The Port of Balchik Concession

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In December 2005, the Bulgarian Transport Minister awarded a 25-year concession to the Bulgarian cargo company Port Balchik to upgrade and maintain the Bulgaria’s port terminal of Balchik. The Balchik sea port was located in northeastern Bulgaria. It was a part of Varna port. The port of Balchik was the main port for grain exports from the northeastern part of Bulgaria. The concession included repairing and expanding the current port terminal; and acquiring the new equipment. Under the terms of the concession agreement the concessionaire is obliged to • keep Port terminal Balchik in a valid for exploitation condition for the concession period; • provide port services with no right to use the service of subcontractors for this purpose; • make the investments stated in the approved Investment program as the amounts of the investments that for the first two years of the concession period should not amount less than BGN 1 097 900, and for the entire period of the concession agreement not less than BGN 3 474 800.; • develop and present annual investment programs regarding the subject to the concession for approval by the Concessee; • preliminary coordination with and approval by the Concessee for improvements of the subject to the concession; • pay concession fees according to the terms of the concession agreement; • insure the subject to the concession; • secure bank guarantees for the concession period; During the concession period, the Bulgarian company Port Balchik committed to invest around $2.6 million in the Balchik port. The grain wholesaler Zarneni Hrani Bulgaria owned 80% of the project company Port Balchik while the Bulgarian Mills had the remaining 20 percent of it. The Port Balchik agreed to pay $169,400 annually as the concession fee. The concession was offered through a competitive tender process. Two Bulgarian companies, Port Balchik and Chimimport Balchik, were tendered and Port Balchik was awarded the concession. The concession became effective as of May 25, 2006. Either Zarneni Hrani Bulgaria or Bulgarian Mills or the two companies together would operate the project is not certain.