site.btaPM Borissov: Bulgarian Government Hasn't Changed Its Position about South Stream

Sofia, December 8 (BTA) - "The Bulgarian government has not
changed its position about the South Stream pipeline," said
Monday Prime Minister Boyko Borissov, speaking in Parliament.
"We support its implementation provided it is done in compliance
 with EU rules," he further recalled. Meanwhile, the Prime
Minister dismissed allegations that Bulgaria would lose hundreds
 of millions if the project was suspended.

Borissov briefed MPs on the findings of an analysis of collected
 South Stream documents.

The Prime Minister said after last Monday's announcement by
President Vladimir Putin that the project was suspended, there
is no formal Russian position yet.

Borissov said that despite much speculation as to what
Bulgaria's losses will amount to in case South Stream is not
implemented or its route changed, there is no longterm gas
transit contract and a completed financial model about the
project.

Borissov said that Russia's Gazprom Export has submitted to the
Bulgarian Energy Holding a draft long-term gas transit contract,
 which has not been signed. He quoted experts that the draft
does not comply with EU's legislation and contains clauses that
are unfavourable to BEH in its capacity as shareholder in the
project company. The draft envisages an interim internal rate of
 return of 4.25 per cent compared with a set internal rate of
return of 8 per cent under a protocol of August 27 2012 and very
 low transit tariffs for the first 15 years when BEH needs
revenues to pay out its loan to Gazprom.

The Prime Minister said that in effect the draft contract
envisaged profits only until investments are returned.

Borissov said that these facts are enough to put an end to
speculations about the lost profits from the project for
Bulgaria.

He recalled that after the EU opened an infringement procedure
against Bulgaria over the selection of a contractor, Bulgaria
can't go ahead with the implementation of the South Stream
project. In a letter of August 14 2013, the European Commission
warned the Bulgarian authorities that there might be
inconsistencies between the 2008 Bulgarian-Russian pipeline
agreement and EU legislation.

Borissov said he was convinced of the benefits if South Stream
went through Bulgaria, but that indirect revenues such as taxes
are set to exceed transit fee revenues. He said that Ministers
Tomislav Donchev and Temenouzhka Petkova will be visiting
Brussels on Tuesday for a meeting of ministers of South Stream
countries. Borissov said that Bulgaria will insist that South
Stream is built under EU rules.

The Prime Minister once again urged the parliamentary groups to
rally around a common position on South Stream. He suggested
that each parliamentary group nominates a representative and the
 group approves a version of the project that Bulgaria will
defend.

GERB and the Reformist Bloc said that South Stream would operate
 at a loss. BSP-Left Bulgaria defended the project and urged the
 cabinet to defend the actions of the previous governments
before the European Commission. According to Ataka, the project
is very beneficial for Bulgaria and the government should find
ways to deflect pressure and defend Bulgaria's interests.
According to the Movement for Rights and Freedoms, the major
challenge before the South Stream is that Bulgaria was unable to
 come up with a clear national position about the project.

MP Martin Dimitrov of the Reformist Bloc said that the South
Stream project was conceived as a losing project and that Russia
 never planned to meet EU requirements. He said that figures
unveiled by Prime Minister Boyko Borissov proved that. Dimitrov
said that Russia played vabanque to make the EU break its own
rules. He added that Russia has not asked for an exemption from
the Third Energy Package as it did about Nord Stream.

Delyan Dobrev of GERB said that the masks were off now. He said
that the project could only be profitable if it operated at 100
per cent of its capacity without complying with EU rules. He
said that if the pipeline operated at 50 per cent, then it would
 be unprofitable. Under the most optimistic scenario, BEH will
make a zero profit until 2023 and then will earn 65 million euro
 annually until 2040, Dobrev said.

Former energy minister Dragomir Stoynev (BSP-Left Bulgaria) said
 that estimates about the pipeline revenues were misleading. He
urged that the loan agreement be made public, specifying that
the loan terms are very favourable, that the only guarantees are
 dividend revenues and that Bulgaria won't pay a dime. Stoynev
said that no gas transit contract has been signed because the
pipeline status is unclear. He said that the conflict in Ukraine
 had played on the nerves of the European Commission and that it
 had grown dissatisfied with the pace Bulgaria imposed.

Dimiter Bairaktarov of the Patriotic Front urged that all
officials involved in the project be held accountable. He said
that the indirect costs in connection with the project will be
much more extensive.

Kiril Tsochev of ABV recalled that a week ago he urged the
parliamentary groups to set up a working group to draft a joint
statement.

Ataka leader Volen Siderov said that Bulgaria has fallen victim
to a war between the US and Russia. He added that the gas
pipeline is beneficial to Bulgaria because it turn the country
into an important European factor.

Speaking to journalists in the halls of Parliament, Foreign
Minister Daniel Mitov said that Bulgaria can't be an obstacle to
 South Stream. The Minister said that Bulgaria had done
everything and that if South Stream was to be implemented, this
should be done in compliance with EU rules at a profit for
Bulgaria. Mitov said that the Prime Minister's report on Monday
raised questions about the project's benefits. The Foreign
Minister said that Bulgaria has requested that the European
Commission goes ahead with negotiations about South Stream which
 will decide its faith. He added, however, that accusations
against Bulgaria were unacceptable.

Asked about what the positions of Ministers Donchev and Petkova
at Tuesday's meeting in Brussels, Mitov said that they will
insist that the European Commission presses ahead with
negotiations, because the project has not been formally
terminated.

ABV leader and former president Georgi Purvanov (2002-2012) has
suggested that the South Stream redirects over the route of the
Nabucco gas pipeline that was supposed to transit gas from
Turkey to Austria.

He told a press conference after a meeting of the ABV leadership
 that such an option would meet the expectations of all
countries involved in the aborted Nabucco project. The idea will
 be put forward to the delegation which is to take part in a
meeting of the South Stream countries in Brussels on Tuesday.
Purvanov argued that negotiations should be led by the involved
countries and not by the Energy Commissioner.