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Bulgaria Love/불가리아 뉴스

불가리아 주요 경제뉴스 ( 8 – 15 FEBRUARY 2008 )

KBEP 2008. 2. 15. 18:27

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 8 – 15 FEBRUARY 2008 )

 

 

Sections/headline briefs:

 

MACROECONOMY:

 

·        Center for Economic Development forecasts 6% GDP growth in 2008

·        PM: Bulgaria to consolidate energy assets by year-end

·        Japan grants Bulgarian ports �238 M loan for new terminals

·        EU-sponsored campaign for Bulgarian wines on the Asian markets

·        EU subsidies for vineyards

·        Wine-making sector to receive more money than it can absorb

·        Bulgaria to buy tankers for oil pipeline

·        Construction of Burgas-Alexandroupolis oil pipeline could finish 2012

·        After 'South Stream', Bulgaria starts actions on 'Nabucco' Project

·        Program for sustainable development of Bulgarian enterprises to be presented in Sofia

·        Bulgaria leads in online reservations for 2008

·        Only 3% of Bulgarians go shopping online

·        2007 industrial production 8.5% up Y/Y

·        Tourism to yield � 6 B in 2013

·        Financial intelligence hampers crime combat

·        Grey economy at 30% in fuels sector

·        Bulgaria still blacklisted as intellectual piracy heaven

·        Bulgaria closes duty-free shops after Brussels critics

·        More than 4,000 new vehicles sold in January

·         Logistic service prices remain high

·        German logistics official: Bulgaria on the right track

·        Bulgarian yellow cheese weakens its market positions

·        Producers vs large retail chains

·        Speculators may trigger new price bubble

·        Die Presse: 'Bulgaria - a building site without builders'

·        Bulgarian oil and gas association demands establishment of competitive environment

·        Burgas airport passengers up 323%

 

INVESTMENTS:

 

·        Investments in Bulgaria - mainly in tourism and real estate

·        CED: Bulgaria foreign investment growth to continue in 2008

·        Sofia hurries to renew water sector

·        CSFI fund to invest �500 M in real estate, energy, manufacture and finance

·        Spain's Riofisa to build commercial centres in Bulgaria

·        Spain's Cyes to invest in Pleven area water sector

·        Spain's Bogaris to invest �15M near Rousse

·        Investors in Bansko legalise projects in Sofia

·        Ceres to make investments for � 20M in 2008

·        Bulgarians invest � 563 M in mutual funds

·        Pamporovo builds longest ski-run net on the Balkans

·        British developers to invest in Banya village

·         German company to produce bio-fuel in Bulgaria's Targovishte

 

 

 

COMPANIES:

 

·        Five energy companies to form Bulgarian Energy Holding Company

·        German companies eye Ivailo ordinance plant

·        CityGas plans 1000 km gas pipelines in 5 years

·        Raiffeisenbank, Overgas to launch joint service

·        Companies bid for a private healthcare fund

·        Germany's Hochtief signs �23 M water deal in Bulgaria

 

 

 

ANALYSIS:

 

·        Tips for buying home in Bulgaria

·        Lost in European directives

·        Rising end-year consumption, imports widen Bulgaria's C/A gap in December

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Center for Economic Development forecasts 6% GDP growth in 2008

Bulgaria's economy would grow by a real six per cent in 2008, fueled by continued growth in the industry and services sector, as well as the recovery of its agriculture, economic policy think tank Center for Economic Development (CED) forecast on February 12 2008.Incoming EU structural finds would also have a positive impact, CED representatives told a news conference at which they presented a report on Bulgaria's economy in 2008.The think tank's experts believe Bulgaria's economic growth to have slowed down to 5.5 per cent in 2007, compared to 6.1 per cent a year earlier. The National Statistics Institute is expected to release the full-year data in March.CED expects Bulgaria’s current account deficit to exceed 20 per cent of gross domestic product (GDP) for 2007, but projected its growth to slow down in 2008. However, the think tank does not expect it to decrease, since its main driving force, the trade gap, is unlikely to shrink. Even though exports are expected to go up, productivity will remain low and EU subsidies will further boost imports, CED said.Despite the global credit crunch, foreign direct investment in 2008 will reach six billion euro, an increase over last year's 5.5 billion euro, but to keep investors interested in the long term, the Cabinet will have to prove its commitment to structural reforms that would improve the business climate, the report's authors said.CED also believes it unlikely that the combination of factors that caused inflation to jump to a seven-year high of 12.5 per cent at end-December would not repeat itself this year, but still forecast it to remain above the EU average over the next several years.

PM: Bulgaria to consolidate energy assets by year-end

 

Bulgaria will consolidate the biggest state-owned energy companies into a holding company to strengthen its position on the European market, Prime Minister Sergei Stanishev said on Sunday, cited by Reuters.The government will link Bulgaria's dominant power utility NEK, its dominant gas company Bulgargaz, its largest coal mines Maritsa East, the country's largest thermal power plant Maritsa East Two, as well as its sole nuclear power plant Kozloduy."The government has decided to set up a Bulgarian energy holding," Stanishev told reporters after a two-day meeting of the ruling Socialist-led coalition in spa resort in southern Bulgaria."There is a wave of consolidation of the energy sector in the European Union and for Bulgaria to stay competitive, such a consolidation is necessary."The holding should be operational by the end of the year, he said. Its assets will be EUR 4 billion (USD 5.80 billion), and the expected annual revenue EUR 1.8 billion.The new joint holding company will allow the Balkan state to invest in the neighbouring countries and help building and financing of the planned EUR 4 billion, 2,000 megawatt new nuclear power plant at Belene, Stanishev said.

 

 

Japan grants Bulgarian ports �238 M loan for new terminals

Japan Government grants Bulgaria 238 million EUR loan for construction of terminals for container treatment of Varna - East and Burgas - West harbors. This was informed by Japanese Ambassador to Bulgaria Tsuneharu Takeda on Monday, February 11 at a meeting with Bulgaria's Foreign Minister Ivailo Kalfin.The loan will be bestowed by Japanese Bank for International Collaboration in relation with official aid for development.This is the 6th and similar loan to Bulgaria, with highest valuation by now.The project is foreseen to be finished in 2015.

EU-sponsored advertising campaign for Bulgarian wines on the Asian markets

 

Millions of Chinese people will have the opportunity to taste Bulgarian wines which will be promoted on the immense Asian markets with the money Bulgaria will receive from the EU, suggested Plamen Mollov, head of the National Wine and Vine Chamber.
 To him the priorities should be China and Vietnam. "If every Chinese national has only a glass of Bulgarian wine, this will do more than enough for the successful development of the wine business," Mollov said further. Mr. Mollov also believes the wine-drinking tradition has vistas to develop in China and Vietnam. The 166 million euro subsidy from the EU for the development of the sector will be unevenly distributed over the years - less in the beginning, growing over the years. In 2009, 15,6 million euro are envisaged to be absorbed on the programme. In the following year the money will be 21,2 million and in 2011 - 22 million. In 2012, 27 million will be allotted and in 2013 and 2014 the subsidy will be 26,8 million for each year. In the first nine months of 2007 Bulgaria exported 857 hectolitres of wine which is by 21% more compared to the same period of
2006, according to data from the National Wine and Vine Chamber. Out of the exported wine, 68% goes to Russia where the table and semi dry and sweet wines are preferred.
 The more expensive products sell at the Bulgarian market. Presently, there are 270 wine-producers in Bulgaria and in the recent years they have planted about 70,000 ha of new vines."The EU programme for rural regions development will benefit the growth of wine tourism," Plamen Mollov believes.

