BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT (22 – 29 JUNE 2007)
Sections/headline briefs:
MACROECONOMY:
· Russia ready to help Balkans resolve energy issues
· Bulgaria's End-April Gross Foreign Debt Rises to 20.506 Bln Euro
· Register to protect EU funding
· Bulgaria`s economy well prepared for EU accession, analysis of Bank Austria Creditanstalt said
· Raiffeisen Research sees Bulgaria c/a deficit, inflation gains
· Bulgaria auto dealers sell 131 units daily in May
· Bulgarian Q1 GDP growth accelerates to 6.2%
· Bulgarian Business: Reduce Taxes!
· In case of energy crisis electricity prices increase twofold
· Cabinet delays launch of new company register
· Three Wind Power Stations to be Build in Bulgaria
· Rose oil price in Bulgaria to reach 5 000 EUR per kilogram
· Bulgaria June Business Sentiment Index Up 0.4 points
· World Bank Approves Infrastructure Rehabilitation Project in Bulgaria
· Japan's JCR Affirms Bulgaria's Foreign, Local Currency Ratings, Outlook Positive
· Competition Regulator Updates US Ambassador on Public Procurement Practices
INVESTMENTS:
· Bulgaria named region's retail star
· Sofia Municipality Granted 1st Class Investor Certificate
· Bulgaria's Overgas To Invest 27 Mln EUR in Network Expansion
· Investments in construction seen at EUR 2.76bn
· Maxit to invest 10 mln levs in Plovdiv premixes plant
· German Companies in Bulgaria to Increase Their Investments
· Nearly BGN 1.5 bn investments missing
· US investment fund raises by 5% stake in Prista Oil
· Turkish Companies Want to Construct Buildings in Bulgaria
· Bulgarian tourism co Albena to invest 53 mln levs
· Dobrich working on industrial zone project
· Orchid to build EUR 100m mall in Varna
· Return on Investment In Real Estate In Sofia Dips To 5.1%
· Bulgarian venture capital fund to invest in IT projects
· Bulgarian Wine to Be Bottled in Russia
· EUR 160 mln amusement park to be built in Rousse
· Bulgarian Property Developments to build logistics park in Ruse
· 2 Austrian Firms Mull 190 Mln EUR Investments in City of Ruse
· Germany's Grammer to expand Bulgarian ops
· 250 mln EUR invested in Bulgaria`s Golden Sands coastal resort in past 6 years
COMPANIES:
· Four companies with market capitalisation above BGN 1bn
· Lukoil Wants to Buy Petrol
· Bulgaria's First Investment Bank Goes Public
· Magnat Real Estate Opportunities GmbH enters Bulgarian market
· Electronic money already legal means of payment
· Companies in Bulgaria to rely on outsourcing for major IT projects
· Logistics company opens new warehouse
· AIG to borrow 1.6 bln euro to fund BTC acquisition
Articles:
MACROECONOMY:
Russia ready to help Balkans resolve energy issues
Russia is willing to do everything possible to assist the Balkan states in resolving energy problems, the Russian president said Sunday. Vladimir Putin, who arrived in Zagreb to attend the Balkan energy summit in the Croatian capital as a special guest, is meeting with 10 heads of state from the Balkan region - Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Greece, Macedonia, Montenegro, Romania, Slovenia, and Serbia. "Russia, as a global leader in oil and natural gas production is ready to do everything possible to resolve energy problems in the [Balkan] region," Putin said at the summit. The president said that Russia would continue talks on natural gas supplies through the Balkans and the construction of underground gas storage facilities in several Balkan states. "We are also interested in expanding gas supply network to reach Macedonia, Albania, southern Serbia and Kosovo," Putin said. He said that Russian companies participating in joint energy projects in the Balkans would maintain the highest ecology standards, in an apparent reference to an agreement on the construction of the Burgas-Alexandroupolis oil pipeline signed between Russia, Bulgaria and Greece in March 2007. The 280-kilometer (175-mile) pipeline will pump 35 million metric tons of oil a year (257.25 million bbl), a volume that could eventually be increased to 50 million metric tons (367.5 million bbl). Earlier reports said the pipeline could be commissioned in late 2010 or early 2011. The Russian leader also said the new South Stream gas pipeline from Russia to Europe on the floor of the Black Sea would be beneficial for Europe. Russia and Italy signed a memorandum on the construction of a new natural gas pipeline from Russia to Europe across the Black Sea. The memorandum was signed in Rome by representatives of Russian energy giant Gazprom and Italy's ENI in the presence of Russian Industry and Energy Minister Viktor Khristenko and Italian Economic Development Minister Pierluigi Bersani. The pipeline, which will be called South Stream, will stretch for 900 km (560 miles) across the Black Sea from Russia to Bulgaria at a maximum depth of over 2 km (over 1 mile)."It is a very promising project, which will improve energy supplies to the whole Europe," Putin said.The president also said Russian companies were interested in the construction of a nuclear power plant in Bulgaria, a thermal power plant in Macedonia and modernization of power plants in Bosnia and Herzegovina.Putin supported the idea of an "energy ring" in the Black Sea region, which he said would help outlining the parameters of a common energy market in Europe."Synchronizing energy systems in western, central, and southern Europe with energy systems in CIS countries and the Baltic states is an important area of cooperation in the energy sphere," he said."The implementation of this project would allow us to create the Black Sea energy ring," Putin added.
Bulgaria's End-April Gross Foreign Debt Rises to 20.506 Bln Euro
Bulgaria's gross foreign debt totalled 20.506 billion euro ($27.598 billion) at the end of April, up by 4.3% from the end of last year, the central bank said on Monday. The end-April gross foreign debt figure was equivalent to 76.7% of Bulgaria's projected 2007 gross domestic product (GDP). Bulgaria's long-term debt was 13.828 billion euro at the end of April and short-term debt totalled 6.678 billion euro, the Bulgarian National Bank (BNB) said in a statement.
