불가리아 주요 경제정보( 16 – 23 NOVEMBER 2007)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 16 – 23 NOVEMBER 2007)

 

 

Sections/headline briefs:

 

MACROECONOMY:

 

·        National Assembly passes 2008 national budget bill on first reading

·        Kalfin: We want to become an important transport hub

·        World Bank: tax payments eased but more reforms needed

·        EU gives Sofia �312 M for waste management

·        Russia promises oil supplies for Burgas-Alexandroupolis

·        Project company for Burgas-Alexandroupolis oil pipeline will be created in The Netherlands in the end of 2007

·        Bourgas-Vlore oil pipeline ready in three years

·        Bulgargaz to increase gas price by 33.6%

·        Bulgaria's economy minister noncommittal on gas price hikes

·        Bulgaria housing prices among EU's lowest

·        Sofia's Vitosha Blvd. 32nd in world's Top Price locations

·        Representatives of German enterprises to visit Bulgaria

·        Stanishev welcomes French business delegation

·        French business representatives impressed with Bulgaria's macroeconomic parameters and tax policy

·        Bulgarian and Italian companies to improve business cooperation

·        Bulgarians' savings amount to BGN 16 billion

·        FinMin: We firmly back up currency board

·        Transport Minister to open Silistra-Calarasi ferryboat terminal

·        Danube bridges agreement is to be signed between Bulgaria and Romania

·        Bulgaria to list stake in future energy holding

·        Trakia highway concession updated with EC recommendations

·        Bulgaria's foreign debt melts

·        Bulgarian tourists spend around �1 billion per year on holidays abroad

·        Hospitals ready to apply for EU funding with projects for �120 M

·        Bulgaria "Loved and Hated" for its cheapness

·        Property deals to exceed �11 Bln in 2007

·        Owners sell their real properties to trade in shares at the stock exchange

INVESTMENTS:

 

·        Investment may trigger two-digit economy growth

·        New cargo storage for Bulgaria`s Varna airport

·        Silistra site to be developed into industrial zone

·        German companies increase investments in Bulgaria

·        Greek direct investments in Bulgaria reach �230M in 2007

·        Greek FIA to invest �27M in Bulgarian property

·        New resort estate appears on a Black Sea island

·        Enemona receives first class investment certificate

·        Bulgarian and Romanian chemical industry representatives discuss technological improvements

·        Qatar will invest in Bulgarian energy

·        BGN 2.1M state aid for Miroglio's project

·        Plaza Centers NV announces its first investment in Bulgaria

·        Bulgarian Ecoprocess unveils �821,000 tyres recycling plant

·        Key Austrian investor in local rafinery quits

·        Aladin co to invest in new Pleven retail center

·        Maison Creative co to invest �8 M in Plovdiv residential scheme

·        Doverie Obedinen Holding to invest in hospital chain

·        Direct Investment in Bulgaria reaches �3.8 Bln in Jan – Sept 2007

·        Belgian investor to build village near Plovdiv

 

 

COMPANIES:

 

·        Bulgarian companies suffer shortage of qualified staff

·        Twelve world companies have demonstrated interest in water sector

·        Orbitel wins first Bulgarian court case over comparative advertisement tactics

·        Sopharma continues its foray into eastern Europe

·        Sopharma enters the market of Serbia

·        Germany's Klockner given green light to buy Metalsnab

·        Holding Patishta's earnings grow more than 3 times in Jan – September 2007

 

 

ANALYSIS:

 

·        The road of EU money passes through the Balkans

·        EBRD plans to invest �1.5 Bln in renewable energy and energy efficiency projects in CEE

 

 

Articles:

 

 

 

MACROECONOMY:

 

National Assembly passes 2008 national budget bill on first reading

 

The National Assembly passed the 2008 National Budget Bill on first reading after a nearly nine-hour-long debate. The vote was 163 in favor, 59 against and no abstentions.
Parliament also voted, 4-65 with 146 abstentions, to defeat a 2008 National Budget Bill including a draft judiciary budget of the Supreme Judicial Council."In this budget, too, the Bulgarian Government prioritizes the creation of sufficiently guaranteed conditions for financial stability, for stability of the Bulgarian national currency, of personal income and conditions for sustainable and fast economic growth," Prime Minister Sergei Stanishev said at the end of the debate. He argued that there is no serious, in-depth public debate on budget policy and budget implementation.

Kalfin: We want to become an important transport hub

Bulgarian economy is developing dynamically and this speed is the best for at least the last 30 years and there is a stable tendency that this will continue, said the Bulgarian deputy prime minister Ivaylov Kalfin during his opening speech of the 10th Economic forum of the Central European initiative (CEI).The minister added that Bulgaria strives to become an important transport hub for goods and energy through the development of its infrastructure. With regard to this, Bulgaria will seek opportunities of the public-private partnership, pointed Kalfin.In his welcoming speech to the participants in the event, foreign minister Kalfin pointed out that for the first time Bulgaria is hosting this event as a member of the European Union. He added that the fact that half of the members of the CEI forum were EU members and the other half were encompassed by various EU initiatives was of extreme importance for the development of the region.Bulgaria pays special importance to the fact that since 1 January 2007 it became part of the big European family and that the Bulgarian institutions and the business work under the clear European regulations. This says a greeting statement of prime minister Stanishev to the participants in the 10th Economic forum of CEI, read at the opening of the forum in Sofia. In the statement, Stanishev points out that the hosting of the 10th economic forum is of very high importance to Bulgaria.This year the conference unites two regional events – the CEI forum and the traditional economic forum for South-east Europe, organized by the Bulgarian economic forum.

World Bank: tax payments eased but more reforms needed

 

Bulgaria is among the world's top tax reformatory countries, a report by the World Bank, the International Finance Corporation and auditors PricewaterhouseCoopers states.Tax reforms aimed at easing companies' tax burdens can increase national budget revenues and broaden the tax base, the Paying Taxes 2008 report says.This is the second such annual report on taxation systems, treating 178 countries worldwide. The report, published in Brussels, concludes that both government revenues can be enhanced and company expenditures reduced from simplified tax systems and compliance obligations. Thirty-one countries improved their taxation systems in 2007 by providing breaks for businesses, which has been done by a total of sixty-five countries over the past three years.Bulgaria is the most successful reformer, followed by Turkey. While reducing corporate income tax was the most popular reform,implemented by twenty-seven states worldwide, many reduced company expenditures by simplifying some enterprise taxes or removing others altogether.

EU gives Sofia �312 M for waste management

"Sofia Municipality will receive nearly �312M to resolve its garbage issues," said Eva Kaluzynska, Spokesperson for the Regional Policy Commissioner Danuta Hubner. The money will be granted for the period 2007-2013 and will be allocated from the Structural Fund of the European Union. "We are waiting for Sofia Municipality to submit a project for a waste processing plant," Kaluzynska added. "After the project is submitted, the European Commission will take their time to examine and approve it. Bulgaria is still among the countries that produces less domestic waste than the other EU members. Unfortunately, however, garbage is thrown out in open dunghills," EC officials said.

Russia promises oil supplies for Burgas-Alexandroupolis

Russia will supply the necessary quantity of crude oil for the Burgas-Alexandroupolis pipeline. At a meeting in Athens on friday, the stakeholders in the Burgas-Alexandroupolis project - Russia, Bulgaria and Greece, negotiated this, sources from the Bulgargaz company said. Bulgaria's natural gas company and the construction company Technoexportstroy are stakeholders in the Bulgarian venture, which is to carry out the construction of the pipeline.The three partners also agreed on that the international design company Burgas-Alexandroupolis should be registered in the Netherlands by the end of the year.

 

Project company for Burgas-Alexandroupolis oil pipeline will be created in The Netherlands in the end of 2007

 

The international project company among Russia, Bulgaria and Greece for the realization of the Burgas-Alexandroupolis oil pipeline is planned to be created in The Netherlands , Trend Capital reported on Saturday. As it is noted in an announcement by the Bulgarian government, this decision was reached during a meeting among the Russian, Bulgarian and Greek shareholders.According to the plans of shareholders the international company could be created at the end of the year.

