South Stream Bulgaria JV Raises Capital Despite Ban

Business » ENERGY | August 19, 2014, Tuesday // 11:48
Bulgaria: South Stream Bulgaria JV Raises Capital Despite Ban

The South Stream Bulgaria project company has increased its capital in defiance of orders to the contrary issued by caretaker energy minister Vasil Shtonov.

According to a statement posted on the website of Bulgaria’s Economy and Energy Ministry on Tuesday, the capital of the project company set up to build the Bulgarian section of Russian-led South Stream gas pipeline has been increased to BGN 397.6 M.

The increase was entered into Bulgaria’s Commercial Register on August 18 in violation of Shtonov’s order issued a week earlier to freeze all activities relating to the implementation of the project until the project was brought in compliance with EU regulations.

South Stream Bulgaria is equally owned by state-run Bulgarian Energy Holding (BEH) and Russian gas giant Gazprom. It is represented jointly by two executive directors.

In addition, the statement said, the capital hike had been made despite an explicit order to the contrary issued by BEH  on August 11.

In June, the European Commission launched an infringement procedure against Bulgaria over the way the country is handling the South Stream project and demanded it be frozen until it complies with EU law.

While the capital increase itself does not mark the start of construction works on the project, it does allow for preparations to go ahead, the statement said.

It also added that construction works can be launched only after upfront payments to the contractors were made – a step that can take place only after the two executive directors of South Stream Bulgaria had signed the documents ordering the payment.

“The Economy and Energy Ministry believes the actions of the managers of South Stream Bulgaria do not protect BEH’s interests in the joint venture and intends to refer the case to law enforcement bodies,” the statement said.

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Tags: South stream, Vasil Shtonov, Bulgarian Energy Holding, BEH
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