Businesses in Bulgaria are on high alert due to soaring electricity prices, described as „code yellow” by Vasil Velev, Chairman of the Association of Industrial Capital (AIKB). While protests have been postponed following assurances from parliamentary groups, businesses are pressing for legislative measures to empower the Ministry of Energy and the Council of Ministers to implement a comprehensive compensation program for excessive energy costs.
Velev stressed that these provisions must cover all of 2025, not just the first quarter, during which the temporary budget law will remain in effect. Such measures, he argued, would provide stability for investors and prevent knee-jerk reactions to future price spikes.
Electricity Price Disparities Across Europe
Velev highlighted the stark contrast in electricity prices within the European market, noting that while Sweden pays 30 leva per megawatt-hour, Bulgaria faces prices approaching 300 leva. He urged the Bulgarian government to advocate for European-level compensation to address systemic imbalances in Southeast Europe. He also clarified that the regulated price of 138 leva per megawatt-hour for institutions like kindergartens, schools, and prayer houses is funded through a self-financed program, independent of the state budget.
Widespread Impact on Non-Household Consumers
The rising electricity prices affect over 600,000 non-household consumers, including manufacturers, healthcare providers, social services, and cultural institutions. Velev underlined that the current compensation schemes are not subsidies but partial reimbursement for costs inflated by high energy prices. He called for immediate legislation covering the full year to prevent financial instability, cautioning against relying on retroactive measures to address the issue.
Economic Risks and Comparisons to Regional Challenges
Velev warned that Bulgaria could face significant fiscal deficits if current policies remain unchanged. He drew comparisons to Romania, where unchecked social spending and growing deficits have led to economic strain, describing it as a „milder Greek scenario.” To avoid similar challenges, he advocated for prudent budget management and sustainable fiscal policies.
Income Growth and Inflation
Despite rising electricity costs, Velev noted that incomes in Bulgaria have outpaced inflation, with the minimum wage increasing by 38% over the past two years and 15% this year alone. Regarding eurozone entry, he expressed optimism that Bulgaria would meet inflation criteria by December. However, he emphasized the critical role of compensation programs in managing high energy prices and ensuring economic stability.
In summary, Bulgarian businesses are calling for decisive government action to address the energy price crisis, ensure long-term fiscal health, and protect the country’s economic stability amidst regional challenges.
