Bulgaria plans scheme to subsidize electricity prices for businesses

Bulgaria is the first European Union country to introduce financial compensation for energy-intensive industries due to rising electricity prices, according to Energy Minister Traycho Traykov.

The US-Israeli attack on Iran has severely disrupted the global supply of oil and natural gas. Since the war began in late February, the benchmark Brent crude price has spiked by more than 55%, while the TTF natural gas benchmark soared nearly 60%. Under the EU’s merit order system, natural gas prices dictate the price of electricity.

On Bulgaria’s power exchange, IBEX, the day-ahead price for April 2 reached EUR 136.6 per MWh, compared to EUR 67.5 per MWh on February 27, just before the conflict started.

The measure will be implemented retroactively

Minister Traycho Traykov stressed that the financial scheme will be launched within a few weeks, pending approval from the European Commission.

The compensation will cover up to 50% of the part of the electricity price above the threshold of EUR 63 per MWh, according to the Ministry of Energy. The measure will be implemented retroactively from July 1, 2025.

Traykov pointed out that this support provides these industries with the flexibility to price their products without further stimulating inflation. The ministry added that compensating energy-intensive sectors will also benefit other parts of the economy that rely on their products.

Businesses’ representatives called on the government to act

This initiative is an additional step in the government’s efforts to curb inflation driven by the war in the Middle East. The measure will support businesses and help maintain their competitiveness during this critical period, the ministry stressed.

A few days ago, the Bulgarian Industrial Association (BIA), the Confederation of Employers and Industrialists in Bulgaria (KRIB), and other employer organizations asked the government to accelerate compensation for high electricity costs.

In a letter to the government, these organizations noted that Bulgaria’s energy-intensive industry generates 26% of the nation’s GDP and plays a vital role in employment, regional development, and strategic supply chains.