EU subsidies for vineyards

 

The EU Common Agricultural Policy provides for the allocation of EUR 18 mln to Bulgarian wine producers aimed for the diversification and expansion of vineyards. The subsidy will cover 2 403 hectares. Projects will be accepted till February 19th. Approved applicants might receive the whole amount of the subsidy in advance if they would present 120% bank guarantee. Projects for conversion, replanting or expansion of vineyards have to cover minimum one decare. Maximum aid for relocation of vineyards/he is BGN 40 248/he, for replanting – BGN 26 810/he, for diversification – BGN 40 248/he, Capital Weekly writes.

Wine-making sector to receive more money than it can absorb

 

The President of the National Viticulture and Viniculture Association (NVVA) Plamen Mollov told journalists on Wednesday that Bulgaria will receive from the EU more money than it can absorb in the vine-growing and wine-making sector. "The money in this sector is so much that we will be unable to absorb it," Mollov said.There is only a limited number of consulting firms, and such firms have a special role to play in presenting projects for EU funding, he said.The last five years have seen the creation of 7,000 ha of new vineyards. They have been created mostly under the SAPARD programme. Registered producers total a little over 270. Many of them, however, have not operated in the last few years, said NVVA Chief Secretary Lili Stoilova.Mollov noted that by August Bulgaria is to present to the European Commission a national programme for the development of wine-making. The country's wine-makers will receive 166 million euro from the EU in seven years.More emphasis should be laid on advertising Bulgarian wines in Asian countries, where the market is becoming increasingly attractive as an alternative to the traditional Russian market,Mollov said.

 

Bulgaria to buy tankers for oil pipeline

 

Bulgaria's Technoexportstroy is in negotiations to buy two tankers for transportation of crude oil from Novorossiysk to Bourgas. The oil will feed the future pipeline to Alexandroupolis, the executive director of the company, Emil Kotsev, said. Technoexportstroy and Bulgargas share Bulgaria's 24.5-percent stake in the international project company (Amsterdam-registered Trans Balkan Pipeline BV) that will build the pipeline. Russia holds 51% of the project through Transneft, the remaining 24.5% is held by Greece.The term for feasibility studies and selection of a technology is between six and eight months, the chairman for Bulgaria of the international company's supervisory board, Stefan Gunchev, said. The company that will conduct the studies will be chosen within six weeks. Most probably the project will be carried out by Germany's ILF, Emil Kotsev added. The technology to be selected will depend mainly on Transneft. At any rate preserving the environment will be a priority during the project implementation, Stefan Gunchev pointed out. The construction of the Bulgarian stretch of Bourgas-Alexandroupolis will cost some EUR 500 million.

 

Construction of Burgas-Alexandroupolis oil pipeline could finish 2011-2012

 

The construction works of the Burgas-Alexandroupolis oil pipeline could finish in 2011-2012, member of the Transneft leadership Dmitriy Evstratov forecast at a press conference, cited by Focus News Agency’s correspondent Denka Katsarska.
However, Evstratov did not point to exact periods. He noted Transneft applied strict environmental parameters and if they turned out to be stricter than the Bulgarian legislation requires them to be, the company will build in accordance to its own environmental standards, no matter they are stricter.

After 'South Stream', Bulgaria starts actions on 'Nabucco' Project

The condition of Nabucco project will be discussed by the Parliament Energy Commission and the Economy and Energy Ministry representatives. The discussion's accent will be the European oil pipeline Nabucco acceleration contract, signed on February 5 by the countries - partners ministers, including by Bulgarian Energy Minister Peter Dimitrov. The deputies have to define the structure of the auctioneer capital for the oil pipeline and the terms of construction finalizing.In Nabucco are included 6 countries partners - Austria, Hungary, Romania, Bulgaria, Turkey and Germany.The other accent on the discussion will be the signed with Russia contract of other oil pipeline ‘South Stream' and its realization details.

Program for sustainable development of Bulgarian enterprises to be presented in Sofia

An information seminar on which the Program for sustainable development of the Bulgarian enterprises will be presented, will be held in Grand Hotel Sofia, informed the Bulgarian hotel and restaurant association.Aneliya Krushkova – chairwoman of the State Agency on Tourism and officials from the Swiss embassy in Sofia will take part in the event.The program aims at creating practices in the field of Cleaner production (CP) and Corporate Social Responsibility (CSR).The project is implemented with the financial support of the Swiss government. Partners under this project are the Bulgarian hotel and restaurant association, the Balkan institute on labor and social policy and the Regional tourist association “Stara Planina”.The objectives of the program include increase of the knowledge about the sustainable development of the tourist sector, mainly in hotel management through training of local experts in the field of CP and CSR as well as demonstration of concrete results for the enterprises from the introduction of CP and CSR practices. The longterm aim of the project is distribution of positive experience throughout Bulgaria. The current condition of around 25 hotels in the region of Sofia and Central Stara Planina will be evaluated withing the project. The enterprises will be acquainted with the opportunities for optimization of the expenses and the work with the personnel, which opportunities could lead to better economic results and improved quality of the offered services. The evaluation of the current condition of the tourist enterprises and proposals for the increase of their efficiency and competitiveness will be conducted jointly by Bulgarian and foreign experts.

Bulgaria leads in online reservations for 2008

Bulgaria ranks in frontline in online reservations for season 2008. This was informed after data of one of the biggest German Internet portals weg.de, quoted by expert.bg.This summer season the Germans will remain faithful to classical tourism destinations, comment the German experts.Such summer spots are: Mallorca, Turkey and Egypt. Lately more holiday-makers are attracted by Bulgaria and the Canaries Islands.Flights to Bulgaria became more frequent and prices are now quite more competitive.The reason for more often booking doesn't due to commercial campaign or new management, believe from weg.de.A lot of people talk about Bulgaria, many people who had visited the country and left quite pleasant from the vacation share about their experience. The Germans explain that the hotel basis is very good and many new hotels were recently built-up.

Only 3% of Bulgarians go shopping online

Bulgaria and Romania mark fewer amounts of goods' orders by Internet, shows a special research of ‘Eurostat' by the occasion of today's Internet Safety Day. Besides that every 8th European refuses to purchase in the global network, due to suspicious transaction security.The most active shopping occurs in Denmark (55% of the population). In Bulgaria and in its North neighbor hardly 3% of the users purchase online.People in Spain, Finland and Cyprus are most scared for the security of their proper data and credit cards.‘Eurostat' reports on round 25% of the 27 EU state-members had became victims of virus attack in the last 12 months.Most frequently had been ‘attacked' Lithuania, Slovenia and Malta, and less - the Czech Republic, Estonia and Sweden.

2007 industrial production 8.5% up Y/Y

 

According to preliminary figures for the January - December 2007 period, industrial production increased by 8.5 per cent compared to the previous year, the National Statistical Institute (NSI) told BTA. Production in the processing sector in December 2007 dropped by 2.7 per cent year-on-year. In the mining industry production increased by 8.5 per cent in the period under review while the production and distribution of electricity, gas and water went up by 30.1 per cent, BSI reported. According to preliminary estimates, December 2007 production increased by 1.2 per cent as from November. Production in the processing industry dropped by 3.5 per cent and in mining, increased by 11.1 per cent. The production and distribution of electricity, gas and water went up by 15.9 per cent.Preliminary data also show that in January - December 2007 revenues from sales in the industrial sector increased by 7.8 per cent as of the like period of the preceding year. In December 2007 sales increased by 1 per cent year-on-year. Revenues from sales in the processing industry in December 2007 decreased by 2.3 per cent as from December 2006. The ones in mining went up by 7.7 per cent over the same period. According to NSI, in December 2007 revenues from sales dropped by 0.9 per cent as from the previous month. Sales in the processing industry dropped by 3.4 per cent and the ones in mining grew by 14.3 per cent as from November 2007.

