Bulgaria’s Coal Split Deadline

Bulgaria has 45 days to do what it has spent years putting off. Atanas Pekanov, the country's deputy prime minister, told parliament last week that every unfinished reform in Sofia's EU recovery plan must now be completed inside that window (Fakti). The reform causing most trouble is not a new tax or a grand climate target. It is a corporate reshuffle: two coal companies must be taken out of the state energy holding. Without that, about €400 million in EU money will not be paid.

The cash sits inside the Recovery and Resilience Facility, the EU's post-pandemic fund that pays governments only when they can show that agreed reforms have actually been delivered (European Commission, Regulation EU 2021/241). It is not a grant cheque handed over on trust. Miss a milestone, and the European Commission can reduce or suspend the payment. Bulgaria's final claim is worth nearly €1.7 billion and has to be submitted by 31 August (BTA). Brussels has already shown it is willing to use the mechanism: when Sofia filed its fourth request for €1.1 billion, the Commission judged that 23 of 26 milestones had been met and held back money linked to the rest (Mirage News).

Why Splitting a Holding Company Matters

On paper, the reform looks almost technical. Mini Maritsa East, a state coal mine, and TPP Maritsa East 2, a coal-fired power plant, must be separated from Bulgarian Energy Holding, known as BEH. Energy Minister Iva Petrova has confirmed that this is a binding commitment and cannot be unwound later (BTA).

The point is visibility. While the coal businesses remain inside BEH, profitable arms such as gas trading and electricity networks can quietly carry their losses. That keeps the political cost of coal lower than the financial cost. Once the companies stand on their own accounts, the losses become harder to disguise and the government has to say plainly how much public money it is prepared to spend keeping them alive (Mirage News). If coal is to be subsidised, Brussels wants it on the budget, not buried inside a state corporate structure.

From Budget to Payroll

If the final payment is delayed, the first pressure point is the state budget. Pekanov said the previous tranche was critical for public finances, while less than half of recovery money had actually reached the projects meant to receive it (Fakti). A hold-up leaves Sofia with familiar choices: borrow more, cut elsewhere, or slow payments to contractors already waiting.

In the coal region, the issue is more immediate. Petrova said Mini Maritsa East needed about €50 million in one month alone for wages and operating costs, with labour costs up about 8% and external services rising roughly 12% (BTA). The company cannot meet payroll from its own resources. The state is filling the hole. If EU money is frozen, that hole becomes harder to cover.

Petrova has promised there will be no closures and no mass layoffs (Nova). The alternative being offered is indirect support: about €500 million from the EU's Just Transition Fund could be used for land reclamation, industrial zones and new employers in the region. Pekanov told parliament that the money cannot go directly to the two coal companies, though they could be used as subcontractors. For workers in Maritsa East, the distinction matters. Transition funding may restore land and build roads, but it does not guarantee the next wage packet.

Bulgaria is not alone in discovering that the recovery fund's deadlines have teeth. Romania risks losing more than €4.5 billion if it fails to pass six reform laws before a similar deadline (Digi24). With the RRF closing at the end of 2026, every unfinished reform now has a budget price attached (Regulation EU 2021/241). Bulgaria's problem is sharper because the blocked reform is not a delayed tender or a missing administrative rule. It is a governance change facing active political resistance in a region where the state is already helping to pay wages.

The RRF is doing exactly what it was built to do. For governments that signed up to reforms and then delayed them, that is the difficulty.