by Andrew Macdowall*

Once minor hurdles are overcome, expect handsome dividends from a new growth industry

Bulgaria's biofuels industry has only been operating for a couple of years. But already around 25 installations are in place and many firms are lining up to exploit the competitive assets of relatively low-cost farming and labour as well as expected subsidies and incentives. The biofuels industry (fuel deriving from biological material) is now sufficiently big for traders to note an upward pull on the price of that great Bulgarian staple - sunflower oil.

Local firms are also meeting the challenge. The Slunchevi Luchi, or Sunny Rays, refinery - part of the giant Chimimport conglomerate - is close to completing a biodiesel factory at Provadiya worth almost $21 million. The refinery hopes to produce the first trial batch of biofuel in August. It is also planning a plant for bioethanol in Varna, worth a little over $67 million. Then there is Evro Etil, or EuroEthyl, which invested $10.7 million in a bioethanol plant in Alfatar that came into production late last year. Now it intends to spend another $20.2 million expanding it. Finally, Kristera floated a $6 million corporate bond in May with a view to building a biodiesel plant.

Foreign companies are also attracted to Bulgaria's biofuels industry. Spain's bio-energy firm Green Fuels Corporation has announced that it is planning to invest up to $94 million in a biofuels plant near the northern town of Pleven, with an annual capacity of 45,000 tonnes of biodiesel and 60,000 tonnes of bioethanol. The municipality of Pleven is also reportedly negotiating with as yet unnamed Swedish entrepreneurs who are contemplating another $94 million plant - this one only for bioethanol.

When Rumen Ovcharov, former economy and energy minister, visited the United States in March he spoke to market leader Galveston Bay, who reportedly also expressed considerable interest. And everywhere there are signs that productivity in biofuels is soaring. Late last year capacity in place for biodiesel alone was around 140,000 tonnes.

Industry experts estimate this could soon reach 400,000 tonnes. This is convenient because Bulgaria now subscribes to the EU target of raising biofuels' share in total transport fuels to 5.75 percent by 2010 and 10 percent by 2020.

But Bulgaria has to overcome various challenges before this happens. First, there is concern over quality. Besides the refineries, there are estimated to be about 100 garage producers of biofuel. Obviously, little of their output is up to standard. Nor, for that matter, is everything produced by the refineries themselves. Recently, Austria's OMV, a big player on the local petrol retailing market, was quoted in the local press as saying it would like to add biodiesel to its range but could not find a local Euro-compliant producer. That will change as refineries under development come into production, OMV officials added. There is also the question of hefty Bulgarian excise duties on fuel.

Biodiesel has been exempt since the beginning of 2006, but nothing else has. And that is just for pure biodiesel. There has been no tax advantage to putting an admixture of biodiesel - or any other biofuel - into conventional fuels. This situation will soon be remedied by a special law on renewables and biofuels currently being passed by parliament. This will favour admixtures and also provide exemptions for biomethanol, bioethanol, and biomethyl ether, which can all be used as a fuel additive.

Subsidies are also needed to encourage production while the cost of conventional energy sources - petrol and diesel - is lower. Brussels is offering a subsidy of a little over $60 per hectare planted for the raw material used in making biofuel. Bulgarian authorities recently issued the ordinance needed to put the scheme into practice. Unfortunately, to qualify for the subsidy, farmers need to have a signed contract with a refiner, who in turn needs to make a cash deposit of close to $80 per hectare to guarantee that the crops grown will be processed into biofuels. This ordinance was published just a week before the deadline it laid down for submitting that guarantee, so rendering the paperwork impossible. The EU reconsidered this requirement and introduced a new rule in March that no deposit is required if the refinery in question is a registered producer of biofuels. However, Bulgaria has yet to install a registration procedure.

All signs are that Bulgaria will become a successful producer of biofuels once it has sorted out these minor legislative, bureaucratic and financial issues.

*Andrew MacDowall, Oxford Business Group analyst


    Commenting on

    Vagabond Media Ltd requires you to submit a valid email to comment on to secure that you are not a bot or a spammer. Learn more on how the company manages your personal information on our Privacy Policy. By filling the comment form you declare that you will not use for the purpose of violating the laws of the Republic of Bulgaria. When commenting on please observe some simple rules. You must avoid sexually explicit language and racist, vulgar, religiously intolerant or obscene comments aiming to insult Vagabond Media Ltd, other companies, countries, nationalities, confessions or authors of postings and/or other comments. Do not post spam. Write in English. Unsolicited commercial messages, obscene postings and personal attacks will be removed without notice. The comments will be moderated and may take some time to appear on

Add new comment

The content of this field is kept private and will not be shown publicly.

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.

Discover More

Six months after the Covid-19 pandemic forced the world into lockdowns and uncertainties, a fuller picture of its effect on the world economy is beginning to emerge. Bulgaria fared not too bad, according to recent statistical data.

Nowhere is the abyss between what Boyko Borisov's GERB says it is doing and what it in fact does so obvious than in the economy of what firmly remains the EU's poorest state.

From bad to worse? According to a poll by Alpha Research published at the end of 2011, the majority of Bulgarians consider 2011 to have been "the worst" since the economic collapse of 1997.

In the third quarter of 2010 the average monthly income of an adult member of a family in Bulgaria decreased by 2.2 percent on a year earlier. At the moment it is 932 leva, or 466 euros, according to the National Statistical Institute.

The crisis was already a fact in Bulgaria at the beginning of 2009, but the owner of an accountancy firm in Gorna Oryahovitsa would deny it even more vehemently than then Prime Minister Sergey Stanishev.
Rays of hope have started to peep through the cloud-covered economic horizon – even in the new EU member states. Poland has managed to avoid going into recession.

At first, they stopped buying. Then it got worse - they started selling. Yes, it seems the British have deserted the Bulgarian property market and the Bulgarians are taking it very personally.
"The Bulgarian economy is stable." The words former Finance Minister Plamen Oresharski uttered in October 2008 seem more than just a little out of place a year later.

While last autumn the prevailing opinion of people in this country was that the economic crisis did not have a direct effect on them, their view is now completely different.

The commercial real estate market in Bulgaria is at a crossroads.
The "monster munch," as Londoners call the current credit crunch, in my view is running out steam. Everyone is growing tired of the pundits.
According to a saying very popular among Bulgarians in the past, "In his life, a man must do three things: raise a child, plant a tree and build a house for his family." Nowadays this way of thinking no longer reflects the urban lifestyle – the current rati