The Week: Plovdiv wins clean air battle, no cabinet in sight and an Olympic gold

Plovdiv, Bulgaria

The Week: Plovdiv wins clean air battle, no cabinet in sight and an Olympic gold

Can you clean Plovdiv in a year, why industry in Bulgaria shut down for a week and who jumped into the deep end of politics

Plovdiv, Bulgaria

© Tsvetelina Belutova

You probably know about Plovdiv. Bulgaria's second biggest city is fast gaining status as a cool, rapidly developing place - combining a large industrial base with nice nightlife and excellent cuisine.

What you probably don't know is that it has a dark side. Plovdiv has a huge problem with its air: it is now ranked 292 out of 323 European cities for air quality by the European Environment Agency. It used to be a lot worse though - in 2007-2008 the city recorded over 150 days with over-the-norm pollution levels.

That's why a decade ago a group of more than 100 citizens launched their first collective case against a municipality for failing to clean the air. The case was such a novelty and such a shock for the Bulgarian justice system, that the court in Plovdiv abstained. Two other court instances: Smolyan and Veliko Tarnovo later rule that the problem is overwhelming and far beyond the abilities of the municipality and so this absolves Plovdiv of responsibility.

This week saw the successful resolution to this ongoing saga. The Supreme Court of Cassation ruled that Plovdiv is indeed responsible for the air its citizens breathe and declared that the local authorities are duty-bound to clean it within a year.

That is a HUGE step forward for Bulgaria. First, because it is the first instance where a collective case regarding such an environmental topic has been upheld in court. Second, because it clearly puts responsibility where it belongs - with the local authorities. And third, because Plovdiv is far from the only city with air problems. Out of several Bulgarian urban centers, measured by the EEA, Plovdiv comes second behind Varna (Sofia is marked as having "no data" which is curious, but the capital has huge and known problems with its air).

Some of the things that need to be done are politically hard to sell: restricting car use in the city center or convincing part of the poorest population to stop heating with hard fuels and adopt something more sustainable. Yet the preferred defense of the local authorities here: we're poor, we're helpless and there is nothing we can do, is b.s (as Americans say) and needs to be called out.

If goodwill and street protests can't force authorities to work for better city environments, then the court will have to.

1. Politics this week

Cabinet negotiations: are TISP doing this on purpose or is this really the best they can?

It's been a rough week for government building efforts in Bulgaria. If you remember last week's newsletter, we (and everybody in Parliament) was convinced that the next nominee for Prime Minister of There is such a people (TISP) party would be lawyer Petar Iliev. Well, he did not appear at the entrance of the Presidency at 17:00 on Friday as expected. Someone else, just as obscure as him, did - TISP MP Plamen Nikolov.

From left to right - Plamen Nikolov, Filip Stanev and Toshko Yordanov from TISP during the cabinet negotiations this week
Photographer: Julia Lazarova

It is still officially unknown why Mr Nikolov, а 44-year old representative of a US swimwear company, had to take over the nomination, but it likely has to do with the allegations of academic plagiarism against Mr Iliev that appeared in between (read more about the whole saga in our Monday piece here). In any case, the move was abrupt and unexpected, and left potential TISP partners perplexed.

Politeness is for the weak

The reaction of TISP's leadership, especially that of reclusive showman and idealogue of the party Slavi Trifonov, made it harder still for Democratic Bulgaria and Stand up BG to pledge support for its prospective cabinet. Mr Trifonov accused Democratic Bulgaria leader Hristo Ivanov of interfering with the party's choice of a cabinet and Toshko Yordanov, leader of the parliamentary group of the party, threatened to sue everyone who openly talks about Mr Iliev's potential plagiarism.

We've got penetration!

Add to this the leaked Facebook posts of new Justice Minister nominee Momchil Ivanov where he bashes "Sorosoids," "traitors of the motherland" and other foreign agents like yours truly, the Capital weekly team, and you get where this is going. Absurdly, Mr Ivanov - a previously unknown lawyer from Veliko Tarnovo - tried to absolve himself by claiming he had received a message on his phone that said it had been "penetrated" just before the appearance of these controversial posts. (Just before publishing this newsletter, Mr Ivanov resigned his nomination - apparently TISP would have to nominate a brand new candidate for Justice Minister - one of the most crucial positions - in the very last moment.)

This whole behavior stinks of scandal, but it is even worse when it happens at the same time Ivanov's party supposedly seeks support to pass a reformist cabinet, repeating that it has 90% overlap in priorities with the same parties it bashes. Naturally, after this series of debacles and publicity catastrophes by TISP, its supposed partners are not particularly enthusiastic about backing them up. Or, as Stand up BG political veteran Tatyana Doncheva told bTV on Thursday: "There are rules in politics. They were established centuries ago. If someone does not understand this and they [TISP] think they would reinvent the wheel - let them do as they please. But they should not expect us to bear the burden of their non-existent ability to complete the task [of forming a government]."

In short: nothing is certain until the last moment

What follows next? TISP continues its attempted negotiations with the "protest parties" and BSP until tomorrow, then it will present the cabinet-nominees to President Rumen Radev, who will send the names to Parliament. The MPs will, in turn, have to vote the Prime Minister (first) and then the cabinet in its entirety next week. Several possible scenarios exist for how these votes might go, depending on how DemBG and Stand up BG vote (BSP is almost certainly backing TISP) and if MRF withdraws its MPs at the time of voting in order to lower the quorum. The suspense could linger until the last moment.

We like you, North Macedonia, but not that much

This week PM Stefan Yanev got a call. It was from his Macedonian neighbor Zaev: asking for help with the ongoing fires. We hear you, said Yanev, but we also have troubles of our own, so we'll see if we can spare anything. A day later (and after Serbia had agreed to help its "friends" and send helicopters and manpower) Bulgaria was lending firefighting teams to help across the border. Nothing like a bit of competition to win hearts and minds!

