Position on Draft Act Amending and Supplementing the Subsurface Resources Act

In its capacity as a member of Working Group 20, the Bulgarian Association of the Cement Industry (BACI) hereby presented to the Ministry of environment and water its position regarding some of the draft texts.

  1. §12 proposes amending the text of Article 23, whereby in Article 23, Paragraph 1, Item 4, a requirement is added, viz., the person should not have been imposed “an administrative sanction under the terms and procedure of this Act during the last year prior to submittal of an application for obtaining a licence for prospecting and exploration or for exploration or for a concession for extraction”. The text is imprecise due to the absence of a clarification that the penalty decree should be enforceable. Imposing an administrative sanction, following the arguments of Article 53 of the Administrative Violations and Sanctions Act, is done by issuing a penalty decree but until it takes effect, the said decree should not be a hindrance for granting a licence for prospecting and exploration or for exploration and concession for extraction. On the other hand, Paragraph 2 of the same provision says that in respect of the presence of the circumstances under Paragraph 1, Item 4, an ex officio check shall be carried out; however, in its present form the text of Item 4 may be interpreted and implemented in a different way.
    Suggestion: To clarify the text by adding the phrase “with an enforceable penalty decree”.
  2. §17, Item 1 proposes amending the text of Article 26, Paragraph 1, Item 1, whereby the current “the competent ministers with respect to protection of the national security and the defence of this country, the territories, sites and cultural values protected by law” is suggested to be replaced by “the competent authorities with respect to protection of the national security, the defence of this country, the territories, sites and cultural values protected by law, or officials authorized thereby”. We are of the opinion that the new wording brings more ambiguity with regard to the circle of officials who are to take part in the coordinating procedures and also with regard to how are they to be involved. The effective provision clearly indicates the circle of ministers who should be involved in the coordinating procedures, who for their part are competent to engage the specialized administrations.
    Suggestion: We think that the existing text of Article 26, Paragraph 1, Item 1 of the Subsurface Resources Act should remain.
  3. §17, Item 3 proposes to erase the existing last sentence of Article 26, Paragraph 3 of the Subsurface Resources Act which says that failure to present a position within a 30-day period on the part of the authorities under Paragraph 1 shall be considered as consent without any objections. The suggested scrapping of the text opens up considerable ambiguity about how to interpret failure to present a position within a concrete procedure and the possible effect of a position presented by an authority outside the set deadline.
    Suggestion: We think that the existing text of Article 26, Paragraph 3 of the Subsurface Resources Act should remain.
  4. §60 proposes the creation of a new Article 66b to provide for cases of amending/supplementing concession agreements. A text has been initially suggested in Paragraph 1, Item 3, viz., “the occurrence of circumstances as a result of which the benefits for the concessionaire from the concession surpass the projected benefits upon the award of the concession”. After subsequent revisions the text now reads as follows: “occurrence of objective circumstances as a result of which the financial conditions as at award of the concession are considerably changed”. We think that despite the revisions of the initially proposed text, it still does not offer sufficient clarity as to the potential scope and how a change that has occurred will be assessed. Such a provision may spell economic instability for any agreement that is signed and an additional risk for any investment intention.
    Suggestion: We think that the suggested new Article 66b, Paragraph 1, Item 3 should be scrapped.
  5. §65 proposes the creation of a section in respect of consequences upon termination of a concession agreement. The suggested new Article 71c, Paragraph 2 envisages excluding a possibility for receipt of compensation for improvements made as a result of a concession agreement, namely:  “The compensation under Paragraph 1 shall not be due when the concession agreement is terminated unilaterally by a concessionaire or through concessionaire’s fault”. We think that the unilateral termination by a concessionaire should not be included in these exceptions with a view of the fact that such unilateral termination may have occurred completely on the basis of a legitimate interest or due to reasons beyond the control of the concessionaire. In this case it would be illogical not to have compensations for already made accretions and improvements.
    Suggestion: Scrapping the unilateral termination by the concessionaire in the text of the new Article 71c, Paragraph 2, and keeping only the hypothesis of the concessionaire’s fault.

We hope that our comments will be reckoned with.