Bulgarian MPs approve expanded powers for Lukoil special administrator
Bulgaria’s National Assembly approved on November 7 amendments to the country’s law regulating operations in the oil and oil products industry, expanding the powers of special representatives appointed to manage assets deemed of critical importance.
Although the amendments at no point refer to the assets of Russian oil major Lukoil, which owns the Lukoil Neftochim oil refinery in Bourgas and an extensive network of petrol stations through Lukoil Bulgaria, the motives tabled by the bill’s sponsors specifically point out that the changes were aimed specifically at those companies.
Lukoil became subject of US sanctions last month, but the US Treasury Department’s Office of Foreign Assets Control (OFAC) gave affected companies until November 21 to carry out all necessary transactions and transfers, setting a hard deadline for Bulgarian authorities to find a way for the refinery to continue operations.
So far, this prompted Bulgaria’s National Assembly to legislate rules on any sale of Lukoil assets, requiring a clearance from the State Agency for National Security (SANS) and the Cabinet – vetoed by President Roumen Radev, but overturned by MPs on November 6 – and a resolution to impose restrictions on the export and intra-community supplies to other European Union countries of fuel products.
Lukoil had announced it agreed the sale of its international assets to Swiss-based oil trader Gunvor, but US authorities shut down the prospect of approving the deal late on November 6, prompting Gunvor to withdraw from the agreement.
Details of the bill leaked in Bulgarian media earlier this week, but the failure of the Lukoil-Gunvor deal appeared to spur Bulgaria’s government coalition into action and to speed up proceedings in the National Assembly.
The bill was passed without debate in a hastily-called sitting of Parliament’s energy committee, with one opposition MP claiming that members of the committee from opposition parties had been notified too late and unable to take part.
Parliament then voted to amend its order paper to add the bill to its agenda for the November 7 sitting. After a lengthy and, at times, ill-tempered debate, the bill passed at first reading with 130 votes in favour, 71 opposed and two abstentions.
The ruling majority’s votes were enough to pass a motion to hold the second reading of the bill on the same day, despite the opposition’s criticism that this would curtail their ability to table any further amendments.
Some changes were made to the bill between readings, with opposition MPs repeating the criticism that they did not have enough time to fully assess the impact and demanding that the second reading was postponed. Against the opposition’s calls, the National Assembly proceeded to vote on and pass the bill’s clauses at second reading.
The bill’s provisions greatly expand the role of the special administrator, who would be appointed by Cabinet decision. The appointment of the administrator would suspend the rights of current shareholders and the administrator would have the power to sell ownership shares after a market assessment, subject to approval by Cabinet decision.
Any revenue from such a deal would be put in a special account in the Bulgarian Development Bank, which account would be managed by the Finance Ministry.
However, the administrator cannot sell parts of the assets owned by the entity they manage, outside of standard operational activities, nor can the administrator take on financial liabilities outside standard operational activities, according to the bill.
According to the bill’s sponsors, the appointment of the special administrator would allow the Lukoil refinery and petrol stations to operate beyond November 21, with the bill’s motives citing that a similar model was already employed in Germany and had secured an exemption from sanctions.
The amendments would go into force as soon as they are published in the State Gazette, although that could be delayed if President Roumen Radev opts to exercise his right to veto, returning the bill to the National Assembly for further discussion.
Speaking to reporters earlier in the day, while Parliament was still debating the bill, Radev said that the appointment of a special administrator was “an emergency option”, without giving a clear indication whether he intended to use his veto power.
(Lukoil petrol station. Photo: sociate/flickr.com)
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