Tourism to yield � 6 B in 2013

A strategy of the Bulgarian State Agency for Tourism envisages that tourism revenues will amount to 6 billion euro in 2013. It is expected that a per-tourist/day yield will rise to 90 euro. In 2007  Bulgaria earned 43 euro per a tourist/day on the average and tourism brought a total of 2.4 billion euro to the country last year. Anelia Krushkova, chair of the State Agency for Tourism and her team expect 2008 will bring 600 million euro more and thus the total revenues from the sector will be 3 billion euro. In the next five years the share of sea tourism will drop to 58% thanks to the development of cultural, hunting, business, winter and SPA tourism, the strategy also reads. Presently sea tourism occupies the leading positions providing 75% of the earnings from tourism in Bulgaria. The yields from other types of tourism in Bulgaria account for  only 25% of the total revenues from this sector.

Financial intelligence hampers crime combat

The organized crime in Bulgaria generates huge financial resources of dubious origin, which are later injected in the country's economy and business. Thus, this financial octopus spreads its multiple tentacles over the Bulgarian economy and state apparatus. For this reason, one of the major priorities of the newly-founded State Agency for National Security (SANS), organized as a counterpart to America's FBI, is to cut down the financial resources of the mafia and to crack hard on the top-placed state officials, who patronize organized criminal structures. These "patrons" take fat commissions from shady deals and infect the state apparatus with corruption. In so doing, they cause considerable harms to the Bulgarian economy and society and often put the national security at risk. In addition to considerable financial means, reliable human resources are also needed in the war on corruption and organized crime. When several special services and their directors are put under a common cap, as is the case with the new security agency, the proteges of some compromised politicians and professionals with dubious reputation may also find a place in the ranks of what is thought to be Bulgaria's most efficient crime combat body. For various reasons, at present there is no effective counteraction to money laundering in Bulgaria and idea of including the Financial Intelligence Agency, headed by Vassil Kirov into SANS contradicts the very concept for the structure and organization of the new security agency.This is the reason that most likely lies behind SANS simultaneous introduction of new mechanisms for investigating money laundering and starting changes of key figures like directors of departments, according to informed sources from the SANS. one of the first to leave is the past head of Financial Intelligence - Vassil Kirov. For the last five years the doings of the Bulgarian Financial Intelligence have been with hardly more than pathetic results. In the BFI there are over 700 un-closed files, according to data from the US reports on the progress made in combating money laundering. Actually the Agency so far has been used only for shielding suspicious money-laundering cases or for political racketeering. Curiously there has not been a single case of a Bulgarian politician found guilty on charges for at least attempting to launder money. For all of the above, the legal expert Vassil Kirov is hardly needed in the new management of SANS. At least for his proneness to butt in rather than help in detection of dirty money laundering, experts believe.

 

Grey economy at 30% in fuels sector

 

Тhe introduction of licensing for fuel distributors, the online connection between filling stations and the tax authorities and the setting up of a laboratory for the testing of the quality of fuels are the mechanisms, which can tackle the grey economy in the fuels sector, Andrey Raichev, chairman of the Bulgarian Petroleum and Gas Association (BPGA), said. The grey economy in the fuels sector has been expanding and already stands 30%, according to the BPGA. The state lost BGN 100 million from unpaid VAT tax in 2007, ministry of finance data show, but the figure is probably twice as much, according to Delchev. The existence of grey economy in the fuels sector questions the investments of the large-scale distributors in the country, according to Dimitar Tortopov, representative of EKO Bulgaria chain of filling stations. The grey sector also affects the quality of the fuels sold in Bulgaria. Some fuel distributors import fuels that do not meet the quality standards and sell them at cheaper prices, which hinders competition, Tortopov added. one of the major problems are the fly-by-night companies, which make one-off fuel imports in large quantities and then disappear without paying VAT. BPGA also opposes the existence of duty-free filling stations, which are considered by the association as unfair-competition creating grounds for corruption. Other companies import duty-free petrochemicals, which are subsequently mixed and sold as fuel. The fuel, however, does not meet the quality standards and discredits the sector, according to BPGA.

 

Bulgaria still blacklisted as intellectual piracy heaven

 

The International Intellectual Property Alliance has recommended that Bulgaria stays blacklisted among the countries where piracy is still alive and well due to continuing concerns regarding high levels of piracy and lack of leadership.The IIPA report, which was issued on Tuesday, says that during 2007, Internet piracy in Bulgaria reached alarming proportions and is no longer a distant second to the longstanding problem of physical piracy.Argentina, Canada, Chile, China and Russia topped the US-based industry group list of countries with the worst record of fighting piracy of copyright goods. Bulgaria's record improved slightly in 2007 as compared to the previous year and the country was taken off the so-called Watch List and put among the countries "deserving special mention".The 2006 trend in Internet piracy of migrating from offering access to illegal content in the free-hosting area towards peer-to-peer (P2P) file sharing continued in 2007, the 2008 Special 301 Report says. The international organization evokes in its report last year's raids on several portals, including www.arena.com and www.zamunda.bg , who were warned to take down their pirate torrent tracking sections. The report points out that criminal proceedings were initiated against the owners of these sites, but neither case has reached the court yet. "These enforcement actions triggered a media debate which revealed that some political officials openly challenged both the government's and the creative industries' effort to fight widespread Internet piracy," IIPA claims. The report points out that there is currently little dialogue between the industry and the Internet Service Providers (ISPs) in Bulgaria, despite attempts to establish cooperation made within Council on IP Protection at the Minister of Culture in 2006 and in 2007.For the business software sector, end user piracy, particularly in the small and medium enterprises, is still the major threat for the software industry in Bulgaria.In addition to Internet and mobile piracy, the massive burning of copyrighted materials on CD- and DVDRs remains a key element of a landscape still dominated by piracy. Indeed, these illegal discs are still easily available, especially in the summer and winter resorts in all major cities, and are allegedly linked with the influence of organized crime elements remains notorious. IIPA blames the continued high levels of piracy on the prosecutors and the courts, who in practice "consistently fail to treat copyright infringements as serious crimes". Unjustified delays permeate the process, and the whole system lacks transparency, the report says, adding that only recently have senior Bulgarian prosecutors shown a welcomed willingness to improve this situation, but much more needs to be done.

Bulgaria closes duty-free shops after Brussels critics

Bulgaria's triple coalition (BSP, NDSV and MRF parties) decided to close duty free shops in the country. This was informed by Bulgaria's PM Sergei Stanishev on Sunday, February 10. He added that the decision was taken after criticism and suggestions of corruption in EC's latest report, The Sofia Echo reported.The suggestion was accepted at a meeting of the leaders of the three ruling parties right after the meeting of the political council last weekend in Hisarya, media said.The decision was taken after the Minster of Finance, the Internal and Foreign Ministers presented concrete information about duty free issues on the meeting - discussion in Hisarya.The duty free shops will be closed after local Finance Minister Plamen Oresharski proposes amendments to the law.

More than 4,000 new vehicles sold in January

A total of 4,039 new cars were sold in Bulgaria in January, according to statistics provided by the National Union Of Automobile Importers. Together with motorcycles, buses and trucks the figure grows to 4,309. Back in January 2007, the number of new vehicles sold stood at 3,209, of which 3,067 cars. The Bulgarian importer of Toyota - Toyota Balkans leads the sales this January (452 ), followed by Moto Pfoe (Ford) and Posrche BG (Volkswagen). More than 300 slaes are also reported by Opel and Peugeot, followed by Dacia, Citroen and Chevrolet. 270 buses and trucks were bought last month. The leaders on this segment are Iveco and Mercedes with market shares at 44.07% and 30.37% respectively. Motorcycle sales, which are usually very slow in winter, totaled just 15. Ten of those were Peugeut and the rest – Piaggio, Yamaha and Honda.