 

Bourgas-Vlore oil pipeline ready in three years

 

The Bourgas-Vlore oil pipeline project will be completed in three years, Rumen Nikolov, representative of US company AMBO, which will set up the pipeline, said. Nikolov attended on Thursday the signing of a protocol establishing the entry and exit point of the pipeline.AMBO will hold a financial meeting on the project in Washington in the beginning of 2008. The pipeline will go through Bulgaria, Macedonia and Albania, which will have representatives at the meeting.The project is expected to obtain an environmental impact assessment report a year after the meeting, Nikolov said. The start of the construction works will become clear after the meeting in Washington.No contracts for Caspian oil supplies have been signed yet. Nevertheless, talks with large-scale companies, that are willing to sign preliminary agreements, were launched about a month ago, Nikolov said. Contracts may be signed only after the environmental impact assessment report is ready, Nikolov added.The oil unloading equipment will be installed in the Bourgas bay. The facility will convey 35 million tonnes of crude oil annually, while investments in its construction are estimated to total EUR 1.8 billion. Bulgaria is expected to earn USD 60 million annually from the 870 km long pipeline.

Bulgargaz to increase gas price by 33.6%

Local state gas monopoly Bulgargaz said on Friday natural gas prices should be increased 33.6% in the first quarter of next year due to high global oil prices. Bulgaria's sole gas wholesaler said it would look into ways to ask for a lower increase on December 11, when it has to table its proposal with the state energy regulator, which has a final say on the price, Reuters informed.If approved, the raise will put further pressure on new European Union member's consumer price inflation, which was 12.4% y/y in October on the back of high food prices and strong domestic demand.The forecast price for the first quarter should be 443.8 BGN (222 EUR) per 1,000 cubic metres without value added tax.Bulgargaz also said that the government's decision to lower the gas price increase in the fourth quarter of this year to 4% from initially approved by the state regulator 9.2% would also contribute for the rise.

Bulgaria's economy minister noncommittal on gas price hikes

Bulgaria's economy minister Petar Dimitrov left the door open on Monday for more government intervention to temper the rise in the natural gas prices."The government might intervene when the next price hike is discussed," Dimitrov said, but refused to commit himself to any definite action in that sense.Bulgaria's state-owned gas company Bulgargaz said on Friday it plans to ask permission for a 33,6% price hike to BGN 444 per 1000 cubic meters from utilities regulator DKEVR, effective from January 1.The company argues the hike is justified by the record high prices for crude oil and other fuels.
Such a drastic increase would hit thermal power and heating plants worst, since they are the biggest consumers of gas in the country, as well as companies in the chemical sector and steelworks, which use a lot of gas.Bulgargaz also said it could ask for a smaller hike if gas consumption in winter is lower than expected. DKEVR's next meeting is on December 11.The ministry can tamper the price hike by using part of the dividend it is due to subsidise the difference, as it did in October, when prices rose by 4%, instead of the 11% Bulgargaz demanded.

Bulgaria housing prices among EU's lowest

Bulgaria continues to boast the cheapest housing in the EU despite average annual price increases of 21% in the last five years, according to a comparative overview of 19 EU property markets to be released by real estate company Era, Dnevnik a.m. reports.A price of 300,000 euro for a top-quality home was considered ok in 2006 whereas a year ago it would have been priced at around 150,000 euro, said the authors of the report.One of the factors driving housing prices was Bulgaria's EU entry in late 2006 when demand briefly outpaced supply.In 2006 alone, Bulgaria housing prices added around 15% after jumped close to 40% the year before, said Era. Over the past five years, Bulgarian home prices have tripled. And so far 2007 is proving to be no exception as far as major metropolitan markets are concerned.Some Bulgarian cities posted a 25% increase in property prices in Q1 2007. The market value of old homes is steady while upscale housing properties gained 10% year-on-year in Q1 2007.The average Sofia home cost 78,000 euro in 2006 versus a nationwide average of 44,000 euro. This compares with, for instance, Austria where the nationwide average is 165,000 euro while the price of housing in the capital Vienna is 242,000 euro or the Czech Republic where the nationwide average is 67,000 euro and the Prague number is 112,000 euro.However, to get a balanced view of the Bulgarian property market, the Era data should be contrasted with recent press reports, claiming that Bulgaria has the least affordable property for its domestic citizens in the EU.Although the Eastern European country has some of the lowest prices on the continent - with an average property costing just 54 570 euro, low average earnings mean property remains expensive, according to a property search engine.An average annual wage of 1,884 euro means it costs the equivalent of 29 years' salary to make a property purchase in Bulgaria. This compares to an average of just nine years in the UK.According to Era research, revenues from the sales of Bulgarian housing properties to foreign nationals tripled year-on-year to 1.1 bln euro in 2006, a trend that the company expected to persist.

 

Sofia's Vitosha Blvd. 32nd in world's Top Price locations

 

Sofia's Vitosha Boulevard ranks 32nd in a chart of the world's most expensive retail locations for 2007, down four spots over last year, a consultants report shows.The average rental level per a square meter for a shop in the fashion street is EUR 1200 per year, Cushman & Wakefield consultants report in their annual research about the main streets in the world.There are no changes at the top places of the chart compared to 2006.The most expensive street in the world is again New York's 5th Avenue with EUR 11 983 per square meter per year followed by Causeway Bay in Hong Kong (EUR 9.688 /sq. m/year) and Champs Elysees in Paris (EUR 7.364 /sq. m/year).The data in the research is collected by the company's offices around the world and its partners.

Representatives of German enterprises to visit Bulgaria on Prime Minister Stanishev's invitation

 

A delegation of German entrepreneurs headed by Chairman of the Eastern Committee of German Industry, Dr. Klaus Mangold, will visit Bulgaria on an invitation of Prime Minister Sergei Stanishev, German Embassy in Sofia told BTA on Friday.German enterprises are interested to get convinced on site in the overall framework and the investment opportunities in Bulgaria a year after this country's EU accession, the press release added. More than 20 representatives of enterprises in the field of energy, medical equipment, information and communication technologies, defence industry, media, construction and services among others, will have discussions with Stanishev, Economy and Energy Minister Peter Dimitrov and Finance Minister Plamen Oresharski.According to data of German Embassy, trade between Germany and Bulgaria stood at about 1,800 million euro for the first half of 2007, up 8 per cent year-on-year. Bulgaria is one of the 10 most important trade partners of Germany in Central and Eastern Europe. Exports to Bulgaria rose 10.7 per cent and exceeded 1,000 million euro in the first half of 2007 already.Germany exports mainly machines and equipment, chemicals, cars and car accessories to this country. Its main imports from Bulgaria include clothing and metals. In the first half of 2007, German enterprises were ranked 12th regarding investments in Bulgaria with about 50.6 million euro, the embassy also said.

 

Stanishev welcomes French business delegation

Bulgarian prime minister Sergei Stanishev will receive a 15-member French business delegation of MEDEF International – the biggest employers organization.The delegation is lead by Pierre Morayon, chairman of the Committee for Bulgaria. The delegation comprises of representatives of Gaz de France, Bouygues, Alstom Transport, Calyon, Saur etc.It is expected during the meeting the possibilities for deepening of the trade and economic relations and the promotion of investments to be discussed.Bulgaria's trade with France in 2006 is 1.250 bln EUR, which ranks her 6th among Bulgaria's foreign partners from the EU. The bilateral trade by the end of August 2007 is 820 M EUR.
Bulgaria's export to the French market has grown with 7.1 % compared to the same period last year. The French investments in Bulgaria are around 450 M EUR. The main investors are Societe Generale, BNP Paribas, Mr. Bricolage, Danone Group, Groupe Scheider etc.French companies participate in the implementation of a range of joint projects in the field of energy and high technologies.

French business representatives impressed with Bulgaria's macroeconomic parameters and tax policy

Pierre Moraillon, head of a business delegation of MEDEF International, told Prime Minister Sergei Stanishev the French business representatives were impressed with Bulgaria's macroeconomic parameters, tax policy and low unemployment, the government information service said.The delegation includes representatives of Gaz de France, Bouygues, Alstom Transport, Calyon and Saur. The visit by the largest employer organization is expected to contribute to promoting investor interest. Bulgaria and France will expand economic cooperation because Bulgaria has a strong, lasting economic potential, and its EU membership as of 2007 is an additional contributing factor, said Moraillon, who is also member of Calyon Banque's Executive Committee.Stanishev told the French delegation that Bulgarian-French relations are excellent and should give impetus to economic partnership. The sides have untapped potential for cooperation in the energy sector, infrastructure modernization and high technology, he said, and identified agriculture, the food industry, water and waste management as other promising areas of cooperation.Two-way trade stood at 1,250 million euro in 2006, making France Bulgaria's sixth largest trading partner in the EU. Two-way trade stood at 820.2 million euro in the first eight months of 2007, with Bulgarian export to France increasing by 7.1 per cent from a year earlier. French investments in Bulgaria are estimated at 450 millioneuro, the major investors being Societe Generale, BNP Paribas, Mr. Bricolage, Danone Group and Groupe Schneider. Montupet S.A. is building a car spares maker in an industrial park near Rousse (on the Danube). French companies are also involved in a number of joint projects in the energy sector and high technology. Alstom Power is the project contractor in the construction of capacity at the Maritza East 1 thermal power plant. AREVA is a partner of Russia's Atomexportstroy, which won a tender to complete the construction of the Belene nuclear power plant. Dalkia International won a tender for Varna's district heating utility. Major projects are also being implemented through military economic cooperation. Eurocopter was selected to supply 18 helicopters for the modernization of the Bulgarian armed forces, and five of them have already arrived.

