Bulgarian Energy Holding Puts Off Gazprom Loan on South Stream

The Bulgarian Energy holding surprisingly decided to postpone a decision whether to receive a EUR 620 M from Gazprom for the construction of the South Stream pipeline.

BEH had planned to boost the capital of South Stream Bulgaria (a joint venture of the holding and Russian energy concern Gazprom) with the funds.

It had stressed it needed additional money to transfer the 10% (EUR 380 M) of advanced payment to Stroytransgaz, a sum that the subcontractor involved in the construction is expecting under the signed agreements.

The 22-year loan will bear an interest rate of 4.25 percent.

Is was not announced when a new decision is due to be taken on the issue.

BEH's decision to put off the loan, contrary to previous announcements, came as President Rosen Plevneliev criticized the fact that the South Stream project is ongoing despite Prime Minister Plamen Oresharski's commitment to halt activities until odds with the EU Commission are cleared.

Plevneliev was quoted by Mediapool.bg as urging that all activities on South Stream be frozen, implying that it was not the moment for important financial decisions related to the pipeline.

Sofia announced it would temporarily stop the construction of South Stream after the European Commission warned it had launched infringement proceedings against the country over non-compliance of the Bulgarian section with the EU's Third Energy Package.