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21.03.2017 16:49
Bulgaria Will Likely Stop Concession Procedure for Sofia Airport
Interim transport minister to submit report and justification against carrying on with the procedure as is due to expected outflux ot carriers and passengers
AUTHOR: Lyudmila Zlateva

  • Interim transport minister said concession of Sofia airport with its current conditions should be stopped
    © Bulgarian Ministry of Transport, Information Technology and Communications

The public interest is not well enough protected and the concession of Sofia Airport will lead to higher airport taxes and an outflux of passengers, Bulgarian interim transport minister told journalists during a press conference in Sofia on Tuesday. The minister said that he personally got acquainted with the conditions of the concession procedure for the airport of Bulgaria’s capital city. As soon as today the ministry will start preparing the needed motivation for the Council of Ministers to consider and vote the termination of the procedure in its current form.

Alexiev said that the Council of Ministers would most likely have the matter on its agenda next week or the week after.

“A concession is a good way to manage public infrastructure but it should be made in a way to protect the state interest. I think this is not the case”, Alexiev stated, declining to comment on whether there was interest expressed by a Russian-Turkish consortium.

Minister Alexiev explained that his ministry used the concession of Belgrade airport as a benchmark. The analysis found that a main disadvantage of Sofia airport was the lack of tender for consultancy, so that the future deal is popularized and more candidates state their interest.

“After it chose a consultant Belgrade airport received 27 offers for the concession, while in the case of Sofia we expect no more than 5. It means that something is not right”, Alexiev said.

National security was also found to be on the bottom of the list of criteria for the choice of operator of Sofia Airport. It had an importance of 5 per cent while a request by Bulgarian President Rumen Radev explicitly asked for security to be a priority, minister Alexiev said.

He went on to criticize the heft in the selection process of the BGN 550 m (about EUR 225 m) initial concession premium to be received by the state. It has a 55% importance – the highest among all selection criteria, while plans for the development of the airport were estimated at 25%.

“The future contractor should pay at least BGN 550 m when signing the deal with the state. The latter however has promised to include this amount in the recognized expenses, meaning that they would also impact airport taxes. It seems as the aim is to get short money immediately rather than look in the long term”, Alexiev said, adding that airport taxes would go up by BGN 20 – 25 m/y, decreasing Sofia’s chances “to become a regional hub”.

The proceedings were also meant to secure funding for indebted state-run railway operator BDZ. Alexiev however saw this scheme as adverse to EU practices and an unsustainable way to solve problems in one transport sector by cripling another.

Making sure that the future concessioner of Sofia Airport would not generate excess profit was another strong point in Alexiev’s statement. He pointed out that a longer concession period – e.g. 35 years for Sofia airport, could mean a greater chance for excess profit. He said that Belgrade went for a 25-year period. The Serbian airport also scored much better in terms of profits – EUR 25 m for last year, while Sofia struggled to get “a mere EUR 6 – 7 m”.

Alexiev said that this provided enough evidence for the need to cancel the concession procedure.

“A consultant for a feasibility study should be selected first and foremost, so that a new general development plan for Sofia Airport be forged”, Alexiev said, stressing that the development plan being outsourced to the concession holder is not a recognized practice in Europe.

TAGS: Bulgaria | Sofia Airport | concession | flights | profit 

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