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Big state deals called into question after resignation of Boyko Borissov’s cabinet

Photo: BTA

Bulgaria’s Premier Boyko Borissov handed in the resignation of his cabinet this week. The outgoing cabinet will continue functioning until a new caretaker government is formed. However, the future of some state deals worth billions of Euros remains blurred, because the outgoing cabinet may not have time to deal with the contract procedures. Moreover, the fulfillment of those projects may be hampered by the obstructions and the different views expressed by other political parties.

In the beginning of 2016 the concession agreement for Sofia Airport was declared the biggest deal and the authorities were estimating that EUR 280 million would go to the state budget from that deal only. The cabinet was planning to give this money to the Bulgarian State Railways, which has been experiencing serious financial difficulties. Now it is clear that such concession contract will not be signed until end 2016, because the Ministry of Transport extended the application deadline until December 14. The Bulgarian Socialist Party already announced that it was against that concession and that it would do its best to prevent such a deal. The labor unions are also against the planned concession of Sofia Airport, so is Europe’s biggest low-cost airline Ryanair which recently launched flights to and from that country.

The purchase of new military equipment was also called into question. The team of Bulgaria’s outgoing Minister of Defense Nikolay Nenchev prepared two of the most-expensive projects for modernization of the Bulgarian Armed Forces- the purchase of new fighter jets to the tune of over EUR 770 million and the purchase of two new multi-purpose patrol ships worth EUR 420 million. Bulgaria’s Ministry of Finance approved those expenditures and calculated them in the 2017 draft budget. However, those expenditures must be approved by the outgoing National Assembly, too. Even some GERB MPs showed reticence about the purchase of the two patrol vessels. The Patriotic Front presumed that the future of that public procurement order has been already predetermined. Meanwhile, the project for acquisition of new armored vehicles for the Bulgarian Land Forces to the tune of EUR 500 million has not been completed yet.

The fulfillment of the energy efficiency programme for home renovation worth millions of Euros is also uncertain. So far over 4,000 applications from all Bulgarian regions were filed under that programme and the applications of 2,918 buildings have been already approved. Their renovation will cost nearly EUR 500 million. However, it is not clear how much money the outgoing cabinet would pay to the Bulgarian Development Bank by the end of 2016 under that programme.

The introduction of electronic toll collection system was also called into question. Since the spring of 2016 Premier Borissov’s cabinet has been attempting to choose a contractor of that project, but the public procurement order worth EUR 100 million has been blocked three times by company complaints and is not likely to end this year. The Bulgarian Socialist Party is not against the introduction of a toll collection system. However, they stood categorically against the way this project has been fulfilled and insisted that the topic should be discussed in Parliament first.

Bulgaria also has to distribute nearly EUR 1.5 billion for railway roads and motorways, financed under various EU programmes. The country should also absorb EUR 300 million for local projects in the water sector.

Thus, the investment projects and contracts worth billions of Euros became hostage to the political uncertainty in Bulgaria and to the power vacuum which occurred after the resignation of Borissov’s cabinet. Their fulfillment depends on whether the political parties will be able to act pragmatically in the period preceding the early Parliamentary elections.

English version: Kostadin Atanasov


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