불가리아 주요 경제뉴스 ( 18 – 25 JULY 2008 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 18 – 25 JULY 2008 )

 

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

 

 

·        NPP Belene first sod to be turned August 1^st

·        AES eyes Maritsa Iztok 1 extension

·        Bulgaria sends uranium fuel to Russia

·        Bulgaria, Romania to unify gas networks

·        South Stream Project to make Bulgaria one of most important natural gas transit centres in Europe

·        Moody's: Bulgaria's banking system stable

• Bulgarian deposit base 7th biggest in CEE

·        FM presents to MPs policy of transparency in budget management

·        New strategy to redress trade deficit

·        Unemployment in Bulgaria below EU average rate

·        Good crop curbs prices of foods in Bulgaria

·        Farmers pushing for BGN 350/ton of wheat

·        EEA earmarks some � 2 M to Bulgarian ecology

·        Bulgaria records second fastest car sales growth in EU

·        Bulgaria Q2 PC sales up 53%, Toshiba leads

·        Peak moment in Bulgarian real estate market

·        Infrastructure dominated by foreigners

·        Bulgaria sees �2.3 B tourism revenue in 2008

·        Sofia among the cheapest cities in the world

 

 

 

 

 

 

 

INVESTMENTS:

 

 

·        Bulgaria's Mega Group to build �100 M oil refinery

·        Bulgarian-Israeli company Melina hires Turkey's Intertek to build �50 M shopping centre in Bulgaria

·        Bulgarian Fantastico opens �3.1 M store in Sofia

·        State invests BGN 10 M in reconstruction of 16 railway stations

·        7 Malls under construction in Bulgaria's Ruse over Romanian shopping spree

·        Retail Center company to build shopping complex in Pleven

 

 

 

COMPANIES:

 

 

·        Bulgaria's Litex Motors negotiates car assembly deals with China's Beiqi Foton, Great Wall

·        Turkey's Dogus Insaat, Trace Holding picked to build Sofia's second metro line

·        Companies borrow BGN 1.3 B in June

·        Bulgaria's private railway freight carrier buys 26 UK-made locomotives

·        Bulgaria's Enemona teams up with Turkish businessman Fuat Guven to set up gas distribution company in Svilengrad

 

 

 

ANALYSIS:

 

 

·        Export prices for Bulgarian wine do not cover production costs

·        Bulgaria exports 138 M Hl wine in January-September 2007

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

NPP Belene first sod to be turned August 1st

The ground-breaking ceremony of NPP Belene will take place the end of July or on August 1. Most probably, the company that will take the 49-percent share in the project will be selected by the beginning of next month, sources from the Ministry of Economy and Energy told the Standart. Also, by the end of the month the National Electric Company is expected to select one of the two candidates - RWE, the second largest electricity producer in Germany, and the Belgian company Electrabel. Well-informed sources told The Standart that the two companies might share the minority share in Bulgaria's second nuclear power plant. Energy and Economy Minister Petar Dimitrov ordered the National Electric Company to organize the ceremony of the NPP Belene's construction site opening.

 

AES eyes Maritsa Iztok 1 extension

U.S. corporation AES has asked the Bulgarian national power utility to approve a one-year extension to the project for a new 710MW coal-fired capacity on the site of the Maritsa Iztok 1 thermal power plant, said the energy ministry.Talks are in progress to establish the objective reasons for the delay and whether or not they have to do with the organisation of work or with the contractor Alstom, said Lyubomir Velkov, chief executive director of national power grid operator NEK. The management of the utility so far seems inclined to make the necessary adjustments to the contract The 1.4 bln euro project, which got underway three years ago, is now seven months behind schedule. The first of the two 355MW units should be brought on stream by June 2009. Under the existing contract, any penalties should be imposed after the project is completed. Several sources said the delay has caused unease among the banks that have lent money for the project to AES. The consortium bankrolling the venture comprises EBRD, BNP Paribas, Calyon and ING. AES declined to comment on the talks with NEK.

