The logic of the operation is simple. If you live in a developed country, there are usually pretty strict environmental requirements about what to do with waste. Complying with them is expensive, and the temptation to send your garbage elsewhere, where they pay little attention to it, is great. In order not to turn developing countries into landfills, there are various restrictions – a ban on the export of hazardous waste from the OECD countries to those outside the rich club, a ban on export of landfill, etc.
However, Bulgaria seems to be one of the best available destinations for circumventing the rules in Europe. The country is part of the European Union, so the regime for trans-border shipments of waste from other EU member states is not that burdensome. In theory, the same rules apply as in other parts of the Union, but control by the authorities is weaker. This allows those who are involved in waste trade to realise a pleasant surplus profit: in selling the waste in Bulgaria they receive the same price per ton as if they sold it in other EU countries, but they don’t have to invest in technologies to meet the same environmental requirements.
It is significant that from 2010 to 2017, the import of waste in Bulgaria has increased by almost five times. Initially, the country was a traditional importer of scrap metal, batteries and old batteries, but after 2013, deliveries from Italy and the United Kingdom of the so-called solid fuel based on waste – refuse-derived fuel (RDF) and solid recovered fuel (SRF) – increased considerably.
A false start
Although the big noise in Bulgaria nowadays is around Hristo Kovachki’s thermal power plants (TPPs), the original idea of making money from foreign trash is not his idea indeed. Industry officials say the trail was paved by several companies affiliated with the recent Lukoil Bulgaria CEO Valentin Zlatev, who began contracting imports from southern Italy as early as 2014.
The subject is also covered by the Italian media, which informed about the first bales to leave the country in 2016, travelling to Bulgaria when approval was received from the Bulgarian authorities for 35,000 tons. According to the publications, a consortium of Italian companies De.Fi.Am and Ecobuilding won a €14 million contract from the municipality of Giugliano to dispose of its baled garbage. The said municipality signed a contract with the Bulgarian “Es Er Technologies” (Es Er Te) to ship the bales from Naples to Burgas, from where they were supposed to be sent to the waste treatment site of the company near the village of Bratovo. It is not entirely clear where the garbage was to be sent next.
According to the sources, the plan was to burn the waste mainly in the cement plant “Devnya Cement” and in the power plants owned by Hristo Kovachki in Sliven and Rousse. At one point, however, the cement plant refused to accept this rubbish, which was RDF according to the documents. In fact, it was partially separated rubbish and it had not undergone any special treatment that requires drying. An agreement was not reached with Hristo Kovachki either. However, the suspicions in the industry’s relevant branch hint that it was at this time that Kovachki saw the potential of the business and began to import garbage himself, while Valentin Zlatev gave up this business.
The fate of Zlatev’s Italian bales is not completely clear – according to Italian media, the contract with Bulgaria collapsed and the flow of garbage now goes to Portugal, which accorded the necessary regulatory approvals. Anyway, the conflict of De.Fi.Am with Es Er Te is also visible in the accounts of the latter. They indicate that the Italian company filed a lawsuit in Italy against the Bulgarian company for outstanding commitments and damage to reputation in 2017. The claims amount to €1.18 million. The case was terminated in 2018 as the contracts between the two companies contained an arbitration clause for disputes in Bulgaria. Therefore, Es Er Technologies is bringing a case before the Sofia Arbitration Court against De.Fi.Am, in turn claiming that there are receivables due for €494,000 plus interest of €29,000.
A brief history of Es Er Technologies
The “Es Er Technologies” company was initially established under the name “Vi Ey Pi” in 2012. Relations with Valentin Zlatev emerged around 2014, when Asen Naydenov, who is in the management of the Cypriot company “Agriway Holdings Limited”, acquired a 30 per cent stake. Meanwhile, Zlatev officially declared himself as the owner of a hotel business. The other partners in Es Er Te were “Vi Pi Commodity Trading”, a company of Julian Prodanov (the share was initially owned by his brother Vasil), and the Greek citizen Konstantinos Sukos.