 

Logistic service prices remain high

 

The expectations that logistic service prices will decrease by 20 to 30% in 2007 did not materialise, the deputy chairman of the Bulgarian National Forwarding Association, Ivan Petrov, said at a forum on the problems of logistics, intermodal transport and infrastructure. According to him that was mainly due to the high price of labour at the background of insufficient growth in productivity and the gross domestic product.
Wages in the sector rose by an average of 22% last year, while labour efficiency went up by only 2%. The rapid wage hike was caused by the acute shortage of workforce in the logistic industry.

German logistics official: Bulgaria on the right track

 

The path Bulgaria is following is the right one, Manfred Boes, Vice President of the German Freight Forwarders and Logistics Association (DSLV), said on Wednesday. The statement came at a Transport Logistics, Intermodal Transport and Infrastructure conference, held under the auspices of Transport Minister Peter Moutafchiev.At the opening, Moutafchiev said that the complex character of logistics and the effect it has on the overall optimization of transport routes make it an important factor in raising the competitiveness of the European economy.Boes applauded the country's progress, but noted that the year since Bulgaria's EU accession was too soon to expect drastic improvements. Three to five years are needed for tangible results. Many German logistics firms have been moving into Bulgaria over the last few years to cash in on its strategic location, Boes said, adding that an increase in trade has been noted for this period. He emphasized that logistics and infrastructure development are considered the third most important industry in Europe.Deputy Transport Minister Vesela Gospodinova outlined the priorities of the country's participation in the Marco Polo II Programme.

 

Bulgarian yellow cheese weakens its market positions

 

Statistics shows that the prices of white cheese and yellow cheese endured three significant changes last year. In the first half of the year the market remained relatively calm and producers only predicting bankruptcies and price growths because of their need to meet the European hygiene standards. In July and August, the "prediction" came true and prices jumped up drastically, on the contrary to the usual summer drop. Following the state's attempts to put the price shock under control, prices got more stable in autumn and winter but at levels much higher than those in 2006. Record values were reported for some of the essential goods. one example is the Vitosha yellow cheese which continued to grow more expensive in January 2008. Starting from an average wholesale price of BGN6.73 per kg a year ago, it moved quickly upwards and reported a 28% increase in August and September alone. However, the price increase is going on - according to the Agrimarket Information System (SAPI), in January 2008 yellow cheese price went up 7% in Sofia. In Varna and Dobrich the increase was most insignificant - about 1%, and in Shoumen and Montana a small decrease was registered (by 3% and 1% respectively). In terms of retail prices, the Vitosha type is sold between BGN8.50 and BGN13.90 per kg depending on its quality and producer. In early February, the average retail price in the country was BGN10.41 per kilogram. Logically, a growing number of consumers try to evade the price growth by replacing Bulgarian products with imported ones. For example, wholesale prices of Gauda yellow cheese made in Poland and the Baltic states start from EUR3.50 per kg and in most cases the cheese is of more permanent quality than the Bulgarian products. The producers of white brined cheese are in a much more favourable position, because their product has no imported analogue. But in this segment, too, price growth was record high last year - 36%, the SCCM research shows. Whereas in 1999 (the first year of the analysis) white cheese was sold for BGN3.20 per kg on the average (wholesale price), at the end of 2007 its price already exceeded BGN5. Currently, the lowest wholesale price amounts to BGN3.95 and the highest - to BGN7.50, the SAPI figures reveal. Prices continue to go up - for just one week in January the white brined cheese grew by 3% in Rousse and Stara Zagora. The prices went down in a few towns like Dobrich and Yambol. The average retail price of cow's milk cheese is BGN5.99 per kg, SAPI informed, and sheep's milk cheese costs about BGN7.

 

Producers vs large retail chains

 

The rosy period of unimpeded expansion and concentration of retail chains in the European Union is drawing to an end. Producers and suppliers have finally found a lobby in the European institutions to take measures against the abuse of monopoly by the large supermarket chains.In early February the European Parliament adopted a protest resolution against the abuse of power by the big retain chains under pressure from the European associations of food and beverage producers. They convinced the majority in Strasbourg (438 of 785 MEPs) to sign a declaration, which automatically turns into a parliamentary resolution.The mass expansion of supermarkets and hypermarkets is a relatively new phenomenon and there are no restrictions yet for market dominance, as is in the case of producers. More than 70% of the food market in some European countries is held by four or five retailers, who in practice control the access of farmers and other suppliers to EU consumers. The monopoly affects the producers of all fast-moving consumer goods.In Bulgaria, the problem is still in embryo. Marketing surveys show that the large retail chains account for only 20% of the sales, the vice president of Fantastico, Vladimir Nikolov, said. According to him there are no problems between traders and producers.Sooner or later the problem here will inevitably reach the stage that is currently observed in the EU, the president of meat packer Tandem, Kiril Vatev, pointed out. The pressure of the big chains is increasing every year and this is seen in all sectors, the CEO of Parshevitsa dairy, Dimitar Zorov, said.

 

Speculators may trigger new price bubble

 

Small players and market speculators may push the indexes of the Bulgarian Stock Exchange to new record highs, analysts say. Their expectations are based on the fact that substantial amounts were withdrawn from the market in the past three months. According to different sources, an amount of nearly BGN 500 million is waiting to return to the stock market. The sudden release of so much money is certain to inflate a new market bubble.The prevailing part of professional investors in Bulgaria are of the opinion that a rapid market hike is not very likely but it should not be ruled out. Speculators' actions may cause euphoria, Konstantin Abrashev of BenchMark said. Unlike individual investors, institutional ones have much more investment opportunities and they use them. To a great extent the movement of the indexes in the next few months will depend on foreign investors and foreign markets, observes say.

 

 

Die Presse: 'Bulgaria - a building site without builders'

Bulgaria is a big building site without builders' is the comment of Austrian newspaper ‘Die Presse' about Bulgarian Government's plan of introducing ‘green card' for foreign workers.Bulgaria experiences development now, such as the other Eastern - European countries after entering the European Union. The insufficiency of working force affects not only the low qualified staff. Bulgaria constantly lacks qualified work force, especially engineering staff.The tourism branch is already alarming insufficiency and wants to hire for this year' s summer season workers from Moldova and Russia.' the Austrian paper comments.The foreign investors, who usually pay even much higher salaries, also complain of lack of employees.Though, the Austrian issue also points out that  the ‘green card' initiative doesn't meet positive response everywhere and it is disputable to claim the local labour potential is actually exhausted.

Bulgarian oil and gas association demands establishment of competitive environment

 

Representatives of the Bulgarian Oil and Gas Association (BOGA) insist on the establihsment of a good competitive environment within the law. According to them, one third of this business is in the shadow sector.The state loses 80 to 100 million leva from VAT evasion, BOGA's Andrei Delchev said citing figures of the Finance Ministry on Tuesday. According to representatives of the Association, the actual figure is double as high. The quality of biofuels is not monitored but it is difficult to calculate the loss from selling low-quality fuels, Delchev also said.As EU Member State, Bulgaria is obliged to maintain 90-day reserves. This commitment is honoured by the State Agency for Contingency Reserves and Wartime Stockage and the importer-companies, which have to allocate a certain quantity anually, Delchev said. In his view, however, there are still gaps in the law as, for example, a provision allowing the establishment of companies with the single purpose of effecting one-time big imports. Such companies avail themselves of every opprtunity to evade VAT payment and do not meet their commitment to the 90-day reserve, he noted.Radko Simeonov of Shell Bulgaria said the Association is categorically against the duty-free fuelling stations. This is unfair competition, which does not yield any benefit for the public and creates possibilities for corruption, he said.There are over 3,500 fuelling stations in this country and many of them have been built making numerous compromises in terms of technical and fire safety, said Svetoslav Yordanov of Petrol AD. This is why the Association insists on introducing licensing requirements for this type of business.

