Paragraph 10 of the Transitional and Final Provisions of the Concessions Act - the new “Catch-22” for investors in Hydropower Plants (HPPs)

Under the pressure of the ambitious goals of the European Union in the field of electricity production from renewable sources in the last decade in Bulgaria was created a regulatory framework to stimulate investments in the sector.

With the Renewable Energy Act, adopted in 2011, the relevant amendments to the Energy Act and a number of by-laws, incentives and reliefs were introduced for investors in renewable energy production facilities.A number of investors have turned to projects for the construction of hydropower plants - a traditional and existing for over a century method of obtaining electricity from waterpower.

Precisely on the occasion of using the necessary water resource, these projects turned out to be, in fact, entirely dependent on the possibility to legally abstract water from the surface water bodies on which they were built. Unfortunately, the legislator turned out to be extremely inconsistent in providing this possibility.

The problem with protected areas

In 2015 para. 4 of Art. 118g of the Water Act introduced a ban on water abstraction from surface waters for electricity production, when the relevant part of the river falls within a protection zones under Art. 119a, para. 1, item 5 of the Water Act: protected territories and zones, defined, or announced for protection as living places and biological species, in which maintenance or improvement of waters condition is an essential factor for their protection.

The answer to the question of which are the protected areas and zones in which maintenance or improvement of waters condition is an essential factor for their protection was provided to the Basin Directorates in places, which widely reflected such areas in the River Basin Management Plans 2016-2021. The above process was somehow left out of the attention of investors, as the practice of the Basin Directorates was relatively constant - that the ban applies to new investment intentions, but not to facilities that were built and put into operation before its adoption.

The strange legislative decision of par. 10 of the TCP of the Insurance Code

This completely reasonable, logical and in line with the normative logic decision was torpedoed by a transitional and concluding provision, adopted without public discussion in a normative act that has no connection with the subject of regulation, namely: para. 10 to the Transitional and Final Provisions of the Concessions Act. The text itself reads: “The provision of Item 4 of Article 118g (1) of the Water Act shall not apply to water withdrawal for any hydroelectric power plants which were commissioned by the 9th day of August 2010.“

On the contrary, in the practice of the Basin Directorates it was accepted that any requests for extensions of water abstraction permits for plants falling within a protection zones should be refused, for which they themselves have determined that water protection is an important factor, and in the cases that the HPPs have been put into operation after August 9, 2010. Thus, dozens of hydropower plants already built and operating for years, turned out to have controversial rights to abstract water.

Several key circumstances are not taken into account - in the process of realization of the investment these sites have received positive assessments of compatibility or such are not even required, they have been adopted without a note of acceptance committees. Faced with the imposed restrictions years after they have built their projects, the investors in the affected HPPs have no choice but to challenge the refusals in court.

Disputing in court the refusals for extension of the right to water abstraction

Because of this, in our opinion imprecise legislative solution, administrative courts were seized with complaints against the refusals.Our team was involved in preparing complaints against pronounced refusals to continue the right of water abstraction and representation in Court proceedings.

We are available, in case you want to get our professional opinion on a similar case.