Register to protect EU funding
Companies and all other beneficiaries of EU funding will be included in a public register, Gerard Legris, head of the Transparency, Relations with Stakeholders and External Organisations unit at the European Commission (EC), said in Sofia. The bigger publicity will reduce the possibilities for malpractices, according to Legris. The EC will compel all governments to provide information on the corporate bodies handling the European funding. The data will be published on the website of the EC and on the websites of the governments. Finance minister Plamen Oresharski and EU Commissioner for Regional Policy, Danuta Hubner, signed the National Strategic Reference Framework under which Bulgaria will get access to EUR 7 billion from the EU funds in the period 2007-13. The professional qualification of the public administration and the quality of the projects applying for finances are among the challenges Bulgaria will face in its attempts to absorb EU funding, according to Hubner.
Bulgaria`s economy well prepared for EU accession, analysis of Bank Austria Creditanstalt said
Bulgaria’s budget policy was well prepared to meet the challenges of EU accession, analysis of CEE Quarterly, magazine of Bank Austria Creditanstalt, said. The policy of budget cuts led to decrease of economic growth in 2005 and 2006 and the 6.1 per cent economic growth in 2006 was below the expected levels, the analysis said as quoted by Deutsche Welle (DW) radio. Economic growth showed misbalance between internal demand and the negative export rates. This misbalance reached its peak since the collapse of the communist regime in 1989, DW said. Still, internal demand and the positive effect of the EU accession will continue stimulating economic growth. According to the analysis, the EU accession showed Bulgaria’s advantages of a country offering good opportunities to foreign investors and stimulating foreign investment flow. Bank Austria Creditanstalt experts said that conservative income planning and the improvement in VAT collection will most probably lead to significant budget surplus in 2007. It was unclear whether the Bulgaria’s Cabinet will keep its promise to decrease social insurances, which are among the highest in Southeastern Europe. Bulgaria may reach the predicted budget surplus of 2.3 per cent of the GDP in 2007, the magazine said.
Raiffeisen Research sees Bulgaria c/a deficit, inflation gains
Bulgaria's c/a deficit continued to widen at a worrying rate in April and reached 8.1% of GDP in just first four months, Raiffeisen Research says in its monthly report on the Bulgarian economy.The report revises the full-year c/a projection of the analytical unit up to record-high 18% of GDP. Bulgarian finance minister Plamen Oresharski voiced concern about a month ago that the c/a deficit could balloon to 18% towards the back-end of 2007 and just a couple of days ago admitted that the macroeconomic targets budgeted for the full year may have to be revised. The expected disbursal of EU structural and cohesion funds is widely hoped to ensure long-term financing of the c/a. The EU commitment totals 6.853 bln euro for 2007-2013, while the indicative amount is 2-3% of GDP per annum for 2007-2009. Even if Bulgaria manages to reach an utilisation rate in the order of 20-30% for 2008-2009, this will still bring in EU funds for just 0.5-0.9% of GDP. When compared to the expected C/A deficits above 15%, it is clear that the role of EU funds for c/a financing is largely exaggerated, says Raiffeisen Research. Inflation stays subdued at 4.3% year-on-year in May but is likely to accelerate in July on electricity price rise, wage and pension boosts. Pressure on the government to raise public sector wages has been mounting. After the government ceded to requests for a substantial rise of wages of Sofia transport workers, recently teachers, medical staff and social workers have launched protests, too, requesting wage increases of up to several times their current levels. Given the rise of social pressure, the government is likely to loosen the belt further either in the second half of this year if budget performance allows it, or more probably in 2008. Therefore, Raiffeisen Research forecasts a lower surplus target for 2008, in the order of 1-1.5% of GDP. Real economic growth accelerates to 6.2% year-on-year in Q1 of 2007, driven by industry and services. Construction boom remains key growth driver.
Bulgaria auto dealers sell 131 units daily in May
The local auto dealers were moving 131 new units on a daily basis in May, shows data of the Union of Automobile Importers in Bulgaria. New car sales topped 4,087 units in May with 19,124 units sold since January 1. The market is up about a fourth over the year ago period. Bulgaria's best -selling car in May was the Dacia Logan with 1,130 units. In terms of manufacturers, Toyota is clear of the competition with 2,197 units in May and a market share of 11.49%. It is followed by Ford dealer Moto-Pfohe with 1,982 units and a 10.36% share and Peugeot with 1,649 units and a 8.62% share. In a reshuffle of the end-April sales rankings, Opel sneaks in to take no.4 spot from VW by dent of just 7 more units. The import of used cars doubled to 124,000 units in the first five months of the year. It is not clear how much will have to pay the Bulgarian taxpayer to get rid of the old automobiles. Jelev advised the future ecotaxes for used and old cars to be high.
Bulgarian Q1 GDP growth accelerates to 6.2%
Bulgaria's economy grew strongly in the first quarter, driven by strong domestic demand and rising investment, said news agency Reuters. According to the agency, analysts suspected one-off effects and remained cautious about hailing the rate.The economy grew a real 6.2% year-on-year from January to March, Bulgaria's first three months as an European Union member, up from 5.7% in the last quarter of 2006, statistics office data showed on Tuesday. Growth was 5.5% in the same period a year earlier.The Socialist-led government expects full-year growth to be around 6%, in line with last year's 6.1%. 'The net exports are (the) most negative since 2000 and private consumption is the highest since then, too. I cannot be fully optimistic. The data still highlights the imbalances,' Agata Urbanska, an emerging market analyst at ING, told Reuters. Investment grew a record 35.9%, compared with 23.8% in the fourth quarter of 2006, making up 29.5% of total GDP. But analysts suspected the jump could be linked to Bulgaria's EU entry. Investment helped the growth in services and industry, which grew 8.1% and 7.6% respectively, said Reuters. Urbanska told the news agency that if the trend persists it will allow industrial output to pick up and boost exports, but the rate was probably pushed up by companies moving investment to the first quarter rather than making it last year because of the EU. Individual consumption, which includes household and state spending on healthcare and education, rose 8.1% on the year, up from 5.9% in the last quarter of 2006, making up 82.2% of GDP. Import growth outpaced exports, growing 13.2% on an annual basis. Exports grew 2.2% through March.The difference helped to widen the trade deficit, raising concerns that the current account gap - already the second highest in the EU, will expand to 18% of GDP in 2007, increasing Sofia's vulnerability to external shocks, said Reuters
Bulgarian Business: Reduce Taxes!