Burgas airport passengers up 323%

The concessionaire company ‘Fraport' counts amazing increase of 323% in the serviced passengers until January 2008, compared to the previous 12 months. In January last year round 16,500 passengers passed through the airport.Varna airport data are considerably lower. In January 2007 through the North seaside airport had passed 15,300 passengers , which is growth of 3% compared to January 2008.We remind you that the German ‘Fraport' signed in 2006 a contract for the concessions of the two airports for a period of 35 years.

 

 

 

INVESTMENTS:

 

Investments in Bulgaria - mainly in tourism and real estate

Bulgarian Agency of Investments (BAI) announced the data of direct foreign investments in Bulgaria for the last year. According to BAI accounts the foreign investment in Bulgaria have reached 5.5 billion EUR, which means round 20% increase since 2006. This is a good achievement, which shows enough thrust in Bulgarian economics to generate profits.Some reforms of Bulgarian law-giving, though, was repeatedly delayed, such the trade register. Except that, starting business in Bulgaria is still a complicated and expensive process (investors are demanded a big number of procedures, expends of time and resources). The realized results are not approved in big rate by BAI, because 60% of the investments are directed towards tourism and real estate, which presents 'alarming disbalance' and 'Government has to do anything possible to attract investments in producing'. The motives of such opinion are the search of fast benefit in trade and services areas. In this reason the state support in 2008 will be for bank and softwear projects. Other priority areas will be industry, renewing energy resources, healthcare and education.Though, in BAI opinion, the fixing of priority fields is wrong practice and have to be avoided. What the state have to do is to create good conditions for all investors and to leave the choice of particular business to themselves.The state policy have to be directed towards improving of whole environment of business making. This means lower taxes, decreasing in the demanded permissions and licenses to starts business and better defense of the investors' rights.Except that it is necessary to improve the quality of public services - administration, education and healthcare service.If the Governors want to keep the established positive drift of the last few years, they have to launch actions towards expanding of economical freedom, which will bring benefits as in short terms, thus in longterm plan.

 

CED: Bulgaria foreign investment growth to continue in 2008

 

The influx of Foreign Direct Investment (FDI) will continue to increase in 2008 and could reach 6 bln euro towards the back end of the year, local research institute Center for Economic Development (CED) said in its Q4 2007 overview. According to the CED analysts, there is no reason to anticipate that FDI streams could either be diverted elsewhere or hit a softer patch. 'The country has great potential and remains attractive for investors. There are no indications for an FDI decrease over the long term.' To remain on the radar, however, Bulgaria should engage more actively in structural reforms and should take more hands-on measures to improve the business environment, said CED.

Sofia hurries to renew water sector

 

Sofia Deputy Mayor in charge of investments and construction Irina Savina required to expediate the work on the integrated water sector project, financed by the EU's ISPA programme. She proposed that it should be divided into three stages in order to begin its implementation in the shortest term possible. That happened during the meeting at the Sofia Municipality with Carsten Rasmussen from the EC Regional Policy Bulgaria Н4 directorate, and representatives of the Ministry of the Environment and Water, the Finance Ministry, the State Energy and Water Regulatory Commission, and the Sofiyska Voda water and sewage utility, the municipality's press centre announced. The project for the water sector development in Sofia includes five stations for treatment of potable water, rehabilitation of two water-mains, and six collectors. The project signed on January 11, 2006 between the EC and Bulgaria's Government, is worth EUR58.5M. The consulting company Carl Bro was chosen in a tender invited by the Ministry of the Environment and Water to carry out the project work and technical assignment. Carl Bro began its work in October 2007 and should complete it by end-May 2008. The Sofia Municipality co-finances the project with EUR3.8M. It has also worked out detailed plans of the sites for the construction of water treatment stations, closed contracts with the Electricity Distribution utility for including them in the electricity transit network, and has specified the routes of the collectors and water-mains. However, municipality sources announced that the projects' realization has been delayed due to filed claims regarding the evaluation of the real estates through which the specified routes pass and are liable to expropriation. Therefore, the local authorities have demanded from the Ministry of Regional Development and Public Works to grant the project on Sofia's water sector the statute of a national site.

 

CSFI fund to invest �500 M in real estate, energy, manufacture and finance

The fund of Bulgarian banker Tsvetelina Borislavova, CSFI, plans to invest some 500 mln euro in real estate, renewable energy, industrial manufacture and financial services over the next five years, said Martin Ganev, chief executive director of the investment vehicle. The biggest chunk of the investment resource will be injected in energy project which will also take the longest to implement, said the company official. CSFI, launched in 2005, usually pairs up with strategic investors for the implementation of investment projects. It has accumulated 110 mln euro in assets. The fund intends to bank-roll the projects with its own resources and with borrowed capital. The investment cycle is estimated at for to seven years. In partnership with Spain's Ferry Group, CSFI will invest in a biomass production. The company has so far secured 3,000 ha of land near Vidin and Varna and plans to increase the total area to 10,000 ha. The land will be planted with fast-growing tree used for the commercial production of fuel pellets at two processing plants. The fund intends to spend another 250 mln euro on three wind parks with a combined capacity of 200MW in the area of Kavarna, on the Black Sea. one of the fund's real estate projects is a cluster of banking offices on Sofia's Tsarigradsko Shose boulevard. The four purpose-built bank office buildings will occupy a footprint of 2.5 ha and will have a combined built-up area of 100,000 sq m. Construction is scheduled to get underway in 2008 and take around 24 months to complete. Ganev said CSFI already has preliminary agreements with potential tenants for the bank offices. The fund will also develop a number of retail parks, including purchased locations in Varna, Burgas and Plovdiv. Solid progress has been made on the CSFI retail park development near the Sofia train station. Construction on the 4.0 ha site should begin this year and wrap in 24 months. The fund is in talks with strategic partners in respect of this project with an estimated tab of 90 mln euro. These include France's Carrefour, said Ganev. CSFI also owns 47% in Pamporovo AD, the company that owns the skiing infrastructure in the local resort of the same name. In the vicinity of the resort, the fund will be investing over the next two years in a holiday apartment complex with a built-up area of 100,000 sq m. The area of the new vacation village will be linked with the Pamporovo resort with a for-seat lift and two ski runs. Pamporovo is expected to welcome 25,000-30,000 tourists this season, almost unchanged year-on-year. Some 85% of visitors come from the UK and Ireland. The resort has 32 km of ski courses with seven new runs to be added. New ski runs in the Perelik and Chepelare areas will ensure the resort has the biggest total length of ski runs in the Balkans, said Ganev.

Spain's Riofisa to build commercial centres in Bulgaria

Spain's Riofisa plans to invest in the setting up of 5,6 commercial complexes in Bulgaria in the next few years, Juan Merino, general manager of the Shopping Centre Division of the company, said. Merino presented Riofisa's second project in Bulgaria. It is a commercial and entertainment complex, dubbed Civis Centre, which will be located near Sofia's Central Railway Station. Riofisa's first project of this kind carries the same name and will be implemented in Plovdiv. A contractor for the Civis Centre project in Sofia will be selected within a few weeks. Riofisa also plans to build commercial centres in Varna and Bourgas, as well as a second one in Sofia. Riofisa's interest in Bulgaria dates back to 2006 when the the company acquired am 84,000-sq. m plot at the former locomotive repair plant in Sofia. The Civis Cenre project in Sofia will be implemented in two stages. The first stage is slated for completion in 2010, while the investments are expected to total EUR 270 million. The first stage of the project will include the setting up of a 23-storey tower accommodating hotel and office space, as well as a shopping mall with 77,820 sq. m of gross leasable area, 12 movie theatres and restaurants. The mall will also accommodate a parking lot for 4,000 vehicles. The second stage of the project will see the setting up of residential properties and offices on both sides of the commercial centre. Urbas Guadahermosa, another Spanish investor, plans to launch a large-scale project, which envisages the construction of commercial and residential complex in proximity to Riofisa's project. The implementation of the Civis Centre will also include large-scale infrastructure investments as the complex has no transport links to downtown Sofia.

