Bulgaria waives Russian gas transit tax in hopes of furthering Schengen talks

9 months ago 26

Parties of the ruling majority in the Bulgarian parliament have agreed to cancel the tax on Russian gas imports transiting through Bulgarian territory, with GERB leader and former prime minister Boyko Borissov hoping it could help the country’s Schengen Area bid.

Kiril Petkov, party leader of We Continue the Change, announced the news on Monday, adding that Bulgaria would be following the common European approach.

“This tax should not be unilateral on the part of Bulgaria. It is necessary to work with the European Commission so that together with all European countries, this type of taxes can be imposed in a way that will actually have an effect on the economy of the Russian Federation as well,” he added.

But “since we are quite close to Schengen, any possibility of this fee hindering us should be removed,” said Borissov.

Doubts about the fees arose when the tax was introduced in October, with doubts that Bulgaria could collect €2.4 billion from the transit of Russian gas.

“When the European Commission gives us a mechanism (to create the new fee), then we will implement it,” Petkov said.

President Rumen Radev was also among those who questioned the fees, using similar arguments to criticise their introduction in October. Hungary is the main EU country affected by the tax, as it receives its gas through the continuation of the Turkish Stream pipeline, which passes through Bulgaria.

Budapest and Belgrade both said that the Bulgarian gas tax would increase gas prices by 20%, to which Sofia replied that Gazprom should pay the money.

Despite Hungary and Serbia’s concerns that the new Bulgarian tax will make the Russian gas they use more expensive, the authorities in Sofia have not managed to collect a single euro from the new tax. The fee is about €10 per MWh, and initial expectations were that it would raise more than €1.2 billion a year.

At the end of October, the Commission confirmed that Bulgaria would decide independently how to use the revenue from new fees for the transit of Russian gas.

“The fees imposed by Bulgaria for the transit of Russian gas to Serbia, Hungary and North Macedonia are a national measure, and therefore Bulgaria will decide where the money from them should go,” said European Commission spokesman Tim McPhie at the time.

“So far, the EU has imposed 11 packages of sanctions against Russia. The restrictive energy measures affect oil and coal, but not the import of gas,” the Commission’s spokesperson added.

Bulgaria was expecting revenue from the new fee to be paid on 14 November, but some Bulgarian energy experts had already questioned whether the country would receive any money. The problem is that pipeline gas can hardly be certified as Russian because it combines several sources.

Gazprom has not yet reacted to the tax, and it is not clear whether the Russian state-owned company intends to pay it. (Krassen Nikolov | Euractiv.bg)