Банкеръ Weekly



The Trakiya Motorway AD consortium includes five companies. Three Portugese firms hold the majority share: MSF-Moniz Da Maia, SerraFortunato-Empreiteiros has 21%; Lena Engenharia E Contrucoes and Somague Concessoe E Servicos hold 15% each. The Bulgarian Technoexportstroy EAD) and Avtomagistrali EAD own 24% and 25% respectively.

If we make a kind of a rating of the cases in the Supreme Administrative Court (SAC), expected with the highest interest, the concession on the Trakiya motorway will be inevitably the leader. The lawsuit which was resumed on January 31, 2006, should answer the question if the decision of the former cabinet was lawful. Without holding a tender of competition the government of ex-premier Simeon Saxe-Coburg-Gotha granted a concession on the section from Kalotina to Bourgas to the Portugese-Bulgarian joint-stock company Trakiya Motorway. We cannot ignore the fact that this is matter of a deal worth EUR715MN, although the concessionaire will only have to construct 187.1 km of all 443 km of the highway. In fact the economic parameters of the deal caused a wave of accusations in corruption and furious protests against the contract signed on March 29, 2005. Still more curious in this case is that the incumbent rulers from the BSP were among the most violent opponents to the concession. It's them who will decide its fate today.
Minister of Regional Development and Public Works Assen Gagaouzov has already publicly declared that the parameters of the already signed contract will have to be changed, but did not specify any details. The audit to be effected by PriceWaterhouse Coopers will show if the contract is advantageous. The consultants won the competition invited by the Finance Ministry and the contract for the audit is to be sighed by mid-February. Thereafter, the auditors will need about a month to check the deal in detail. Thus, things could be expected to become clear towards the end of March. If the auditor's decision is negative, there will be a new competition, Mr. Gagaouzov said for a national TV. However, he preferred to play it safe by mentioning that any options were possible and the Government would have to explain the decision it would ultimately make.
It will depend on the decision of supreme magistrates if the Cabinet will be able to manoeuvre freely. If the court rules that the concessioning was unlawful, the contract will be declared null and void. The procedure, however, will be much more complicated if Themis does not find out any lapses in the concessioning. Then the Portugese-Bulgarian company Trakiya Motorway will be able to use as a trump the contract of March 29, 2005 and it will be difficult for the incumbent construction minister to impose any corrections in the document whatsoever.
All that explains why hall 1 in the SAC was full of journalists, lawyers and senior state officials on January 31. Deputy Minister of Regional Development and Public Works Kalin Rogachev was among the audience, too. In fact he used to head the political cabinet of former construction minister Valentin Tserovski as well. The lawsuit itself lasted less than ten minutes. Boyan Magdalinchev, who was presiding the panel of magistrates, asked separately the lawyers of the Council of Ministers, of the Ministry of Regional Development and Public Works, and of Trakiya Motorway AD, if they had presented all necessary documents and he got three positive answers. And when everybody in the hall were expecting judge Magdalinchev to give the sides the floor, he asked from the Council of Ministers to present evidence regarding para 3, item 3 of the Transitional and Conclusive Provisions of Concessions Act and fixed the next session for February 28.
Under the legal provisions, the state-run companies and enterprises which have right on public state-owned property (the highway in this specific case) were obliged within three months after the enforcement of the Concessions Act (on November 20, 1995) to state to the Council of Ministers they would be exercising these rights of theirs. The case that seems complicated at first sight was explained still in the court room by SAC's Chairman Konstantin Penchev. My colleagues want to get convinced that one of the Bulgarian participants in the consortium - Avtomagistrali EAD - has filed a statement that it is willing to continue repairing and using the Trakiya motorway. If the company has done that it means the highway could be concessioned without a tender or a competition, Mr. Penchev said.
Avtomagistrali was registered as a single-shareholder joint-stock company in 1994 and until then it was Motorways' Maintenance Department with the Chief Roads Directorate of the Transport Ministry. Its subject of activity is construction and maintenance of motorways in the country and use of road establishments, bases and equipment. But it's hardly probable that in 1996 the company asked from the Council of Ministers concession rights on the Trakiya motorway (or on any other Bulgarian highway), lawyers presumed. According to them, the rights were probably required them by the Road Agency and its representatives specified that the rights on Trakiya were taken out of the state-run agency several months before the concessioning procedure was officially opened and transferred to Avtomagistrali. However, nobody ventured to explain how that transfer was realized and if it was in compliance with the Concessions Act. Representatives of the Government and of the Ministry of Regional Development and Public Works said they thought fully sufficient the evidence for the lawsuit about the concession of the Trakiya Motorway, which they has submitted to the court back on November 3, 2005 and no other argument were necessary therefore.

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