The chairman of the Bulgarian Industrial Association (BIA) Bozhidar Danev proposed that the VAT in Bulgaria be reduced from 20% to 18% at a discussion on the grey economy in Bulgaria. If the reduction of the VAT leads to a growth of revenues, the VAT should be further decreased to 15-16%, BIA officials also demand. The grey sector accounts for at least 35% of Bulgaria's economy, Mr Danev reckons. He proposed that the incomes of the Bulgarians be levied with a flat tax of 10% as it is the case in several other new EU member states.
In case of energy crisis electricity prices increase twofold
Electricity prices in Bulgaria are expected to double if the need for energy during the winter months turns out to be pressing and Bulgaria has to import power, revealed calculations of the country's energy balance made by the National Electric Company. Two options were discussed yesterday. The worst-case scenario for Bulgaria's is that power generation will be insufficient. To avoid power supply restrictions, the state will be forced to buy Romanian electricity. However, a possible energy crisis in Bulgaria may result in a speculative increase of electricity prices across the entire Balkan region. Currently, 1 MWh costs between 82 and 90 euros at the EU energy markets. Nevertheless, Bulgaria couldn't possibly buy power at these prices because no contracts have been made in advance. Thus, instead of 0,15 levs, the Bulgarian consumer will have to pay 0,30 levs per kWh. Politicians and energy experts are unanimous that no chance will be given to such an apocalyptic alternative. For this reason they will restrict export of Bulgarian electricity and boost Maritca Iztok Thermal Power Plant' power production
Cabinet delays launch of new company register
PM Sergei Stanishev admitted yesterday that the government will delay the launch of the new electronic company register until the start of next year instead of Jul 1 this year due to organisational problems in the line state agency. The plan for introduction of a new company register was set as a structural criterion in the IMF agreement, which expired in March, and brought several waivers in the Fund’s performance reviews for Bulgaria . However, the government has already repaid all debts to the IMF and will not seek new programmatic arrangements. The project is also tackled by ongoing WB programmes for improving the country’s investment climate. Stanishev stressed that it is better to delay the new system of electronic registrations rather than meeting the deadlines with risks of critical failures that could cause significant difficulties to the business sector.
Three Wind Power Stations to be Build in Bulgaria
Three big wind power stations are constructing in the moment with a total power of 300 MW. According to Shushulovs, chairman of the State Committee for Energy and Water Regulation, entering of alternative energy sources is as better for environment as complicated for the energetic balance.
Rose oil price in Bulgaria to reach 5 000 EUR per kilogram
Rose oil prices in Bulgaria could reach 5000 euro per kg, according to predictions of producers. The current price varies between 4500 to 4700 euro per kg but it may increase if the global market faces shortage of rose oil, investor.bg reported. Bulgaria is the only European Union country which produces large quantities of world-quality rose oil, representative of rose oil company Natural Aromatic Ivan Dimitrov said. Despite floods and the drought in 2007, rose oil produced in Bulgaria equaled the quantity produced in the previous years. This resulted from rose terrains enlargement and the establishment of new ones, experts said. France, Germany and US feature among main rose oil consumers that traditionally buy the world's entire rose oil production. Besides Bulgaria, Turkey, Tunisia and France produce rose oil but in small quantities. Turkey is Bulgaria's main rival in the sector. The number of companies producing rose oil and rose water in Bulgaria reached 15 and the competition between them steadily increases. Despite their increasing number the quantity of rose oil sold abroad will hardly increase, experts said.
Bulgaria June Business Sentiment Index Up 0.4 points
Bulgaria's June business sentiment index increased by 0.4 points from a month earlier when it edged down by 0.8 points, the National Statistics Institute (NSI) said.The general business climate indicator, which is based on business expectations in the industry, construction, retail trade and services, was 0.7 points below the 13-year high of 50.7% it reached in March, the NSI said in a statement.The industry sub-index continued its upward trend in June and hit a new 13-year high of 51.4% mainly thanks to optimistic expectations of the managers in the sector regarding the business climate in the next six months. More than half of the polled executives, 52.5%, expect that the business climate in the sector will remain unchanged and 46.3% said it would improve over the next six months.The business sentiment in the construction sector in June fell by 4.3 points from May but, however, remained favourable due to optimistic estimates of orders and construction activity, NSI said. Overall, 73% of the interviewed building contractors expect that prices will stay flat in the next three months.The retail sector sub-index for June went up by 2.4 points compared to May when it dropped by 4.9 points, as managers' expectations for the business climate in the next six months have improved. The forecasts about the number of orders and sales are also optimistic. Competition and insufficient demand remain the major obstacles to the development of the sector according to 46.1% and 38.9% of the polled executives, respectively. The retail sector expects higher prices through September. The business sentiment in the services sector in June rose by 3.2 points from the previous month. Managers said the current demand in the sector is improving and will remain stable in the next three months. Most of the executives, 75.1%, think that price hikes in the coming three months are unlikely.
World Bank Approves Infrastructure Rehabilitation Project in Bulgaria
The Board of the executive directors of the World Bank has approved Road Infrastructure Rehabilitation Project in Bulgaria worth 90 M euro, informs the website of the financial institution.The project aims to assist the country reduce road transport costs by improving the condition and quality of its roads network during the first years of EU accession. Bulgaria’s road network is of critical importance for trade with the European Union as well as for the integration of the country’s remote regions in the European market.
Limited funds for road rehabilitation and maintenance have led in the past to a deterioration of a large percentage of roads, which may be depriving from an important source of economic growth. According to the project the government will rehabilitate chosen roads of I, II and III grade with overall length 450km.Assistance will be received also in the promotion of the technical and management capacity of “National Road Infrastructure” fund through investment of equipment, technologies and procedures allowing for more effective use of resources for the road sector, including EU funds.
The World bank points out that the road rehabilitation project will also help for coping with the increasing problem Bulgaria faces with road accidents. The banks states that the traffic fatality rate in Bulgaria is twice as high as the European Union’s average.
