Three Portuguese companies that own 51 per cent in the consortium awarded the concession on Trakiya Highway are set to pull out of the contract next week, Kapital weekly reported on May 10.

The companies were given until May 14 to secure funding to complete the highway, estimated by Regional Development Minister Assen Gagaouzov in January at 590 million euro. The Portuguese firms have not managed to do so and will make an official announcement to that end next week, Kapital said, quoting sources familiar with the situation.

One of the reasons was the global credit crunch, which has made financing more expensive and hard to obtain, but also the rising prices for raw materials, which has pushed the costs of completing the highway by 40-50 percent, which made the project not viable, the same sources said.

The delays with the signing of the contract, which drew criticism from the European Commission for the non-transparent way in which it was awarded, has further put off the Portuguese firms, prompting them to look for investment opportunities elsewhere, Kapital said.

Awarded in 2004, the concession deal was signed two years later, but had to be amended last year, after the EC said it breached European Union state aid rules. The EC gave its approval for the amended contract in January, after which the consortium had 120 days to secure financing.

In the meantime, Bulgarian authorities have attempted to force the consortium's hand on the issue which local companies would be picked as subcontractors, further straining relations with the consortium.