Bulgaria sends uranium fuel to Russia

 

Bulgaria has sent its remaining highly enriched uranium to Russia for safeguarding from terrorist or other potential misuse. Nearly 14 pounds of the spent fuel were received Thursday at a Russian nuclear facility, the U.S. National Nuclear Security Administration announced. A first shipment of 37.3 pounds of fresh uranium fuel was sent to Russia in December 2003."With this shipment there is no more highly enriched uranium in Bulgaria," said Brian Wilkes, a spokesman for the U.S. agency, which was established by Congress in 2001. "Bulgaria now joins Latvia in clearing out all Soviet-era dangerous nuclear fuel."Remaining in Bulgaria, he said, are small quantities of low-enriched uranium, which most civilian reactors run on. In the 1970s the Soviet Union sent shipments of enriched uranium to Bulgaria, which was then part of the Soviet bloc. The returned shipment was transported under guard in casks to the Danube River, loaded on a barge and shipped to Ukraine and then shipped by rail to the secure Russian facility near Chelyabinsk.Spent and fresh uranium fuel has also been returned to Russia from Serbia, Romania, Libya, Uzbekistan, Poland, Germany, the Czech Republic and Vietnam. At the same time, all highly enriched uranium spent fuel was returned to the United States by Argentina, Brazil, Chile, Colombia, Denmark, Greece, Italy, the Philippines, Slovenia, South Korea, Spain, Sweden and Thailand.

 

Bulgaria, Romania to unify gas networks

 

The Pari Daily has announced Romania's Transgaz Medias and Bulgaria's Bulgargaz have started negotiations on the topic of unifying their gas distribution networks. The project is part of the initiative of Hungary's MOL for connecting the gas distribution networks in the region. Connecting the gas distribution systems of the two countries will require building an 8-km gas pipeline between Rousse and Giurgiu. Quantities transported are expected to reach 1.5 billion cu m per year, or 9% of Romania's national consumption.

South Stream Project to make Bulgaria one of most important natural gas transit centres in Europe

The South Stream project is expected to make Bulgaria one of the most important natural gas transit centres in Europe, Economy and Energy Minister Peter Dimitrov said on Wednesday. Dimitrov took part in a discussion on a bill of ratification of an agreement between the governments of Bulgaria and Russia on cooperation in the building of a pipeline for the transit of natural gas via Bulgaria. The discussion will continue on Thursday.According to Dimitrov, it is extremely important for Bulgaria to have an alternative route for natural gas supply which will prevent political risks from threatening the Bulgarian economy.South Stream is precisely this kind of route: it will lie on the bottom of the Black Sea and will avoid the countries where there is such tension. Dimitrov said the pipeline will ensure above all political independence of natural gas supplies to Bulgaria, a lower price than in the other countries along the route, and additional amounts of natural gas.According to him, it is not true that Europe is against this pipeline. It will be built mainly for the EU, where consumption is concentrated, and Bulgaria will be rather a transit country, Dimitrov said. He said that the Nabucco project for the transfer of natural gas from Central Asia is a number one priority for Bulgaria and the EU as it ensures double alternativeness, but it has not been provided with natural gas yet. Therefore the EU also needs South Stream. Dimitrov said the assumption that South Stream is unfavourable for Bulgaria is untenable. Bulgaria counts on energy sources other than Russia and would not like supplies to come only from Russia, he said.Democrats for Strong Bulgaria Chairman Ivan Kostov said his party will not back the agreement on cooperation in building the South Stream natural gas pipeline. He said the ratification of this agreement runs counter to the European view on how energy monopolies should be overcome. According to European agreements and the European energy charter, it should not be allowed that the owner and the manager of natural gas transportation are one and the same, as in this case it is Russia, Kostov said. This project also lacks an environmental impact assessment, he said.Martin Dimitrov of the parliamentary group of the United Democratic Forces said that his group will not back the ratification, either, because the economic benefit of the agreement has not been proven, and because the thesis that this project makes Bulgaria the largest energy centre in the world is devoid of any content.

