On 27 February, the European Prosecutor's Office (EPPO) broke the news that it had launched a series of probes into enterprises related to Bulgarian energy magnate Hristo Kovachki. The investigations are linked to possible frauds with the EU Emissions Trading System, which have allegedly incurred losses of millions of euros of European taxpayers' money.
According to the announcement by the office of European Chief Prosecutor Laura Kovesi, Bulgarian police raided offices of energy companies in Sofia, Pernik, Burgas, Ruse, Veliko Tarnovo and the regions of Kyustendil, Stara Zagora and Haskovo - all of which have coal-powered thermal power plants (TPPs) linked to Mr Kovachki.
Reportedly, a brand new company responsible for the verification of greenhouse gas emissions of the coal power plants and local heating plants without prior experience in the field, GMI Verify, has been submitting wrong reports about the carbon footprint of the plants to the national authorities.
In early 2021, journalists from the International Journalist Organization for Investigations Against Corruption and Organized Crime (OCCRP) published a report exposing Kovachki's alleged plants Bobov Dol and Brikel for having drastically reduced their reported CO2 emissions without investing in any purification systems or revising its operations. A parliamentary inquiry ensued and then the case was handed over to the Bulgarian Prosecutor's office which buried the matter.
The accusations against the plants
The investigation, carried out by the journalists, showed that Bobov Dol TPP reported a mere third of the levels of harmful emissions in 2020 than in 2017, without reducing its operations or implementing new green technologies. A similar decrease in CO2 quota was also recorded in Brikel.
Apart from having the "reduced emissions" in common, Bobov dol and Brikel are both considered part of Hristo Kovachki's energy group. Even more, they rely on the same company to report their carbon emissions - GMI Verify, which can also be traced to Kovachki's enterprises.
According to official data analyzed by OCCRP, Bobov Dol and Brikel plants have "saved" at least 26 million euros from the dubious revised recordings at a time when the price of emissions was around 20 euros per ton. With their price increasing to 100 euros/ton in recent months, these purported reductions were worth vast sums.
In 2021, the plants told Capital weekly that the reduction arose from a change in the fuel mix. Instead of 100% coal, the share of biofuels, which according to the EU classification have a zero carbon footprint, has increased over the last three years.
Fraudulent declarations?
According to the EPPO, GMI Verify deliberately submitted false data on the emissions of greenhouse gasses produced by thermal power plants and district heating to understate the amount of emissions produced by them within the framework of the EU (ETS) trading allowances.
Based on the evidence collected, it is estimated that the underreporting has resulted in losses for the EU and member-states' budgets totaling millions of euros.
More than 40 inspections have already been carried out and more than 70 witnesses interviewed by order of EU prosecutors.
Who is Kovachki?
Hristo Kovachki is not officially in charge of any of these plants. Considered one of the richest Bulgarian businessmen, Mr Kovachki is a shadowy figure who rarely gives interviews or appears in public.
It is not documented how he became a millionaire, but after graduating in Physics in (then) Soviet Russia, he launched a couple of small trade and retail companies, just to end up buying (via proxies) several of the biggest Bulgarian mines and power plants (TPPs) in the 2001-2009 period.
These include Maritza East-3 TPP, the Bobodov TPP, which are associated with poor working conditions, rampant pollution and, most recently - burning Italian trash without having proper facilities for doing so. As ever, the Bulgarian state has played a helpful role in all his endeavors. Mr Kovachki officially does not own much - he merely acts as a "consultant" for these TPPs and mines, so all investigations into mishaps happening there never reach him.
The biggest electricity traders, Grand Energy Distribution, which was operational until last year and has now been replaced by Nomad Energy Companies, are also part of his energy conglomerate. Their combined turnover in the last 2 years amounts to billions of leva.
Under his scope is also the company providing the Kozloduy Nuclear power plant (NPP) with technical support - Atomenergoremont. Two former directors of the nuclear plant - Alexander Nikolov and Ivan Genov - were sanctioned by the US under the Magnitsky Act this month.
On February 15, Kovachki himself responded in writing to Capital's questions regarding American sanctions and the Kozloduy NPP. Recently, a consortium with the participation of "Atomenenergoremont" won part of the tender for the expansion of the Chiren gas storage facility, but the contract has not yet been signed.
On 27 February, the European Prosecutor's Office (EPPO) broke the news that it had launched a series of probes into enterprises related to Bulgarian energy magnate Hristo Kovachki. The investigations are linked to possible frauds with the EU Emissions Trading System, which have allegedly incurred losses of millions of euros of European taxpayers' money.
According to the announcement by the office of European Chief Prosecutor Laura Kovesi, Bulgarian police raided offices of energy companies in Sofia, Pernik, Burgas, Ruse, Veliko Tarnovo and the regions of Kyustendil, Stara Zagora and Haskovo - all of which have coal-powered thermal power plants (TPPs) linked to Mr Kovachki.
