The Cabinet has set six ultimatums to the consortium that has to build Trakia Highway, connecting Sofia with Bourgas on the Black Sea coast.

"We simply are sending these six ultimatums to the Portuguese consortium, and, depending on their response, the Trakia Highway will be finished or not," Deputy Minister of Regional Development and Public Works Savin Kovachev told national private television channel Nova Televisia on January 25.

Kovachev was referring to the Cabinet's decision to approve the Transport Ministry's proposal to add an annex of amendments to the draft concession agreement for Trakia Highway.

If approved by the concessionaire, the annex would remove all forms of state guarantees arranged under the document signed by the former government in 2005.  The document guaranteed sufficient traffic to make the highway payable. If the traffic is less than projected, Bulgaria will have to pay compensation to the Portuguese consortium. This obligation has been criticised by the media and public.

The new requirements are that the concessionaire fully assume the construction risk and the availability risk. The consortium will remain the contractor for the planned 261km extension of the 443km Trakia motorway. The initially contracted price for the construction and rehabilitation of the main road connecting Kalotina, the northern section of the Sofia ring road, Orizovo village, the cities Stara Zagora, Nova Zagora, Yambol, Karnobat and Bourgas remains unchanged.

The financing of the project will start within three months following the signing of the annexes to the agreement. The sections of the new motorway will go into operation as they are finished. The concessionaire must accept these requirements unconditionally, the Cabinet said. If there is no agreement, and the requirements are not included in a new annex, the Government will stop the project, Prime Minister Sergei Stanishev told journalists on January 25.

"The contract with Trakia Highway AD puts too great a burden on us, financially and with respect to the risks covered by the state," Stanishev said.

The concessionaire has to respond to the proposed amendments by February 15. If the new conditions are rejected, the Government will start a new concession tender for the construction of the highway. The launching of a new tender procedure is expected to take 12 to 16 months, while if the consortium signs the annex, the motorway could be completed within 36 months. Stanishev presented new estimates of the cost of completing Trakia Highway, now adding up to 590 million euro. In 2005, when the contract was signed, the sum was 700 million euro. The difference comes from the  40km road section financed by the state and opened in the autumn of 2006.

The consortium is made up of Portuguese construction companies Lena-Engenharia e Construcoes, Moniz Da Maia Serra & Fortunato-Empreiteiros and Somague, and Bulgarian state-owned construction firms Technoexportstroy and Avtomagistrali. The deal covers investments for rehabilitation of existing motorway sections, building new sections, road maintenance, and toll collection. Although Bulgaria signed the deal with the consortium in 2005, nothing has been done to build the highway, with the exception of the state-funded 40km section.  The 35-year concession was protested in court.

Some of the main objections were that the deal was unlawful and was granted without a preliminary government tender as the law required. However the court found no irregularities in the deal. The deal did not receive clearance from the European Investment Bank, which is a major lender for the project.