The independent energy regulator in Bulgaria which sets down the cost of electricity twice a year has decided to up prices as of July 1 by 2 percent for households and almost 20 percent for businesses.

This raised a wave of discontent in business circles who calculated that excessive electric energy prices will quench their competitiveness and wipe out their businesses. Prime Minister Boyko Borissov himself stated his support for industrialists, expressing his solidarity with their demands to keep prices unchanged at least until the end of the year. The Prime Minister has good reason to dread a large scale backlash because of the rise in electricity prices, seeing as in 2013 the first cabinet he was head of had to step down over protests against the unaffordable cost of electric energy. His second cabinet is now faced with a decision by the regulator that, by law, cannot be swayed directly and openly, though it can be influenced using personal political contacts and leverage. Because the members of the regulatory commission represent the political forces in parliament which, on their part, could not overlook the opinion of their political structures. This is the instrument – publicity and a stated concern for the interests of businesses and of society – that PM Borissov resorted to, calling an emergency extended cabinet meeting on Sunday that was attended by cabinet ministers as well as experts and analysts. This reaction was so swift because of the unforeseeable but unavoidable severe effect on businesses the rise in electricity prices would have but also because of the direct threats businesses made that as of Friday they would start daily one-hour warning work stoppages, layoffs, wage and output cuts and many other catastrophic events of the kind.

On the political stage all players seemingly agree that electricity prices must remain unchanged and in this, parties and government are at one. With one exception – the government’s small coalition partner Bulgaria of the Citizens of former European commissioner Meglena Kuneva, now Deputy Prime Minister in the Borissov cabinet.

The bomb in Bulgarian power generation is ticking and it is just a matter of time, given an apposite interplay of circumstance for it to go off. The independent regulatory commission and its prestigious chairman Ivan Ivanov obviously think that the moment has now come. Because the National Electricity Company is in practice bankrupt, its state owner – the Bulgarian Energy Holding has ten days to find EUR 500 million, nobody knows where to pay the old debts of the electric power stations. The problems are so many and have been piling up for so long, in such proportions and with massive consequences that yesterday’s emergency cabinet meeting had no choice but to take radical and comprehensive measures. And the only such measure is to cut the administrative expenses of the state energy companies by 10 percent a year over the next three years. This is hardly likely to have any tangible effect on the energy system as a whole, yet it seems a sensible thing to do seeing as in this sector, which is running at a loss, the average wages are double the average for the country. The other important government decision is to put the energy problems on the table, at long last, so they may be considered by parliament which, being an authority of the highest order and having powers that are practically unlimited, could vote the necessary rescue package of measures. Otherwise, as the chairman of one of the biggest organizations of employers, the Bulgarian Chamber of Commerce Bozhidar Danev put it, power generation could shake the economy down to its very foundations. This is precisely what Prime Minisster Borissov is trying to avoid – he has been showing off with the surprisingly good achievements of the national economy since he has been at the helm, i.e. since the autumn of last year. But he is never letting out of his sight the fact that there are local elections coming up in the autumn that he must win if he wants the control and influence of his party, GERB in the country to be full and unrestricted. The regulatory commission has now hinted that it may postpone the price rise by one month, a time that would allow for a more thorough and careful consideration of all possible steps for a way out of the crisis.

English version: Milena Daynova