The week: A bridge worth paying for, Aurubis is at the top again and out with the hawks, in with the doves

The bridge that will put Croatian cost in infrastructural maps

The week: A bridge worth paying for, Aurubis is at the top again and out with the hawks, in with the doves

The bridge that will put Croatian cost in infrastructural maps

It is a beautiful sight. The new Pelješac Bridge, connecting Southern Dalmatia with the rest of mainland Croatia, was opened this week with fanfares and in the presence of both the European Commission and the Chinese prime minister.

The bridge cuts above the sea to connect two parts of Croatia without passing through Bosnia and Herzegovina.

This spectacular and expensive project is the largest ever EU investment in Croatia amounting to 420 million euros, 357 million of which were contributed from the EU cohesion funds. The bridge is 2.4 km long, with 13 spans, five of which are 285 meters long and a height of 55 meters in the middle. The supporting infrastructure is 32.5 km, including bridges, viaducts, and tunnels. It is, in short, an architectural and engineering jewel. The Commission loves flagship projects like these to put on brochures about the success of its regional policy.

There is a lesson here for Bulgaria.

The country received well over 25 billion euros in the past 2 programming periods. A good chunk of that went to building new roads and highways, bridges and railways. Are there, you might ask, any architecturally astonishing achievements with that money? Not exactly. Most of what has been built is barely covering the minimal requirements for an EU road (and then again, not very often).

Then maybe, it's the sheer amount of new roads and railways that counts. Surely we have at least ONE highway from border to border or at least ONE fast railway line, which is worth 14 years of investment? Again, no, on both counts. The two "achievements" of the past decade are the completion of something called Trakia highway connecting Sofia to the Black Sea coast, which is not going to be considered a highway anywhere outside of Africa, and the near-completion of the highway between Sofia and the Greek border.

But wait, I hear critics say. Maybe, it's the difficulties in front of builders that count. Well, the builders of Pelješac managed to build a gigantic bridge over the Mali Ston bay, which is a 30-meters deep natural reserve, in the space of 4 years. To put things in perspective, this is how long it takes the National Rail Infrastructure Company here to procure and receive designs for a 30 km rail line in the mountains around Sofia. If we are lucky, it will take 6 more years to build it.

Ok, so what is it?

I'm afraid you all know the answer already. But let me offer a solution. The Croatian bridge was constructed by the China Road and Bridge Corporation (CRBC) which bid on a much lower price, competing with other international bidders. The last genuinely international bid in Bulgaria was before the first Borrisov government: the Danube Bridge-2 project. Since then, the infrastructure construction sector was quietly overtaken by political figures and business associates, who use it only to milk money. They have not only failed to deliver but are also regularly organizing protests to claim more money (this week included).

If there is to ever be a solution to the bind we find ourselves in, it is - invite the Chinese. Invite the Brazilians. Invite the Greeks. Invite the Italians. Invite everyone. Cut the damn umbilical cord between big procurement and politicians and set us free.

We leave this message as advice to the coming caretaker government. And let me use also this opportunity to tell you that K Insights newsletter will follow politicians' lead and go away for August. Spend more time on the beach and have some time-off before this autumn. It promises to be a rollercoaster ride, again. See you in September with our new Real Estate report!

(if interested in it, again - message [email protected])

this newsletter as usual was helped by

Martin Dimitrov and Anina Santova


Elections it is, again

After a dramatic weekend in which TISP's Slavi Trifonov accused his former coalition partners from BSP and Democratic Bulgaria of duplicity for trying to negotiate with his party behind closed doors while publicly bashing him, on Monday it was already clear that there is little chance for a new cabinet in this National Assembly.

On Wednesday this was officialized when the Socialist party - which held the third and final mandate to try to form a government - failed to even put a legislative program for the next three months on the parliament's agenda. This initiative aimed to "show whether there is an anti-corruption majority in this National Assembly," as Socialist MP Georgi Svilenski put it. "There is none," he concluded after the unsuccessful attempt.

Ninova's failed plan

This meant that the plan of BSP leader Kornelia Ninova to keep the mandate for a few more weeks in order to facilitate Parliament to pass key bills linked to the unclogging of EU funding failed. She returned the mandate to President Rumen Radev on Thursday. Mr Radev, who hasn't been really on good terms with Ms Ninova for years now, did not miss the opportunity to castigate the former ruling coalition for the energy woes of the country.

In return, Ms Ninova lambasted the President for being an "accomplice" in the coalition that brought down the cabinet. "The president has not stopped criticizing this government since day one, even though he created the main party in it," she said.

So, what comes next is:

  • Parliament will be dissolved at some point next week - on Tuesday or Wednesday;
  • President Radev will appoint his fourth caretaker cabinet on the same day;
  • Bulgarians will head to the polls for the fourth time (excluding the presidential vote) in a year and a half, likely on Sunday, 2 October.