Spain's Cyes to invest in Pleven area water sector

Spanish construction company Cyes will invest in wastewater treatment plants and the replacement of water supply infrastructure in the Pleven area, it emerged after a meeting between company executives and regional governor Tsvetko Tsvetkov. one of the priorities for the Spanish investor is participation in the 12 mln euro wastewater treatment plant that will service the Pleven municipality. Cyes will also consider the opportunities to join other water sector public-private partnerships in the area.

Spain's Bogaris to invest �15M near Rousse

Spain's Bogaris (former Detea Group) will invest EUR 15 million in the industrial park near Rousse, it emerged after a meeting of Spanish ambassador to Bulgaria, Fernando Arias Gonzales with Mariya Dimova, regional governor of Rousse. Bogaris will design and build manufacturing facilities, a warehouse base and offices in the industrial park. Bogaris is the second Spanish company to do business in Rousse after Keros Bulgaria.

Investors in Bansko legalise projects in Sofia

 

A lot of investors in apartment complexes in the Bulgarian mountain resort of Bansko legalise their projects through a state acceptance commission in Sofia, because the fees are lower, the mayor of the town, Alexander Kravarov, said. After the latest tariff revision, the resort now collects BGN 10 per sq. m for construction permits and BGN 20 leva per sq. m for putting buildings into operation. At the same time the maximum fee charged by a commission of the National Construction Control Directorate (NCCD) stands at BGN 1,000 for the whole building.Millions of leva are thus diverted from Bansko's budget and paid to the NCCD, Kravarov said. However, according to NCCD's deputy director, Georgi Darakchiev, it is natural for developers to choose the state fees, given that they pay some BGN 50,000 to the municipality for a relatively small apartment building.

 

Ceres to make investments for � 20M in 2008

 

Private equity fund Ceres Agrigrowth Investment Fund, which invests in agricultural land will make investments for EUR 20 million in 2008, Svetlan Stanoev, executive director of the company, said. A total of EUR 11 million of the figure will be earmarked for the purchase of arable land. Further EUR 9 million will be invested in farming equipment and in the setting up of two grain storage silos in the Pleven and Vratsa regions. The company currently cultivates 4,000 ha of grain crops in these regions. Some 40-50% of the financing for the planned investments for 2008 will be secured from the EU funds, according to Ceres. The company also plans to get listed for trade on the Bulgarian Stock Exchange (BSE) by the end of 2008. Investments in arable land account for over 90% of Ceres' portfolio. The company plans to own more than 25,000 ha of arable land within the next year or two, according to Stanoev. The value of the land in Ceres' portfolio rose by 30% in each of the last two years, Stanoev said. Ceres Agrigrowth Investment Fund was established in 2006 and is the third largest arable land owner in Bulgaria at present. The company owns 17,600 ha of land mainly in Northwestern and Central Bulgaria. The capital of the fund amounts to EUR 30 million. Raffeisen Centrobank AG, Firebird Management, Black RiverAsset Management, Mezzanine Management and Rosslyn Capital Partners are among the big institutional investors in the fund.

Bulgarians invest � 563 M in mutual funds

The Bulgarians have invested 563 million euro in mutual funds, stated the Director of Pioneer Investments, Yavor Achev. This makes nearly 4% from the assets of the Bulgarian households but it is quite under the average rates for Europe which is 12%. "The development of the financial culture of the Bulgarian nationals is a fact and the investments in mutual funds are expected to reach 7% from all savings in 2009 whereas the mutual funds investments amounted to only 1% in 2005," Mr Achev added further.
 In his opinion, such investments bring more profits than the bank deposits.

Pamporovo builds longest ski-run net on the Balkans

 

Pamporovo, will turn into a place with the longest net of ski runs on the Balkans. The construction of two new 7-km-long pistes 7 is to be launched soon. The size of the investments will be USD9 million. Moreover, the ski runs in Pamporovo will be connected with those of Chepelare and Perelik. The length of the now existing ski runs is about 55 kilometers. The construction of a new villa complex near the village of Stoikite has also been envisaged. The investments will amount to USD29 million. Over 10 million levs were invested in the improvement of Pamporovo infrastructure in the period 2005-2007. Presently, the ski lifts of the complex serve about 8,600 tourists. In 2007, a project for the construction of a new lift with a length of 3 km was approved.

 

British developers to invest in Banya village

 

Professional property developers from Great Britain have been attracted as investors in the Blagoevgrad region. The Brits will be partners to Tempo Group's tour operator, Tempo Holiday. They will build a holiday complex, Pirinea Residence, near the village of Banya.The complex will consist of a hotel and apartment buildings with a total floorage of some 44,000 sq. m. The investment will amount to some EUR 25 million. The four-star spa hotel will have 110 rooms, bars and restaurants, sports facilities etc. Pirinea Residence will include five buildings with 147 apartments, the prices will range between EUR 1,000 and 1,500 per sq. m. The complex is expected to be completed by the summer of 2009.

 

German company to produce bio-fuel in Bulgaria's Targovishte

 

The German firm Fikon intends to build a factory for production of bio-fuels and bio-fuel derivatives (gas, methane, electricity) in the northeastern Bulgarian city of Targovishte. The proposed investment is worth EUR 81 M, and the necessary raw material for the functioning of the factory would be about 300 000 tons per year. The investors intend to use locally grown corn and wheat. About 125 highly-skilled workers are to be hired, and the plant is supposed to be constructed in 14 months. An environment-friendly technology will be used in the production.The German investors chose a plot of 113 decares next to the railway station in Targovishte.The Municipal Economic Development Council in the city approved the German company's offer as a high tech class investment which is also in accordance with Bulgaria's agreements with the EU for the production of bio-fuels.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Five energy companies to form Bulgarian Energy Holding Company

 

Five energy companies will make up a Bulgarian Energy Holding Company, which is expected to become operational by the year's end, the government information service said on Wednesday.The five companies are: Maritza East Mines, Maritza East 2 Thermal Power Plant, Kozloduy Nuclear Power Plant, National Electric Company and Bulgargaz.The parent company's assets will be worth 4,000 million euro,making it one of the region's largest energy businesses. Its annual operating income is projected at 1,800 million euro.The decision was made by the Political Council of the government coalition on February 9-10. The consolidation will increase the competitiveness of the five companies in the regional and the European market, enhance their effectiveness and the quality of energy services, optimize expenditures and management, and ensure modern mechanisms for attracting investments.On Wednesday, Economy and Energy Minister Peter Dimitrov presented a model for restructuring and consolidation of the energy companies, with the State as the sole owner of the capital. Deloitte Bulgaria was awarded a public tender as a consultant in the drawing up of the model.The new entity aims to group together economically stable,flexible businesses with an adequate market conduct, functioning under a single financial strategic management, the government information service said. Other advantages of the holding company are even greater transparency, larger revenues, balanced interests of the shareholders and the subsidiaries.The expected benefits are better investment potential, higher credit rating and a lower cost of capital raising, which will boost growth to levels unattainable by stand-alone, financially weak companies. The new investments will substantially increase the certainty of supplies and will help to meet growing demand.The Bulgarian Energy Holding Company will be 100 per cent held by the State. The Economy and Energy Ministry will keep stakes ranging between 51 and 75 per cent in the five energy companies,while the minority shares (between 25 and 49 per cent) will be transferred to the parent company. The Ministry will hold a controlling interest to cushion the subsidiaries from any risks during the transition period. The restructuring and consolidation model includes establishing a financial(strategic) holding company and preparation for transformation at the level of the individual subsidiaries, followed by transformation into an operational holding company.The key aim is to transfer the corporate management and supervision functions from the Economy and Energy Ministry to the Bulgarian Energy Holding Company. This will involve appointing professional managers and introducing a market-oriented business strategy and transparent decision-making, management and accountability. The transformation of the subsidiaries encompasses the management of finances and investments, productivity, human resources effectiveness and operational effectiveness. This management will prepare the holding company for listing on the local and international stock exchanges and for entry into the  international financial markets.The opening of the European energy market and energy trade integration have led to numerous mergers by acquisition or by the formation of new companies aimed at horizontal and vertical integration of related activities in a single industry, the government information service said. As a result, dynamic energy corporations have emerged across Europe, either as predominantly state-run companies or as private companies.Judging from international practices, non-integrated companies operating in different parts of the energy chain are not successful in the liberalized energy market, the press release said. In the long term, they may have to be gradually privatized or strongly subsidized to deal with solvency problems.

