The Inadvertent Dam(n)

19 July 2008

As time goes by, mistakes that everyone thought were neatly buried in the past tend to resurface, their reverberations much stronger than expected. In Bulgaria, one particular type of mistake that actually crept in a few times in the past has now come to the attention of the public, bringing about the bitter realization of a gaffe that will now cost everyone a lot.

In the late 1990s Bulgaria went through a somewhat rushed process of privatization of state owned assets, mostly production units and companies, and, it appears, an occasional dam. According to Bulgarian legislation, all water basins, including rivers, lakes, dams and reservoirs, are public state property and can not be sold or transformed into private property under any circumstances. However, a few dams in the country were mistakenly sold to private enterprises.

One such dam is now stirring up public interest as some regions begin to experience water supply shortages. According to experts, the Indzhe Voyvoda dam, located close to Bourgas, is crucial for the Southern Black Sea coastline that is already suffering from a serious water deficit, threatening to assume the shape of water supply restrictions in the following years. Especially for resorts and holiday villages and towns.

Inadvertently, the Indzhe Voyvoda dam, which is still under construction, was sold in 1999 to Neva Holding as part of the Promet-Debelt state-owned steel plant. The legal paradox that occurred through the negligence of some officers of the state who were then in charge of the privatization of the steel plant, referred by some government offices today as an annoying technical mistake, is apparently going to cost the tax payer a minimum of 10,000,000 euros.

Nearly 10 years after the deal was signed, it appears that the buyer, Ukrainian billionaire Rinat Ahmetov, who was also interested in taking over the Kremikovtsi steel plant, is going to make an unexpected and very quick profit. Bulgaria will have to buy back its mistakenly privatized dam as this is the only solution to the impending water crisis in the region, Minister of Regional Development and Public Works Assen Gagauzov said in mid July. Although officially a state secret, information about the price of the 1999 deal has already leaked into the public the steel production line together with the incomplete dam were sold at 1,800,000 euros.

The construction of the Indzhe Voyvoda dam that has a planned capacity of 20 million cubic meters began in the early 1980s, and was solely intended to provide for the water supply needs of the steel factory. Nowadays, however, the project, which was abandoned at 30% realization in the end of the 1980s when the effects of the severe economic crisis experienced by Bulgarian industry were felt, needs to be resumed. Serious overbuilding along the southern coastline that boasts superb holiday locations and nearly perfect weather conditions has already severely burdened water supplies in the Bourgas region as the existing network, built more than 40 years ago, is not capable of covering for such excessive consumption.

20 million cubic meters of water more are going to satisfy the needs of the whole of the south-of-Bourgas region. But the dam must be bought back and its construction finalized. At the expense of the tax payer, although there is another way out of the situation, as legal experts say. Addressing the issue in proper legal terms, the state is entitled to declare the privatization deal void in its part for the ownership of the Indzhe Voyvoda dam. However, the court proceedings required by the law in order to expropriate the water reservoir would take years, which is a luxury the state and the region can now not afford as crisis is going to hit much sooner. Irreversibly. Of course, just as we see too often nowadays, no one is going to be persecuted for this inadvertent mistake.