2. Economy

It was a HUGE week for electricity By that, we mean that we have witnessed a spike in energy consumption that translated into peak prices of over 160 euro per Mhw - more than 70% on top of the EU average! The reasons are complex: the heatwave (and lots of AC), fires in Turkey and Greece which cause a spike in energy export, and the inexplicable decision by the biggest state-owned plant Maritza Iztok 2 not to work on full capacity. Given that it usually loses money whenever it decides to switch on, to keep it shut down in one of the few instances when it can actually turn a profit, seems like a deliberate decision to keep prices up.

Which - in turn, provoked industry plants to shut down for a day in protest. All in all, a nice little energy storm brewing for the caretaker government, or whoever is coming next.

Development Bank is at a loss. Of about 250m levs

The Bulgarian Development Bank (BDB) expects a loss of 250 million levs for 2021 because of accumulated provisions for large loans. The top 20 exposures of the state-owned bank, which are responsible for 90% of the loan portfolio, are serviced, but excessively risky and are therefore expected to bring significant losses.

This was the brief message of the caretaker Minister of Economy Kiril Petkov during his hearing in parliament. When asked about the need for provisions for large exposures, Petkov announced that the bank's management is currently reviewing and analyzing them, but preliminary expectations are for a loss of about 250 million levs for 2021.

Sofia airport's concessionaire gets more funding from EBRD

The EBRD is investing 74.3 million euro in Sofia Airport's concessionaire, Sof Connect. The main shareholder in Sof Connect is the Paris-based Meridiam fund. According to preliminary information, the bank will indirectly control about 20% of the capital. Earlier, the EBRD also granted a 50-million-euro loan to pay the first installment owed to the state and launch an investment program at Sofia Airport.

Construction improves in July but not for long

The current financial condition of construction companies improved in July - the industrial index that measures the estimates of managers in the industry increased by 6 points last month, up to 26.9 points, nearing pre-crisis levels of about 30 points. However, expectations for the coming months are deteriorating. It might be because of political instability or the expected incoming wave of new coronavirus cases in the fall.

The central bank received drawing right worth 2 billion levs from IMF

The IMF Board of Governors approved the largest distribution of 456 billion special drawing rights (SDRs) among all countries in relation to their quota in the fund. For Bulgaria, this means a tranche of SDR 859 million worth about 2 billion levs, which the Bulgarian National Bank will receive on August 23. Consequently, the central bank's foreign exchange reserves will increase. The IMF's kind of currency theoretically allows governments to sell or use it to obtain liquidity from other members of the fund.

3. Business

MET Swiss group MET is planning to buy a second wind farm in Bulgaria - the 60-megawatt power plant in Suvorovo, near the Black Sea. The seller is the Spanish Enhol. The price has not been announced. Last year, MET bought the fifth largest wind farm in Bulgaria - Enel Green Power Bulgaria, near Kavarna, with a capacity of 42 megawatts. Then, the estimated price was 35-40 million euro. So it's likely that the current deal is in the 50-60 million euro range. The deal should be finalized in the third quarter



Advance Terrafund

Advance Terrafund has sold more than 5 ha of land near the capital, in the Vrazhdebna district, for 2.1 million euro. The buyer is CTP - the largest owner and operator of industrial and logistics parks in Central and Eastern Europe. The group entered the Bulgarian market in August 2019. The deal itself is for a company created just for this purpose - Project Vrazhdebna. The new owner is "CityPark Epsilon".

4. Energy

CEZ deal continues
Eurohold offered a tender price for CEZ Distribution and CEZ Electro below market expectations. Eurohold - the new owner of 67% of CEZ Distribution, hastened with its bid to buy the remaining 33% of the company at a price of 276.88 levs per share, which is below the current stock exchange price (about 300 levs).

5. Watch out for:

Video of the week: Watch as Ivet Goranova, 21-year old karateka from Pleven, wins gold in the women's 55 kg event at the 2020 Summer Olympics in Tokyo. This is Bulgaria's first gold medal at the Olympics since 2008. Oh, and notably, so far all the five winners of medals for Bulgaria are women and, furthermore - compete in supposedly masculine sports: air pistol, wrestling and boxing.

People: Plamen Danailov - TISP's nominee for Finance Minister - believes that Bulgaria ought to join the euro only after Bulgarians reach the median EU income - a marked difference from his party's previous positions. If he indeed heads the Finance Ministry, this might mean Bulgaria would join the euro at some point in the next 20 to 50 years!

Date: 11 August - the most likely day when the National Assembly would vote the cabinet and Prime Minister nominated by TISP

Place: Israel - you can't go there. From this week, in a sign of what is probably to come, Israel shut out Bulgarian tourists, placing them under a mandatory quarantine even if they are vaccinated or have had COVID.

Word of the week: Shnorhel (snorkel)

The unexpected nomination of Plamen Nikolov for Prime Minister was, indeed, a jump into the deep end for the previously unknown politician. Luckily, he appears to be perfectly equipped for the job, as his previous employment was as regional director for the US-based swimwear company FINIS and the first item that appeared on the firm's website when googling it was a snorkel. Naturally, social media latched on to this and the rest is history.

You probably know about Plovdiv. Bulgaria's second biggest city is fast gaining status as a cool, rapidly developing place - combining a large industrial base with nice nightlife and excellent cuisine.

What you probably don't know is that it has a dark side. Plovdiv has a huge problem with its air: it is now ranked 292 out of 323 European cities for air quality by the European Environment Agency. It used to be a lot worse though - in 2007-2008 the city recorded over 150 days with over-the-norm pollution levels.

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