Court overturns Sofia airport contract

SOFIA (Reuters) – A Bulgarian court overturned a government decision to grant Denmark’s Copenhagen Airports (CPH) a 35-year, 526-million-euro ($630.2 million) concession to run the country’s two Black Sea airports. The ruling yesterday was a blow to Bulgaria, which is struggling to spruce up the investment climate ahead of EU entry as political wrangling and legal challenges obstruct government efforts to complete major privatization and concession deals. «The court revoked the government’s decision to choose a winner for the concessionaire of the civil airports in Bourgas and Varna,» the Supreme Administrative Court said. The court obliged the new Socialist-led government to continue the tender with the other two bidders – Germany’s Fraport and a linkup between French Vinci Airports and Vinci Concessions. The ruling can be appealed within 14 days. In June the centrist Cabinet of ex-king Simeon Saxe-Coburg – relegated by the Socialists to a junior coalition partner in summer elections – signed a contract with CPH, which it hailed as «one of the biggest investment deals in Bulgaria.» But the court blocked the process after Fraport and Vinci questioned the government’s method of ranking bids. It ruled that the former government had made procedural irregularities in the tender and had wrongly let Copenhagen Airports take part, even though it did not meet required criteria on prior investments and experience. «The appellants’ stance that the commission allowed the participation of a candidate which did not meet the qualification criteria is justified,» the court said. Damages It also ruled the government must pay damages for costs accrued by the appealing bidders totaling around 80,000 levs ($49,020). Shares in Copenhagen Airports were unchanged from their level before the news. The company said it had not yet been informed of the ruling but would not sit on its hands. «If the story is true, Copenhagen Airports will consider whether to take legal action against the Bulgarian government,» its head of investor relations, Flemming Petersen, told Reuters. The two airports, which lie 130 kilometers apart on the Black Sea coast, are key to Bulgaria’s blossoming tourism industry and are expected to benefit from a significant rise in traffic ahead of the Balkan state’s entry to the European Union in 2007 or 2008. Bulgaria has been plagued with troubles surrounding the sale of state assets and concessions and has drawn fire from corruption watchgroups criticizing its procedures as opaque. This year a court halted a billion-euro highway deal awarded without a tender to a Bulgarian-Portuguese group, and the state is now struggling to prevent the sale of three major thermal power plants from collapsing by selling at least one. Last year Saxe-Coburg’s government managed to close the politically charged sale of fixed-line telecoms operator BTC but only after years of bitter court battles, while plans to sell tobacco firm Bulgartabak this year failed amid political opposition.