 

 

Bulgarian and Italian companies to improve business cooperation

Today(20th Nov) the international association for the development of the cooperation East West (Inter-co-oper) and Bulgarian industrial association opened a 2-day Bulgarian-Italian business forum, which aims to create new and stable contacts between Italian and Bulgarian companies, informed from the BIA press center.The forum is held in the National palace of culture in Sofia where bilateral business meetings organized in advance will be conducted. The event happens in the framework of the project “Initiative for participation of Italian enterprises from the small and medium business in the programs for local development in Bulgaria” of the Italian ministry of international trade.There is no organization and entrance fee.The fields in which the participants are specialized are environment, energy, information technologies. electronics, telecommunications and construction. The profiles of the Italian guest companies can be found at http://www.partenariatobulgaria.it.

Bulgarians' savings amount to BGN 16 billion

"The Bulgarians' savings amount to sixteen billion levs (1 Euro=1.95 Levs). During the first half of the term-of-office of the Stanishev-led Cabinet, the money deposited in banks grew by fifty-five percent, reads a report of Minister of Economy and Energy Petar Dimitrov presented at a plenum of the Bulgarian Socialist Party. "As I hear so much scathing criticism from our rivals, I have the feeling that I must have become a minister in a different country," Mr. Dimitrov said.Prime Minister Sergey Stanishev reproached his party fellows for their low self-confidence."If another political party achieves our successes, they will beat the drum for it like no other," he said. Statistical data of the Bulgarian National Bank show that the bank deposits in Bulgaria grew by seven billion levs in a year's time. However, only 35,000 Bulgarian citizens have fat bank accounts, whereas the majority of our compatriots live on loans.

FinMin: We firmly back up currency board

We back up the currency board system until Bulgaria joins the eurozone, which will happen during the next government's term, finance minister Plamen Oresharski said at a discussion on the 2008 budget and inflation, which was organised by the Pari daily on Friday. The current fixed exchange rate of the Bulgarian lev will be preserved; it will be maintained even at the cost of unpopular measures that are good for all citizens, because of the stability we enjoy, Oresharski underscored. Our overall policy, including the maintaining of a substantial reserve, is a sign we support the lev until eurozone entry, he added. The currency and fiscal reserves exceed BGN 20 billion, which covers a touch above 50% of the broad money.

Transport Minister Moutafchiev to open Silistra-Calarasi ferryboat terminal

Transport Minister Peter Moutafchiev will open a terminal of the ferryboat connecting Silistra and Romanian city Calarasi today.The project for the construction of a new ferryboat terminal on the Danube river with both state funds and private capital is the first one of this kind implemented in Bulgaria. The port terminal is designed to process ro ro cargos and mail, passenger and sea and technical services.Its area stands at 65,189 sq m. The line will be served by two vessels. The Bulgarian vessel is 82 m long, has an eight-member crew and may carry between 12 and 18 cargo trucks on board.On September 13, Regional Development and Public Works Minister Assen Gagaouzov opened the border check point in Silistra as well as the approaching road, which connects the terminal to the Rousse - Silistra republican road. The infrastructure is part of the ferryboat complex.

Danube bridges agreement is to be signed between Bulgaria and Romania

An agreement was prepared to be signed between Bulgaria and Romania with the name Danube Bridges, Transport Minister Petar Mutafchiev said after the opening of the newly built Ferryboat Terminal Silistra, Focus News Agency informs. According to the draft agreement more bridge facilities should be built to secure the normal crossing of the river between the two states. There are talks for bridges between Oriahovo and Beket, Silistra and Kulurash and at Nikopol. The use of Trans-European Corridor number 7 along Danube river connecting Bulgaria with Europe is very important, Mutafchiev said.

Bulgaria to list stake in future energy holding

Shares in the energy holding that Bulgaria will set up in 2008 will be listed on the Bulgarian bourse and on one of the foreign stock exchanges, Bulgarian energy minister Petar Dimitrov said on Monday.The holding will be created through the consolidation of the Maritsa Iztok mining company, thermal power plant Maritsa Iztok 2, nuclear power plant Kozloduy, national power grid operator NEK and Bulgargaz Holding.The initial plans were to consolidate into the holding structure first the power stations and the mines, then Bulgargaz telecom division Bulgartel and NEK's telecom operations and then the gas and electricity transmission operations.Energy experts said the incorporation of the holding will take around 18 months.Asked what would be the reaction of the ministry if the European Commission opposes the creation of the energy holding, deputy energy minister Galina Tosheva said the ministry will take into account the recommendations of the EU executive and power production and transmission will be unbundled.

Trakia highway concession updated with EC recommendations

A new annex will be tagged onto the Trakia motorway concession contract to incorporate the latest recommendations made by Eurostat and the European Commission, Bulgarian deputy regional development minister Savin Kovachev said on Tuesday, November 20. Kovachev and a representative of the Portuguese-led consortium awarded the motorway concession Tuesday met with experts from the EC transport directorate to brief the European officials on ten items from the contract which may have unregulated state aid implications.The new annex will have three clauses. Under the first one, the Bulgarian state will be obliged to reimburse the operator for no more than 50% of revenue lost due to low traffic. Under the second clause, the operator will not be entitled to any compensation payments for losses incurred due to the partial or complete closure of the motorway in the event of bad weather or an accident.Another EC recommendation that will be included in the annex is obliging the operator to return any payments determined as unregulated by Brussels.The regional development ministry expects the new texts to be submitted for review by the government as soon as next week.Kovachev and Boiko Kotsev, executive director of Technoexportstroy, one of the Bulgarian companies in the consortium, said the new annex will be signed within a week. They also suggested that the construction of the motorway will begin within 90 days.The EU experts requested information on the methodology and criteria used to set the tolls and the opportunities that the operator has to participate in the process. The Bulgarian officials responded that the tolls are set by the state alone and are market-based. The EU official also wanted to know if the state aid to which the operator will be entitled in case the motorway is undertrafficked will be paid as a grant or a loan. Kovachev reportedly explained that the aid will be extended as an interest-bearing loan.Another question raised by the EC experts was whether Bulgaria will make any payment to the operator after the concession contract runs out.'We replied that the state will not owe anything and will make payments to the concessionaire only for construction improvements,' said deputy regional development minister Kalin Rogachev.The EC is still perusing the contract and has not started an official investigation.The concessionaire Magistrala Trakia, led by Portuguese builders MSF, Grupo Lena and Somague, will complete a 118 km section of the Trakia motorway from Stara Zagora to Karnobat, a 60 km section from Sofia to Kalotina and the 22 km northern arc of the Sofia ring road.

Bulgaria's foreign debt melts

In October, Bulgaria's state debt decreased by 17.4 million euro and in the end of the month amounted to 5.728 billion euro, according to sources from the Ministry of Finance. Of these 5.728 billion, 1.599 billion form the domestic debt and 4.129 billion, the foreign debt. In the end of October the state and state guaranteed debt accounted for 21.9% of Bulgaria's GDP.

