Balkan sale mysteriously delayed

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Officials in the Bulgarian Ministry of Transport have postponed the sale of flag carrier Balkan Bulgarian, despite a "perfectly legitimate" bid from Balkan Air. The carrier was due to be sold by the end of the year to a consortium led by Balkan Air, which included a management team and a foreign financial backer.

Eberhard von dem Bussche of the Treuhand Osteuropa Beratungsgesellschaft, a privatisation consultancy in Germany advising the Bulgarian Government on the sale, says it now looks like the government will either put the carrier up for a new tender or opt to keep it in state hands.

"We have been trying to say to the government 'make a statement' on whether Balkan will be sold to any of the bidders. So far they have been saying neither 'yes' or 'no'," he adds.

He says Balkan Air had arranged a credit facility and was capable of making the large scale investments needed to upgrade the airline. It had even struck a deal with Lufthansa's ground services division which could have expanded. "I really don't know why they postponed their decision," he says.

Another source close to the deal suggests that the pressure on the Bulgarian Government to complete the sale by the end of the year has probably eased with the granting of an International Monetary Fund loan. This means it can delay politically sensitive privatisation plans for the immediate future.

The source also says there could be another bidder "with close government connections" in the pipeline. "Given the record of previous privatisations in the country [involving selling businesses to government officials and their friends] I would not be surprised if another bidder emerged soon." As yet, a new timetable for privatisation has not been announced.