Bulgarian contract renewals promise new lease of life for duty-free

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By Trevor Lloyd-Jones

The new Bulgarian government elected last month is expected to shake up the existing national contracts for duty-free operators when they expire next year.

Under the country's Customs Act, all Bulgarian duty-free operators have a licence to trade until the expiry of their contracts with the Chief Customs Directorate, but not later than December 31 2002. The first ten-year contracts that were sealed in 1991and 1992 are about to expire by the end of 2001.

One operator BNK, which operates a store at Kalotino and supplies six or seven other stores, believes changes and a new law are inevitable some time after September. A BNK spokesman, Nikolai Balevski, told TRW: "People expect this government to make many positive changes. BNK has a contract until the end of 2002. Some duty-free companies have a licence until December 2001, but at the moment no one knows exactly what is going to happen."

According to the Chief Customs Directorate there is no way of extending duty-free licences under the acting legislation. Changes will have to be decided by the Finance Minister, Muravei Radev. Another possible measure would be to renew the licences by annexes to the old contracts. As in other Eastern European countries, the government is also taking account of the role of border shops in its negotiations for future EU membership and their importance in attracting foreign currency.

There are about ten duty free operators in Bulgaria with total turnover of approximately $44m. The largest operator is state-owned Transimpex, which is about to be privatised. There is also speculation that, as part of the changes, the government might reform the state monopoly at Sofia International airport, introducing an element of competition.