Bulgaria will lose money from the Recovery and Sustainability Plan

The second payment, which is for 653 million euros, is not out of the question, and it will certainly be denied to us, even though Bulgaria has implemented 85% of the reforms under the second payment. This was said at a briefing at the Council of Ministers by Deputy Prime Minister and Minister of Innovation and Growth Tomislav Donchev on the occasion of the implementation of the National Recovery and Sustainability Plan (NRSP).

"The European Commission uses such a formula - if a reform is more important, it increases the value, so there will be no income under the second payment," said Donchev, quoted by BTA. The Deputy Prime Minister explained that so far Bulgaria has received the first payment for 2.677 billion leva. He recalled that a few weeks ago he announced in the National Assembly the situation surrounding the NRSP, which, in his words, is worrying.

The measures and reforms under the entire plan total 321 up to the ninth payment, of which Bulgaria has implemented 115 so far, Tomislav Donchev also said. According to him, in four years Bulgaria has implemented an insignificant part of the reforms. According to the requirements of the NRSP, the reforms and projects must be completed by the end of 2026. This practically means that our country will not be able to complete the reforms at all and will miss the opportunity for additional billions of euros in investments in our GDP.

Thus, Bulgaria became the first and only country in the EU that voluntarily gave up over 5 billion euros in grants agreed under the Recovery Plan. And this was because of delayed reforms in energy, transport, regional development, environment, digitalization. The total funds that were provided for under the plan were 6.6 billion euros.

Forewarned "zero"

Back on February 7, Donchev said in response to a parliamentary question that due to partial implementation of the required reforms, he expects us to receive "zero" funding under the second tranche. At that time, he said that the parliament and the government would have half a year to assess which of the reforms in the plan were feasible, in order for the country to receive part of the money under the second payment. In total, the plan provides for 9 payments under the EU Recovery and Sustainability Mechanism.

In addition to the delayed reforms, Deputy Prime Minister Donchev identified the expenditure part of the NRSP as a bigger problem.

"About 11 percent has been paid in 4 years under the NRSP, less than 700 million euros. The deadline for payments is August 2026 and we have a year and a half to pay the remaining 89 percent of the funding," Tomislav Donchev told MPs at the beginning of the month.

On February 7, the Deputy Prime Minister defined this task as a challenge. Today, February 26, he said that "paying 90% is clearly impossible" by the deadline.

Seven projects at risk

Seven projects cannot be implemented under the NRSP by August 31, 2026, for 15 projects the degree of probability of implementation is extremely low, Finance Minister Temenuzhka Petkova announced at a briefing today. This is shown by an analysis that the ministry has been working on for several weeks.

Petkova added that overly ambitious reforms have been set. According to her, the impossibility of implementing the projects means that all these investments that cannot be financed with funds under the Plan must remain at the expense of the national budget. This will have an extremely negative impact on the country's public finances for 2025-2026, because we are talking about a "significant amount" of these funds that may remain at the expense of the state, said Temenuzhka Petkova. Therefore, we must be extremely precise and practical in terms of the actions that we must take in the next few weeks, she added.

Petkova believes that each project and the degree of its implementation must be specified. Where we can save certain stages and goals of the respective investment, we will do so, but where this is impossible, we will be forced to reduce these projects, the minister also said. According to her, together with the other ministers, they are working extremely intensively, and the hope is that there will be concrete results in the next two weeks.

 "Rescue" Operation

Donchev, in turn, announced that there would be only one criterion for which projects to be dropped, and it was related to whether the project had started.

"During the talks with the European Commission, it became mercilessly clear that this is the deadline and period (August 31, 2026). After this date, the costs are not eligible. If we have payments for some projects in September or October 2026, they are covered by the budget.

"We have reached an agreement with our colleagues from the European Commission that no matter how difficult and burdensome such a decision is, the most reasonable thing is to begin an analysis and make the difficult decision of which of the projects in the plan should be dropped. If they are not dropped now, they will in fact remain financed by the national budget, which will generate an extreme risk of deficit in 2026," commented Tomislav Donchev.

If, with a deadline of August 2026, projects for which not a single public procurement has been carried out, the chance of their implementation is zero. "The awarding alone takes four months, and that in the best case, when there are no appeals," argued Donchev. He assured that the government will make maximum efforts to save as much of the funding as possible.

The Deputy Prime Minister specified that an attempt will be made to save some of the projects by transferring them to the operational programs. He assured that everyone who implements a project under the NRSP will receive their due payments, the risks are for the projects that have not yet started.

Three of the endangered projects

The other Deputy Prime Minister and Minister of Transport and Communications, Grozdan Karadjov, announced that the tender documents for the purchase of 35 new electric trains are being evaluated. The time remaining until the end of the implementation period is 16 months. He added that he will make an attempt to save this investment.

Another project at risk is the one for broadband access in the country. According to Karadjov, the deadline for submitting documents for the project is April 11, and a possible appeal could prevent the installation of over 7,000 kilometers of fiber optic cables and active devices for 5G mobile network coverage.

It was the turn of the Minister of Regional Development and Public Works Ivan Ivanov, who pointed out that the delay in the national program for the renovation of residential buildings makes it impossible to implement it in its entirety, which is part of the Recovery and Sustainability Plan. According to him, there is understanding in the government, since the program is one of the most awaited by citizens. There is a readiness for the remaining part of the NRSP to be financed from the state budget, said Ivan Ivanov.

Energy reforms - unfeasible

Minister of Energy Zhecho Stankov said that the reforms set out in the NRSP by the regular government, headed by Kiril Petkov, are unfeasible, "threaten the country's energy security and completely contradict the national interest". According to the minister, such reforms are:

the removal of the Electricity System Operator (ESO) and Bulgartransgaz from the Bulgarian Energy Holding (BEH). "This will lead to an early call on bond loans, which currently amount to 1.2 billion euros, and will also reduce investor confidence in the energy sector."

the extraordinary commitment made by the "Petkov" government to a 40% reduction in emissions from coal-fired power plants. "There is no such commitment in any regulation or directive. An artificial commitment."

the adoption of a roadmap for climate neutrality, "which in essence does not make an additional commitment to Brussels, but creates tension and misunderstanding in society."

It is worth recalling that on September 17, 2024. Acting Minister of Energy Vladimir Malinov told the National Assembly that, in connection with the requirements for "Decarbonization of the Energy Sector", an agreement was reached with the European Commission services to "abolish stages related to imposing limit values ​​for carbon dioxide emissions when producing electricity from each individual installation. There will be no ceiling on carbon emissions for each individual installation. The general threshold is maintained, namely from January 1, 2026, in the amount of 10.9 million tons of carbon dioxide".

"This (for the 40 percent) will not be recorded in the NRSP", Malinov assured at the time. "A principled agreement has also been reached with the EC that the market and market forces ensure the effective implementation of the decarbonization goals provided for in the NRSP. The main measure with the most significant contribution to the decarbonization of the energy sector is the effective liberalization of the market."

And in connection with the restructuring of BEH, Malinov then said that "the requirement to remove ESO and Bulgartransgaz from BEH is key for the European Commission, because it will provide guarantees that the possibility of cross-subsidization between state-owned energy companies is eliminated." It is known that Vladimir Malinov has been a long-time director of Bulgartransgaz, and after leaving the ministerial post he returned to head the gas operator.