Why Can Energy Companies Build on Public Land Properties Owned by the State

05_Why Can Energy Companies Buid on Public Land Properties _june_ 2013_ME

The Constitution of the Republic of Bulgaria distinguishes between private and public property. Only the State and municipalities are entitled to own public property. The public properties owned by the State and municipalities may not be subject to disposal transactions; they may not be subject to sale or acquisition by prescription. However, limited rights in rem may be granted on such properties, such as buildings rights, including the right to build extensions and superstructures, the right to use, and easement rights. This exception applies only to cases in which the granting of the respective rights is envisaged explicitly in a special law.

An example of such a special law is the Energy Act, which envisages the right of and the opportunity for energy companies to build energy facilities on state-owned properties upon the granting of the right to build on the land for consideration without any competitive bidding or public tender. This paper focuses on the opportunity for granting limited rights in rem to properties which are public state ownership.

As well as the existence of a special law, another requirement for the granting of the right to build on land which is public state ownership is to ensure that the building right will be needed for the implementation of a national project or will meet public needs on a long-term basis.

  • A national project is a project defined as such by law or as any of the following infrastructure projects: construction and rehabilitation of transport and communication networks and facilities like national roads, railroads and railway infrastructure facilities, ports, airports and related facilities; other technical infrastructure networks and facilities like water supply, sewage, drinking and waste water treatment plants, waste treatment facilities, power supply, district heating, gas supply and electronic communication networks, which are specified as national projects in a decision of the Council of Ministers pursuant to the State Ownership Act;
  • Public needs – there is no legal definition of this term but this is not a lacuna; conversely, it is an opportunity for the relevant government authority to decide whether the projects with its characteristics meets public needs or not on a case-by-case basis.

Previously, that opportunity for granting the right to build on public properties of the state was not applicable to cases when the property in question was within the domain of the exclusive public state ownership. Exclusive public property are the mineral resources, the sea coastline, national roads, as well as water resources, forests and parks of national importance, and natural and archaeological reserves as specified by law. However, now it is permissible to grant the right to build on such properties pursuant to the amendments to the State Ownership Act of 15 March 2013 (The State Gazette, No. 27 of 2013) which allow the granting of limited rights in rem to properties which are in the domain of exclusive public ownership.

Building rights may be granted for a fixed term or for an indefinite period of time but they are always granted for consideration. In the case of an indefinite term, the building right holder retains the ownership right to the buildings and the building right does not pass onto the land owner, whereby when the buildings are demolished, the building right holder is entitled to build again. If the building right is bound by a fixed term, the land owner becomes also owner of the buildings upon the expiration of the term.