The “Lukoil Neftohim Burgas” refinery has filed two lawsuits because of its concession on the Rosenets tanker unloading terminal, which was revoked last year, Mediapool reported.
However, both cases are still pending because of the consideration of the case in the Constitutional Court, which was referred by President Rumen Radev in October 2023. Radev claims that the parliamentary decision to terminate the concession was taken hastily, it may disrupt the supply of raw materials for processing, moreover, it is contrary to the basic law and the interests of the citizens.
The outcome of the two cases really depends on the decision of the Constitutional Court, because if it ruled that the basic law was not violated, the two courts would probably come up with the opposite decision and rule in favor of Lukoil. In the opposite case, however, the concession may be reinstated and even a multimillion-dollar fine to be paid by the state to the oil refinery.
The works
One of the cases filed by “Lukoil Neftohim Burgas” is before the Burgas District Court. It is against the Executive Agency “Maritime Administration” and is due to the revocation of the license of the Rosenets port operator company, which is based on the parliament’s decision to terminate the terminal management concession.
The other case is before the Supreme Administrative Court. It is against the state and is because of the withdrawal of the concession itself for “Rosenets”. According to Lukoil, this is illegal because Article 5K of the Council’s European Regulation 2022/576 of April 8, 2022 on new restrictive measures against Russia due to the war in Ukraine provides that the bans will not apply until October 10, 2022 for contracts concluded before April 9, 2022. This is exactly the concession contract for “Rosenets”, signed in 2011 by the government of GERB leader Boyko Borisov.
That is, by October 10, 2022, the government should have decided to terminate this contract, but on October 6, the cabinet made decision 738. It allows the continuation of the contract for granting a concession on “Rosenets”. The former operator of the oil terminal claims that the concession contract was cemented in this way because the state expressed its will, according to the requirements of the European regulation.
In addition, the Council of Ministers has not taken a decision to cancel the old decision on the derogation for the “Rosenets” concession, lawyers explain and recall that the Bulgarian constitution equates concession rights to property rights.
The letter of the law
They also draw attention to the fact that in the Bulgarian Law on the Control of the Implementation of Restrictive Measures adopted last summer in view of the actions of Russia, by virtue of which “Rosenets” was taken away, it is written that the awarded concessions for strategic sites of importance for national security affecting oil and petroleum products produced from crude oil originating in Russia or exported from Russia. And the Council of Ministers or the Ministry of Transport have not analyzed what these sites are, whether there are other concessions besides the Burgas refinery. No formal decision was taken by the Council of Ministers to take away the port.
The Ministry of Transport confirmed the case filed for the revoked port operator’s license. The agency refused to comment on the defense of the executive director of the Maritime Administration, who issued the order. She will be presented as the case continues
An interesting aspect of the case before the Supreme Administrative Court for the revocation of the concession itself is that, according to the concluded contract, upon its unilateral termination by the state, it owes a penalty in the amount of the investments made by the concessionaire. However, a separate civil action must be filed for such a claim.
Who will pay whom?
The competent department indicated that the investments recognized by the Minister of Transport for the period from the date of entry into force of the concession contract on July 30, 2011 until its termination on August 15, 2023 are BGN 57,727,963.59 excluding VAT (€29,515,839.10 without VAT). According to the contract for the 35 years of operation, the private company had to invest 44.5 million euros in the development of the terminal for unloading crude oil tankers.
It turns out that if the clauses of the concession contract are followed, “Lukoil” can claim the reimbursement of nearly 30 million euros, although Minister Georgi Gvozdeikov announced in August 2023 that the state will not pay anything for the early termination of the concession. A month later, he already admitted that Lukoil could file claims for compensation, which it most likely will.
The state takes back Rosenets from Neftohim, appoints its manager if necessary and stops the export of fuels from there
In reality, for 12 years – until the withdrawal of the concession for Rosenets, Lukoil paid concession fees (one-time, fixed and variable) totaling BGN 20,184,149.45 without VAT, according to the data of the Ministry of Transport.
It is a curious fact that at the moment – in order to use the terminal, “Port Infrastructure” has entered into an agreement with “Lukoil Neftohim” for cooperation “in view of the need for smooth operation of the terminal by the state company.
“The agreement does not regulate a financial value. The period of validity is tied to the occurrence of various cases, one of which is when concluding a contract for the performance of port services and activities or a concession contract with a port operator who has won a competition, according to the procedure provided by law, “Port Infrastructure stated.”
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