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Oil Turmoil In Bulgaria, Conservatives Sabotage Their Coalition Cabinet

Bulgaria went through a series of five inconclusive elections and caretaker cabinets were in office for the better part of the last 3 years – writes Boyan Koutevski, PhD of Political Science, journalist.

The Conservatives, who were in charge of the country for almost a decade, were unhappy to let the Liberal newcomers to the table. Now they are leading the newborn politicians into a trap, which could topple the coalition cabinet and leave the liberals to take the blame while destroying the energy security of the country in the process.

Since June, the birth of the new de facto coalition cabinet, the Conservatives began sabotaging the cabinet by refusing to appoint cabinet members. This is a clear sign they don’t intend to share the responsibility of the government for the upcoming energy crisis and fuel deficit.

The players behind this ill-conceived cabinet

In July GERB suggested terminating early the Lukoil`s concession on the oil terminal serving their refinery near the city of Burgas. It is the only point of entry for crude oil in Bulgaria. The move was clearly a provocation, aiming to destabilize the government by creating instability in the fuel market. The price increase is viewed as acceptable by politicians.

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In August GERB suggested tearing down the monument of the Russian Army, in Sofia city, knowing well enough that part of liberals are socialists, nostalgic about Russian cultural presence in the region. Liberals now have to choose between losing some votes or being branded pro-Russian by keeping the monument.

On 1 September the autumn session of the Parliament began and GERB is now preparing to make the final blow. Earlier they submitted to the Parliament a really damaging proposal, to rescind a year and a half ahead of schedule, the derogation from the oil embargo, granted to Bulgaria by Brussels.

The Dilemma

Now Bulgaria is looking forward to the municipal elections at the end of October. The Liberal wing – “The Change” party faces a dilemma: if they back the proposal to rescind the oil derogation, they will be responsible for the ensuing fuel price hike just prior to the vote, because they have control over the cabinet. On the other hand, if the liberals refuse to back the proposal, they will be branded pro-Russian, thus losing some of their voters.

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At first glance, this looks like a simple and neat political trick, which puts “The Change” in the corner.

There is more to it than meets the eye.

If the derogation is rescinded this early and the local refinery does not have time to diversify supplies because of the serious logistical challenges of bringing crude to the Black Sea through the Bosporus, the whole production cycle may be jeopardized. Experts say that this could not only inflate the diesel price out of control but may even cause temporary shortages. There are simply no alternative sources of fuel at a price point that the locals can afford.

There are also no proper transport links to satisfy the local market with deliveries of fuel from other producers in the region at the moment. Suffice it to say the fuel market on the Balkan peninsula will be stirred up. North Macedonia will be affected the most since it is sourcing fuels mainly from Bulgaria.

The Bulgarian reserves are not at the regulatory levels but way lower – between 70% and 50% of the regulatory thresholds which were planned for 90 days. In other words, shortages are a real threat, despite the seeming abundance of diesel at the moment.

Unfortunately, this fuel “apocalypse” is already at stake in this political game and the clock to the final vote on the derogation is ticking.

Here comes the twist

What further fuels this derogation nonsense is that some of the GERB and MRF politicians have an eye for the fuel business a way back. They even attempted to grab a chunk of the retail market a few years ago, others persisted in their efforts and today own shares of one of the largest retailers in the Country. They will back the motion in the Parliament against the derogation, hoping that disruption in local production will expose the market to the shortage, and they will step in and arrange shipments from neighbouring countries, mainly Turkey where prices are the lowest.

There are rumours that the vote on the derogation will be expedited within days, without public consultation. After all, why should the citizens have a say in such business matters, right?

If the derogation remains in force, it will eventually expire in end-2024, but by then the local refinery will have time to find ways to source alternative crude oil and upgrade the technological process. The cabinet and the owners of the refinery are already making plans on how to proceed.

Should the derogation be abolished now, the market volatility will surely take people to the streets. The new cabinet will be toppled and the liberals will face certain demise. Price hikes will affect the whole region and we may even see diesel shortages in all Balkans.

Want more?

Then again, how it happened is not on local news, warning people of what is going on? As you may have guessed, the person who owns two large TV channels and other media in Bulgaria also has an eye for the fuel import business. He is a secret partner in one of the largest fuel retailers and an acting MP, sponsoring the bill for the abolition of the derogation. The same MP is on the US OFAC sanctions list but is still in charge of many businesses and many fellow MPs in the Bulgarian Parliament. As seen in public, this is him showing the finger to the US for the sanctions against him and for twisting the arms of the locals to back the coalition cabinet in the first place.

There is no doubt who will be to blame for this mess. However, this is a homemade problem created by good old-fashioned greed and corruption.

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