EU Anti-Fraud Office to Probe Bulgaria Thermal Power Plant

Bulgaria in EU | December 14, 2009, Monday // 12:39|  views

European Anti-Fraud office, OLAF, is poised to investigate irregularities in a tender awarded for desulphurization work at Bulgaria's Maritsa East 2 power plant. Photo by BGNES

The European Anti-Fraud Office (OLAF) has launched an investigation into a tender awarded in 2008 for desulphurization of two units of Bulgaria’s TPP Maritsa Iztok 2.

The contract was originally awarded by competitive tender to an Italian - Chinese consortium, Idreko - Insigma, and was funded by a EUR 34 M loan from the European Bank for Reconstruction and Development (EBRD), with EUR 36,1 M from the ISPA program and funds from the TPP itself.

OLAF has initiated the investigation as a result of a complaint filed by French company Alstrom Power, ranked second in the bid. According to them, the auction had been conducted according to EBRD rules, and not according to the Public Procurement Act. That complaint was, however, dismissed.

However, according to sources from the EC, as cited by Dnevnik, the criteria of the bank for choosing the contractor did not fully comply with the requirements of the European Union.

The bank had also failed to submit the tender documents to the appropriate committee, as is the practice with ISPA-funded projects, explained the Dnevnik source in Brussels.

According to the EC, in the course of procedures, the Italian company from the consortium selected as the winner, had changed the list of similar projects that it had implemented.

Brussels has announced that they have requested the Bulgarian regulatory authorities to audit the procedure. They have also warned that payments will be frozen until the conclusion of the investigation.

Nona Karadjova, the Bulgarian Minister of Environment and Water, stated that she was aware of the problem. She expected that OLAF would complete its checks of the auction in January, 2010 at the latest.

Traicho Traykov, Bulgarian Minister of Economy, Energy and Tourism, has told Dnevnik that he awaits the bank's opinion on the matter. He also feared that funding might be stopped. In his words, the bank had not disbursed funds for the project.

A spokesperson for TPP Maritsa East 2 stated that there was no suspension of payments yet, and that they were doing everything possible to keep to deadlines for the desulphurization of both units. So far EUR 12,8 M have been spent, and the projected construction period is 36 months.

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Tags: Maritsa Iztok 2, TPP, OLAF, Alstrom, Idreko-Insigma, Nona Karadzhova, Traicho Traikov, ISPA, EBRD

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