THE contract on a 35-year concession on Trakia highway was signed on March 29 by Regional Development and Public Works Minister Valentin Tserovski and the executive directors of Avtomagistrala Trakia AD, Emil Kotsev and Costa Ferreira.
Prime Minister Simeon Saxe-Coburg, Portugal's secretary of state for public works and communications Paulo Campos, and Portuguese ambassador to Bulgaria, Mario Jesus dos Santos, attended the signing ceremony.
The shareholders in the consortium, Avtomagistrala Trakia (Trakia Highway), are the state-owned Avtomagistrali EAD and Technoexportstroy EAD of Bulgaria, and three Portuguese companies - MSF-Moniz da Maia, Serra&Fortunato-Empreiteiros S.A. of Lisbon, Lena Engenharia e Contrucoes S.A. of Fatima and Somague Concessoers e Servicos S.A. of Sintra. The Portuguese partners hold 51 per cent of the company capital, and the Bulgarian participants own 49 per cent.
The Government's decision to award a 35-year build-and-operate concession for the Trakia highway was taken on December 17, 2004. The concession was awarded for the road from Kalotina (on the Serbian border) to Bourgas (on the Black Sea) via Sofia's Ring Road (its northern arc), and via the towns of Orizovo, Stara Zagora, Nova Zagora, Yambol and Karnobat.
The total length of the highway, including the Kalotina-Sofia section, is to be 443 km, of which 182 km have been completed, while the remaining 261 km will have to be constructed by the concessionaire. The latter will be entitled to charge a toll on the highway in compliance with the Roads Act.
"I hope that the parameters and the principles in this concession contract will guarantee the implementation of the large-scale project. Such a large public-private partnership venture is launched for the first time in Bulgaria's road infrastructure," Tserovski said after signing the document.
He said that the contract is 100-per-cent guaranteed with the funding required, 590 million euro for the first stage of construction of the missing stretches, which will include the enlargement of the northern arch of Sofia's Ring Road and the building of the remaining part of the Sofia-Bourgas road, and 125 million euro for the Kalotina-Sofia stretch.
Within the 35-year term of the contract, the concessionaire will pay 3 008 464 800 euro to the state. This, according to Tserovski, will raise the annual budget of Roads Executive Agency by 168 million leva and thus the agency will have additional money for rehabilitating other country roads. A total of 1087 jobs will be created for the implementation of the project.
The burden of the so-called "revenues" on this project will be carried 57.9 per cent by the foreign vehicles using the highway, Tserovski said. He believes that in five years Bulgaria will have its first border-to-border highway infrastructure.
Despite the Government official's optimism, opposition parties called the contract one of the largest crimes of Bulgaria's transition, and said it would file a court challenge against the way in which the concession had been awarded, which it said showed a total lack of transparency and a conflict of interests.
Furthermore, the deal will come into force only if it receives the approval of the Competition Protection Commission (CPC), EUROSTAT and the European Investment Bank (EIB).
The EIB has to allow the transfer of concession rights over a 70 km stretch of the highway it financed with 100 million euro in 2000. The EU statistics office has to sanction the accounting policies of the public-private partnership deal.
The CPC has to decide on whether the Government has allowed an inadmissible state aid by awarding the concession without a competitive procedure.
The battle looks serious enough, as the opposition Union of Democratic Forces said it would report the deal to Prosecutor General Nikola Filchev, saying it was "illegal". The UDF also threatened to complain to the Competition Directorate of the European Commission about the contract.
UDF spokesman and deputy leader Nikolai Mladenov, speaking to journalists in Dobrich on March 29, said that his party would contact the European Parliament about the concession agreement. They said that they would ask the European Commission to pronounce whether, under EU requirements, the highway, built with money from the ISPA programme, could be granted on a concession to "a private investor of suspicious origin".
Another opposition party - the Democrats for a Strong Bulgaria (DSB) - has been challenging the deal for months now, saying it would cost Bulgarian taxpayers eight billion leva for the concession period of 35 years. DSB MPs have seen documents indicating such a negative result in their capacity as members of a special committee investigating the concession contract.
The total sum of money that will be paid by motorists for using the highway in the period of 35 years is a little more than eight billion leva. The sum was calculated on the basis of a forecast traffic of 25 650 cars a day.
Furthermore, the price for the construction of a single kilometre of Trakia highway would be four times higher than normal for this type of road, DSB MP Ivan Ivanov said on March 28. Ivanov said that, under the contract for the highway's concession, the concessionaire will invest 590 million euro in building two stretches - Stara Zagora-Karnobat and Kalotina-Sofia - of a total length of 137 km. The investment also includes a toll system to be built for the paid use of the highway.
A simple calculation shows that the price for a kilometre will be 4.3 million euro, Ivanov said. Meanwhile, research by the US Trade and Development Agency showed that the construction of a new 60-km highway stretch between Kalotina and Sofia would cost 60 million euro, which means a price of a million euro a kilometre.