Key agreements signed for Gas Interconnector Greece-Bulgaria signifying the beginning of construction phase

The Executive Directors of the project company ICGB Teodora Georgieva and Konstantinos Karagiannakos took part in the fifth Meeting of the High-Level Group on Central and South-Eastern Europe Connectivity (CESEC). During the forum they both signed a number of key documents, guaranteeing commitments towards the construction of the Gas Interconnector Greece-Bulgaria and its interaction with other key gas projects in the region.

The agreements were signed in the presence of the Minister of Energy of the Republic of Bulgaria Temenuzhka Petkova and the Minister of Environment and Energy of the Hellenic Republic Georgios Stathakis.  The ceremony was moderated by Klaus-Dieter Borchardt, Director at the European Commission’s Directorate B on the Internal Energy Market.

“The construction of Greece-Bulgaria interconnector is among the most important priorities of the Bulgarian and the Greek government in the energy sector. The project has a key role for diversification of the sources and routes for natural gas supply not only for our country but also for the whole region of South-East Europe”, announced ICGB’s Executive Director on Bulgarian side Teodora Georgieva.

She announced that the project company will be included as an eligible beneficiary for financing under the European Structural and Investment Funds (ESIF) for Bulgaria under Innovations and Competitiveness Operational Program. According to her, currently the Monitoring Committee for the Operational Program is initiating the change. “This is a key step for the realization of the IGB project and we’re thankful to the Bulgarian Government and the Ministry of Energy, which presented in 2017 detailed substantiation for including ICGB as an eligible beneficiary for financing”, added Georgieva.

ICGB’s Executive Directors signed agreement for cooperation with the Trans Adriatic Pipeline (TAP) for connectivity of the two gas pipelines. “This really is a strategic project which – via important synergies – enables gas from the Southern Corridor, and LNG facilities in Greece, to flow into the Bulgarian gas network and further into the South-Eastern Europe region”, announced Konstantinos Karagiannakos, Executive Director on Greek side for ICGB.

“We are especially pleased that the national regulatory authorities of Greece and Bulgaria approved in May ICGB’s application for Exemption from EU rules on regulated access and look forward to the European Commission’s endorsement”, he added.

Within the forum the Executive Officers of the Project Company announced the serious progress that has been achieved during the last 6 months with regard to the conclusion of Intergovernmental Agreement between Bulgaria and Greece for establishing stable tax regime of the pipeline. A Head of Terms Document on fiscal matters serving as basis of the IGA has been elaborated and it is expected its finalization between the tax authorities and the Ministries of finance of the two countries.

During the ceremony the Chairman of the Energy and Water Regulatory Commission Ivan Ivanov and his colleague from the Greek national regulator announced their joint statement and an exemption decision for the interconnector taken in May 2018 in this regard and submitted for further approval by the EC.

The exemption decision discharges IGB from the tariff and ownership rules and from third part access   in compliance with Directive 2009/73/EC of the European Parliament. This is a key decision related to the cross-border nature of the project and the necessity of defining a singular tariff for the whole interconnector, also relevant for signing gas transmission agreements with the shippers with reserved capacity. Issuing the final exemption decision will allow ICGB to apply for license for independent transmission operator.

During the Meeting of the High-Level Group on Central and South-Eastern Europe Connectivity the following documents were also signed:

– Memorandum of Understanding between the Bulgarian Energy Holding (BEH) and the European Investment Bank (EIB) regarding the realization of the IGB project. The memorandum concerns securing preferential loan financing in connection with using the state guarantee of Bulgaria (expected EUR 110 million) and is a key step in IGB’s realization. The preferential loan is one of the main sources of funding for the project.

– Joint declaration between the shareholders in the project company for confirming a commitment for development and approval of a final business plan and an irreversible commitment of the shareholders for readiness to start construction. The declaration is an addition to the Final Investment Decision for the realization of the project, taken in December 2015. The purpose of the declaration is to affirm the achieved progress on the project and to update the financial parameters listed in the business plan. With this step and the final approval of EIB’s preferential loan and grants from the European Structural and Investment Funds the realization of the project will be fully secured.

– Cooperation agreement for interconnection between ICGB and DESFA, laying grounds for defining the relations between both countries for reaching to an agreement on the physical connectivity between DESFA’s gas pipelines and IGB.