Japan's JCR Affirms Bulgaria's Foreign, Local Currency Ratings, Outlook Positive
Japan Credit Rating Agency (JCR) said on Wednesday it has affirmed Bulgaria's foreign currency long-term senior debts at BBB+ and local currency long-term senior debts at A- with a positive outlook."The affirmation of the ratings is mainly supported by Bulgaria's sounder fiscal structure underpinned by a continued fiscal surplus and a substantial reduction of government debt, and stabilisation of prices and its currency under the currency board arrangement," JCR said in a statement. Bulgaria operates under an IMF-prescribed restrictive monetary mechanism called a currency board which bans the central bank from lending to the government and ties the cash in circulation to the level of the central bank's foreign exchange reserves. The government's fiscal policy, one of the tightest in Europe, is the only tool to influence the economy."Also supporting the ratings are the country's high economic growth prospects mainly bolstered by an expanding production capacity rendered by massive foreign direct investment (FDI) inflows in recent years and a substantial amount of subsidy from the EU, as well as the continued prudent fiscal and monetary policies," JCR said. Bulgaria's gross domestic product (GDP) has been growing by over 6.0% in the last three years and the government expects stable growth to be sustained in the near future.The run-up to joining the European Union on January 1 attracted a strong FDI inflow, which has additionally boosted the economy. Bulgaria attracted 4.1 billion euro ($5.5 billion) in FDI last year and expects about 4.5 billion euro in FDI in 2007, the head of the government's investments promotion body Stoyan Stalev said earlier this week. on the other hand, the ratings remain constrained by a deteriorating current account deficit resulting from strong imports caused by robust private-sector demand and the fact that industrial transformation is still at a primary stage, with per capita GDP () estimated around 35% of the EU25 average," JCR said. The large current account gap is one of the key concerns of the Bulgarian government. Finance Minister Plamen Oresharski said earlier this week the deficit could reach 18% of the projected GDP in 2007, up from 15.8% last year."The tripartite coalition, which led Bulgaria to EU membership in January 2007, is expected to pursue a tight fiscal policy and the economy is highly likely to return to sustainable growth in the years ahead. Risks of refinancing the widening current account deficit are largely mitigated by the continued massive inflows of FDI. While the government has yet to decide when to apply for euro adoption, it is set to join the ERM-2 at an early date by maintaining the currency board arrangement." Bulgaria has said it hopes to enter the EU's Exchange Rate Mechanism (ERM-2), the euro's two-year waiting room, later this year, and adopt the euro early next decade.
Competition Regulator Updates US Ambassador on Public Procurement Practices
The largest number of public procurement contracts challenged before the Competition Protection Commission (CPC) in Bulgaria concern the building industry and infrastructure rehabilitation, followed by hospital supplies, and computer hardware and software supplies.CPC Chairman Petko Nikolov broke the news on Thursday, emerging from a meeting with US Ambassador to Bulgaria John Beyrle. The diplomat had asked for an update on claims made against public procurement contracts.Nikolov said such claims have not become less frequent since September 2006.While public procurement contractors have decreased, procedural standards have not deteriorated, he said. Contracting parties have become more law-abiding, thus minimizing corrupt influences.The CPC Chairman told Ambassador Beyrle that the Commission is using the opportunities offered by its agreement with the prosecuting authority to report any suspicion of corrupt practices involving any party to a concession or public procurement contract.The Ambassador asked the CPC whether inspectors meet their deadlines, and whether the Commission has found any indications of corrupt practices. The US diplomat further inquired about the CPC's capacity to ensure lawful use of funding, including money from EU funds, which will be distributed to public procurement contractors.The Ambassador said the CPC enjoys a good reputation among US companies.
INVESTMENTS:
Bulgaria named region's retail star
Bulgaria is the 12th most attractive country for investments in the field of retail, the 2007 retail development index of ATKearney shows. The document defines Bulgaria as Eastern Europe's star, as it has advanced nine places from 21st last year. Romania has receded from the 22nd to the 29th place. The top positions in the ranking are held by India, Russia and China.The index is based on the following main criteria: risk, market attractiveness and saturation, time pressure. According to ATKearney's ranking, the indicators for Bulgaria are respectively 62, 32, 42 and 68 points (on a 100-point scale). Bulgaria's average result is 63 points, compared with 50 for Romania and 92 for leader China.Eastern European as a whole remains attractive. There is potential for retailers willing to enter the region's markets in categories such as do-it-yourself, consumer electronics and apparel. But the report warns that the window of opportunity for large-scale supermarkets will likely close in the next year or two.The retail market in Bulgaria is not an easy one, especially as concerns foods. This is evident from the fact that some chains like Turkey's Ramstore and Greece's Ena have pulled out because of unsatisfactory results, Fantastico's vice president, Vladimir Nikolov, said. The multinational chains that want to enter this market should very carefully investigate its potential. The market is small and people are not that rich, he added.Global retail is experiencing an explosive modernisation as investment rushes into developing markets, according to ATKearney's report. Retail's ambitions now stretch worldwide, embracing the latest trends in marketing, distribution and supply. Another catalyst for growth is the Westernisation of the culture, as television and internet allow consumers to shop in air-conditioned comfort.Retailers that can identify the most promising markets will become fierce global competitors, ATKearney analysts say. The trouble is, it is difficult to determine which new market is the most promising one.
Sofia Municipality Granted 1st Class Investor Certificate
Sofia Mayor Boyko Borissov was granted 1st class investor certificate for the garbage recycling plant that will be constructed within 5 years. Sofia Municipality received a certificate of first class investor for its project for building a garbage-recycling plant. Stoyan Stalev, head of the Invest Bulgaria Agency, handed down the document to Sofia Mayor Boyko Borissov and Sofia Municipal Council chairman Vladimir Kisyov. This is the first time when an investor certificate is given to a municipality. The project amounts in total to BGN 275 M and will be carried out in five years. The Municipality will use three of its properties - in the villages Gorni Bogrov, Kubratovo and Kremikovtsi - to build three recycling installations and two garbage storage depots. The plant will have the capacity to recycle around 1000 tons of garbage per day. The projects is partially financed by Sofia Municipality, the other part of the needed money will come from the European Bank for Reconstruction and Development and from the European funds.