Bulgarian tourists spend around �1 billion per year on holidays abroad

 

Bulgarians citizens will pay 10 percent less for a hotel room than the foreign tourists do when staying in a Bulgarian resort. Blagoi Ragin, chairman of the Bulgarian Hotel and Restaurant Association (BHRA) made the proposal for 10 percent decrease of hotel prices for Bulgarian tourists. Thus, Ragin gave his support for a campaign, previously initiated by Travel TV for attracting more Bulgarians to the Bulgarian resorts. Representatives of the various Bulgarian media; newspapers, TV channels and radio stations are involved in the initiative "Treat Yourself to a Holiday in Bulgaria".  
" Every year, Bulgarian tourists spend nearly 1 billion Euro on holiday abroad," commented chairperson of the State Agency for Tourism, Aneliya Krushkova. one reason for the idea is that the prices in the Bulgarian resorts are unaffordable for the average Bulgarian. According to the chairman of the Tourism Council in Sofia,Rumen Draganov, this year, the percentage of Bulgarians who have chosen the Bulgarian resorts has grown with 8%. "If the hotel prices in Bulgaria go down the economy will be stimulated, in contrast, at present, nearly 600 000 hotel beds on the Bulgarian resorts stay empty. This asset in the hotel industry ought to be used accordingly. Voice pieces of the campaign became celebrities as : Niki Kanchev, the host of the Bulgarian version of " Who Wants to be a Millionaire" TV game, Bulgaria's Minister of Culture and famous actor, Stefan Danailov, the  Minister of Foreign Affairs Ivailo Kalfin, actor Georgi Mamalev, singers Rushi Vidinliev and Toni Dimitrova.  Bulgaria's Minister of State Administration, Nikolay Vassilev expressed his full support to the media initiative. The public figures Georgi Gergov, Krasimir Gergov, Milen Velchev, Vlado Karolev and Neli Sandalska will be the people, responsible for raising funds for the campaign.

 

 

18 hospitals ready to apply for European funding with projects for �120 M

Eighteen of the biggest hospitals in Bulgaria are ready with projects worth a total of 120 million euros to apply for funding under European programmes, Health Minister Radoslav Gaidarski said here on Monday. The projects, mainly for refurbishment and purchase of new equipment, will be presented to the Regional Development and Public Works Ministry.Gaidarski said that nearly 60 million euros are expected under the European structural funds for the development of emergency aid in Bulgaria.The Health Minister said that the debts of the state-run hospitals in Bulgaria add up to 42 million leva, of which overdue ones total 13 million leva.Gaidarski recalled that health care outlays in the 2008 budget will be by 368 million leva more than the 2007 figure. He noted that 10 million leva will be set aside for the first time for training of interns.In Varna the Health Minister inaugurated a clinic for interventional cardiology with the St Marina University Hospital. A total of 1.3 million leva were invested in the repair works and re-equipment of the clinic, its Executive Director Krassimir Ivanov said.

Bulgaria "Loved and Hated" for its cheapness

Loved or hated for it, cheapness is the reason you go to Bulgaria and its property market has evolved in a similarly budget-minded way, says the Daily Telegraph in an article that explores the country's property upmarket."Search for Bulgarian property on Primelocation.com and you plough through 20 pages before you even reach GBP 10,000.Try to spend more than GBP 100,000 and you are hard-pressed to find anything. As home to many of the country's 200,000 millionaires, Sofia, the capital, naturally has a higher number of top-end properties. But even there, only a quarter of the 130 homes shown on Primelocation hit six figures. " The article cites data of Colliers International, according to which the current price range for Bulgarian property is GBP 550- GBP 1,170 per square metre, putting it on a par with Albania at the lowest level and Budapest at its peak. So does all that mean that there is no such thing as "upmarket Bulgaria" - that good quality is hard to come by ? Or is it possible to find real quality with unusually low price tags?

Property deals to exceed �11 Bln in 2007

Property deals for more than EUR 11.3 billion will be closed in Bulgaria by the end of 2007, the manager of Yavlena agency, Strahil Ivanov, said at the 10th economic forum in Sofia. The market is primed for a fresh record, after achieving a turnover of a touch above EUR 9 billion last year. Compared with EUR 6.4 billion in 2005, the volume this year will nearly double.The property market growth is the result of the continuing price rise, brokers said. In the residential segment for instance, the prices in the big cities are expected to increase by 20 to 30%. At the same time the number of deals is decreasing and brokers project that there will be less than 300,000 sales in 2007.The boom in the property market in Bulgaria has not finished - it is yet to materialise, the executive director of Colliers International for Bulgaria, Atanas Garov, pointed out. According to him, demand is increasing in all business property segments: offices, commercial and warehouse space. As companies expand, they need more and more space, he added. The supply of business properties is also expected to rise with the completion of new projects in the next three to five years.

 

Owners sell their real properties to trade in shares at the stock exchange

Bulgarians sell their real properties to trade in securities and shares at the stock exchange, real estate agents and finance experts told The Standart. Some time ago, bank clients would mortgage their real estates to shares and securities with the money; now, the owners have started selling their apartments to trade at the stock exchange with the money. Most often, they sell real properties, which they have obtained for investment purposes. Investments in real estates however become more and more unprofitable, whereas the stock exchange trade is gaining momentum every day. The investments in real estates and holiday properties in Bulgaria bring only five or seven percent profit and those in commercial premises - about eight or nine percent, whereas the investments in stock exchange traded funds can bring about 150 percent of profit in a year's time. So, the landlords who hope to profit from rents and then sell their apartments at a high price should reconsider their plans. Over the past few months the market got over-saturated with commercial real estates and for that reason these properties bring less and less profit to their owners. For all of the abovementioned reasons, the more flexible-minded owners tend to sell their properties invest their money in more profitable businesses.

 

INVESTMENTS:

Investment may trigger two-digit economy growth

Bulgaria may achieve two-digit growth with the help of foreign investment, the general manager of Hewlett-Packard Bulgaria, Sasha Bezuhanova, said at the 10th CEI Summit Economic Forum in Sofia. Bulgaria has the image of an attractive destination for foreign capital in a long-term plan.However, there are still some obstacles we have to cope with, she added. The framework of research and development activities in Bulgaria needs to be thoroughly improved. The protection of intellectual property is also an outstanding issue. Public private partnership should be expanded, Bezuhanova pointed out.Information and communication technologies are not just an industry: they influence all other sectors of the economy. The integration of IT in production is already a must and that requires investments.

New cargo storage for Bulgaria`s Varna airport

Bulgaria's Varna Airport opened a new cargo storage, equipped with video cameras and an x-ray device for processing shipments to meet requirements of the airline companies that use the airport.The storage was built after various companies expressed interest to carry out cargo-flights using the Varna airport, BGNES news agency said.Varna Airport’s new cargo zone passed all checks needed and received logistic activity permit from the customs.In mid-October 2007, Fraport Twin Airport Management, the concessionaire of Bulgaria’s two coastal airports Varna and Bourgas, received a first class investor certificate for the enlargement and modernisation of the Bourgas Airport. The investment was worth 49.6 million euro.Fraport manages the airports since November 2006. The company announced it would invest a total of 403 million euro in the two airports.

 

Silistra site to be developed into industrial zone

Dunav Industrial Park, a unit of the local Alfa Finance Holding, will develop a 4.0 ha site in the city of Silistra, on the Danube, into an industrial zone, it was announced during Monday's inauguration of the Silistra-Calarasi ferry boat complex.The existing 900 m quay wall of the site will be equipped over the next couple of months to operate as a multi-purpose cargo port.Over 13 mln euro have been invested in the new ferry complex, including the cost of a port terminal. The 65,189 sq m terminal is designed to handle ro-ro cargo and mail shipments and to provide passenger and technical services.The ferry complex is operated by Dunav Industrial Park under a concession agreement. It was the first domestic concession contract granted on the build-operate-transfer principle. There a further three ferry lines between Romanian and Bulgarian ports, at Vidin, Oryahovo and Nikopol. Alfa Finance Holding is a leading Bulgarian industrial and financial group active in financial services, real estate management, mining and logistics.

German companies increase investments in Bulgaria

57 % of the German companies in Bulgaria plan to increase their investments and to open new workplaces. This shows the annual research of the German-Bulgarian industrial chamber about the business climate in Bulgaria in 2007.77% of the interviewed expect increase in their turnover. These data were announced during the meeting of prime minister Stanishev with managers of leading German companies. The 30-member delegation, which is visiting Bulgaria is led by the chairman of the Executive board of “DaimlerChrysler  Service” Klaus Mangold.Germany holds the sixth place in the foreign investors ranking with around 1.04 bln EUR invested in the Bulgarian economy by the German companies.The biggest German investors are Allianz, METRO Group, Heidelberger Cement, E.oN, Liebherr, Siemens, Kaufland, Festo, Willi Betz, Lindner International etc. The Bulgarian economic development is very good, the GDP growth is impressive, claimed Klaus Mangold, who is also chairman of the East commission of the German economy.Germany is a leading trade partner of Bulgaria. For the first seven months this year the turnover is 3.06 bln, which is over 30% more than the one in the same period last year. The most demanded Bulgarian goods on the German market are in the field of textile, electronics and machines.The most imported German goods are machines, cars, chemical and pharmaceutical products. over half a million of German tourists annually spend their holidays in Bulgaria.

