Банкеръ Weekly



Will the Trakiya highway concession survive? The answer to this question is now of key importance mainly because of the forthcoming parliamentary elections. The refusal of the European Investment Bank (EIB) to give green light to the highway put a wet blanket on the Government. The financial institution announced in public early this week that the Trakiya concessionaire had not been chosen fairly and insisted for its withdrawal, giving a chance to a new tender.Anyway, the situation is quite delicate. On March 15, the Cabinet decided that three conditions should be fulfilled in order to enforce the concession agreement. The first one - to get a permission from the Commission for the Protection of Competition, was fulfilled on May 5. The other two were to get the written consent of the creditor, EIB, to include the sections Orizovo-Stara Zagora and Karnobat-Bourgas in the concession, and to obtain a confirmation from Eurostat that the investments are reported in the concessionaire's balance sheet and are not included in the measuring of the deficit of the consolidated state budget. There is no answer from Eurostat yet, but the bank already sent its negative opinion.Certainly, the rulers are well aware of the fact that the breaking of the deal will hardly raise their rating both in the country and abroad. Moreover, it is not clear what legal and financial consequences for Bulgaria there will be as a result from breaking the agreement which is not valid yet. At this stage the Cabinet seems ready to act even against EIB's will, although the bank has already provided some EUR25MN for the construction of the two sections and promised an EUR100MN credit for their entire building.The ministry has no information about whether the EIB will decide to withdraw, but that will not terminate the concessioning of the highway, Minister Valentin Tserovski said. However, a question arises about whether the State should lose the confidence of such an authoritative financial institution simply because of the obstinacy of several rulers a few days before the end of their mandate? In fact, the Government is now negotiating with its managers for the co-financing of six Bulgarian water supply and sewerage companies amounting to EUR60MN. Minister Tserovski himself noted that he expected support from the EIB for the linking of the second Danube bridge with the Greek border through new highways. But obviously the support which the next rulers will enjoy is much less important for the present ones than the concession of the Trakiya highway. In order to jump over the opinion of the EIB, the Council of Ministers will have to correct its own decision made on March 15. So will the Cabinet dare undertake some scandalous changes in the last month of its mandate? According to well-informed sources, it is now waiting for the Eurostat opinion.

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