Bulgaria's Overgas To Invest 27 Mln Euro in Network Expansion in 2007
Leading Bulgarian gas retailer Overgas Inc. said on Friday it would invest 27 million euro ($36.2 million) to expand its distribution network by 163 kilometres of pipelines and add 15,000 users in 2007. The network of Overgas and its subsidiaries currently exceeds 1,584 kilometres of pipes and serves 21,000 users, the company said in a statement. Overgas invested 20 million levs ($13.7 million/10.2 million euro) in the construction of its gas distribution network last year. The 2007 investment plan includes 17 million levs ($11.1 million/8.7 million euro) in expanding the company's urban distribution network in 29 towns. Overgas has invested 165 million levs in its urban distribution infrastructure by the end of 2006. Overgas holds 27 out of the 38 gas distribution licences awarded by the Bulgarian energy regulator so far. The company dominates the gas distribution market in Bulgaria with a share of around 85%. Its network has the capacity to supply gas to more than 200,000 households. Overgas ( www.overgas.bg ) is 50%-owned by Gazexport, the trading arm of Russian gas giant Gazprom.
Investments in construction seen at EUR 2.76bn
The investments in the Bulgarian construction sector in 2007 will amount to some EUR 2.76 billion. The annual increase in the volume of construction will stand at 13.8%, according to a forecast of Report.BG - Business Information 2007. The publication provides detailed information about the possibilities for project financing under the European programmes and includes the contacts of 5,000 top companies in 22 leading business sectors in Bulgaria. As much as 39.3% of the expected investments in 2007 will be directed to the energy and water related sectors, where capital inflow will rise by 22.8% compared with 2006. These are followed by the sectors manufacturing goods for intermediate consumption (37.5% of all investments), where the year-on-year increase is projected at 10.1%. The investments in the sectors producing foods, beverages, and non-durables are expected to decline to 16.5%.
Maxit to invest 10 mln levs in Plovdiv premixes plant
The local unit of Maxit Group, the Swedish premix and exclay producer, said it will start building from scratch a plant for dry mixes near Plovdiv, Bulgaria's second biggest city. The 1.5 ha plant site, comprising production, storage and office premises, is located in Plovdiv's industrial zone. The first phase of the 10 mln lev greenfield investment project should be concluded in late 2007 with the launch of the new plant. The production capacity of the plant will be enlarged during the second phase which will last through the end of 2009. The new plant will manufacture some products that are currently imported here by maxit Bulgaria like adhesives, plasters and mortars. Maxit Group started opeation in Bulgaria in 1998 with the launch of a dry construction mixes unit at the HeidelbergCement Group mill in Zlatna Panega. Maxit Group is part of HeidelbergCement Group.
German Companies in Bulgaria to Increase Their Investments
57% of the German companies plan to increase their investments in Bulgaria, points a conducted questionnaire among the members of the German-Bulgarian Chamber of Industry and Commerce. Three thirds of the interviewed companies define their business condition in Bulgaria as good.According to most of the German companies Bulgaria's accession to the EU will and has already started opening new possibilities to them as foreign investors and this will help Bulgarian business to achieve high and sustainable economic growth.Germany is with traditionally strong positions as an investor in Bulgaria. In the last 10 years (1996-2006) it holds the sixth place among all investors with 861M euro investments and relative share 5.1% of the total volume of foreign direct investment, which in the mentioned period are 16 959.7M euro.The German-Bulgarian Chamber of Industry and Commerce, which has more than 380 member-enterprises in Bulgaria, is part of the world network of bilateral German commerce chambers in 80 countries.
Nearly BGN 1.5bn investments missing
Kremikovtzi's owners have saved themselves BGN 50 million of the contracted investments. Nearly BGN 1.5 billion leva was agreed but not invested under privatisation contracts in 1994-2005, the 2006 report of the Post-Privatisation Control Agency (PPCA) shows. That makes up more than 27% of the BGN 5.300 billion investments contracted. The problem is in the privatisation contracts themselves, sociologist Ilia Bozhinov, who used to be deputy director of the Mass Privatisation Centre, said. In 2003-5 alone buyers did not observe 34% (BGN 186 million) of their investment commitments, which amounted to BGN 550 million. Last year the agency checked up 330 reports on 228 privatisation deals signed in 2003-5 and found out that 65 investment commitments had not been observed. The PPCA imposed forfeits to the amount of BGN 5.342 million and USD 51.635 million. The biggest contract breachers are Kremikovtzi, which owes USD 49.269 million to the state, and Zlatni Pyassatsi (USD 1.141million). Sviloza's buyer owes USD 535,913 and Aleko Sport 99's, BGN 1.225 million. The PPCA cannot collect its receivables from these companies, because they have been ruled insolvent. Recent legal amendments, however, have allowed faster debt collection by means of writs of execution. For the first quarter of 2007 collections increased 2.3-fold, year on year, PPCA's report shows.New owners have not observed their employment commitments either. Such cases have been registered in 41% of the inspected enterprises. In 2006 alone 19% of buyers did not keep their employment engagements. Nearly BGN 12.471 million forfeits were imposed.
US investment fund raises by 5% stake in Prista Oil
US Gramercy Emerging Markets Fund raised by 5%to 30% its stake in Dutch-registered Prista Oil Group B.V. The move of the investment fund is a recognition of Prista Oil Group's business projects and the logical succession in which they were implemented, representatives of its Rousse-based unit Prista Oil said. Gramercy specialises in various investment projects in Central and Eastern Europe. The fund owns the Business Park Sofia in Bulgaria. In the meantime, Prista Oil has raised to 100%its stake in Ukrainian company Star Oil by purchasing Joss Chemicals' shares in the base oil terminal.
After opening representative offices in Romania, Turkey, Serbia, Hungary, Slovakia, Macedonia and Ukraine, Prista oil will also start operating in Thessalonike as of July 1, 2007. The company plans to become one of the major players on the Greek market for industrial lubricants in the next five years. Prista Oil is also expected to acquire the majority stake in Verila Lubricants soon. The deal is part of Prista Oil's portfolio diversification strategy.
