The European Commission (EC) is to investigate a possible legal violation in the Build-Operate-Transfer (BOT) contract for Bulgaria¡¯s Trakia highway, according to Bulgarian MEP Nikolai Mladenov.

The 35-year concession for the Trakia highway, which links the country¡¯s western border with the port of Bourgas on the Black Sea coast, was awarded in March 2005 without a public tender and no competitive bid, said Mr Mladenov, between the previous administration and a Bulgarian-Portuguese consortium.

The consotium consists of Portuguese construction companies Lena-Engenharia e Construcoes, Moniz Da Maia Serra & Fortunato-Empreiteiros (MSF) and Sacyr Vallehermoso''s Portuguese unit Somague, and Bulgarian state-owned construction firms Technoexportstroi and Avtomagistrali.

¡°The contract, which was shrouded in secrecy, includes state guarantees, or aid that could see the Government pay up to € 400 million to the concessionaire,¡± said Mr Mladenov, ¡°which means the Commission must be notified.¡±

According to Mr Mladenov the current Government renegotiated the contract in late 2006, revising it to better suit Bulgarian interests. Again, the Commission wasn¡¯t notified, despite a 35000-signature petition being presented to the Bulgarian Government, added Mr Mladenov.

According to an interim report by Transparency Internation, Granting a Concession on Trakia Motorway, the concession contract contains several clauses, which are inconsistent with the Commission¡¯s State Aid Act. They include the granting of the concession without a tender or a competition; compensating the deficit in the constructing and operation of the site; the temporary relieving of the concessionaire from the concession payment; ensuring from the state a 12% return of [its] own capital in favor of the latter, including the interest for capitalisation on this sum, due at the time the concession contract was concluded until the time when the concessionaire is able to provide this income itself.

The deal had been criticised by the Statistical Office of the European Commission (Eurostat), which required the concession costs to be considered expenditure of the concessionaire, not consolidated government budget spending. The Government however had not properly responded to the demand and this caused the EC to act, said Mr Mladenov.

The Commission had not been notified of the renegotiated clauses of the contract, and still had ¡°some texts providing for different schemes for state support and guarantees for the concessionaire¡±. It was therefore ¡°inadmissible¡± for the Government to make such commitments, said Mr Mladenov.

The Bulgarian Government pledged to make all documents relating to the contract public on September 1. Mr Mladenov told CE this has not happened. The Commission, said Mr Mladenov, has requested all documents be sent to Brussels.

¡°We want to see find out if contract, and its amendments, has been notified to EC and if state aid schemes included in the contract are in line with EU guidelines and if not what happens next, because my greatest fear is that the Government budget will be burdened with costs up to € 400 million. While the part of the highway yet to be built could come with extremely high costs.¡±