 

Moody's: Bulgaria's banking system stable

The credit outlook of Bulgaria's banking system was stable despite concerns over future asset quality, global credit rating agency Moody's Investors Service said on July 23. Most banks had solid profitability levels, elevated business volumes, healthy interest margins and comfortable capital levels, the agency said in a report on Bulgarian banks."Bulgaria's improving regulatory and supervisory environment and the positive economic cycle are supportive for the franchise development of the country's banks," Moody's analyst and report author Elena Panayiotou said."However, the banks increasingly face challenging funding conditions due to both intense competition domestically and the rising uncertainty in the global financial markets, which has had an adverse impact on their foreign parents' financial standing and ability to continue channelling funds to their Bulgarian subsidiaries at very low costs," she said.The increasingly limited access to external funds would likely tighten profit margins, but the country's banks should still be able to generate good returns on their business volumes, the credit agency said.Rapid credit growth would continue, which "could result in a high level of non-performing loans in the system in an economic downturn and that rising consumer indebtedness raises concerns about the future performance of these borrowers," the report said.Competition betwee Western European banks, who own most of the lending institutions in Bulgaria, was another factor contributing to the strong credit growth.Foreign owners brought in greater expertise and Bulgarian banks have improved the quality of services offered, but there was still room for improvement, Moody's said. In particular, corporate governance practices could and transparency were two of the areas that would benefit from more effort toward improvement, in Moody's opinion.That observation applied to the regulatory and supervisory framework as well, though the agency said it regarded positively the measures taken by the central bank to enhance supervision and oversight.Moody's stable outlook for the Bulgarian banking system expressed only its view of the sector over the next 12 to 18 months,  not a projection of rating upgrades or downgrades, the credit rating firm said.

Bulgarian deposit base 7th biggest in CEE

The deposit portfolios of Bulgarian banks added up to 19 billion euro at end-2007, the equivalent of 65 per cent of gross domestic product (GDP), ranking the country 7th in this respect in Central and Eastern Europe (CEE), the annual market overview of UniCredit Group showed.The regional leader is Poland with 139 billion euro in deposit savings, followed by the Czech Republic with 89 billion, Hungary with 46 billion, Romania with 38 billion, Slovakia with 31 billion and Croatia with 26 billion euro.Bulgaria's deposit savings to GDP ratio is above the CEE average of 40 per cent but well below the eurozone average of 102 per cent.Deposit rates have been creeping uo since 2007, when the banks stepped up efforts to secure lending resources. The average rate on time deposits in leva rose 24 basis points to 4.65 per cent in the first quarter of this year, while the average rate on time deposits in euro added 16 basis points to 3.92 per cent, the latest economic overview report issued by the Bulgarian central bank showed.The rate marched on in May, reaching 5.19 per cent on time deposits in leva and 4.15 per cent on time deposits in euro. An increasing number of banks, however, are offering interest rates in the five to six per cent range on one-month deposits.

 