Turkish Companies Want to Construct Buildings in Bulgaria
Turkish companies want to construct buildings in Bulgaria. The South neighbors also intent to participate in projects of the sport and road infrastructure in the country. This was announced after the meeting of Bulgaria's vice Minister of Regional Development Dimcho Mihalevski with delegates of the Turkish-Bulgarian business council.In the council participate members of the Istanbul's trade chamber and representatives of Turkish firms that deal on the Bulgarian market.The chairman of the business council underlined the desire of Turkish companies for bilateral collaboration with Bulgarian firms. Extremely important is the project for the construction of the Black seaside high way that will connect Bulgaria and Turkey.On the meeting were also discussed projects for the building of social houses and apartments in Bulgaria.The neighbors suggested to be assigned areas where the Turkish companies could begin the projects execution.
Bulgarian tourism co Albena to invest 53 mln levs
Bulgarian tourist company Albena said it will invest 53 mln in the construction of new hotels.A new hotel will be built on the site currently occupied by the Kardam, Dobrotisa and Kamelia hotels in the Albena sea resort. A second hotel will be constructed near the corporate headquarters of the company in the resort. Albena's investment spending reached 46.45 mln levs in 2006. The tourism company is in talks with a major international investor to sell its White Lagoon resort, on the Black Sea. The general meeting of shareholders approved a proposal to distribute a dividend of 0.50 levs per share for 2006. The company posted a net profit of 15.5 mln levs last year. Revenues rose 6.8% to 92.2 mln levs. A total of 226,794 people vacationed at the Albena resort in 2006. Overnight bookings were down 2% year-on-year to 2 mln.The resort posted a growth in bookings on all foreign markets where it is advertised with the exception of Germany.
Dobrich working on industrial zone project
Dobrich is among the 10 Bulgarian cities actively working on the development of industrial zones.The Dobrich municipality, North-eastern Bulgaria, has won a Phare-funded project to develop the industrial zone scheme with assistance from the Volunteers for Economic Growth Alliance (VEGA), mayor Detelina Nikolova told a conference on public-private partnerships organised by the USAID and VEGA.The defence ministry has granted the Dobrich municipality use of a decommissioned military outpost with an area of 42.4 ha. The site for the future industrial park is conveniently located in close proximity to railway, road and gas infrastructure.The new zoning plan of the city should be ready by the end of 2007. It will include the architectural plan for the industrial zone. The municipality intends to participate as a shareholder in a corporation specially set up to develop the project.
Orchid to build EUR 100m mall in Varna
Orchid Development Group has received a first-class investor certificate for its Grand Mall project in Varna. The mixed-type complex will offer to its tenants both commercial and business space. The investment is estimated at over EUR 100 million.
Grand Mall will cover a built-up area of 150,000 sq. m with 45,000 sq. m of commercial space to be let. Construction works are scheduled to start in the end of the summer, while the complex is slated for opening in 2009. The mall will be entirely designed by MYS Architects, which also designed the Mall of Sofia. Orchid Developments Group is one of the largest investors in Bulgaria. The company operates in few major sectors of the real estate market. Orchid owns and manages hotels at the Sunny Beach resort. The company also works on two projects for gated residential complexes in Varna and Sofia. Orchid has been operating in Bulgaria for eight years and has made investments for more than EUR 100 million, Ofer Miretzky, joint chief executive of the company, said.
Return on Investment In Real Estate In Sofia Dips To 5.1%
The returns on the invested money in real estate in Bulgaria's capital Sofia is getting lower and now stands at 5.1%, down from 10% in 2002, according to the information brought by Creditex and cited by Profit.bg. The decrease in returns is because of two main factor-the rising prices of homes over the past 4-5 years and because of the increasing rates of monthly rents in Sofia.The return on investment in vacation homes is also down, due to the sharp increase in their prices over the last few years. Investments like this usually take up to 20 years to repay completely, and the return on them is calculated at 5%.In this matter real estates such as houses and apartments are getting less attractive for investors, compared with commercial real estate, where returns stand at between 12% and 14%. Commercial real estate, however, is too expensive for individual investors, which do not have that amount of capital at their disposal. An opportunity they prefer to use instead is investment in Real Estate Investment Trusts (REITs) listed on the stock exchange.The priority of many REITs is investing in commercial real estate and logistics centers and, according to legislation, they have to distribute 90% of their annual profit as dividend. Dividend is subject to a 7% tax.
Bulgarian venture capital fund to invest in IT projects
New Europe Venture Equity (NEVEQ), Bulgaria's first private venture capital fund, said it is starting to invest in IT projects. The fund has raised 22.5 mln euro will be deployed over the next 18 months, said managing partners Konstantin Petrov and Pavel Ezekiev. The capital of the fund was contributed by the EBRD (20%), U.S. investors (20%), Swiss investors (30%) as well as private investors from Bulgaria and Austria. NEVEQ will pursue investments in Southeast European providers of global IT solutions and services. The fund will initially focus on Bulgaria and Romania and later expand throughout the region.We are interested in start-ups that have a pipeline of globally marketable IT products and solutions,' said Ezekiev, adding that the raised cash should be enough for around 10 investment deals.The first investment agreement signed by NEVEQ was with the lessno.com portal for travel services.The portal will offer online booking of airplane tickets and will later expand into rent-a-car and hotel bookings.NEVEQ will invest in fledgling projects as well as in mature corporations. The minimum investment per project will be 0.5 mln euro while the ceiling is 5 mln euro.Petkov said the fund will cash out of start-up companies up to 5 years after the initial investment while the investment cycle for mature companies will be around 3 years.
Bulgarian Wine to Be Bottled in Russia
"Bulgarian wine will be bottled in the Russian city of Ulyanovsk," told The Standart Ulyanovsk District Governor Sergey Morozov, who visited the region of Gabrovo and had talks with Bulgaria's Deputy Minister of Agriculture and Forestry Dimitar Peychev.