Captured state fights back - another episode

On Tuesday, Sofia City Administrative Court ruled that a list of magistrates, politicians and judges with undeclared properties and accounts abroad will remain secret. The list came to light in 2019 after a State Agency for National Security (DANS) probe, yet it was never published. The court decided that the refusal of DANS to make the names of 40-odd politicians and magistrates public had been lawful.


Construction companies are protesting (again)

They want more money for road maintenance and repair works, claiming the payments are due before September as they were contracted by the last GERB government in 2020. The outgoing government concluded, however, that most of those contracts were unlawful and stopped payments. The way out of the deadlock was supposed to be found in Parliament which is why the road cartel is piling pressure on lawmakers to make a decision in its favor.


275 million levs

Is the amount of mortgage loans taken out by households in June. The amount for the first 6 months of the year is 15 billion levs.


Is the rise in company loans in June. This is the biggest increase since 2009.


Bulgarian Railways on profit

turned an operating profit for the first time in 10 years. The state-owned company receives a large subsidy from the government budget each year, but it is the first in a long time that it manages to have a profit. It is not exactly clear what's helped BDZ come in the clear yet it must be noted that the primary goal of the company is not so much the operating profit, as much as to operate an efficient and useful service. Still a distant feat.


Bulgarian glass factories with a 27% increase in sales in 2021

Glass manufacturers in Bulgaria recorded strong growth last year. After a shaky 2020, when the pandemic depressed demand for some products, all five glass factories in the country increased their sales in 2021. Their average turnover is up 27% year-on-year and their results exceed pre-Covid levels. Only BA Glass Bulgaria reported a 9% increase but the company, which owns the factories for bottles and jars in Sofia and Plovdiv, managed to cross the 2 billion levs barrier. The main risk for the industry is the high cost of natural gas and electricity.


Discordia boosts revenue by 50% in 2021 International freight transport company Discordia founded by Hristo Hristov reports 259.3 million levs in revenues for 2021 which is a 50% increase compared to 2020. The rate of growth is not surprising as the company's business expands by nearly 35% each year. Discordia also has ambitions for the future - by the end of the decade, the company aims to rank among the top 10 transport and logistics companies in Europe, and to increase its revenues eightfold to 1 billion euros.


Parliament brings back Ivan Ivanov as energy regulator head

He might be 77 years old, but he is returning to active duty. Ivan Ivanov, the ex-head of the Energy and Water Regulatory Commision (KEVR) was brought back as chairman, after the Constitutional Court ruled the election of his successor unlawful. This happened with a vote across party lines, as otherwise the most regulated industry in Bulgaria would have practically been blocked.

Bulgargaz demands a 54 percent spike of natural gas price for August

Mr Ivanov's likely first move would be to rule on the price hike for natural gas requested by the public gas supplier on Wednesday. Bulgargaz called for an increase in the natural gas price applicable for August by 54 percent, which would translate into 287 BGN per MWh, excluding fees and taxes. If KEVR remained incapacitated, businesses would not have known at what price to buy gas from the provider. Not that they would be very happy with the current set price, though Prime Minister Petkov at least promised to adopt the new electricity price compensation program for businesses from July 1 to September 30 before he leaves office.


PEOPLE Delyan Peevski

Had a birthday this week and received the best possible present from his friends at the Specialiazed Prosecition service: they dropped the Magnitsky-related investigations against him and his colleague Ilko Zhelyazkov. This was also the last thing the Specialized Prosecution did, as it was officially shut down on Wednesday, after Parliament approved a new law disbanding it.

Galab Donev

the next cabinet of "pacifist" President Rumen Radev can literally and figuratively be described as "out with the hawks, in with the doves", as it will be headed by Galab (meaning "dove" in Bulgarian) Donev. The former Minister of Labour and Social Policy in the caretaker government of Ognian Gerdzhikov and in the caretaker government of Stefan Yanev, has most recently worked as Secretary for Social Policy and Health of the President.


3 August

likely the last day of the current Parliament, when it will be dissolved by President Rumen Radev


Aurubis Bulgaria

is the biggest company in the country for the second year in a row. The local unit of German copper producer Aurubis comes out at the top of K100 - the annual ranking of the biggest Bulgarian companies produced by Kapital. It has over 6.6 billion levs in revenues in 2021, up 22% on 2020, and a profit of 292 million levs.


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It is a beautiful sight. The new Pelješac Bridge, connecting Southern Dalmatia with the rest of mainland Croatia, was opened this week with fanfares and in the presence of both the European Commission and the Chinese prime minister.

The bridge cuts above the sea to connect two parts of Croatia without passing through Bosnia and Herzegovina.

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