EU Clears Subsidies to IGB Pipe Project
The European Commission (EC) said November 8 it has approved national subsidies and support for the 182-km Interconnector Greece - Bulgaria (IGB) pipeline project. EU competition commissioner Margrethe Vestager said support measures to be granted by Bulgaria and Greece were "limited to what is necessary to make the project happen" and in line with EU state aid rules.
IGB will cost €240mn ($275mn) and is designed to transport 3bn m3/yr from Greece (Komotini) to Bulgaria (Stara Zagora) by 2021, with a potential later phase increasing that to 5bn m³/yr and allowing physical reverse flow capacity from Bulgaria to Greece. It will be owned by ICGB AD, a 50-50% joint venture of IGI Poseidon consortium (including EDF-owned Edison of Italy and Greek gas incumbent Depa) and BEH, the Bulgarian state gas and power incumbent.
Bulgarian energy minister Temenuzhka Petkova said last month that the pipe would be flowing gas by 2020 and that construction of the gas pipeline would begin late 2018 - early 2019.
The €240mn project will be financed by a direct equity contribution of €46mn from ICGB shareholders; €45mn from the EC-managed European Energy Programme for Recovery (EEPR); a €110mn loan from the EU's European Investment Bank to BEH (subsequently passed-on to ICGB); and a direct €39mn subsidy from the Bulgarian state budget via its 2014-20 'innovation and competitiveness' programme.
In addition to the €110mn loan and €39mn grant cited above, the EC approved additional state aid measures namely: an unconditional state guarantee free-of-charge by the Bulgarian State to BEH to cover the €110mn EIB loan; a fixed corporate tax regime that will apply to ICGB for 25 years from the start of commercial operations and will be governed by a Bulgaria/Greece intergovernmental agreement.
The EC said the project will enhance the diversification of EU gas supply sources and increase security of gas supply, said support measures were proportionate, and would not unduly distort competition – with neither BEH in Bulgaria nor Depa in Greece being allowed to book more than 40% of the capacity of the new interconnector at the entry points to Bulgaria and Greece respectively. Thus "at least 60% of the new capacity will be open to competitors that want to sell gas in these markets," the EC added.
In July 2018, the EC 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 EU Gas Directive.
IGB will connect both the (Greek) Desfa and Bulgargaz systems with the Trans-Adriatic Pipeline (TAP) now under construction, and enable alternative sources of gas (primarily LNG and Azeri piped gas) to enter Bulgaria, currently 98%-dependent on Russian monopoly piped gas exporter Gazprom. For several years therefore, IGB has been on the EU's list of Projects of Common Interest.
But a second Greek LNG import terminal, at Alexandropoulis in northern Greece that was to be developed in conjunction with IGB, has experienced project setbacks and may not be ready by 2020. Monaco-based LNG shipowner GasLog, a 20% co-venturer in the floating LNG terminal project, said November 1 the target for its final investment decision had slipped again, this time from late 2018 to 1H2019.