The bottling factory will be built with Bulgarian capital. The investment will amount to two million Euro. The ambitious project is launced by the winery in the town of Sevlievo and it is to start off in September. "The project also provides the construction of a joint-stock cannery," Mr. Peychev said. Bulgarian wines are highly valued in China and there is a great demand for them on the Chinese market. This transpired during the talks between Bulgaria's Deputy Minister of Economy and Energy Anna Yaneva and Chinese Commerce Minister Bo Xilai. China is also interested in the Bulgarian yoghurt, rose oil, medicines and technologies in the metal founding industry.
EUR 160m amusement park to be built in Ruse
A commercial and amusement complex for EUR 160 million may be built in Ruse, if the city's municipal council accepts the proposal of Kubus. A total of 5,000 new jobs will be created after the completion of the project. Kubus plans to acquire 15.4 ha of municipal land and build a large number of stores, restaurants, children's playgrounds, a cinema, a bowling hall and a casino. In order to complete the project, Kubus is ready to pay a good price for the plot in Rousse's Lagera district. Kubus is headquartered in Vienna and has already built a similar commercial and amusement park in Bratislava.
Rousse municipal councillors are expected to give start to the procedure for the launch of the project at a meeting scheduled for July 6.
Bulgarian Property Developments to build logistics park in Ruse
Bulgarian Property Developments PLC (BPD), the LSE-listed investment company, will build a contemporary logistics hub on the territory of the industrial zone taking shape in Bulgarian city Ruse, on the Danube. BPD Wednesday won a competition for a 5.367 ha municipal land plot with zoning approval. It will pay over 2.6 mln levs for the property. The 9.068 mln euro logistics park will comprise state-of-the-art facilities for regular and refrigerated storage, Class A offices and parking lots.BPD in partnership with FairPlay International, the Bulgarian construction and property development company, is developing another logistics park scheme, in the industrial zone of Varna, on the Black Sea.
Two Austrian Firms Mull 190 Mln Euro Investments in Bulgarian City of Ruse
Two Austrian companies, Cubus and Europolis Real Estate Asset Management, have proposed to the Bulgarian city of Ruse to invest a total of 190 million euro ($255.8 million) in two real estate projects in the city, a local government official said on Thursday. "Cubus want to build a large retail and recreational centre, the value of investment ranging between 150 million euro and 160 million euro," the head of the city council, Iskren Veselinov, told SeeNews. The company has said it would need some 20 hectares of land for the project which it would complete in three years.The other potential investor, Europolis Real Estate Asset Management, has proposed to build a logistics centre worth some 30 million euro in two years. It has expressed interest in buying a landplot of 12 hectares, Veselinov said. Officials of the two companies were not immediately available to comment. The Ruse municipality is considering launching a tender for two landplots, suitable for the projects, Veselinov said. "If these projects are successful, they will most likely draw more investors to the city. We should not waste time," Veselinov said, adding that the city council is expected to launch the competition procedures on July 7. Investor interest in Ruse, on the Danube river, has been growing after the country's accession to the EU in January. The city has also attracted a growing number of visitors from Romania, Bulgaria's northern neighbour across the Danube and fellow EU member
Germany's Grammer to expand Bulgarian ops
Grammer, the German auto interiors company, will invest 3 mln levs to add a new capacity to its seating systems factory in the village of Trudovets, North-western Bulgaria, reports news agency SeeNews. The construction of the new facility, with a 3,900 sq m footprint, should be completed by mid-Jan '08, allowing Grammer to reduce the number of its suppliers. Bulgaria Seating Systems Grammer AD manufactures tractor seats, seat cases and armrests.
250 mln EUR invested in Bulgaria`s Golden Sands coastal resort in past 6 years
Nearly 250 million euro have been invested in the Bulgarian Black Sea resort of Golden Sands in the past six years. The resort will mark its 50th anniversary with a number of festivals, investor.bg reported. Money has been invested mainly in hotel construction and the setting up of luxurious vacation complexes in the resort. The number of hotels there was only eight in 1957. Now their number exceeds 90. Almost 80 per cent of the beds have already been booked. Nearly 15 million tourists have visited the resort in half a century. More than 500 000 people serviced the tourists in the same period. The 50th anniversary celebrations will include folklore performance, Latino and rock fiestas.
COMPANIES:
Four companies with market capitalisation above BGN 1bn
The listing of First Investment Bank (FIBank) on the Bulgarian Stock Exchange (BSE) has made it the fourth public company with a market capitalisation exceeding BGN 1 billion, the other three being Bulgarian-American Credit Bank (BACB), Bulgarian Telecommunications Company (BTC), and Chimimport. That emerges from Pari daily's ranking of companies by market cap. Substantial changes in the ranking have been observed since FIBank and Corporate Commercial Bank joined the team of public companies.FIBank has made it to the third place with a BGN 1.3 billion market cap. BTC has remained a leader with more than BGN 3 billion even though its stock cheapened by BGN 2.28 after Viva Ventures and AIG Global Investment Group closed a contract for the purchase of the majority package in the telecom at a price of BGN 11.25 per share.
Chimimport is second with a market cap of BGN 1.5 billion. The fourth and fifth place belong to BACB (BGN 1.04 billion) and Sopharma (BGN 942 million). They are followed by Economic and Investment Bank (BGN 835 million), Central Cooperative Bank (BGN 642 million), DZI (BGN 617 million), Druzhba Glass (BGN 578 million) and Petrol (BGN 506 million).Corporate Commercial Bank (CCB) follows suit with a BGN 495 million market capitalisation. For five days since the stock was offered for trade, the price has reached BGN 82.62, up by 41%.Another market debutant this year, Kaolin, has climbed up to the 15 position (BGN 337 million). It is followed by Monbat (BGN 253 million), Alcomet (BGN 246 million), and Bulgartabac Holding (BGN 235 million).CCB and FIBank have increased BSE's market capitalisation to more than BGN 20 billion. Before the two banks were listed, the market assessment of all companies on the stock exchange was about BGN 18 billion. After Tuesday's session, the capitalisation reached BGN 20.72 million.
Lukoil Wants to Buy Petrol
Lukoil Oil Company plans to increase twice its share on Bulgaria's market for a period of 3 years, by constructing and purchasing 200 new petrol stations.For the purpose the company will invest $ 300 million. Absorption object could become the Bulgarian company ‘Petrol'.‘Petrol' arranges 450 oil stations, 80 petrol basis and 3 harbor terminals. Lukoil estimates its share on Bulgarian land to 17% at the beginning of last year. By that time Russian company had 170 petrol stations.After the contract between 'Lukoil' and 'Petrol' (2001) for joint activity, the both companies controlled 37% of the local market.