FM presents to MPs policy of transparency in budget management

Finance Minister Plamen Oresharski presented the major lines of activity for which additional budget loans were utilized in 2007 and the effects of the policy of transparency in budget management, the Finance Ministry said in a press release on Friday. The total amount of funding from the central government budget, approved in accordance with Council of Ministers Decree 298/2007, is 1,371.8 million leva, Oresharski said, speaking to the Budget Committee in Parliament on Thursday evening. This funding was secured by overfulfillment of revenues and by economizing on expenses and was provided to ministries and departments, municipalities, autonomous budgets, the National Fund, nonfinancial enterprises and for cleaning of rivers and riverbeds, BTA reported.Over 80 per cent of the funding was utilized for building infrastructure and for the honouring of commitments under the EU Accession Treaty with Bulgaria. Out of the total amount, 658.2 million leva was spent on building and maintenance of roads, railway, environmental and other infrastructure and on the Sofia underground railway, and 438.6 million leva was spent on activities under the Accession Treaty. A total of 223.9 million leva was utilized for equipment, fuels and other activities, and the remaining 40 million leva for activities of the administration.In 2005, Parliament approved a mechanism for transparent redistribution of revenues over expenses, Oresharski recalled. In 2007, additional budget loans accounted for 2.5 per cent of gross domestic product (GDP) and 6.5 per cent of the expenses under the consolidated budget. In 2004, the figures were 2.8 per cent of GDP and 7.1 per cent of expenses under the consolidated budget.As early as in the spring of 2006, ECOFIN noted in its assessment of Bulgaria that the rule of spending overfulfillment exceeding 1.5 per cent of planned revenues by a sanction of Parliament enhances the transparency of budget management. A recognition of transparency in budget management was also received from the International Monetary Fund in the autumn of 2007, Oresharski said.

 

New strategy to redress trade deficit

The Bulgarian economy ministry has developed a strategy aimed at improving the nation's trade balance by attracting investments and boosting exports. The center-piece idea of the strategy is to lure foreign investment that will fuel domestic manufacture and thus power up exports. The opportunities presented by the Bulgarian economy will be showcased in marketing campaigns, business media articles, informational portals, sectoral analyses and marketing research papers. The successful implementation of the strategy should move the trade balance into surplus territory by '14. Bulgaria\s trade deficit now is around 1.4 bln levs.

Unemployment in Bulgaria below EU average rate

Unemployment in Bulgaria is 5.7% which is below the EU average rate, announced the Ministry of Labour and Social Policy. This is due to the high seasonal employment. The employment agencies registered 221,089 jobless - with 8,044 less than last month. Compared to June 2007, the number of unemployed dropped by 53,731 people. A few days ago Bulgaria's Social Minister, Emiliya Maslarova, and PM Sergei Stanishev stated that due to the low unemployment, the cabinet considered priority not the number of unemployed but their rights.

 

Good crop curbs prices of foods in Bulgaria

Prime Minister Sergey Stanishev has measured the achievements of his Cabinet in pork chops and eggs. It appears that in terms of pork chops and eggs, the Bulgarians' living standard has improved considerably since 2001, although the inflation for this year is record-breaking 15.3%, which is the highest registered inflation rate since the winter of 1997. The prices of foods will go down because of the rich crop this year, Minister of Economy and Energy Petar Dimitrov says. Now, the jobbery has to be curbed, too.
The sunflower crop is very good and the price of sunflower oil will finally go down a bit, producers say. However, bakers foretell the startling 1.70 levs for a loaf of bread, despite the rich wheat crop. It seems that the bakers, unlike the sunflower oil producers, have not been suffering from cartel prices, experts say. The Commission for the Protection of Competition will check any attempts at boosting inflation artificially.

Farmers pushing for BGN 350/ton of wheat

 

A ton of wheat actually costs above BGN 350 a ton, the chairman of the National Grain Producers Association (NGPA) Stiliyan Stoyanov said. Stiliyan Stoyanov also called upon grain producers to hold their sales until the market calmed down. In his words most of the farmers had to sell wheat because of a current grain warehouse shortages, while at the same time, the State Reserve’s warehouse facilities have been left locked and empty. Mr. Stoyanov defined wheat prices at the moment as a sort of racketeering, specifying that low-quality grain sold at BGN 260 on the average, while high-quality wheat was traded at around BGN 300. NGPA chairman Stoyanov said local producers had been increasingly seeking partners in Romania, driven by higher commodity prices there.