 

German companies eye Ivailo ordinance plant

 

Аn arms company and a construction company, both from Germany, have expressed interest in the privatisation of the Veliko Tarnovo-based Ivailo EOOD ordinance plant, which is part of the TEREM military repair holding. A new procedure for the sell off of self-contained parts of the holding's subsidiaries will be organised in 2008, TEREM said recently. Ivailo specialises mainly in arms overhauls and repairs. The orders of the company decreased significantly after the Bulgarian army was reduced in size. The Veliko Tarnovo-based company owns 39 ha of land and 3.7 ha of built-up areas. Self-contained parts of land and adjacent buildings of the company will most likely be offered for privatisation. Ivailo's main line of business will be preserved, experts say.

CityGas plans 1000 km gas pipelines in 5 years

The CityGas company, which is part of the Italian “GRUPPO SOCIETA GAS RIMINI S.p.A.” plans to build 1000 km gas pipelines till 2013. The investment will be 89 M EUR, informs sgrada.com.The company intends to provide gas supply to the “Thrace” region, part of which are the towns of Plovdiv, Haskovo, Kazanluk, Dimitrovgrad, Radnevo, Galabovo, Harmanli and Simeonovgrad.The project has already been submitted for approval to the State energy and water regulation commission, which should pass its decision within the next week.Last year, “CityGas” gasified the town of Septemvri and started building the gas supply network of Kazanluk and Plovdiv. The company shows interest in supplying with gas some other Bulgarian towns.

Raiffeisenbank, Overgas to launch joint service

 

Raiffeisenbank Bulgaria and Overgas have signed a contract, which will enable the clients of the natural gas distribution company to pay automatically their bills through the Utility Payments service offered by Raiffeisenbank. The bank will settle the gas bill payments for the clients using their payment accounts opened with Raiffeisenbank. The clients will receive via e-mail information about each payment. In order to be able to take advantage of Raiffeisenbank's new service, the clients will have to register at one of the bank's 150 offices and to have a payment account with the bank. Raiffeisenbank also allows automatic payment of electricity, heating, water and mobile phone bills.

Companies bid for a private healthcare fund

Soon, the monopoly of the National Health Insurance Fund in Bulgaria's healthcare sector will be broken. During a meeting in the resort town of Hissarya, the partners in the ruling Coalition for Bulgaria - Prime Minister Sergey Stanishev, Ahmed Dogan, Leader of the Movement for Rights and Freedoms, and Simeon Saxe-Coburg-Gotha, Leader of the National Movement for Stability and Progress, agreed on the establishment of a private health insurance fund in the near future.By the middle of the next month, an ad hoc group is to work out a plan for the liberalization of the healthcare sector.The three leaders are calling for an increase in the health insurance premiums. In addition, the Bulgarian citizens will have to have a health insurance with a private fund.

Germany's Hochtief signs �23 M water deal in Bulgaria

 

German construction group Hochtief said on Thursday it has been assigned a 23 million euro ($33.6 million) project to build a wastewater treatment plant in Ruse in northern Bulgaria. "The facility near the country's border with Romania will purify the waste water of 240,000 inhabitants of the region from 2010 onwards," Hochtief said in a statement. The project is part of an integrated water programme for Ruse, on the Danube river, which also includes repair of the city's water supply network and the upgrade of its sewerage system, worth a combined 47 million euro. The integrated water project is co-financed by the European Union's ISPA pre-accession programme, the European Bank for Reconstruction and Development (EBRD) and the Bulgarian government. Last month, Bulgaria assigned a 12.4 million euro deal to a Czech-Bulgarian consortium to build an 11,500-metre sewerage system in Ruse. According to government estimates, Bulgaria, which joined the European Union in January 2007, needs 1.5 billion levs ($1.1 billion/768.7 million euro) in investments to improve its outdated water supply network and a further 5.7 billion levs to improve its environmental infrastructure, including the quality of water and waste management, by 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS:

 

Tips for buying home in Bulgaria

Author: Charles Rae, The Sun

 

An overseas' property expert has warned that UK investors can make many mistakes when buying a home in Bulgaria. David Hollands said: "There can be a few gems to be found, but you have to know what you are doing or have a tried-and-trusted partner with you all the way to the bank. "It is more difficult to buy now because there are many more rules and the legal administration is better managed. "The most popular locations to buy that will bring the best returns will be the rural affluent regions, those that compare to middle Italy and mid-France. "Newly-built cottages and farmhouses with gardens and stunning views start at Ј35,000." Here are some tips from David to help avoid problems:

  • As Bulgarian property is cheaper, what seems a bargain and too good to be true, often is. Just because you can afford it does not mean you have to buy it.
  • The legal title to land and building rights has to be clearly confirmed by independent lawyers. You may be buying what seems a smart villa but is it being built legally? Most contracts will not state this. Beware.
  • Commission payments. All included fees and costs are another thing to be aware of. What this normally means is that you are paying over the market price for the property - in a lot of cases well over.
  • Off-plan property can be tricky as you do not know what the finished quality will be. Be sure never to release any funds unless you have had real proof of the building progress and have also visited the property during building work.
  • Contracts are often lengthy and of course are written in Bulgarian. Make sure you have a full and authorised translation of the contract and have it independently checked.
  • Don't believe all you read on the internet. It is what you don't see in the lovely picture that will determine the value of a property, not the property itself.
  • Find an agent that has experience and shows you all the downsides of an investment as well as the upsides.
  • Do not believe all you hear. Make comparisons of property quality by demanding to visit property that is already finished so you can see what the end result may be.
  • Do not believe guaranteed rental. This quote is nearly always a false guarantee. All you will receive is a few thousand euro back over the next two years, no real rental at all. You have paid over the market price and you are getting back your own money.
  • Do get sight of the developer's holiday rental agreements with tour operators.
  • Do understand the demands and tourist trends that will increase the value of your holiday home. Think of the future, not what has happened in the past.
  • Don't go on a weekend two-day trip to buy the only property the agent has on offer.
  • Don't pay any deposit or sign any documents on your initial trip that will tie you into a contract that you haven't understood.
  • Don't accept a promise that the property can have a mortgage on it. Many properties do not qualify for mortgages.
  • Don't expect to re-sell your coastal flat within the first year or re-sell before it is finished, thinking you will make a profit.

