Bulgaria's Supreme Administrative Procuracy and the National Security State Agency (NSSA) have been investigating this past month the procedures for the collection of transit fees paid by Russian gas monopoly Gazprom, a source told Dnevnik.

The check aims to establish the legality of the transit fees for gas pumped to Greece and Turkey pocketed by Bulgargaz trading unit instead of Bulgartransgaz and if the scheme is prone to abuse. Both of the cited companies are subsidiaries of state-controlled gas distributor Bulgargaz Holding.

The probe was launched in response to a request from Bulgartransgaz executive director Angel Semerdjiev that the authorities ascertain the energy legislation and the gas directive were being upheld in the way that the transit fees are collected.

The prosecution authorities confirmed that such an investigation was in progress.

A NSSA spokesperson said the agency was not involved in the case in any capacity.

However, sources told Dnevnik that the managers of the two companies, of Bulgargaz Holding have been questioned by none other than NSSA staff which has also interviewed officials from the State Energy and Water Regulatory Commission and the economy ministry.

Semerdjiev told Dnevnik he had alerted the prosecution authorities because, in his view, the energy law and the gas directive require that the transit fees are collected by a company licensed to transit gas and Bulgargaz does not fit that description. According to him, instead of collecting the fees directing and investing them in the expansion and maintenance of the transmission grid, the company now relies on the funds it is remitted by the trader.

According to unofficial estimates, Bulgargaz annually collects 126 to 250 mln levs in transit fees. The company refuses to provide official data because it is classified information. A portion of that amount is transferred to Bulgartransgaz under a services contract that is a commercial secret. Unofficially, the trader is believed to retain more than half the resource.

Bulgargaz has a signed transit contract with Bulgartransgaz, fixing the relevant service prices, said Bulgargaz executive director Dimitar Gogov. He said the transit tariff was adjusted for inflation in early 2008.

Experts told Dnevnik the current scheme allows for the cross-subsidising of the domestic gas price. In late June, the chief of the power regulator said it doe snot tolerate such a practice.

In late 2006, when Bulgargaz unbundled its transmission and trading operations and the Bulgargaz Holding catch-all structure was set up, it was provided for the trader company to remain the only party to the existing agreements with Gazprom. At the time, the legal department of the ministry argued that this was in breach of the gas directive.

A commission appointed by the economy minister to investigate the issue had discussed changes to the agreement with Gazprom but they were rejected on fear that the Russian company may use such an opportunity to amend some of the contractual clauses in its favor.

(Dnevnik)

UK steel company Stemcor has filed a claim against Bulgarian metallurgical plant Kremikovtzi, Dnevnik learned from a City financier with investment interest towards the bonds issued by the Bulgarian company.

Bozhko Bonev, corporate secretary of the Bulgarian steel maker, said the company had not yet been notified of the issue in controversy and that Stemcor had most likely filed for arbitration to establish the exact amount of outstanding dues from Kremikovtzi. These stem from 2006-2007 contracts worth $40-60 mln.

The two parties are disputing the exact value of the contracts with Kremikovtzi claiming they are at the low end and Stemcor arguing the opposite.

On April 30, just before interim receivers took control of the plant for the first time, some of the management tried to register a special pledge in favor of Stemcor worth $40 mln. That contract was never signed because former Kremikovtzi executive director Alexander Tomov could not be located at the time while the newly appointed management had not been registered.

In addition, the government, a minority shareholder in Kremikovtzi, opposed the pledge.

A similar pledge deal with State Tradingo Corporation of India also fell through.

Stemcor continue to supply input materials which allows Kremikovtzi to keep the production facilities in operation, said Bonev, adding that the plant was not incurring new debts towards the UK company.

On Sunday, the court-appointed receiver Ana Milenkova said she was not aware of the Stemcor claim.

She said she will begin her term on Wednesday and will most likely organise a competitive procedure involving the candidates to acquire Kremikovtzi: Vorskla Steel and Arcelor Mittal unit Arcelor Distribution.(Dnevnik)

The Bulgarian banks have extended the biggest volume of credits to the local companies in the retail and repair of automobiles and household goods sector, shows data of the central bank.

These clients had borrowed a total of 9.3 bln levs by end June.

The processing industry is the second biggest borrower with 5.6 bln, followed by construction with 3.8 bln levs.

The 117,131 business credits in the portfolios of the local banks have a combined value of 27.7 bln levs, working out to an average of 236,600 levs per borrower, up from 228,000 by the end of March.

The number of corporate loans increased 37.5% year-on-year by end-June while that of household loans was up 20%.

In November 2007, domestic corporate lending outpaced the growth in retail exposures for the first time in five years.

Some 2.8 mln Bulgarians owe the local banks 16.3 bln levs in credits by end-June, assuming that each borrower has only one credit to pay down.

At the end of March, household credits numbered 2.7 mln. They average size increased by 349 levs on the first quarter to 5,841 levs by the end of June.

The number of corporate and household deposits rose 8.6% year-on-year to 12.258 mln by the end of June.

In terms of value they are up 27.4% year-on-year to 33.974 bln levs.

In contrast to the credit segment, the growth in the number of household deposits is faster than the corporate segment at 8.7% versus 6% on the year.(Dnevnik)

Bulgaria sold last Friday a 70% stake in its national maritime fleet NMB to German-Bulgarian consortium KG Maritime Shipping for 440 mln levs.

The deal, almost a year in the making, will also ensure 778.88 mln levs in investment for the fleet over the next decade.

Some 350 mln levs from the privatisation of the fleet will be transferred to the yet-to-be-create called Silver Fund in support of the pension system, said transport minister Petar Mutafchiev.

The investment commitments of the new owner are focused primarily on the purchase of new vessels.

KG Maritime Shipping is 30%-owned by local company Advance Properties while the remaining equity is controlled by KG Maritime Partners. In turn, KG Maritime Partners is 99%-owned by German charterer Martrade Shipping&Transport, based in Duesseldorf.

'We hope to complete our plans regarding the fleet in 5 and not in 10 years as is stated in the sell-off contract,' said Kiril Domuschiev, co-owned of a 30% stake in KG Maritime Shipping.

The fleet is expecting the delivery of 3 new vessels from local shipyard Bulyard and is in negotiations to buy 10 more 34,000 DWT vessels from Korean ship builders.(Dnevnik)

BTC, the Bulgarian incumbent telecom, will seek shareholder approval to transfer 100 real estate properties valued at over 281 mln euro to one of more o fits subsidiaries.

The general meeting of shareholders is scheduled for September 23.

BTC plans to transfer the said assets as a non-cash contribution to the balance sheets of one or more newly incorporated single proprietorships, said the shareholder meeting notice.

The property valuation was provided by real estate consultants Forton International.

The move should streamline the management of the transferred properties and maximize their commercial potential.

The bulk of the properties that will be transferred are located in Sofia and have a valuation of 142 mln euro.

The company said in its report to the shareholders that a significant number of BTC real estate properties are not related to its core business.

In 2006, The previous BTC shareholders approved the creation of subsidiary BTC Real Estate to run properties valued at 36.78 mln levs.

The last unconsolidated financial report of the company did not mention a subsidiary by that name.

At the time, the BTC's Telephone Palace, the most valuable of the properties earmarked for transfer, was quoted at 25.563 mln levs. Forton now estimates it could fetch 44.4 mln euro.

BTC owns land properties with a balance sheet value of over 1 bln levs, shows the unconsolidated financial report of the company by June 2008.(Dnevnik)