Bulgaria's First Investment Bank Goes Public
FIB executives rang the opening bell to mark the start of Monday's tradting session, which the bank's shares dominated.Shares in Bulgaria's First Investment Bank (FIB), the country's fifth largest lender, started trading on the Bulgarian Stock Exchange (BSE) on Monday after an initial public offering (IPO) last month.FIB offered investors 10 million new shares and 6,5 million existing ones at a price of BGN 10,7. The shares started trading at BGN 12-13, settling down to an average price of BGN 12,3 as the session progressed. At that price, the bank's market capitalisation is BGN 1,35 B. "Our goal is to be the fastest growing Bulgarian bank on the market," FIB chief executive Maya Georgieva said at the start of the trading session.FIB becomes the fifth bank to go public and the capitalisation of the BSE is expected to exceed BGN 20 B.The bank's IPO was oversubscribed six times, with half the shares going to foreign investors, the bank said earlier.FIB is the fifth biggest bank in Bulgaria, with assets worth BGN 3,16 B at the end of last year. The bank had a credit portfolio of BGN 1,76 B and deposits worth BGN 2,5 B at the end of December.
Magnat Real Estate Opportunities GmbH enters Bulgarian market
MAGNAT Real Estate Opportunities GmbH & Co. KGaA, a real estate company with a focus on real estate development in Eastern European countries, has announced its first investment in Bulgaria. MAGNAT, through a local project company 75% owned by MAGNAT, said it has purchased a site for residential development in Pancharevo, a suburb of Sofia. on a 7.775 sq m plot of land, some 100 upscale apartments with 10.000 sq m of sellable floor space will be built. Total investment volume will be approximately 10 mln euro. The project location is very good, well-connected and only 18 km south of the center of Sofia, in a parkland-style neighborhood. According to the developer, the demand on the residential market in Sofia for such upscale apartments is high, vacancies are practically zero. Due to the imbalanced supply-demand, sales of apartments are possible off-plan or in early stages of development. This market situation allows for high double-digit returns on equity. MAGNAT CEO Jan O. Ruester was quoted as saying by DGAP-News: „With this project, we have entered the Bulgarian market. Negotiations for several other projects in our target countries in Eastern Europe are well under way; we expect signings in the near future. one priority continues to be the residential segment, where we see significant potential”.
Electronic money already legal means of payment
SEP Bulgaria is launching an innovative project that will turn mobile phones into an alternative to ATMs. The company has started building a special system that will transform personal phones into universal tools for conducting electronic financial and business operations. The service is unique for Bulgaria.To reach to the end client, SEP Bulgaria will need the assistance of financial institutions, mobile operators and the central bank. At this stage they all seem interested. Talks have been held with 15 banks already, which are ready to join the new payment channel.The BNB is expected to license the company by this year's end. Actually, the central bank has already approved the creation of a new legal instrument, the electronic version of paper money, SEP Bulgaria's CEO, Atanas Sharkov, told the Pari daily. The technological system will be ready within a few months and then the integration of banks and mobile operators will begin. The pilot service offering will start in seven months.Some of the advantages of the system are that the mobile phone turns into a personal terminal, giving full freedom of action and ensuring the protection of personal information. We are not going to compete the existing operators, Bankservice and BORICA. Our idea is to provide a radically different alternative to electronic payments, Sharkov added.The bulk of the project financing is provided by Advance Equity Holding, which holds 75% of SEP Bulgaria's capital. We do not plan pulling out of the the investment in the first five years. After that the majority stake may be restructured and a portion of it could be sold on the stock exchange, Advance Equity's executive director, Ventsislav Petrov, said.
Companies in Bulgaria to rely on outsourcing for major IT projects
Bulgaria will increasingly use outsourcing for the implementation of major IT projects. The country will use outsourcing to carry out projects for companies abroad and for Bulgarian companies willing to use foreign resources, State Agency for Information Technology and Communications (SAITC) head Plamen Vachkov said. Vachkov took part in the first national conference on IT services outsourcing and opportunities for such developments. Bulgaria is becoming an important factor in IT development and needs sufficient resources and know-how to execute complex projects, Vachkov said. Vachkov said that SAITC will rely in the future on public-private partnership for the implementation of IT projects.
Logistics company opens new warehouse
Logistics company Vectra Ltd, part of DSV Group, opened a new refrigeration warehouse near the Sofia airport. The warehouse is part of the logistics terminal of the group, which was built some two years ago. The terminal was built on a 50,000 sq. m plot, while the investment totalled EUR 15 million. The terminal has a built-up area of 14,000 sq. m and 12,000 sq. m of storage space. Vectra was established in 1993 and along with Corsa Logistics is part of the DSV Group. The group was established through the merger of Danish DFDS Transport and Dutch Royal France Maas.
AIG to borrow 1.6 bln euro to fund BTC acquisition
American International Group Inc. plans to borrow 1.64 bln euro to fund its acquisition of Bulgarian Telecommunications Co., the country's largest fixed-line operator, news agency Bloomberg reported on June 28. The New York-based company's AIG Global Investment Group unit hired Royal Bank of Scotland Group Plc, Deutsche Bank AG and UBS AG to arrange the seven-, eight-, nine- and 10-year loans, the banks told the news agency in an e-mailed statement.The loans will pay an initial interest margin of 2.5 percentage points to 9.25 percentage points above the euro interbank offered rate, or Euribor, a benchmark for borrowing.AIG Global on May 3 agreed to buy 65% of Sofia-based BTC from Icelandic billionaire Thor Bjorgolfsson for 2.11 bln levs and said it plans to purchase an additional 25% stake in the company.BTC has 2.9 mln subscribers and controls 85% of Bulgaria's fixed phone lines.The company had net income of 130 mln levs last year and plans to invest 400 mln levs this year to expand its broadband services and bolster its wireless unit, vivatel.
29. 06. 2007