Greek direct investments in Bulgaria reach �230M in 2007

Direct foreign investments by Greek companies in Bulgaria between January and September 2007 amounted to 231.5 million euro, Bulgarian National Bank (BNB) data showed.For the same period in 2006, Greek companies had invested 190 million euro, Greek newspaper Imerisia said.Greek investments accounted for 6.1 per cent of all direct foreign investments in Bulgaria over the first three quarters of 2007.Greece ranks sixth among the biggest foreign investors in Bulgaria between January and December 2007. The UK, Belgium and Austria took the first three positions. Greece is the fourth biggest investor in the country for the period 1997-2007, Imerisia said as quoted by investor.bg.According to the BNB data, total direct foreign investments in Bulgaria between January and December 2007 increased by 27 per cent to 3.8 billion euro, as compared to the same period in 2006. Direct foreign investments in Bulgaria in 2006 reached 4.4 billion euro. In 2007, they were expected to reach five billion euro.

Greek FIA to invest �27M in Bulgarian property

Greek industrial group FIA Corporation plans to carry out two projects on the Bulgarian real estate market, both worth between 22 and 27 million euro.Greek newspaper Naftemporiki quoted FIA executive director Petros Piloridis as saying that FIA’s daughter company FIA Bulgaria would construct an office building in Sofia worth seven million euro and a mixed residential and retail complex in Hajidimovo municipality, near Blagoevgrad.The complex would cost 15 to 20 million euro and would be built by FIA Bulgaria and United Constructions & Development LTD.In October 2007, FIA Bulgaria decided to raise its capital from 700 000 to 1.225 million leva. In spring 2007 the company announced the construction of an office building in Sofia’s Mladost-1 residential district, investor.bg said.Initially the company planned to invest 11.75 million euro in Bulgaria.FIA is the only company in Northern Greece, which has a daughter company listed in Bulgarian Stock Exchange, investor.bg said.

New resort estate appears on a Black Sea island

The investor Immofinance and Belview Property Management today broke the ground of a new resort housing estate on the island Kolokita, nearby the Bulgarian seaside resort Sozopolis, announced the two companies.The buildings and the housing estate are going to be built in the architectural stile of the Old town of Sozopol, since the concept is the place to offer both luxury and romantic atmosphere.The built-up land area is going to be 88500 m. sq. and is going to include 147 separate properties - small restaurants, shops, houses for one or two families, a luxury hotel with a SPA center, offices and etc.The island is located two kilometers southwards from Sozopol.The investment in Sozopolis accounts for 45 million EUR.

 

Enemona receives first class investment certificate

 

On Tuesday (November 20), the Bulgarian Investment Agency will award Enemona JSC a first class investment certificate.The certificate will be presented by Lachezar Borisov, deputy minister of economy and energetics. Enemona receives the certificate, because of the investments it plans to make in the energy project “Lomski Lignites”.Orders for subscription of shares in the company's IPO will be received next Monday (November 26). The company intends to increase capital from 9.934 mln leva (5.080 mln euros) to 11.934 mln leva (6.101 mln euros) via offering of 2 mln shares with a face value of 1 lev.
The IPO price per share will be between 11 and 16.80 leva, and the subscription method will be book-building.The net IPO proceeds are estimated at 32.8 mln leva (16.770 mln euros) in case shares are subscribed at the maximum price. In this case, the company's market value will reach 200.484 mln leva (102.505 mln euros). Payment starts November 28 and lasts five days. It is expected that shares will be floated January 8, 2008.

 

Bulgarian and Romanian chemical industry representatives discuss technological improvements

 

Investment in technological improvements and compliance with the environmental standards by the Bulgarian chemical industry is expected to reach over 1 billion euro over the next five years, BTA reports.This emerged Monday at the start of a two-day meeting of Bulgarian and Romanian chemical industry representatives in this Danubian city. Following a dramatic decline in the Bulgarian chemical industry in the period of transition after 1989, the Bulgarian chemical industry has been in ascent for two years now, said the Vice President of the Bulgarian Chamber of the Chemical Industry, Yoncho Pelovski. Solvay Sodi of Devnya accounts for 40 per cent of the European soda ash production.The Bulgarian petrochemical industry is processing up to 6 million tonnes of oil. The wages in the sector have improved. This allows chemical companies to attract an ever increasing number of young people. Admission at the Sofia University of Chemical Technology increased by 20 per cent this past admission campaign.

Qatar will invest in Bulgarian energy

Qatar is considering Bulgaria’s proposal to invest in a terminal for natural gas at the Black Sea coast. This became clear after the official meeting between President George Parvanov and the Emir of Qatar Sheikh Hamad bin Khalifa Al -Thani in Doha, Darik Radio reported. Parvanov handed over the order “Stara Planina” with a ribbon to the Emir of Qatar, saying that he wanted to thank him for the support and solidarity in moments of importance for Bulgaria. The Emir rendered significant assistance to Bulgaria during the negotiations for freeing of the Bulgarian medics, who had been sentenced to death in Libya before being released. The Bulgarian president and the Emir confirmed the commitment of both countries to continue assisting the international fund for medication of the Libyan children infected with AIDS in the future. In his turn, the Emir rewarded the Bulgarian president with the Necklace of the Independency of Qatar. He accepted the invitation of Parvanov to visit Bulgaria officially. Later, Parvanov opened a Qatar-Bulgarian business forum. The Bulgarian president offered about 30 Qatar businessmen, participating in the forum, cooperation in six fields – energy, infrastructure projects in the Balkans, tourism, military-defence industry, research, extraction and processing of metals and new technologies including management software. Parvanov gave five reasons to convince the Qatar businessmen to invest in Bulgaria: membership in the EU, good relations with neighbours, economic and political stability, attractive tax legislation and qualified personnel. The commercial balance between Bulgaria and Qatar is only about a quarter million dollars annually. In many fields, Bulgaria doesn’t have settled relations with the Arab country, which is third in the world, after Russia and Iran, in natural gas reserves. Part of the problems will be overcome with the signed contracts for mutual encouragement and protection of the investments, agreement for cooperation in tourism and memorandum between the ministries of foreign affairs, which will provide for opportunities for opening embassies.

BGN 2.1M state aid for Miroglio's project

 

The state will provide BGN 2.1 million additional funding for Miroglio's investment project near Yambol, the government has decided. The Italian company opened in August 2007 a BGN 73.5 million textile plant in Yambol and the project was awarded a first-class investment certificate. The state aid will be used for the setting up of a 1.2-km road in the industrial part of the town leading to Miroglio's new plant.Yambol Hliab, Hydraulic Elements and Systems, Sadko and Papas Olio also operate production facilities within Yambol's industrial zone.

 

 

 

 

 

Plaza Centers NV announces its first investment in Bulgaria

Plaza Centers NV announced it made its first investment in Bulgaria with the acquisition of a retail development project in Bulgaria Shumen, Reuters reported.The development budget for the retail centre was estimated at 38 million euro. The centre was to include shopping and entertainment areas.Plaza Centers expected to complete the project by late 2009, Reuters said.The investment in Shumen was to strengthen its position in South-East Europe after recent acquisitions in Romania and Serbia, where it was developing seven sites in total, Plaza Centers said.

Bulgarian Ecoprocess unveils �821,000 tyres recycling plant

Bulgarian firm Ecoprocess opened a $1.2 mln (821,000 euro) plant for recycling used car tyres into pyrolytic oil, carbon powder, methane and steel wire, company’s executive Todor Velikov said on November 19, 2007. The plant, which is located in Dobrich, northeastern Bulgaria, is the first of its kind in Europe. It uses a patented environment-friendly technology. It has the capacity to process 12 tonnes of used tyres a day. The plant can use the output for the generation of power, which it can sell to the national power grid operator NEK. The investment firm Small Enterprise Assistance Funds (SEAF) has provided some of the funds for the plant’s construction. Germany has already contracted Ecoprocess to apply its technology. The Bulgarian firm is also in talks to introduce the innovation in Kuwait and Croatia. Under data of the environment ministry, Bulgaria dumps some 60,000 tonnes of used tyres a year.

