Банкеръ Weekly

Briefs

New State Property Act To Accelerate Expropriation

This week the government decided to submit to the National Assembly the next amendments to the Law on State Property. The reason is that with the new additions to the normative texts will enable state enterprises and companies with more than 50 percent state participation to participate as equal partners in the procedures for procurement, and similar procedures.

There are many cases in which state-owned companies are not only contractors, but also potential participants in the award of contracts. The now existing order establishes the requirement for them to participate under the general conditions in these competitions.
The problem comes
from the fact that the time terms often do not comply with the specifics of their management and their actual ability to take part in them. Even the standard open procedure in which the deadline for submitting a proposal to participate is 52 days is proving very difficult for a state enterprise or company with more than 50 percent state participation in the capital in order to choose a partner to participate and prepare the offer.

The change provides that rules for the selection of a private partner should not apply when public companies enter into a collaboration agreement or participate in civil partnerships. This is done in order to facilitate the procedure apart from those for participation in the award of contracts but also for those who have a choice of a contractor for services. For example, for construction works or supply, when they themselves receive funding through grants from the European Union, and when an agreement is stipulated by the financing institution.

This is just another proposal that the government of Boyko Borissov has made to change this law.
In early November, the government proposed to the National Assembly to adopt a Law Amending the Law on State Property
with which to accelerate
construction of important national sites. This bill was aimed at amending those regulations regarding the objects of paramount importance - public municipal property. At the end of November last year, after much wrangling, the text was adopted on first reading. These changes were intended to facilitate also a timely absorption of EU funds in the balance between protection of private property and public interests without violating the rights of property owners whose property has been expropriated. The amendments provide expressly for applying the rules of the Administrative Code when communicating orders for expropriation issued by the Council of Ministers, the governor and the mayor of a municipality

Modified, refined and detailed were texts from the State Property Act, which determine the time at which a property is considered to be expropriated. It regulates that the act of expropriation shall enter into force and the property is considered to be expropriated when the act was not challenged and the determined cash compensation is paid on account of beneficiaries and when there is an absence of a designated account – to the account of the governor. In the case of appeal this will take place after a court judgment. The changes are in accordance with the provisions of the Constitution of the Republic of Bulgaria under which expropriation of property for state and municipal needs shall be effected only on the basis of law, provided that these needs cannot be met otherwise, and after an advance and equivalent compensation. An option is provided in an allowed advance implementation of the act of expropriation, the investor of the national site to take possession of the property before the act of expropriation is enacted. This is allowed only in presence of an effective detailed development plan envisaging the construction of a national site and a transfer the specified in the act of expropriation compensation to the entitled persons. There are clear procedures for protecting the rights of owners of expropriated properties. According to them, the investor’s entering into possession of the property is linked to the mechanism for the determination and payment of damages to the owner from the date of investor’s entry into possession of the property to the entry into force of the act of expropriation. The changes also provide compensation for damages to property or its restoration in the form at the time of its takeover by the investor in the event that the expropriation fails to take place or is revoked.
  Benefits payable shall be determined by the investor
of the national facility after entry into force of the act of expropriation. The owner may challenge the amount of compensation determined and want an award of compensation in a higher amount. When the court rules for a higher amount of compensation, the investor pays the owner the difference with legal interest thereon within one month of the judgment. It was proposed, in the event that the investor paid on the account of the governor the additional amount in compensation specified in the act of expropriation, the advance execution of the act of expropriation may be suspended or revoked only if the advance execution can cause significant or hardly repairable damage to the owner, which cannot be compensated. This additional amount should be used to guarantee the payment if the court increases the amount of compensation. Changes also regulate that an investor of a national site will be issued a building permit only if preliminary execution entered into force. Similar changes were requested also for the Municipal Property Act. They affect the option of an advance implementation of the act of expropriation by an investor in prime site, allowing the investor to take possession of the property before the act of expropriation is enacted.

These changes
  actually accelerate the procedure
for expropriation of property and give the green light for the rapid construction of large infrastructure projects. This was needed because the procedure for expropriation of property slowed their construction. Such was the case with North tangent in Sofia, the highways Struma and Maritza and many others, whose realization was stopped due long proceedings on appealed assessments of benefits and some of these projects are in danger of losing a lot of European funds.

In the now active legislation, the act of appeal suspended the execution of the expropriation procedure. With the new changes, the beginning of the litigation will not stop the expropriation and the owner of the property will be able to challenge the amount of compensation determined and want an award of compensation in a higher amount. When the court rules for a higher amount of compensation, the investor will pay the owner the difference, together with legal interest thereon.

The BANKER

Facebook logo
Бъдете с нас и във