In compliance with the changes in the Energy Act (“EA”) the heating suppliers, cogenerations, factory plants and the renewable energy sources plants (“RES”) with an installed power capacity exceeding 4 MW whose electricity was until now purchased by the National Electricity Company (“NEC”) at fixed preferential prices, will sell all their energy on the energy exchange. Until 31th October 2018 they will have to sign contracts with premium with the “Electricity System Security” fund (“ESSF”). The contracts shall enter into force no later than 1st January 2019.

ESSF is entitled as of 1st July 2018 to request for reimbursement for costs arising from obligations to buy electricity at preferential prices and for granting premiums for electricity from renewable sources and from high-efficiency combined generation of electricity and heat.

By 30th June 2018 traders and producers of electricity with sites with a total installed capacity of 4 MW and exceeding 4 MW shall have to deposit a bank guarantee or a deposit under

Article 36j (3) of the EA into the ESSF.

As of 1st July 2018 owners of energy companies licensed under the EA should declare the existence of intentions for division, separation, merger, disposition of shares representing more than 20% of the capital, or sale of part or all assets of the energy company. The company has the obligation to declare the above together with the annual report under the license which is submitted to the Energy and Water Regulation Committee.

EWRC shall expand its powers by being responsible for permissions for disposition fo shares, representing more than 20% of the capital of licensed companies for transmission and distribution of electricity, heat or gas. This change shall be effective as of 1st July 2018 for the purposed of ensuring security of supply, the protection of national security and public order.

Within 18 months of the entry into force of this EA the Minister of Energy develops and delivers for approval by the

Council of Ministers a Strategy for Sustainable Energy Development of the Republic of Bulgaria.

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