The European Commission has found Bulgarian and Greek plans to support the construction and operation of a natural gas interconnector to be in line with EU State aid rules. The project will contribute to the security and diversification of EU energy supplies without unduly distorting competition.

The measures approved today by the Commission will support the construction and operation of a 182 kilometres cross-border gas interconnector (called "IGB") between Greece (Komotini) and Bulgaria (Stara Zagora). The gas interconnector is designed to transport 3 billion cubic meters/year (bcm/y) of natural gas from Greece to Bulgaria by 2021. A potential later phase of the project could increase this capacity to 5 bcm/y and allow physical reverse flow capacity from Bulgaria to Greece.
The total investment cost for the realization of the IGB interconnector amounts to €240 million. This will be financed through:

• a direct equity contribution of €46 million from the joint venture shareholders;

• a contribution of €45 million from the European Energy Programme for Recovery  (EEPR), which  is centrally managed by the European Commission;
• a loan of €110 million granted by the European Investment Bank (EIB) to BEH (and subsequently passed-on to ICGB AD); and

•  a direct financial contribution of €39 million from the Bulgarian State budget via the Bulgarian Operational Programme "Innovation and Competitiveness" 2014-2020 (OPIC).

The Commission approves the following measures to support the investment, which involve State aid within the meaning of EU State aid rules:

• An unconditional state guarantee to be granted by the Bulgarian State to BEH to cover the €110 million loan that the company will receive from the EIB. This guarantee will be granted to BEH free of charge.
•  The €39 million direct financial contribution by Bulgaria via the Bulgarian OPIC programme.
• A fixed corporate tax regime that will apply to ICGB AD for 25 years from the start of commercial operations and will be governed by an intergovernmental agreement between Bulgaria and Greece.

The IGB has been included in the list of European Projects of Common Interest, given its strategic importance for the diversification of natural gas supplies into Eastern Europe through the Trans Adriatic Pipeline (at present 98% of gas imports in Bulgaria come from a single source). The IGB pipeline will connect the DESFA and TAP gas transmission systems in Greece with the gas transmission system in Bulgaria.

The IGB project's key strategic objectives and role in the South-Eastern European gas markets are the following:

• enhanced security of gas supply (avoidance of gas disruptions). By securing added volumes, the project will double the entry capacity of Bulgaria and diversify entry routes to the South-Eastern European region;
• increased transit capacity to the South-Eastern European countries taking advantage of other interconnections with Romania and Serbia; and
• diversification of gas imported by Bulgaria by additional supply sources from the Caspian region, Middle East, East Mediterranean and liquefied natural gas (LNG) terminals (existing and new in Greece and/or Turkey).

In July 2018, the Commission granted the IGB project an exemption from the internal market rules for gas as regards unbundling, tariff regulation and third party access in line with the Gas Directive.

The press release of the European Commission is published on the following link: http://europa.eu/rapid/press-release_IP-18-6342_en.htm

Date 08/11/2018