AMIDST suspicions of procurement fraud, misuse of funds and money laundering, the European Public Prosecutor’s Office (EPPO) has launched an investigation of 17 Bulgarian railway project contracts from 2019-2021. The European Anti-Fraud Office (Olaf) is also investigating two rolling stock contracts with the Bulgarian government warning of €400m in financial corrections if violations are established.
Announcing the investigations, Bulgaria’s new minister of transport and communications, Georgi Peev, says that the new Bulgarian government inherited hundreds of millions of euros in liabilities and projects without secured financing.
“The ministry is providing full cooperation to all national and European institutions,” Peev says.
“Rail transport is the most troubled sector in the system and undoubtedly our greatest responsibility. The analysis we carried out during the first month [in office] shows serious accumulated problems that require a comprehensive change in the way the sector is managed.”
Peev says infrastructure manager NRIC has undertaken liabilities exceeding €764m without secured financing. “The audits have identified a number of questionable public procurement procedures and practices,” the ministry says. This includes a €43m tender for shrub clearance, which Peev has terminated.
Peev says cases have been identified of non-transparent emergency repairs, advance payments made without actual implementation, and projects launched before the completion of expropriation, archaeological and geological procedures.
“Nearly 50% of the railway network is operating under temporary or permanent speed restrictions, while ERTMS is still not functioning,” the ministry says.
Passenger fleet
The ministry says there are also serious problems at BDZ Passenger Services, which has nearly €30m in overdue liabilities. A large proportion of the rolling stock is more than 40 years old. There are also risks related to the maintenance of the Siemens trains, which serve nearly half of the country's railway network. There has also been no timely preparation for the maintenance of new EMUs that are due to be delivered.
The situation at BDZ Freight Services is even more severe, with liabilities exceeding €60m, more than 80% of which are overdue. According to Peev, the analysis shows that the company is performing part of its contracts at prices below cost, raising concerns about its financial sustainability. “In practice, the freight transport company is in an extremely difficult financial situation and requires urgent stabilisation measures,” Peev says.
There are also serious risks surrounding the delivery of 23 new Alstom EMUs. Although the contract has been signed, the financial resources, amounting to €356m, have not yet been secured. In addition, preparations for their maintenance have not been made, as the tenders for the modernisation of depots and maintenance facilities have not yet been launched.
“Our priorities are clear: safety, the efficient use of European funds, infrastructure modernisation, the digitalisation of services and transparency in the management of public resources” Peev says. “Fewer promises and more results - that will be the approach of our team.”
