Have you ever asked yourself which project is more urgent for Bulgaria: the Belene nuclear station or the Gorna Arda hydro-plant? Because clearly President Georgi Purvanov has.

In his article on the energy sector policy of the new Cabinet, the head of state asked why the Government unblocked "within minutes the Gorna Arda project, whose cost is 500 million euro, but has been thinking for months whether to allocate the same amount, needed this year, to continue the construction of the nuclear station".

Leaving aside the purely manipulative link made by the President between the hydro-power project and the previous job of Economy Minister Traicho Traikov in Austria’s EVN, there are enough reasons to seek an answer as to why the Gorna Arda array of power plants is being pushed now and consider the risks inherent in launching the project.

Inheritance
At its meeting on September 2, the Cabinet designated Hydroenergy Company Gorna Arda as the investor and approved a letter of support for the Gorna Arda project. This decision gave the formal reason for Purvanov to identify the current Government as the initiator of unfreezing the project. The truth is, however, that the process began during Sergei Stanishev’s term as prime minister.

The issue was raised during talks with the Turkish government in March 2009 as one of the bilateral issues that needed to be settled. The construction of the hydro-power array was part of the previous cabinet’s energy strategy to 2020, which included the construction of three accumulation dams and three hydro-power plants with a combined capacity of 170MW.

According to the strategy, the array was to be built by a joint venture between Bulgaria’s state-owned power grid operator NEK, which had 69.9 per cent in the company, and Turkey’s Ceylan Group. Over the past decade, politicians from both sides of the border have met three times on the spot to turn the first sod on the project, but construction is yet to start.

In the meantime, despite lawsuits against the group in Turkey, Ceylan did not give up on the project and sued NEK in the International Court of Arbitration for not following through with the project, demanding damages of 90 million euro.

After bilateral talks between Sofia and Ankara in May, Ceylan agreed to sell its stake to the consortium made of Austria’s EVN and Alpine Bau. The four companies signed a memorandum that required Ceylan to suspend its lawsuit for a period of four months for talks on selling its stake.

The deadline for the talks expired on September 14, according to sources at the Economy Ministry. Practically, given that the previous government, for unknown reasons, did not close the process, the new Cabinet had to make the decision on September 2 or miss the deadline.The change to which the Cabinet agreed is that Ceylan would be replaced by the Austrian consortium, which also sought a letter of support, to help the two companies secure financing for the project. Economy Minister Traikov emphasised that the letter did not offer state guarantees and would cost taxpayers nothing. The alternative was for the Cabinet to miss the deadline and have NEK pay 90 million euro, but that would not cancel the project.