Key Austrian investor in local rafinery quits

Bulgarian company Petromaxx has delayed the start of a planned 30,000 barrels per day oil refinery and a leading investor in the scheme is leaving the project, a company official said on Wednesday. The startup of the refinery in northeastern Bulgaria has been put back a year and a half until the middle of 2009, Vladimir Nenchev, manager of the Bulgarian company, told Reuters. This is the second delay of the planned plant at the Danube river town of Silistra due to longer-than-expected construction of a gas-fired power plant needed to operate it and regulatory approvals. Nenchev said the 60-megawatt power plant should be ready by the end of next year, allowing tests at the refinery to start and become operational in May-June 2009."We are delaying the refinery for a year and a half, until May-June 2009, because we needed to build a bigger thermal power plant and we had to wait for its license," Nenkov said.Nenchev said the key investor in the plant, Austrian oil trader Petromaxx Energy Group, plans to leave the project and is in talks to sell its stake in a deal that should be finalized by the end of the year. He declined to elaborate, but said that the project, now estimated to cost $240 million, would not be halted or blocked due to the change in ownership and is backed by Belize-registered Vladimpex Group. "The Austrian investor is exiting the project. The new structure that will be behind the refinery will be clear in the next three to four weeks," he said. Nenchev said the company has a contract with Russia's oil firm Rossgaz to supply it with crude oil and the shipments will start six months before the launch of the refinery.Bulgaria currently has one operational 140,000 barrels per day (bpd) refinery, controlled by Russia's LUKoil, which supplies about 80% of the country's motor fuel needs. Last month the new owners of the Balkan country's bankrupt oil refinery Plama said they plan to restart production in six months and process initially 600,000 tons (about 12,000 bpd) of crude per year. It plans to expand capacity to two million tons a year in the next year and a half. Nenkov said the domestic demand for refined oil products was increasing and did not see a challenge to his project from the planned restart of Plama or the operations of LUKoil's refinery. Petromaxx plans to cover some 15% of Bulgaria's fuel needs.

 

Aladin co to invest in new Pleven retail center

Local company Aladin said it has began buying land for the construction of a retail complex in Pleven, Northern Bulgaria.The developer has already acquired a 1,045 sq m lot in the 1.7 ha patch of land where the scheme will be sited.Aladin intends to team up with other investors for the project with unnamed price tag. The area where the retail center will be built has attracted a number of foreign investment funds, elevating asking sale prices for undeveloped land to around 50 euro/sq m, said Pleven area realtors.One large-scale property listed for sale in the vicinity is a former foundry with a built-up area of 4,000 sq m. The property, valued at 2.5 mln euro, has caught the eye of an unnamed investor with plans for a shopping mall, said a Pleven-based real estate agency. Aladin is currently building Mall Pleven in the city. It should open for business in 2009.

Maison Creative co to invest �8 M in Plovdiv residential scheme

The Maison Creative company will invest 8 mln euro in a 68-house compound near Bulgarian city Plovdiv, said company manager Zhanet Videva.The residential complex is the first local project that will be developed by Maison Creative for which it has been specially incorporated.The first houses in the Teres complex have already been completed.Each house has an individual zoning plan and the new owner will acquire not only the house itself but the entire property.The 10 ha Teres is located 6 km from Plovdiv. It will be fully ready in three years.The wastewater treatment station of the complex will be in place by the end of 2008. For the moment, Maison Creative is not developing any other projects, said Videva.According to the registration file of the company, it is 29%-owned by Videva while the majority stake is held by Luxembourg-registered Bul Invest.

Doverie Obedinen Holding to invest in hospital chain

The local Doverie Obedinen Holding is considering investing in a chain of 5-6 hospitals. The holding owns the Doverie health insurance fund which operates one hospital in Sofia. According to Ognyan Donev, deputy chairman of the supervisory board of the holding company, the National Health Insurance Institute will lose its monopoly within 2-3 years, ushering in a fully-fledged market for medical services as is the practice in all European states. Donev, who is also executive director of drug maker Sopharma, said the company plans to enter the German market but that would happen no sooner than two years, the usual timeframe for the regulatory clearance of a foreign drug. Sopharma also intends to strengthen its foothold in the Balkans. After buying a plant in the Ukraine, the company is in talks to acquire more assets in Bucharest and Belgrade.

Direct Investment in Bulgaria reaches �3.8 Bln in Jan – Sept 2007

According to preliminary data, direct investment in Bulgaria stands at 3.807 bln euros (14.2% of GDP) for the Jan – Sept period this year, versus 2.985 bln euros (11.9% of GDP) last year.Attracted equity capital (acquisition/disposal of shares and equities in cash and contributions in kind by non-residents in/from the capital and reserves of Bulgarian enterprises and receipts/payments from/for real estate deals in the country) amounts to 2.517 bln euros and accounts for 66.1% of all foreign investment in the country. This is 1.249 bln euros above last year's figures (1267.2 mln euros). Equity capital also includes proceeds from real estate sales to non0residents, which came to 1.256 bln euros, against 787.2 mln euros in the respective period 2006.Attracted equity capital in privatization deals with non-residents, owning more than 10% in a Bulgarian enterprise, stood at 86.5 mln euros. Equity capital from other types of transactions amounts to 2.43 bln euros, versus 1.24 bln euros a year ago.Other capital (the change in the net liabilities of the direct investment enterprises to the direct investor on financial loans, suppliers’ credits and debt securities) stood at 1.05 bln euros, compared with 1.511 bln euros for Jan – Sept 2006.According to preliminary data, reinvested earnings (the share of non-residents in the undistributed earnings/ loss of the enterprise) totaled 240.9 mln euros for the period, compared with 207.2 mln euros a year ago.By country, the largest investments in Bulgaria for the period came form Great Britain (15.4%), Austria (8.6%), and Belgium (8.5%).

 

Belgian investor to build village near Plovdiv

 

Belgium's Maison Creative will build an EUR 8 million satellite village near Plovdiv. The start of the project was announced by the Belgian ambassador to Bulgaria, Philippe Beke. The complex will be located 6 km from the city, near the village of Radinovo and the Maritsa industrial zone. The project will be the first Belgian investment of this type in Bulgaria.The village will be named Teres, after the Thracian king. It will be built on a total area of 10 ha and will include 68 one-family houses, a park and tennis courts. The houses will be sold together with the land. The price of a square meter of built-up area is EUR 825, the land costs EUR 45 per sq. m. Senior Bulgarian and foreign managers in the region are viewed as potential clients of the project.

 

 

 

COMPANIES:

 

Bulgarian companies suffer shortage of qualified staff

 

Bulgarian companies are suffering a shortage of qualified staff and this increasing tendency is alarming for most owners and managers, BTA reports. This emerged at a round table discussion on major issues related to the efficient management of human resources in Bulgarian enterprises in connection with this country's EU membership held in Sofia, the organizers Bulgarian Business Network Association (BBN) said on Sunday in a press release.The shortage of staff for the business stands at 17 per cent already. Every fifth place in the companies is not occupied. BBN managers are convinced that there is no unemployment in Bulgaria; just the opposite, there is an increased demand of competent and disciplined employees in all spheres of Bulgarian economy, the press release added.The migration to economically stronger EU regions, the ageing of the population and the negative population growth are also factors, which influence negatively the labour market.According to the business, the excessive decreasing of the unemployment level below 7 per cent is also not a good tendency. It was underlined that the current level of unemployment in Sofia is about 2.2 per cent, which means that the criterion of selection of staff is seriously decreased and the companies employ staff that is not sufficiently trained and qualified.The company owners and managers present at the discussion were unanimous that recently the business climate in Bulgaria is favourable.

 

Twelve world companies have demonstrated interest in water sector

 

12 world-known companies have demonstrated interest in public-private partnership in the water-supply and sewerage sector in Bulgaria. They are waiting for the procedures to start in order to apply officially, Plamen Nikiforov of the ministry of regional development and public works told the Pari daily.The companies have responded to a tentative notice published in the Economist earlier this year. We expect that Bulgarian companies will show interest in the procedures, too, they only have to prove they have the necessary capacity, Nikiforov added. In his words, the state can set up partnerships with consortiums between Bulgarian and foreign companies as well.The new law on water supply and sewerage has to be adopted before the pilot project can kick off. The state is likely to choose a partner six months after the law is approved, most probably in early 2008, deputy regional minister Dimcho Mihalevski said.There are a total of 29 state-owned or state-and-municipal companies, six of them are suitable for public-private partnership. According to a report of the International Finance Corporation of the World Bank Group, these are the utilities in Stara Zagora, Bourgas, Plovdiv, Dobrich, Pleven and Lovech. They have been chosen on the basis of 40 criteria, including the condition of the water-supply and sewerage network, the investments needed for modernisation, the attitude of the local authorities and consumers towards public-private partnership.

