Financial corrections will be imposed for almost 90 million BGN under the Operational Programme “Environment” 2014-2020 for W&S projects

We refer to the European Public Prosecutor’s Office the irregularities found in W&S contracts between 2019 and 2021

Operational Programme “Environment” 2014-2020 proceeds to the imposition of financial corrections of up to 25% on contracts concluded under the Public Procurement Act for the implementation of W&S projects in priority axis 1 “Water”. The reason - irregularities in public procurement for the selection of the contractor and irregularities with contracts signed in the period 2019 - 2020.

This was revealed at a press conference by the Ministers of Regional Development and Public Works architect Ivan Shishkov and of Environment and Water Rositsa Karamfilova.

The Executive Agency for the Audit of European Union Funds has requested the Managing Authority of the OPE to carry out a review of at least 34 construction contracts for a total of 20 projects. This included 10 projects of W&S operators with 21 contracts and 10 projects of municipalities with 13 contracts. Of all the W&S operators’ contracts, only 4 were found to be deficient or in violation. In all the other 17 contracts problems were found, the audit shows.

As a result, 20 contracts with a total value of BGN 412 million with contracting entities W&S companies should be subject to a financial correction of 25%. The total amount of the imposition of this correction amounts to around BGN 90 million or around 21% of their total value.

Criteria for the formation of the sample containing 34 contracts were: to be worth more than BGN 5 million, with the subject of construction engineering and contracts with the presence of major indicators of fraud in the public procurement for the selection of the contractor, where only one bid remained, it became clear during today’s press conference.

Violations that were found ranged from the selection of a contractor under a contract that did not meet the requirements set forth in the solicitation to the selection of a contractor that should have been eliminated because of deficiencies similar to other firms eliminated from the competition.

The imposition of financial correction on the contracts with violations does not stop the implementation of the projects and an individual approach will be sought with each company to compensate the funds so that the projects are completed, explained the Regional Minister.

“Unfortunately, however, these irregularities made in the period 2019-2020 will have to be paid by all Bulgarian citizens,” said architect Shishkov.

The Managing Authority of the OPE in the Ministry of Environment and Water is already working on the possibility that the funds released under the programme from the financial corrections imposed could be redirected to pay for measures with the same object of action - the construction of W&S infrastructure, but implemented by other beneficiaries.

Minister Karamfilova explained that these financial corrections are being imposed to prevent the risk of a flat financial correction for the entire priority axis 1 “Water”. This could have a major negative effect on the OPE 2014-2020 budget, which would subsequently burden the country’s budget.

The resource allocated under Axis 1 “Water” of the OPE is more than BGN 1.8 billion, with about BGN 1 billion earmarked for the projects of the W&S operators that are beneficiaries of the programme. The fourteen W&S operators, beneficiaries of the OPE, have concluded about 100 contracts for the actual implementation of the projects with individual contractors under the Public Procurement Act.

Apart from a problem with the procurement by W&S Burgas, there is a problem with the overall management of the company, it became clear from the words of Ivan Shishkov. He gave the example of the problems with the water treatment plant of the reservoir “Yasna Polyana”, where there was a severe accident some time ago and the issue has not yet been resolved, and urgent measures will have to be taken to save the summer season. The reason, according to the regional minister, is that the manager has been negligent and has not carried out preventive inspections of the facility.

Architect Shishkov also recalled that two - three years ago about 20 million BGN were spent on additional water supply for Burgas, for which nothing has been done to date, but the money has been spent.

It appears, however, that the Ministry of Regional Development and Public Works could not dismiss the company’s long-serving director and appoint a new one, Shishkov explained. It is because of the mismanagement of W&S Burgas in recent years that W&S Holding is currently conducting a comprehensive audit of the company’s operations. To a journalist’s question as to why he could not get rid of the manager Gancho Tenev, the minister suggested asking the Burgas Regional Court.

Deputy Minister of Regional Development Nikolay Shushkov, Director General of the Directorate General of the Operational Programme “Environment” Galina Simeonova and Executive Director of Bulgarian W&S Holding EAD Irena Georgieva also participated in the press conference.