site.btaSofia Airport Concessionaire Asks to Reschedule Payment of Royalties for First Ten Years, Government Awaits EC's Approval

February 24 (BTA) - The owner of the concession for Sofia Airport, SOF Connect, is seeking to reschedule the concession royalties for the airport for the first ten years of the 35-year concession. This transpired during Question Time in Parliament when Transport Minister Rossen Jeliazkov was asked by the opposition Bulgarian Socialist Party (BSP) to confirm that the concessionaire was planning "to postpone their obligations by ten years".

Jeliazkov said that on October 27 the concessionaire made an offer aimed "to restore the economic balance of the concession", which includes the postponement of payment of annual concession rпщбмфйеs due for the first ten years of the concession, and increasing the amount of investment from 608 million to 624 million euro. Furthermore, the concessionaire confirmed their commitments to pay in advance a royalty of 660 million leva, VAT included, and to build Terminal 3 by the tenth year of the concession term, Jeliazkov said. According to the concessionaire, these are the conditions that would convince financial institutions to invest in the project.

Jeliazkov said that the proposal was submitted to the European Commission Directorate General for Competition and is awaiting a decision. After that, he will submit a report to the Council of Ministers.

If the concessionaire's offer is not accepted, the initial concession remuneration of 660 million leva, VAT included, will not be paid this year. This would be serious revenue for the State budget, and is factored in the 2020 State Budget Act.

If the government does not accept the offer, the only option to finance the airport's activity would be through higher airport taxes, the Minister argued.

He also said that Sofia Airport serviced 2.9 million travellers last year which, compared to the 7.1 million in 2019, represents an almost threefold drop in traffic.

Jeliazkov also told the MPs that the concession is only beneficial and there are no negative aspects to it. He pointed out that the BSP has always been against the concession.

He said that if a new concession procedure is started, the State will not receive offers "with such unquestionable advantages".

The concession agreement for Sofia Airport was signed with SOF Connect on July 22, 2020. The consortium includes France's Meridiam Eastern Europe Investments SAS and Austria's Strabag, with Munich Airport as airport operator. The deadline for entry into force of the concession is 12 months from the signing of the contract.

The entry-into-force date depends on the fulfillment of conditions by both parties and Minister Jeliazkov told the MPs that much of those have already been fulfilled. What remains to be done is issue a certificate for the airport and sign contracts with the state services using the airport (such as the Border Service). The Minister said that the entire airport staff will be kept by SOF Connect.

Earlier, BSP leader Kornelia Ninova said from the parliamentary rostrum that if the payment of concession royalties is delayed, the concessionaire will take possession, start laying off airport workers, increase airport fees at the expense of the passengers and make a profit for ten years without making any investment, which is their obligation by contract. According to her, the deal will only be beneficial to the concessionaire and the parties that undersigned it.

Deadline for offers for Plovdiv Airport extended for lack of interest

It also transpired from Jeliazkov's answer that the application deadline for the concession of Plovdiv Airport has been once again extended due to a lack of bidders.

The new deadline is March 24, 2021.

The procedure started in February 2020 and the initial deadline was April 2020 but it has already been extended several times. The winner is expected to make a one-off payment of 150,000 leva pre-VAT at the start of the concession life and improve and extend the airport infrastructure.

In an earlier procedure to find a concessionaire, a Chinese investor beat a consortium of local companies but then withdrew from the project and the authorities cancelled the procedure in 2018. RI/MT/LN/
//