 

Orbitel wins first Bulgarian court case over comparative advertisement tactics

Orbitel won the first court case over comparative advertisement in Bulgaria at the Supreme Administrative Court (SAC), mediapool.bg said.In its motivation, the SAC said that Orbitel had operated as a loyal competitor, its use of comparative advertisement tactics had been aimed at helping clients to compare offers from different companies and to make it easier for them to choose.Subject of the court case was Orbitel's advertisement for its business telephone offers, in which it used a character referred to as "drugiya Lyubo" (the other Lyubo). The advertisement used slogans like "And he is also called Lyubo, but he has a wife and a mother-in-law" and "Beshe TaKa" (was like that). Bulgaria's former state-monopolist and Orbitel competitor, BTK filed a complaint with the Commission for Protection of Competition (CPC) when it questioned the fairness of Orbitel's comparative advertisement tactics.BTK argued that with the "drugiya Lyubo" clip, Orbitel suggested that BTK clients paid inflated prices for their services. CPC agreed with the arguments and imposed a 10 000 leva fine.Georgi Kourtev, head of PR and Corporate Communications at BTK said BTK wanted to send a signal that it was not fair to fool clients. No appeal was possible against the decision of the SAC and Kourtev said that this was where the case would end for BTK.

Sopharma continues its foray into eastern Europe

 

The investment activity of Sopharma brought several successful investments in October. First of all the company managed to subscribe for 108,500 shares during the IPO of the Lithuanian company Olinepharma, representing 0.8% of its capital. Sopharma stepped onto the Baltic market as well. And its product Tabex� for treatment of nicotine addiction became the first original Bulgarian product on the Serbian market. Sopharma is already present on the market in Turkey. Metilprednizolon, registered there, is an anti-inflammatory and anti-allergy medication, used in emergency medicine in serious shock and chronic cases that cannot be cured by standard treatment. Due to the strong competition on that market that is a serious break-through for the company and is the first Bulgarian product, registered in Turkey. In end-September the Bulgarian pharmaceutical producer and the Polish company for production and marketing of medicines Natur Product Zdrovit OOD signed a contract for setting up a joint venture in which Sopharma will be the leading shareholder with a 50.01% share. After its successful privatisation in September 2000 the company is among the leading pharmaceutical producers in Bulgaria. A total of 110 medicines from all pharmacotherapeutic groups make up Sopharma's product portfolio. Towards the end of September Donev Investments AD owned 25.64% of the pharmaceutical enterprise's capital, 23.77% was in the hands of Telco AD, and Telecomplect AD was holding 20.42 pert cent. Sopharma has a one-tier management system with a BoD of five members. Mr. Donev is BoD Chairman and Executive Director.

 

Germany's Klockner given green light to buy Metalsnab

 

The Commission for Protection of Competition (CPC) has allowed Germany's Klockner to acquire the controlling interest in Bulgaria's Metalsnab Holding. According to the anti-trust body, the market shares of the parties to the deal are below the dominant position threshold and the planned concentration will not affect the markets concerned.Klockner is an established international metal distributor. The deal is part of the group's strategy for expansion in Central and Eastern Europe. The financial parameters of the deal were not announced.According to recent publications, Klockner will acquire 77% of the Bulgarian company. Currently the German group holds 7% of the holding. The company plans to modernise Metalsnab's production, logistic and information systems.

 

Holding Patishta's earnings grow more than 3 times in Jan – September 2007

 

The consolidated Jan – Sept profit of Holding Patishta rose more than three times to 16.65 mln leva (8.513 mln euros), versus 5.43 mln leva (2.776 mln euros) a year ago, the company's report reveals.The good result is mainly due to the doubling in consolidated revenue – from 42.88 mln leva (21.924 mln euros) last year, to 92.52 mln leva (47.304 mln euros) at the end of September 2007. Revenue from services rose from 34.54 mln leva to 67.15 mln leva.Production sales surged more than 7 times – from 1.01 mln leva, to 7.46 mln leva between Jan – Sept this year. 8.21 mln leva was reported as Other Revenue. Interests brought the company 921 thousand leva, against 133 thousand leva for the respective period in 2006.Costs grew more than twice – from 37.43 mln leva (19.137 mln euros), to 75.8 mln leva (38.755 mln euros) for the first nine months of this year. Their increase was mainly attributed to rising costs of materials, external services (which nearly doubled) and payroll.Costs on interest payments also grew ro 3.25 mln leva compared with 524 thousand leva for the respective period a year ago.Holding Patishta JSC has appointed a general meeting of shareholders December 11, which is to vote a proposal for a 1:25 split.This was announced in mid-October by the chairman of the Board of Directors Orlin Hajiyankov during the official presentation of the company's strategic objectives before investors.At the moment the company has a capital in the amount of 432 thousand leva, allocated in 17,280 shares with a face value of 25 leva.

 

ANALYSIS:

The road of EU money passes through the Balkans

Publication: Banker Weekly English
Provider: Financial Information Agency

 

