Bulgarian Economy and Energy Minister Rumen Ovcharov has given a green light for the restructuring of state-run gas major Bulgargas into a four-unit holding structure. Under its EU commitments Bulgaria should split gas transmission and public supply activities by end-2006. Under the European practice transmission grid operators have trade relations with gas suppliers to end-consumers. Bulgaria's deregulated gas market should follow this principle but the problem is that Bulgargas monopoly on the gas market will be lifted after 2010 at the earliest since Bulgargas has a long-term gas supply agreement with Russian gas major Gazprom and Gazrpom covers 75 pct of Bulgaria's domestic consumption. Caspian gas is a likely alternative to Russian gas. Caspian gas supply to Bulgaria can be kicked off in 2009 at the earliest when the Nabucco gas pipeline pumping up gas from mid Asia through Iran, Turkey, Bulgaria and Romania to Austria will be built.

The privatisation of the Bulgarian gas major will make sense only after other gas suppliers enter the market. Under the approved strategy for Bulgargas restructuring the holding company Bulgargas Holding EAD will control 100 pct in its four subsidiaries and 20 pct in Nabucco Bulgaria.

The four units in the holding structure are Bulgartransgas EAD in charge of gas sales, Bulgargas EAD in charge of transmission, storage and delivery of natural gas, Bulgartel in charge of communication services and Nabucco Bulgaria, a legal entity 100 pct owned by Nabucco gas pipeline international in which Bulgargas holding controls 20 pct. The Bulgargas restructuring is likely to be supported by EU pre-accession funds or other kind of financing extended by the EU in relation to the agreed full membership of Bulgaria in the Union.