Bulgaria: President vetoes New Concessions Act

Bulgaria

On 24 January 2017, prior to its dissolution, the Bulgarian Parliament passed the new Concessions Act, intending to repeal the current Concessions Act 1 and the Public Private Partnership Act 2. However, following complaints from the public – including non-profits and Bulgaria’s largest trade union – the new President exercised his constitutional powers and returned the act for further discussion and consideration prior to its promulgation in the State Gazette.

According to the governing party, it was necessary to pass the act quickly because Bulgaria is late in implementing EU Directive 2014/23/EU dated 26 February 2014 on the award of concession contracts. The public reacted negatively to the lack of public discussions on the draft bill and its contents.

Draft Act

Although, there is no publicly available draft of the newly adopted Concessions Act, the draft used for final discussions in Parliament (the “Draft Act”) shows that the act conforms to the provisions of the EU Directive and also introduces some new regulations.

The main differences between the Directive and the Draft Act are: (i) the introduction of a new type of concession agreement which gives the economic operator the right to use state or municipal properties; and (ii) in theory the concession duration may be unlimited. Further, state concessions longer than fifty years need to be approved by Parliament and municipality concessions longer than twenty-five years need to be approved with a 2/3 majority of the municipal council. The Draft Act does not provide a maximum time limit for a concession. (Please click here to see our previous eAlert on the Draft Act.)

Main points of concern

The main points of concern are the procedure for granting concessions, longer concession periods and options to prolong concession periods.

The President stated that the Draft Act introduces subjectivity to the decision making process which may give rise to corruption. It introduces amendments to a significant number of other legislative acts and will have substantial effect on business.

The future of the Draft Act

Now, Parliament may pass the new Concessions Act only if more than one-half of all National Representatives vote ‘pro’. As Parliament is currently closed discussion of the new Concessions Act will have to wait until after 26 March 2017, the date of the elections.

When the Concessions Act is passed, the President will have no powers to return it a second time.

One of the most significant concessions at the moment is the one for Sofia airport. The period of the procedure for granting the concession was extended several times now and could be completed under the current Concessions Act.

For more information, please contact: Pavlin Stoyanoff, Denitsa Dudevska and Gabriela Edreva.


1 State Gazette Issue No. 36 dated 2 May 2006, as amended and supplemented
2 State Gazette Issue No. 45 dated 15 June 2012, as amended and supplemented