site.btaEconomy Minister: No Contract with Rheinmetall for Gunpowder Factory near Sopot, Project Funding Difficult

Deputy Prime Minister and Minister of Economy, Investment and Industry Alexander Poulev said on Wednesday that there is no contract or framework agreement with German company Rheinmetall on a gunpowder factory construction near Sopot, only "understandings".

Poulev was answering a question by Continue the Change MP Bogdan Bogdanov concerning the plans announced in October 2025 by the Rosen Zhelyazkov Cabinet for Rheinmetall and VMZ Sopot to build such a facility.

Poulev said Germany is one of Bulgaria’s key economic and trade partners and that Bulgaria wants effective cooperation with it. However, he said the project is complicated, including because of technical issues with the site, and that a full review of its main parameters is needed.

According to Poulev, feedback from the legal teams shows that Bulgaria’s interests were not sufficiently protected. He said Bulgaria had accepted the German side’s terms without seeking to make certain demands, such as reducing licensing payments or ensuring the participation of Bulgarian subcontractors in the supply chain.

Another major problem is financing, the Economy Minister said. He noted that resources under the SAFE mechanism amount to only 10% to 15% of the necessary funding, which is far from sufficient given Bulgaria’s commitment of EUR 400 million. During the talks, potential capital expenditure of EUR 400 million from the state budget had been envisaged.

"I do not know what the capital breakdown in the budget was at the time, but the funds are currently not available. Financing will be difficult. New EU funds will need to be activated, programmes will have to be transformed, and there are more questions than answers. We have informed the German side that we will face difficulties. The entire plan must be transformed, which will take considerable time," Poulev said.

Bogdanov said the Minister’s answer made it clear that the priority investment was not a real project but more of a marketing exercise without secured financing. He added that VMZ has significant capacity and can produce NATO-standard ammunition, whether with Rheinmetall or through smaller investments.