Bulgaria Hopes for Deal with Austria over Troubled Hydropower Project

The construction of the Gorna Arda cascade is expected to be resumed shortly. File photo

An agreement over the construction of Gorna Arda hydropower project in southern Bulgaria, between Austria’s energy firm EVN and Bulgaria’s dominant state power utility NEK will be on the agenda during the visit of the prime minister in Vienna.

Austria's Alpine Bau withdrew from the construction of Gorna Arda hydropower project in the middle of May, leaving energy firm EVN the sole partner of the majority owner, dominant state power utility NEK.

Austria's EVN, which holds a 67% stake in one of Bulgaria's three power distributors and serves clients in Southwestern Bulgaria, has assured that the shareholders overhaul will not delay the project and promised that it will press for speeding it up in a bid to secure green energy for its clients in the region.

At the beginning of September 2009, Bulgaria’s new government sealed a letter of approval for the construction of the hydro power project on the Arda river, known as Gorna Arda (“Upper Arda”).

This was a requirement for wrapping up of the sale of a 30,1% stake, owned by Turkey's CCG, part of the Ceylan conglomerate, to an Austrian consortium of EVN and Alpine Bau.

The move was made after a trial in the International Court of Arbitration, in which Ceylan Holding filed claims for EUR 75 M against the other member in the joint venture - Bulgaria's National Electric Company NEK, was suspended for three months.

The Turkish company was contracted to implement the project under an electricity-for-infrastructure swap deal Bulgaria and Turkey signed in 1998, during the term of the government of Ivan Kostov. The launch of the hydropower construction was delayed after the Turkish company ran into financial troubles.

The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. It is planned to have an electricity production capacity of 160 MW.

Bulgarian Prime Minister Boyko Borisov and a governmental delegation are to pay an official visit to Austria on July 19 and 20 at the invitation of Austrian Chancellor Werner Faymann.

Borisov is scheduled to meet Austrian President Heinz Fischer, his Austrian counterpart Werner Faymann and engineer Josef Proll, Vice Chancellor, Finance Minister and Chairman of the Austrian People’s Party.

The Bulgarian prime minister will also meet representatives of the Bulgarian community in Austria.

The Bulgarian delegation includes Economy and Energy Minister Traicho Traikov, who is expected to sign an agreement for avoiding double taxation between the two countries.

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