Anti-trust regulator complaint halts Sofia Airport concession

Written by on June 19, 2016 in Bulgaria - Comments Off on Anti-trust regulator complaint halts Sofia Airport concession
terminal 2 of Sofia Airport in Bulgaria

Bulgaria’s Transport Ministry said that it has suspended the concession for the Sofia Airport after a complaint has been filed with the Commission for Protection of Competition (CPC), lodged by two construction companies that are currently engaged in litigation with the airport operator.

According to the CPC website, the complaint was submitted on June 15, by Kuwaiti Mohamed Abdulmohsin Al- Kharafi and Sons for General Trading, General Contracting and Industrial Structures W.L.L. and another subsidiary of the Kharafi Group industrial conglomerate, United Arab Emirates-based Admak General Contracting. The regulator’s website only listed the existence of the complaint, but not its full text.

The Transport Ministry’s statement did not give any details about the grounds for the complaint either, but its concession documentation explicitly specifies that the winner of the concession tender would have no liabilities regarding the ongoing litigation between Sofia Airport and the two construction companies, which built the airport’s new runway system in 2006.

In 2011, the International Court of Arbitration ruled in favour of Kharafi Group’s companies. According to the court’s final decision, Sofia Airport has to pay $26.8 million in damages (plus unspecified interest), refund $10.3 million in bank guarantees as well as five million pounds sterling in court expenses. In order for the arbitration court’s decision to become binding, it must be confirmed by Bulgarian courts, where the lawsuit is currently still being appealed, with no clear deadline for when the process might conclude.

Bulgaria’s Cabinet approved the concession offer last month and an official call for bids came on June 3. The Transport Ministry said at the time that it would consider offers that include an upfront payment of at least 550 million leva (about 281.2 million euro), while annual concession fees must be no less than seven per cent of the airports revenues, but also no lower than 9.95 million leva.

It total, the Cabinet is expecting to receive concession payments worth more than 1.2 billion leva over the concession period. The bulk of the money paid upfront by the winning bidder would be used to pay the debts owed by state railways BDZ, as well as for the purchase of new rolling stock, the Transport Ministry has said.

The deadline for submitting bids was set for October 20, but the suspension of concession offer is likely to result in a postponement, reports in Bulgarian media said.

In recent weeks, the concession offer has also drawn criticism from trade unions of airport employees, which argued that the financial parameters of the Cabinet’s offer were too low. The trade unions have threatened to strike if the concession process was not halted.

(Photo: Apostoloff)



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