Lost in European directives

Author: Banker Daily

 

In end-March we'll probably know more about the poisons in our soil, in the air we breathe, and in the water. Then we'll know the results from the first project for measuring the level of persistent organic pollutants in our country, implemented in cooperation with the Czech Republic. The aim of the research was to find out to what extent the "dirty dozen" - the twelve most toxic man-created substances are present in Bulgaria's soil, air and waters, and how their concentration could be controlled. Such researches are very expensive and until recently were unaffordable for Bulgaria. The only laboratory in Central and Eastern Europe, accredited to do them is in the Czech Republic. Five locations in the country have been chosen to measure the presence of carcinogens. Three of them are in Sofia - Bankya (which is considered a sample of environmental purity) and on the opposite side are the Yana railway station (near the Kremikovtzi steel mill) and the Eagles' Bridge (Orlov Most). The other two are in Pernik and Plovdiv. The measurement is carried out with the help of filters which are replaced each six months and tested in the Czech laboratory. In 2002 a much simpler research was carried out in Bulgaria - about a limited number of carcinogens, mainly pesticides. It turned out that the highest content of poisons was in the region of Kremikovtzi - 62%, in Sofia's industrial zone - North (50%), in the region of the non-ferrous metal plant in Plovdiv - 60%, and around the copper mill in Pirdop - 41 per cent. An interesting fact is that a huge concentration of DDT (Dichloro-Diphenyl-Trichloroethane) - one of the best known synthetic pesticides - was found, although its agricultural use as an insecticide was banned in 1969. Even the inspectors from the Ministry of the Environment and Water were puzzled to find it and suggested that the presence of DDT in the tilted land near the big plants could be explained by the use of pesticides. For a long time now Europe has been waging a war on the dangerous dozen of chemicals. The Stockholm Convention on Persistent Organic Pollutants (POPs) is a result of these efforts. Bulgaria joined the treaty on May 23, 2001, and on September 30 it was ratified by an act of Parliament and presidential Decree No 309. The 97 countries within the global treaty have committed to follow a policy and undertake measures to eliminate or reduce the the release of POPs into the environment. However, it turns out that the global levels of toxic substances' admissibility are many times higher than the standards, approved in Bulgaria. For instance, according to global norms it's quite normal for the nitrates' content in vegetable marrows, lettuces and radishes to be five-fold above the standards, applied so far. Meanwhile, the laboratories for measuring the nitrates in fresh fruit and vegetables which existed on all markets in the country, closed their doors. The control on the pollution of foods (of plant and animal origin) which Bulgarians eat formally remained in the hands of specialized labs with the ministries of agriculture and healthcare, and practically - left to the mercy of fate. Nobody examines now the fresh products on the market, says Georgi Vassilev, Secretary of the Bulgarian Pepper Association. Farmers are obliged to observe Food Safety Good Production Practices which determine what preparations could be used for which crops. There are norms for the presence of heavy metals and pesticides in the vegetables and fruit, but their observation is not checked either. A phytosanitary certificate, a microbiological analysis, and a text for presence of heavy metals is required only for export purposes. There is a special Control of Fresh Fruit and Vegetables department at the Agriculture Ministry where some 50-70 people work, but it is busy setting the outward appearance of the products and not the presence of pesticides and heavy metals. All that horticulturists can do is read the instructions for use on the preparations for plant protection and fertilizers. on the internal market only big chains of stores set limits for the presence of pesticides, but that remains a secret between producers and retailers. For the fruit and vegetables which we buy from the markets all we could do is hope that the farmer has conscienciously observed the instructions on the labels of fertilizers and plant protection products. Yet, labs with the regional inspections for public health control could carry out the necessary analyses. The laboratory for chemical analyses at the Centre of Hygiene can also test fresh foods, but that's not obligatory. Meat and meat products could be analysed at the National Veterinary-Medical Institute for presence of nitrites which appear after the dissociation of nitrates, said Assoc. Prof. Yordan Gogov, an expert on control of foods of animal origin. There is an European directive, specifying the norms for the various animals and they are described in Ordinance No 8 of the National Veterinary-Medical Service. According to experts, no excess of the permissible quantity of nitrites has been observed recently. But under the effective law on foods, only random checks are carried out and not the entire output of a certain firm as the former law stipulated. Everything is again left to the good will of producers to observe the Food Safety Good Production Practices. There are also private labs where we have to pay in order to analyse the contents of products, but their results are not accepted as legitimate by the State's control authorities.

 

ANALYST FORECAST: Rising end-year consumption, imports widen Bulgaria's C/A gap in December

 Author: Iva Doneva, SeeNews

Bulgaria's current account gap has widened further in the last month of 2007, as domestic consumption rose around Christmas and the New Year holidays and imports increased to meet end-year demand, analysts said on Wednesday, ahead of the release of official statistics on Friday. Two analysts polled by SeeNews said they expected Bulgaria's end-year current account deficit to have exceeded 18.5% of the gross domestic product (GDP) projected for 2007, a rate that was recorded at the end of November. The country ended the first 11 months of 2007 with a current account deficit of 5.291 billion euro ($7.695 billion), up 69.2% year-on-year. We expect that the current account deficit [for 2007] has reached 22-23% of GDP," Desislava Nickolova, a macroeconomic analyst at Raiffeisen Research, the research department of Austria's Raiffeisen Zentralbank, told SeeNews. The December deficit will increase a little, but this will not change the full-year outlook; my forecasts are for a slight increase, but by how much I could not say," said Ruslan Stefanov, an economist with Sofia-based think-tank Centre for Study of Democracy. The current account deficit exceeded 20% of the projected GDP for 2007, according to a report of Sofia-based think-tank Centre for Economic Development (CED) released earlier this week. The Finance Ministry has said it expected the current account deficit to rise to 20% of GDP in 2007, from 15.8% in 2006. In December people make most of their big buys and traders increase imports at the beginning of the month to meet demand, Stefanov said. In November usually there is a seasonal increase in the current account deficit mostly due to imports of fuels. We expect to see this seasonal leap in December as well," Nickolova said. The rising trade deficit, which was the main reason for the widening of the current account gap in the first 11 months of last year, will increase further due to the "Christmas buys effect" and will boost the end-year current account deficit, Nickolova said. Bulgaria had a trade gap of 6.572 billion euro for the 11 months through November, up 37.2% year-on-year.

 

2008 OUTLOOK

Both analysts polled by SeeNews expect the current account shortfall will narrow this year but will remain high. It will grow more slowly in 2008, the Centre for Economic Development said in its report. For this year, we expect a slight decrease but almost a token one - to up to 21.5% of the GDP," Nickolova said and added: The narrowing of the current account gap will come as a result of the services balance and an expected fall in imports." Tourism revenue is seen rising in 2008 due to expected strong skiing season. The winter is good, ski resorts are full, we will have a good skiing season which will bring more foreign exchange into the current account," Nickolova said. Bulgaria's tourism revenue in the first eight months of 2007 totalled 1.835 billion euro, 17.8% higher than a year earlier, according to the latest data available. According to Stefanov, a possible decrease in consumption and a rise in exports will help Bulgaria rein its widening current account deficit this year. I expect that last year was a peak year [regarding the widening current account gap] and that this year we will see a certain decrease but we have plenty of uncertainties and forecasting is extremely insecure," Stefanov said, adding that international prices of raw materials which Bulgaria imports remain a key uncertainty. Bulgaria will continue to rely on foreign direct investments (FDI) to cover its swelling current account shortfall this year as it did last year. Net foreign direct investments covered 92% of the current account deficit by November. Our forecast for 2008 is that this percentage of coverage will remain above 90%," Nickolova said, adding that Bulgaria will succeed in keeping positive its overall balance of payments thanks to strong foreign capital inflow. The lower FDI expected for this year mirror the overall mood in the international financial markets influenced by the global liquidity crisis, which will mostly influence portfolio investments but will also affect FDI in emerging markets," said Nickolova.