Bulgarian Government Approves South Stream Loan from Gazprom in Its Last Days

The state-owned Bulgarian Energy Holding (BEH) will approve the EUR 620 m loan it was offered by Russia’s Gazprom for the construction of South Stream in Bulgaria during a meeting currently held after 17.00 h EET, Capital Daily reported. The news comes as the government of Plamen Oresharski is expected to resign on Tuesday, the resignation being set for parliament voting on Thursday.

The EUR 620 m is meant to help BEH finance its participation in the project. The amount however would not be enough for BEH to cover its 15-percent share, as the contract with Stroytransgaz Consortium is estimated at EUR 3.8 m rather than the initial EUR 3.5 m, thus obliging BEH to put EUR 68 m more of own financing on the table, Capital wrote.

BEH will pay back the loan with the future dividends from the pipeline.

The newspaper also informed that the capital of South Stream Bulgaria will be increased with 10 percent so that it could make the required advanced payment of 10 percent (EUR 380 m) to the consortium.

This news is just one of a series of rumours pointing to the fact that Bulgaria has not actually stopped working on South Stream despite promises to the EU for the opposite.

Bulgarian liberal political formation the “Reformist Block” alarmed on Monday  that the Bulgarian government is preparing to issue an EUR 100 million bank guarantee via the Bulgarian Development Bank (BDB) and the Bulgarian Export Insurance Agency (BEIA) for the construction of South Stream gas pipeline despite earlier signals that the project has been put on hold in accordance with the EU’s grievances. Ex-energy minister during the GERB government and current member of the Reformists Traicho Traikov stated that the state intends to make its participation in the South Stream project irreversible through the issuance of a state guarantee via the DBD and the BEIA despite the fact that the construction of the pipeline might not happen in the end.

“If the project is to be stopped, delayed or modified, these 100 million euros will be paid by the Bulgarian taxpayers”, Traikov said.

This statement follows earlier evidence uncovered by the Reformists which suggested planned amendments to Bulgaria’s Energy Act in favour of South Stream’s construction were directly adopted from a series of Gazprom letters to the BEH, both partnering with equal shares in the joint venture and future pipeline operator South Stream Bulgaria.

Meanwhile the rumoured tacit replacing of U.S.-sanctioned Stroytransgaz in the construction of the Bulgarian stretch of South Stream with the Gazprom subsidiary Centrgaz was confirmed by Bulgaria’s energy minister Dragomir Stoinev in an interview for bTV. Centrgaz will partner with five Bulgarian companies reported by Bulgarian media as close to the current socialists-led government.

Last week Centrgaz was announced as construction of the pipeline in Serbia.

Source. Publics.bg, 2014

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