The ACF has 8 questions for the Energy Minister because of a legal dispute between „Bulgargaz“ and “Varna TPP”

The Anti-Corruption Fund (ACF) announced that information about a legal dispute between the state-owned company Bulgargaz“ EAD and Ahmed Dogan’s Varna ТPP EAD was published in the media. The information shows that „Bulgargaz“ EAD did not appear in a lawsuit for 40 million BGN that “Varna TPP” owes it for unpaid natural gas supplies. Thus, the state-owned company has missed the opportunity to win the case by default judgment, which comes into force immediately and is not subject to appeal.

The ACF experts analyzed the published Protocol No. 807 of 09.11.2022 in case No. 284/2022 of the District Court-Varna in the litigation between “Bulgargaz“ EAD and “Varna TPP” EAD. According to the information in the minutes, the ACF stated the exact facts of the case and addressed 8 questions to the Minister of Energy about the strange case of the postponed case of “Bulgargaz“ against Ahmed Dogan’s plant.

The Facts

1. On 28 April 2022 “Bulgargaz“ EAD, through an authorised lawyer, filed a claim with the District Court of Varna against “Varna TPP” EAD for payment of amounts in the amount of BGN 36 526 308, BGN 76 principal, BGN 986 770, BGN 43 contractual penalty and together with statutory interest from the date of the claim until final payment.
2. The lodging of the claim was preceded by an exchange of correspondence between the parties:

– on 28.01.2022 ,“Bulgargaz“ EAD notified the TPP that as of 01.02.2022 it was suspending the transmission of natural gas;

– on 25.02.2022, “Bulgargaz“ EAD invited TPP to pay its arrears in the amount of BGN 37 406 487,95.

– On 14.03.2022, “Varna TPP” EAD acknowledges its obligations and offers a schedule for deferred payment;

– on 18.03.2022, “Bulgargaz“ EAD rejected the proposed rescheduling schedule and provides a new deadline for the final payment of arrears – 29.03.2022.

– payment has not been received by the new deadline.

3. The claim requested the appointment of a forensic accounting expert to calculate the amount of the TPP’s liabilities, even though the TPP had already admitted its liabilities before the application was filed.
4. “Varna TPP” EAD did not file a reply to the statement of claim within the statutory time limit;
5. “Varna TPP” EAD has refused to cooperate in the preparation of the admitted forensic accounting expert report by refusing the expert access to the requested documentation;
6. The expert report was not prepared for the first hearing of the case due to failure to provide the necessary documents;
7. On 2 November 2022, “Bulgargaz“ EAD requested that the case should not proceed due to the lack of an expert report.
8. At the first hearing of the case, held on 9 November 2022, neither party sent a representative.
9. The hearing was held in the absence of the parties, the draft report was declared final and the case was adjourned to a new date for the preparation of an expert report on 3 February 2023.

8 questions to the Minister of Energy as principal of “Bulgargaz“ EAD

Given these facts, the following questions arise regarding the behaviour of the state and the state company “Bulgargaz“ EAD:

1. What compelled „Bulgargaz“ EAD to request the appointment of an expertise and to pay the costs for it, given that „TEC Varna“ EAD recognized its obligations even before the start of the court proceedings?
2. If the request for an expert’s report at the beginning of the trial was justified in order to use all procedural means to fully prove the claims against “Varna TPP” EAD, what made „Bulgargaz“ EAD insist on the preparation of the expert’s report, given that “Varna TPP” EAD had missed the procedural opportunity to contest the claim by failing to file a reply to the statement of claim?
3. Given that it concerns a case with a material interest of BGN 40 million, why did the plaintiff – the state company „Bulgargaz“ EAD not send a legal representative? Moreover, even at the time of filing a claim, a duly authorized lawyer was hired to represent the plaintiff and there is no evidence that the lawyer was prevented from participating, or if he was prevented, why was another not authorized a lawyer?
4. Why did the executive director of „Bulgargaz“ EAD submit a request requesting that the case not be proceeded with, given the fact that the lack of prepared expertise is not among the prerequisites for not proceeding? Did „Bulgargaz“ EAD secure its professional legal defense in the process? Is it about the incompetence of the lawyer and/or the executive director, or is it about deliberate behavior aimed at delaying the conviction of “Varna TPP” EAD?
5. Why, by failing to appear at the first hearing, did “Bulgargaz“ EAD miss the opportunity to request a default judgment under Article 238 of the Code of Civil Procedure, which takes effect immediately and is not subject to appeal? In view of the existence of the legal prerequisites for a default judgment, if “Bulgargaz“ EAD had requested a default judgment, it would have entered into force immediately and would have made the liabilities of “Varna TPP” EAD in the amount of BGN 40 million immediately payable. Instead, “Bulgargaz“ EAD will now have to bring a three-instance action under the general procedure to defend its rights. Moreover, once the proceedings are concluded and a judgment of conviction enters into force on the probably well-founded claim (which is not contested by “Varna TPP” either in or outside the proceedings), it is completely unclear what assets TPP will have at its disposal and whether the claim will actually be recoverable.
6. Is there a bank guarantee in favour of “Bulgargaz“ EAD under the gas supply contract and, if not, how is the effective performance of TPP Varna’s obligations secured?
7. Why no action was taken to secure the claim for BGN 40 million by seizing or foreclosing the assets of TPP in the course of the court proceedings?
8. Why does the Bulgarian state, through the Electricity System Operator, continue to pay millions to Dogan’s TPP for providing cold reserve and for balancing the electricity system, given that the TPP owes 40 million (as of 28.04.2022) to the state company “Bulgargaz“ EAD and given that Bulgarian legislation knows legal institutes that would allow the ESO to refuse payment in this case?

The Anti-Corruption Fund addresses these questions to the Minister of Energy as the principal of state-owned company “Bulgargaz“ EAD.

We will inform the public as soon as we receive an answer,“, ACF Director Boyko Stankushev assured.