ON November 18, Sofia mayor Boiko Borissov said he had presented 15 conditions to Sofiiska Voda (Sofia Water) in order to preserve the concession with it.
Sofiiska Voda, which operates the water supply and sewage systems of the Bulgarian capital, was granted a 25-year concession in October 2000 under an agreement between Sofia Municipality and International Water/United Utilities (a UK-based consortium).
In December 2003, the International Water shares were bought by both United Utilities and the European Bank for Reconstruction and Development (EBRD). Currently, shares in the company are divided between Sofia Municipality, which has 25 per cent, and United Utilities/EBRD, which holds the other 75 per cent.
Information disclosed by a municipality-appointed auditor in October 2005 showed that record-breaking wages and bookkeeping violations had marked the operations of Sofiiska Voda. The matter later became one of the hot topics during the mayoral elections in Sofia that Borissov won.
Media reports in Octobver said that deals were also signed to be executed not by Sofiiska Voda directly, but through a mediator - its owner United Utilities - increasing the cost of the deals by five to 20 per cent, which was also calculated in the water bills of Sofians, Dinev said.
In response to public interest, prosecution authorities said they were investigating the alleged violations.
The contract with Sofiyska Voda was disadvantageous to the municipality, Prosecutor-General Nikola Filchev said on November 18 after meeting Borissov.
Borissov confirmed that the deal was extremely disadvantageous and there were two possible options for solving the problem.
“We will suggest renegotiation of the contract, posing 15 new conditions, or else we shall rescind it and pay the penalty due upon terminating the accord,” Borissov said.
He added that the sum amounted to 35 million euro and the better option was to renegotiate the conditions.
Sofiiska Voda provides services to a population of more than 1.5 million and operates and maintains a water-supply network of an overall length of 4 077 km, a 2 086-km sewage network, two water treatment plants and a wastewater treatment plant.
The National Audit Office (NAO), the country’s top financial-control body, has been critical of Sofia Municipality for the deal with Sofiiska Voda. The auditors found in an October report that the municipality had no registered revenue from the concession it awarded to the company.
The contract for awarding the concession, signed by the municipality and Sofiiska Voda, made no mention of the price of the concession, which was in violation of the law under which such transactions were signed, the auditors said.
Sofia Municipality also violated the principles of the Accounting Act for prudence in undertaking conditional obligation to guarantee a loan to Sofiiska Voda from the EBRD amounting to 31 million euro.
The audit also found violations in the formation of the price of the service on the part of the concessionaire.
Some members of the Sofia City Council have already asked for immediate termination of the contract with Sofiiska Voda. However, most councillors oppose such an extreme measure, mainly fearing the penalties under the contract.
Sofiiska Voda had always been ready to negotiate on clause changes in the concession contract and on changes to its investment programme, said Maria Doichinova, head of the company’s communications department, quoted by the news portal mediapool.bg. Attempts by The Sofia Echo to obtain a comment have so far failed.
Doichinova said negotiations had started on amending the concession contract but had not yet been completed. The company was not aware of Borissov’s 15 conditions, she said.
Experts have commented that the termination of the contract will cost much more than the 35 million euro mentioned by Borissov. To end the contract, a ruling will be required from an international court of arbitration, they say. Such court actions last for years.
