Bulgaria must split coal to save €400 million

Bulgaria's deputy prime minister Atanas Pekanov told parliament last week that the country has 45 days to complete every outstanding reform in its EU recovery plan (Fakti). The biggest single roadblock is a corporate governance change: pulling two coal companies out of the state energy holding. If that doesn't happen, roughly €400 million in EU funds won't arrive.

The money comes from the Recovery and Resilience Facility (the RRF), the EU's post-pandemic programme that pays governments only after they prove they completed specific reforms (European Commission, Regulation EU 2021/241). Miss a reform, and the European Commission can cut or suspend the payment. Bulgaria's final payment request is worth nearly €1.7 billion and must be submitted by 31 August (BTA). Brussels already showed how this works: when Bulgaria filed its fourth request for €1.1 billion, the Commission found 23 of 26 milestones met and withheld money for the rest (Mirage News).

Why Splitting a Holding Company Matters

The reform itself sounds like paperwork: separate Mini Maritsa East (a state coal mine) and TPP Maritsa East 2 (a coal power plant) from Bulgarian Energy Holding, known as BEH. Energy Minister Iva Petrova confirmed this is a binding commitment that cannot be reversed (BTA).

The reason Brussels wants the split is straightforward. Inside BEH, profitable divisions like gas trading and electricity networks quietly absorb coal losses. That cross-subsidisation hides the true cost of keeping coal alive. Once the coal companies stand on their own books, every loss is visible and the government has to decide openly how much public money to keep spending (Mirage News). If coal needs a subsidy, it should show up as a budget line, not stay buried inside a corporate group.

From Budget to Payroll

If Bulgaria's final payment stalls, the first hit lands on the state budget. Pekanov described the previous tranche as critical for public finances; less than half of recovery money had actually reached project beneficiaries (Fakti). A delay forces Sofia to either borrow more, cut spending elsewhere, or slow payments to contractors already waiting.

The pressure runs deeper in the coal region. Petrova revealed that Mini Maritsa East needed about €50 million in a single month for wages and running costs, with labour costs rising around 8% and external services up roughly 12% (BTA). The company cannot cover its own payroll. The state fills the gap. If EU funds freeze, that gap gets harder to plug.

Petrova promised no closures and no mass layoffs (Nova). The proposed alternative is indirect: around €500 million from the EU's Just Transition Fund could go toward land reclamation, industrial zones and new employers in the region. Pekanov told parliament the money cannot flow directly to the two coal companies, though they could work as subcontractors. For Maritsa East workers, that's a real distinction: transition funds may reclaim land and build roads, but they don't guarantee the next pay cheque.

Bulgaria is not the only country racing the clock. Romania risks losing more than €4.5 billion if it cannot pass six reform laws before a similar deadline (Digi24). As the RRF closes at end-2026, every unfinished reform carries a budget cost (Regulation EU 2021/241). But Bulgaria's case is sharper. The contested reform isn't a delayed procurement. It's a governance change with active political resistance in a region where the state already covers payroll.

The RRF is working exactly as designed. For countries that signed up to reforms and then delayed them, that is precisely the problem.