Bulgaria's Economy Ministry blocked on October 28 the plans of the Sofia city hall to inject 55 million leva in the city's heating utility Toplofikatsiya, despite having earlier agreed to the proposal, which would have bailed out the debt-ridden utility and cut the Cabinet's shareholding to below one quarter of Toplofikatsiya shares.

The cash would have been used to pay off the bulk of the utility's debts to state-owned gas provider Bulgargas, which would then resume deliveries to Toplofikatsiya to ensure that the utility can operate during the coming winter.

Ministry representatives argued that the injection could have interpreted as state aid, which is illegal under European Union rules. Just weeks ago, however, Economy Minister Petar Dimitrov was the one to suggest that the city hall takes control of the utility, something mayor Boiko Borissov said he accepted unwillingly to ensure that the city's residents were not left without central heating.

"We cannot do anything. When Sofians get cold, let them go to [the Cabinet building on] Dondoukov Boulevard and ask why there is no central heating," a visibly irritated Boiko Borissov said after Toplofikatsiya's shareholder meeting, as quoted by Dnevnik daily.

"The Cabinet wants to stop the money from going into Toplofikatsiya, forcing the city hall's hand and assuming control over the company, because [the Government] already has found a strategic investor for it," he said, adding that the Socialists, the senior partner in the ruling coalition and the main rival of Borissov's party Citizens for European Development of Bulgaria (GERB) at next year's Parliament elections, were intent on making Borissov look bad.

The ministry said in a statement that it was not opposed to the capital hike, but added that it rejected the proposal because the city hall did not present proof that the cash injection would not be interpreted by the European Commission as illegal state aid, which would have made Bulgaria liable to pay a fine double the amount of the aid.

In the same statement, the ministry said that the city hall had not secured permission for the Audit Chamber saying that it could use money from its privatisation fund, something that the ministry said was mandatory. On top of that, the city needed permission from the European Bank for Reconstruction and Development (EBRD) and the World Bank, which have extended loans to Sofia, the ministry said.

According to Dnevnik, which quoted city hall sources, EBRD had given its consent, but not the World Bank, which had too little time to answer the query.