Ivelina Vasileva, Deputy Minister of Environment and Water: We are to ask for some €2.4 bn for water infrastructure

- Mrs. Vasileva, you declared that there may be 'over-contracting' in relation to Operational Programme Environment. What does this means?
- Currently, some 47% of the funds (BGN1.2 bn) have been agreed in the water sector under OP Environment. A total of 27 projects worth BGN 964 mln have already been submitted under the new procedures. Out of these, 9 contracts worth BGN 340 mln were signed. Some 23 projects worth BGN 729 mln have been submitted under the infrastructure project item. Submitted projects, under the two new procedures are worth BGN 1.7 bn. They  will all be implemented in large cities.

At the same time, we are also working on a procedure for smaller settlements and we intend to allocate BGN 300 mln for it. Analyses of the projects which are underway currently show that we will make savings. Normally we negotiate a budget at the beginning, but during the tender procedures, because of the lower prices offered, we are able to make savings - in times of crisis, construction prices decline. Our observations show that about 10% of the contracted funds have been saved. In addition to this, there are municipalities, which are facing problems with the project implementation. They fail to carry out the planned operations and can not fully absorb the allocated funds. This is another source of 'saved funds'. Further to that, when irregularities in the tender procedures are discovered, financial penalties are imposed and this also leads to money going back to the OP. If the projects of smaller municipalities exceed the estimated budget of BGN 300 mln, we will be able to provide resources from the savings under ongoing projects. If necessary, we will seek additional funds from the national budget. Smaller settlements also need sewage treatment plants. This is a legal requirement and a commitment of our country to the European Commission. This is why we are planning to allocate funds needed for the completion of these facilities in the next programming period as well. Currently we are working on the so called “project pipeline” and projects which can not be fully implemented in this programming period, will be transferred to the next one. We will urge Brussels to earmark sufficient funds so that basic infrastructure be built.

- What is the amount that we would need for environmental infrastructure and how much will we requested from Brussels?
- We will ask for at least €2.4 bn for the infrastructure in the water sector, in the next programming period ie twice as much as the funding provided in this programming period.

- What are the funds that would be needed from our government after the EC curtailed the implementation of several projects from the Environmental Protection sector, under the ISPA programme?
- The EC did not extend the financial memorandum for the desulphurisation plants of Maritza Iztok 2 Thermo-electric Power Plant and the project for the full water cycle in the towns of Sliven and Balchik.
The problem with Balchik is that the activities were completed at about 95% and the water treatment plant was constructed long ago. This is why the Commission considered that the project was almost completed and refused the project extension. Due to the delay, we imposed a sanction there amounting to 10% of the project value and expect the contractor to reduce the last payments by the fine owed.
The refusal for Sliven happened because the activities on the water network  had not yet been initiated. The EC expressed concerns about the framework agreement, commissioned by the municipality for the construction works. The construction cost BGN 25.5 mln. One of the reasons for the project suspension was that part of this funding, financed under ISPA, was not provided. The activities under the OP could not be carried out because some of them coincided with work intended to be implemented under funding from ISPA. After the refusal on the part of the EC for additional financing, we have to consider whether these activities should be carried out and to what extent, as we are talking here about BGN 25.5 mln. Also, the tender procedure under the OP should be submitted to subsequent control.

- Minister Karadjova commented that the Ministry of Environment and Water could take over the project management functions. Is this possible?
- This is one of the options. But it should be considered whether this is reasonable, given that the project affects municipal infrastructure. The municipality has to participate and monitor the overall implementation of the construction process. A series of options are being considered, but we should clarify all the circumstances, in order to specific actions.

- What will happen with the project for the desulphurization of Maritsa East 2 TPP?
- OLAF drafted a report, which stated that there were suspicions of fraud, regarding the public procurement procedure. The situation was investigated and the Bulgarian authorities were not found to be involved. Rather, the suspicions concerned the participant in the tender. We expect further action by the Commission regarding the financial memorandum. We referred the case to the Prosecution.

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