Bulgaria Does Not Have the Funds to Build Military Plants with “Rheinmetall”

Bulgaria does not have the necessary funds to participate in the construction of ammunition and gunpowder plants in partnership with the German company “Rheinmetall”. This was announced by Economy Minister Alexander Pulev, who testified before the relevant parliamentary committee. According to him, the “Zhelyazkov” cabinet did not conclude a contract with the German conglomerate, but only signed several agreements.

In this regard, Pulev promised a full review of the terms of the agreements, and the newly established state project company “Iganovo” – which was supposed to build the plants and received over 40 million euros for this purpose – will be shut down.

There are problems with both the site and the financing. Bulgarian interests are not fully protected – we have agreed to everything the German side has requested,” said Pulev.

He gave an example: reduced royalty payments and no requirement to include Bulgarian subcontractors.

The new agreements must change the financing formula for the investment project and better protect Bulgarian interests,” said the Minister of Economy.

The joint investment agreement between the state-owned VMZ and Rheinmetall was signed in October 2025 in the presence of then-Prime Minister Rosen Zhelyazkov. The announced value of the strategic project at that time was 1 billion euros, and the Bulgarian side was to hold a 49% stake.

With the publication of Temenuzhka Petkova’s ill-fated 2026 budget and the accompanying medium-term forecast, it became clear that the government was committing to an investment worth 667 million euros (1.3 billion leva). Approximately 796 million leva (407 million euros) were earmarked for the capitalization of the future joint venture between VMZ and Rheinmetall.

Separately, an additional 260 million euros (over 508 million leva) were earmarked for “Iganovo” to design and build the plants.
With the budget’s collapse, these funds are no longer available.

However, “Iganovo” received the money to pay for certain technologies, patents, know-how, and engineering solutions related to the construction of the two plants, which are to be provided by the German company.

The money has already been transferred to ‘Rheinmetall’, even though no contract has been signed for the future investment,” Minister Pulev stated today.

A check of the Commercial Register shows that 42.3 million euros (82.7 million leva) still remain in the project company’s capital.
Pulev explained that a mistaken impression had been created that Bulgaria would finance the project through SAFE.

In practice, only 10 – 15% of the investment’s value could have been secured in this way. And since there are no funds allocated in this year’s budget, we must seek another financing formula,” the minister explained.

He added that discussions with the German company have begun. “We have announced that we want to revise the plan for this investment, which will take quite some time,” the economy minister explained.

He also announced that “Iganovo” will be shut down. According to him, this company came into being “in a strange way.”

The Deputy Prime Minister explained that initially, the plan was to create only one joint venture between VMZ and “Rheinmetall,” with the state-owned arms manufacturer contributing land and the necessary infrastructure. Subsequently, the previous government decided to establish a second state-owned company to hire a construction firm capable of building the two plants in accordance with German requirements.

Translated with DeepL.