site.btaParliamentary Economic Committee Adopts at First Reading Bill on Termination of Derogation for Russian Oil

The parliamentary Committee on Economic Policy and Innovation adopted at first reading the draft bill on amendments and additions to the Control on Restrictive Measures in View of Russia's Actions Destabilising the Situation in Ukraine Act, submitted by Boyko Borissov, Kiril Petkov, Hristo Ivanov, Delyan Peevski, Delian Dobrev, Desislava Atanasova, Mustafa Karadayi and Ivaylo Mirchev on July 28, 2023. The bill was supported by 12 votes to 5 with no abstentions.

The draft bill envisages that within 30 days of its entry into force, the Council of Ministers will cancel the derogation for Bulgaria on Russian oil. If the Security Council of the Council of Ministers considers the deadline to be insufficient, it proposes to the National Assembly to set another deadline by a special decision, which becomes binding for the Council of Ministers. The Prime Minister shall direct the actions of the process and shall be accountable to the National Assembly for their implementation, the bill further states.

The explanatory memorandum to the bill states that ending the waiver from the oil embargo would be the second step in depriving Lukoil, and therefore the Kremlin, of additional profits to fund its war efforts in Ukraine. If the Russian company does not comply with the condition of full diversification of crude oil supplies, the government should place the refinery and all other assets owned by Lukoil under state control through a special commercial manager.

The first step was the termination of the concession contract with Lukoil for the operation of the Rosenets oil terminal. The reasoning is that this would help Bulgaria to ensure that the terminal is not used to evade sanctions by smuggling oil and would ensure proper accounting of VAT and excise revenues, which are vital for fiscal security.

The proposed amendments to the Act on Administrative Regulation of Economic Activities Associated with Oil and Petroleum Products provide that in the event of the establishment of circumstances that threaten national security, public order, the supply of critical resources, distortion of competition in the case of a monopoly or dominant position where this threatens national security, or violation of international restrictive measures or those of the European Union that are binding on Bulgaria, the Security Council with the Council of Ministers shall propose that a procedure be initiated for the appointment of a special commercial manager.

In mid-2022, the European Commission granted Bulgaria an exemption from the European oil embargo on Russia, which is valid until the end of 2024. Before the parliament's summer recess, GERB-UDF, Continue the Change - Democratic Bulgaria and the Movement for Rights and freedoms submitted a proposal for its early termination. The derogation came into force on December 5, 2022, during the caretaker cabinet and will expire on December 31, 2024.