THE European Investment Bank (EIB) said it would ask the Bulgarian Government to scrap the choice of concessionaire made earlier this year to build and maintain Trakia Highway because the decision contravened European Union rules on tender procedures for such projects.
This was announced in Belgrade on May 23 by EIB vice president Wolfgang Roth, who was quoted by Bulgarian television station bTV and 24 Chassa newspaper. Roth was taking part in the annual meeting of the European Bank for Reconstruc-tion and Development.
Last week, the EIB released a tranche of 15 million euro for the construction of the Orizovo-Stara Zagora and Karnobat-Bourgas sections of Trakia highway, which stretches from Bulgaria's western border to the Black Sea coast. The tranche is part of a loan of 100 million euro loan from the EIB negotiated in 2000, which will continue to be used while the no-bid award of the Trakia concession is scrutinised by EU authorities. Bulgaria has already spent 25 million euro of the loan.
The contract with Avto-magistrala Trakia, a consortium of two state-owned Bulgarian companies and three Portuguese firms, has been approved by the Competition Protection Commission, which has said that granting the project to the venture did not amount to state aid. The EIB could not participate in a project that was no longer carried out by the state, which guaranteed the loan, the bank said.
According to analysts, the EIB's withdrawal means that it will terminate the funding and Bulgaria will have to return the 25 million euro spent so far with a higher interest, as a commercial loan.
The implementation of the Trakia concession needs approval from the EIB but the bank has said it cannot be part of the project because it was not involved in the selection of the concessionaire.
"The EIB has the right to withdraw from the project if it considers that it is a private project, which it actually is," Regional Development and Public Works Minister Valentin Tserovski told Bulgarian National Radio from Luxembourg, "This means in practice that Bulgaria has to find an alternative to complete the construction, which should not be a serious problem," he said.
In April, Transparency International Bulgaria unveiled a report saying that there were serious reasons to suspect abuses in the award of the Trakia highway concession to the Bulgarian-Portuguese consortium.
According to the report, the price for construction of the motorway, 2.7 million euro for a kilometre, was inflated. The ISPA estimates and Bulgaria's understanding with the EIB are for a price of 1.2 million euro a kilometre, and the market price is up to two million euro. The report also found that the award procedure lacked transparency.