Some experts claim that Bulgaria is in a more favourable position as compared to other countries, such as Romania for instance, which still has not approved programmes yet. However, that is not a cause for euphoria because our country has a grave experience regarding the absorption of the EU pre-accession funds. In the period before Bulgaria joined the community only 20-30 of the approved projects were implemented to the end. Despite the considerable percentage of advance payments a few companies succeeded to ensure their own money or borrow a loan in order to carry out the project they have proposed. The same problem exists now for the absorption of money from the structural funds. It is even more serious because as it was said the company applying for financing from the EU should initially ensure itself all the money for the investment and to count on the EU funds only afterwards. Here comes banks' participation The Ministry of Economy and Energy was the first managing body for an operative programme - Development of Bulgarian Economy's Competitiveness in 2007-2013 - which has offered cooperation with credit institutions. The framework agreements between the ministry and banks, however, have not been signed yet because specification of details is still not completed. The overall idea is that the candidates for a free grant under the respective programme should first of all apply to banks which will play the role of evaluators of various projects. Bank experts should examine them and appraise if they are realistic from a financial point of view and if the candidates satisfy the programme's criteria. If the credit institutions establish that the business project meets the set terms, they will issue a document, obliging them to finance it, but only in case it is approved at the following stage as well. The fees, charged by banks for examination of the documents of firms willing to get loans under EU projects are different. DSK Bank, for instance, charges BGN80 for a credit between BGN40,000-80,000. The fee for bigger amounts is 0.15% of the size of financing, but not more that BGN1,500 or EUR750 if the loan is in euro. UBB's fees start from BGN40 and reach BGN200 when the credit is between BGN100,000-500,000. For higher amounts the fee is 0.15% of the money the client demands from the banks, but not more than BGN3,000. UniCredit Bulbank's charges amount to 0.1% of the demanded credit, but the sum cannot be below BGN200 and over BGN3,000. The fees of Raiffeisenbank (Bulgaria) start from BGN100 and reach BGN500 for loans exceeding BGN500,000. When the requested credit is in BG levs the bank negotiates the fee with the client, and it depends also on the kind of guarantee the candidate offers. If the applicant has own money the credit institution only has to issue a bank reference. That is practically a reference for the bank accounts which the firm keeps and for the way in which the candidate services his liabilities if he has such. Principally, the reference is a certificate about the clients solvency. But it is largely conditional and afterwards it might turn out that the applicant does not have the necessary resource to implement the project. That is why some banks insisted to introduce as a requirement an escrow account in addition to the reference, in which a certain resource of the project's executor should be blocked and serve as a guarantee for his solvency. But keeping such an account might turn out a great burden unless the Ministry of Economy and Energy undertakes necessary measures for the evaluation of projects within maximally short terms. Experts claim that the normal term for getting a reply is two or three months. In the beginning of July 2007 twenty one credit institutions signed a memorandum with the Agriculture State Fund Under it, farmers entitled to financial assistance under "Scheme for Uniform Payment per Land Plots" will have the possibility to draw bank credits before their subsidies from the EU are remitted. The annual interest rates which banks calculate on the loans released to agricultural producers and firms applying for financing under the EU programmes vary for the different credit institutions and depend on their policies and are between 8% and 10 per cent. However, the candidates for such credits should be aware that the money from the EU funds they apply for do not cover their expenses for payment of the interest on the loans. Agriculture Minister Nihat Kabil and the representatives of credit institutions agreed also on cooperation for the programmes Development of Urban Regions and Development of Fisheries. Many banks have already offered on the market their own specialized products They can be generally divided into three groups: for pre-project financing, for bridge financing, and for financing to firms in periods when the State has not refunded to them the paid VAT. According to Milena Trifonova, Director of Institutions and EU Funds department of UniCredit Bulbank pre-project financing is mostly suitable for the municipalities. In her words, the expenses for preparation to apply for a programme are between 5 and 10% of the investment's worth. As the practice has so far shown it is between BGN500,000-1,000,000 for firms. That means it will be hardly difficult for them to ensure the necessary money for drafting the projects with which they apply for the EU money. However, things with municipalities are different. Their projects are expected to cost some EUR10MN-20MN, and a few municipalities could afford to set aside in their budget several thousands of BG levs for feasibility studies. They need credit institutions' loans to finance their preparations. Banks' main product connected with the process of absorption of EU money are the so-called bridge credits The approved candidates for EU subsidies may get bank financing amounting to the free grant to be allocated to them afterwards by the EU funds. The pledge of the future receivable serves as a guarantee for the loan. Additional guarantee may be required as well, depending on the client's solvency. According to Ms. Trifonova, however, the bridge credit in its pure form is not always sufficient. Therefore, credit institutions have worked out products providing financial resources, bigger than the expected subsidy. The size of the loan, of course, depends on the evaluation of risk. "If the firm generates the necessary money flow, if it has a fair credit history, and if the bank knows it, it could get a loan covering the entire investment", Ms. Trifonova explained. The third product - credit for payment of VAT is necessary not only because the firms realizing the project pay VAT for the goods and services, provided by their suppliers. And quite a long time passes till the State refunds it to them - four or five months, or even more. During that period the company needs money for working on the project and that can be provided by the credit in question. The banks that started offering these products on the market are: UniCredit Bulbank and DSK Bank. Another bank which announced its entrance onto that segment last week is Raiffeisenbank (Bulgaria). And MKB Unionbank explained they were working out a specialized product for the Development of Bulgarian Economy's Competitiveness in 2007-2013 programme. UBB and other banks have also launched large-scale programmes for work on projects financed by EU funds. Bankers explain that the issuance of bank guarantees and crediting is just one side of the medal on the other side are the need of consultations and assistance in the preparation of qualitative products. Candidates for subsidies should have access to adequate information about the programmes and about how they could best combine their projects with the respective bank product. Each credit institution has found for itself a way to satisfy that necessity. The players DSK Bank, for instance, following the example of its Hungarian owner OTP Group, set up a subsidiary - DSK Bul-Project - which offers consultancy services in developing and implementing projects. In the end of last week Raiffeisenbank (Bulgaria) also announced it would establish an European Funds specialized unit for assisting business. Other banks closed framework agreements for cooperation with specialized firms. Some ten days ago UBB signed a memorandum for mutual assistance with 15 organizations and firms, specialized in the development of EU projects. A similar scheme has been adopted as well by MKB Unionbank. Milena Trifonova said that about two years ago UniCredit Bulbank agreed cooperation with 36 companies, specialized in various spheres, which were picked out in a tender. "Our group's concept is that if the project is being drafted and financed by one and the same institution, that could lead to a conflict of interests. Therefore we make a decision to set these activities apart. When a client comes to us he gets a pay-free consultation from our European Financial centre first. Then, if he wants to, he is directed to any of the firms we cooperate with", she explained. The banks have obviously already created the necessary organization, products and structures in order to actively take part in the absorption of money from the EU funds. It's the Government's and the businesses' turn now to do their job. Then it will be certain that the billions of promised euro from the EU would indeed enter Bulgaria and our economy.

 

EBRD plans to invest �1.5 Bln in renewable energy and energy efficiency projects in CEE

Publication: SeeNews
Provider: AII Data Processing Ltd.

The European Bank for Reconstruction and Development (EBRD) plans to invest 1.5 billion euro ($2.2 billion euro) in renewable energy and energy efficiency projects in central and eastern Europe (CEE) in the next three or four years, EBRD director for Bulgaria James Hyslop said.The amount of money each country in the region will receive under the bank's investment programme depends on the particular projects in that country, Hyslop told SeeNews in a recent interview.In fact, we do not have any upper limit. Usually we finance about 35% of the project, but if it is worth the figure can increase to 80%," he said.EBRD said in late October it plans to extend credit lines worth a total 100 million euro to banks in EU newcomers Bulgaria and Romania to help their industries become more energy efficient.EBRD has three core areas of activity in Bulgaria: energy sector, corporative sector and infrastructure", Hyslop said.We are looking to invest in renewable energy projects, aimed at diversifying the energy supply of the country", EBRD power and energy principal banker Georgios Giaouris told SeeNews.Bulgaria leads the region in terms of EBRD efforts to promote energy efficiency and cut costs for businesses. Over the last few years, the bank has put 150 million euro into credit lines for energy efficiency projects for industrial and residential use in the country.EBRD will also target promoting cooperation among countries in the region and intensifying electricity trade in Southeastern Europe. The bank will also focus on helping the region modernise its electricity distribution networks.EBRD is in discussions for electricity distribution network upgrade projects in the Former Yugoslav Republic of Macedonia and we will be looking to participate in the privatization of the electricity distribution network of Albania, in a similar manner to our involvement in Bulgaria," Giaouris added.EBRD primarily assists local businesses to expand and become more competitive. We are committed to provide more funding options [...] and equity," Hyslop said.The bank prefers to work with private companies with big projects, as it is difficult for it to take part directly in small projects. In September EBRD said small firms in Bulgaria and Romania can benefit from trading in carbon dioxide (CO2) emissions by coupling their projects and applying jointly for financing along energy efficiency credit lines.Under the Kyoto Protocol, countries and companies with excess CO2 emissions, which they find hard to cut, can buy credits from other firms or states, and thus keep their emissions within the allocated allowances.In September EBRD agreed to buy from Bulgarian hydro power plant operator Vez Svoghe 336,462 tonnes of CO2 emissions, and couple of days later it signed a similar contract, for some 1.1 million tonnes of CO2, with the water utility company of Bulgaria's capital, Sofiyska Voda.

INFRASTRUCTURE, RENEWABLES

EBRD also plans to participate in other infrastructure projects in Bulgaria such as the construction of roads, railways and ports.Our strategy also involves taking part in building and expanding low-pressure gas distribution networks as a way to diversify the energy needs of the households and industry," Giaouris said, adding that the bank is in talks with a number of companies but no concrete projects have been signed yet. Low-pressure gas networks supply propane-butane gas directly to households and can significantly reduce the consumption of electricity.Bulgaria can develop wind parks and mini hydropower plants, as a result of its geographical advantages [] the costs of building of photo-voltaic parks on a large scale is still too expensive and their implementation requires a combination of incentives and support by the state, including preferential tariffs. EBRD is currently considering the financing of a cascade of nine mini-hydros along the river Iskar in Bulgaria," Giaouris said.Energy experts say Bulgaria should focus on the development of renewable energy projects to cut its high dependence on energy imports which it now needs to keep its economy running. The EU newcomer has to cover 11% of its gross domestic energy consumption by renewable energy sources by 2010, compared to about one percent in 2005, in order to comply with EU directives. Bulgaria joined the EU in January 2007. The installed capacity of active wind parks in Bulgaria is expected to reach some 70 MW by the end of this year and rise to some 200 MW by 2010.The State Energy and Water Regulatory Commission (SEWRC) has set up the buyout prices of wind and sun-generated electricity at 175 levs ($126.7/89.5 euro) per MWh and 720 levs per MWh, respectively. Bulgaria's power grid operator NETC is bound by law to buy the electricity generated from renewable sources at preferential prices for a period of 12 years. The country closed down a second pair of Soviet-made 440-megawatt reactors at its sole nuclear power plant Kozloduy at the end of 2006 to address nuclear safety concerns voiced by the EU. The closure left Kozloduy with two operating reactors of 1,000 MW each and reduced Bulgaria's power exports to a trickle. Before the closure Kozloduy generated about 40% of Bulgaria's electricity, enabling the country to cover over 70% of the power deficit of its neighbours.