Bulgarian Govt Moves to Offer Sofia International Airport on ConcessionBusiness | April 6, 2011, Wednesday // 14:56| views
Sofia International Airport will be granted on concession. Photo from Wikipedia
Bulgaria's Cabinet has approved a procedure to offer on concession Sofia Airport, the largest international airport in the country.
According to the Borisov government, leasing Sofia Airport will provide for bringing in private investments in the airport infrastructure, improving the technical facilities and organization in line with EU standards, and boosting the competitiveness and quality of the airport services.
The final approval of the tender for the concession procedure will be granted once the Ministry of Transport, IT and Communications drafts a detailed economic analysis of the requirements for the potential concession.
Transport Minister Alexander Tsvetkov has announced that this may take 3-4 months.
"We are going ahead with the preparation of the concession of the entire airport because of the need of a serious modernization. This concession will include the construction of a new cargo terminal, a new general aviation terminal, a new VIP terminal, improvement of the overall infrastructure, construction of new storage facilities for airplane fuel. What is more, the Sofia Airport is still paying off its loan from the European Investment Bank and the Kuwait Fund for the construction of Terminal 2," Tsvetkov argued.
Thus, the future concessionaire will be expected to invest massively in the modernization of the Sofia International Airport, and to assume its loans, which amounted to over BGN 85 M at the end of 2010.
In 2010, State Company "Sofia Airport" registered a profit of BGN 14 M which has led critics to wonder why a profitable state-owned enterprise should be offered on a concession. Others in favor of the concession have argued that the profit of the Sofia Airport must be much higher.
The full concession of the airport proposed by the Transport Ministry marks a shift of opinion for Tsvetkov's team after it had recently argued that it would be best to offer on concession only the cargo terminal of the airport.
The Borisov Cabinet recently announced the start of concession procedures for the Shtraklevo Airport near the Danube city of Ruse, and the cargo terminal of the Plovdiv Airport; it is also starting a concession procedure for the Gorna Oryahovitsa Airport in central Bulgaria.
The airports in Black Sea cities Varna and Burgas have been granted on concession to Fraport Twin Star Airport Management company, a German-Bulgarian consortium between the Varna-based TIM group's holding "Chimimport" (40%) and the German "Fraport."
In 2010, Fraport Twin Star Airport Management paid the Bulgarian state a total of BGN 13 M for the concessions of the Varna Airport and the Burgas Airport, which is less than the total profit of State Company "Sofia Airport" for 2010.
According to draft changes in the Civilian Aviation Act, which are expected to be approved by the end of 2011, the future concessionaire of Sofia Airport will be given the right to determine airport fees.
First starting passenger flights in 1947, the Sofia Airport, located 10 km southeast of downtown Sofia in the Vrazhdebna quarter, opened a new modern terminal, Terminal 2, in 2006.
The construction of Terminal 2 in 2001-2006 cost over EUR 200 M, provided from the Bulgarian government, EU pre-accession programs PHARE and ISPA, and from loans from the Euripean Investment Bank and the Kuwait Economic Development Fund.
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