Банкеръ Weekly

Briefs

UNACHIEVABLE SYMBIOSIS

Only three projects in transport infrastructure have been successfully completed in Bulgaria by a public-cum-private partnership. That is the sad conclusion from the joint forum of the European Bank for Reconstruction and Development (EBRD) and the ministries of finance, transport, regional development and public works, held in Sofia during the week. Theoretically speaking, the cooperation between the State and businesses has many advantages: private capitals are attracted for the fulfilment of activities which are in the government's competence, risks and benefits from the big investment projects are shared, etc. But in Bulgaria always something lacks for the successful finalization of such projects. The main reason are the insufficiently prepared procedures which usually go to court instead of reaching the final.
Regretfully, the mechanisms of public-cum-private partnership are still underdeveloped in our country and we are still seeking the right way, Transport Minister Peter Mutafchiev admitted.
In fact, only the Transport Ministry can boast of the only successful agreements - those for concessioning the ports of Balchik, Silistra and Lesport (Varna). In 2005 the Government picked up concessionaires for three more ports - Somovit, Svishtov and Oryahovo - but the litigation in the Supreme Administrative Court (SAC) of these decisions on the part of the candidate who lost, have not been completed yet. And the bidding for the dangerous cargoes terminal and for the Varna West port was cancelled due to lack of candidates.
Public-cum-private partnership regarding airports also went to court. The procedure for concessioning the airports in Varna and Bourgas was launched back in 2004 and the Danish Copenhagen Airports was nominated winner in the tender. The candidates who lost litigated the decision and the SAC ruled that the Transport Ministry should announce again its stance about the winner in the tender. We are certain there will be no new litigation and we'll sign the contract on the seaside airports within a month and a half, Mr. Mutafchiev told the BANKER weekly. They will most probably go under the management of Germany's Fraport, which was rated second in the tender together with Bulgaria's BM Star. In the beginning of the week Dieter Weirich, Communications Director of the German company said for Deutsche Welle that Fraport was optimistic about its future concession in Bulgaria.
Concession analyses are being made for the Rousse airport as well. The procedure for its concessioning should be launched by the year-end and a Swiss consortium has already announced interest towards it. The ownership of airports in Gorna Oryahovitsa and Plovdiv is still to be specified, and a private owner of the airport in Targovishte will not be sought before 2007.
Railways' concessioning is not on the agenda at present due to the considerable funds, necessary for their construction and also because of the impossibility to be used by western carriers as Bulgarian legislation does not allow their operation on our territory.
Concessioning of railway stations is far more realistic. Those in Sofia and Plovdiv are first on the list now. In addition to the numerous passengers they have quite attractive trade grounds. One of the opportunities for the attraction of private capital is to construct a combined terminal for railway and automobile transport near Sofia. The State and the capital city's municipality are already looking for private investors for that project.
The concessioning of motorways is in the hands of three ministers - of finance, of regional development, and of transport. The Roads Executive Agency will be transferred into a fund, but amendments to the Roads Act should be made for the purpose. The Transport Ministry has already prepared the changes and the Cabinet is to approve them. We chose that option because that is the European-style attitude - not to separate transport from infrastructure, said Mr. Mutafchiev.
More details about the concessioning of motorways will be available after the approval of an overall strategy for the development of infrastructure in Bulgaria. It will be made public in end-May.

The Ministry of Regional Development and Public Works has completed its work on the Water Supply and Sewage Act and will soon move it for public discussion, said Deputy Minister Dimcho Mihalevsky, who attended the forum for public-cum-private partnerships in infrastructure. The legislative act will specify the criteria for municipal and public state property, as well as the transition period for the sector's restructuring. According to World Bank estimates, the price of water in Bulgaria will be about BGN2/cu m in 2007, and will reach BGN4-5/cu m till 2014.

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