys a legal monopoly over the activity of supply to final customers.

There are 42 Gas Traders active on the market. Most of them are privately or municipality owned. The Bulgarian company Overgas AD (the biggest private company active on the natural gas market) is co-owned by Gazprom and controls 26 Gas Traders, and is the biggest private gas retailer in the country.

In 2005 Bulgaria signed a joint-venture agreement for the Nabucco project, which is designed to ensure gas supply from the Caspian region to Western Europe through Turkey, Bulgaria, Romania and Austria.

The projects for regional gas pipelines and LNG terminals have proved to be catalysts for the process of liberalisation of the Bulgarian gas sector.

As the main applicable legislation, the Energy Act 2003 regulates the generation, supply, cross-border trading, transmission and distribution of natural gas. Wholesale gas trading is further regulated by the Natural Gas Trading Rules (NGR).

2. Licensing requirements

Wholesale gas trading is not a licensed activity in Bulgaria. If a Gas Trader wants to engage in supplying gas to final customers (retail trading) licensing becomes mandatory, regardless of whether that Gas Trader is also active on the wholesale gas trading market.

Under the current Energy Act 2003, a legal monopoly for transmission and supply to final customers is applicable for the entire territory of Bulgaria.

This regulatory regime is expected to change soon, as a new bill is currently being debated in the Bulgarian Parliament, and is expected to be passed into law within the following months.

3. Trading requirements

There is currently no commodity exchange or gas hub in Bulgaria. Wholesale gas trading is exclusively OTC via bilateral contracts.

3.1. OTC trading

Like the electricity market, the Bulgarian gas market has not yet been fully liberalised. A large share of the market is still driven by regulated prices set by the Bulgarian NRA. Nevertheless, there is a wholesale competitive market set in place, which is liberalised, and pricing and other relevant provisions are based on the principle of contractual freedom and negotiation, without any regulated tariffs.

3.2. Balancing market

The balancing market is run by Bulgartransgasz EAD, which is also the licensed TSO.

There is a 5% deviation threshold (between the nominated and the actual delivered capacities) beyond which the balancing penalty is mandatory.

Nominations sent to the TSO depend on the terms of the bilateral contract, but the gate closing time is 24 hours prior to delivery.

4. Cross-border trading

Natural gas is transited through the territory of Bulgaria to Turkey, Greece and Macedonia. Bulgaria has interconnectors with Romania, Turkey, Macedonia and Greece.

There are several projects for transmission and transit of natural gas to/via Bulgaria, SEE and EU which are under implementation or subject to negotiations:

  • Project "Nabucco" - Nabucco is the new gas bridge from Asia to Europe and the flagship project in the Southern Corridor. It will be a pipeline to connect the world's richest gas regions - the Caspian region, the Middle East and Egypt - to the European consumer markets.
  • The Bulgarian Parliament has ratified the original multilateral "Agreement among the Republic of Austria, the Republic of Bulgaria, the Republic of Hungary, Romania and the Republic of Turkey regarding the Nabucco Project" in February 2010. Furthermore, the Bulgarian Minister of Economy, Energy and Tourism signed the Bulgarian Project Support Agreement with the Nabucco International Company and Nabucco National Company on 8 June 2011.
  • Construction of Dupnica-Dimitrovgrad-Nis gas pipeline between Bulgaria and Serbia.
  • Trans-Adriatic gas pipeline project from Bulgaria via Macedonia and Albania to Italy.
  • Construction of national liquid natural gas (LNG) degasification terminal on the Bulgarian Black Sea coast;
  • Construction of the South Stream gas pipeline;
  • Construction of a gas pipeline connecting Bulgaria and Greece.

5. Grid access

The Energy Act 2003 introduces the principle of third-party access to the grid for all users of the transmission and distribution networks for gas as well. This right can only be denied if such access could disrupt the technical conditions and the security of the networks, and would prevent operators from fulfilling their public service obligations

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions