The ACF alerts the European institutions over the suspicious order of „Bulgartransgaz“ for „Chiren“

The Anti-Corruption Fund (ACF) alerted two European institutions about a suspicious public procurement of „Bulgartransgaz“ for the „Chiren“ gas storage, published at the end of January. The alert was sent to the European Public Prosecutor’s Office, which is in charge of investigating the misuse of EU funds in Bulgaria, and to the European Executive Agency for Climate, Infrastructure and Environment (CINEA), which provides a substantial part of the funding for the project.

„The ACF team came across several indicators of abuse of public European Union funds in the procurement documentation. Therefore, we urge the European institutions to conduct a thorough investigation,“, Lora Georgieva, legal expert at ACF, commented.

The new tender from „Bulgartransgaz“ was launched almost two months after the ACF published revelations about violations in the first public procurement, which is currently under investigation by the European Public Prosecutor’s Office based on a signal about abuses amounting to nearly BGN 400 million. The second part of the ACF investigation uncovered political and corporate dependencies among key employees of the company.

The new procurement envisages the construction of a maximum of six vertical wells at the „Chiren“ gas storage, instead of the 13 highly efficient inclined wells planned in the project and necessary for the expansion.

The ACF team alerted the European Public Prosecutor’s Office and CINEA regarding the following indicators of abuse of public funds:

1. The estimated value of the procurement is unreasonably inflated by over 100% above the most favorable offer received during market consultations.

The estimated value of BGN 109.5 million for 6 wells was determined after market consultations, through which „Bulgartransgaz“ received indicative offers from 5 companies. PM Lucas Kazakhstan LLP, a large international company with experience in the industry, including in the construction of significantly more complex inclined wells, submitted an indicative offer of BGN 26.5 million for 3 wells. Some of the indicative offers received in the market consultations came from companies with no experience in gas storage drilling, which is why it would have been logical and justified for the contracting authority to consider the offer from the contractor with proven experience when determining the estimated value.

Despite this, the contracting authority, without justification, accepts an estimated price of over BGN 54.5 million for three wells and BGN 109.5 million for 6 (3 + 3) wells. The procurement documentation lacks any explanation for how the inflated estimated value was determined.

„According to international practice, market consultations are conducted with the aim of optimizing the public finances of the European Union (CINEA). The lowest proposed price is reasonably taken into account, which can be adjusted with an inflation index. Instead, in this case, an estimated value has been set, exceeding the indicative price by more than 100%,“, Lora Georgieva explained.

2. The procurement has been announced for the construction of vertical wells, instead of the more efficient inclined wells planned in the project concept. This change puts at risk CINEA’s investment, the expansion, and the safety of the „Chiren“ gas storage.

According to the concept adopted by „Bulgartransgaz“ for the expansion, vertical wells are unsuitable for „Chiren“, and their operation could lead to an explosion. Furthermore, in order to achieve the set goals for increasing the storage capacity, vertical wells would require significant additional amounts of buffer gas, which would increase the overall costs by at least BGN 100 million.

This change puts CINEA’s investment, the expansion, and the safety of the „Chiren“ gas storage at risk.

3. The public procurement leads to a new unjustified fragmentation of the project.

Instead of the 13 wells required by the project, the procurement concerns the construction of only 6. Fragmenting the drilling activities will significantly delay and increase the cost of implementing the project, which is co-financed by the European Union.

As a result of the actions of the management of „Bulgartransgaz“ EAD, the implementation of this strategic project for Bulgaria and the European Union could be delayed indefinitely, with serious doubts about achieving the project goals and ensuring the safety of its operation.

„We’d like to urge European institutions to engage in investigating the case and will keep the public informed of any developments,“, commented Boyko Stankushev, Director of the ACF.

Wave of support to a Burgas police officer who shared about disturbing practices in the Burgas Police Department