EEA earmarks some � 2 M to Bulgarian ecology

A new fund that will provide 1,858 million euro for eco-projects devised by Bulgarian NGOs has been established. The money will be granted under the Financial Mechanism of the European Economic Area (EEA). The fund will be operative by 2010 and will finance projects oriented towards environment protection, sustainable development, social services provision and human rights protection. All beneficiaries will have to ensure at least 10% of the funding.

 

Bulgaria records second fastest car sales growth in EU

Bulgaria reported the second-fastest growth rate in terms of new passenger car registrations in the first half of 2008, the European Automobile Manufacturers' Association (ACEA) said in a statement.Bulgaria's year-on-year growth rate of 20.5 per cent was beaten only by Lithuania's 36.2 per cent. Slovakia was tucked into third place with 19.3 per cent.But at the same time, the number of cars sol was only 23 292 units. only Estonia, Iceland, Lithuania and Latvia registered fewer sales in the first half of this year in the first half of this year.ACEA's data covers 25 European Union member states, Malta and Cyprus excluded, and the four countries that make up the European Free Trade Area - Iceland, Norway, Switzerland, and Liechtenstein.The volume of the Bulgarian market remains disappointing compared to countries with comparable population like Hungary and the Czech Republic, where 82 943 and 73 455 new cars were registered over the same period.Across Europe, new passenger car registrations fell by two per cent in the first half of 2008, ACEA said.The largest European markets were in different ways. While Germany an France continued on a growth path with increases of 3.6 per cent and 4.5 per cent, respectively, there were sizable declines in the Spanish and Italian markets, which posted drops of 17.6 per cent and 11.5 percent, respectively.In total, 8.34 million new cars were registered over the first six months of the year in the countries covered by ACEA.

Bulgaria Q2 PC sales up 53%, Toshiba leads

 

The local PC market posted an annual growth of 53.7% in Q2 '08, The Dnevnik Daily learned from marketing research firm IDC Bulgaria. Laptops have been outselling desktop PCs both in terms of value and in terms of sales volume and have maintained that lead almost unchanged over the past 12 months, said Evelin Stoev from IDC. The newest trend on the laptop market is the rising demand for ultra-portable devices from the bottom to the top of the price range. Toshiba was the best-selling laptop brand in Q2 '08 with a 23.8% of the Bulgarian market, followed by HP with 10.4%.

Peak moment in Bulgarian real estate market

The situation on the real estate market in Bulgaria shows that supply has increased by 50% over demand in the last two months which quite logically affects real estate prices. A major factor, influencing the price of real estate is the world real estate crisis and economic development in the different regions of the country, executive director of "Address real estate" Katya Cenova said at a press conference dedicated to the real estate market in the country.The average price of real estate in the country is 914 EUR per square meter for the first half of the year, which represents a 21% increase in comparison to the second half of 2007.The second city with highest increase in the country is Ruse. Real estate there is about 713 EUR per square meter.It turns out that real estate in Yambol is the cheapest, where the average price is 402 EUR per square meter and respectively the market increase is 19% for the first half of the year.The most sought after real estate in the country and the capital is two-bedroom apartments. In fact every second purchase deal is of this kind.In Sofia rents have increased the most in the following residential districts: Beli brezi - 27%, Mladost - 25%, Studentski grad - 23%. The lowest increase rate takes place in Vitosha, Drujba and the center - 18% and Nadejda, Gorna Banya - 9%.

Infrastructure dominated by foreigners

German, Italian, Spanish and French companies are rushing to take the place of Bulgarian enterprises in the execution of large infrastructure projects. This is so because leading EU companies in the sector do not see enough possibilities for development of road and railroad projects in Western Europe, so they are turning to markets mainly in the new member states. The European Union has restricted funding for infrastructure projects in member states by about 50%, a 2007 survey by international experts showed. This explains why reknowned companies have shifted their interests, regardless of the discontinuation of part of EU funding for Bulgaria. Local business expressed its readiness to participate in infrastructure projects two years ago, when the present government developed a national plan for integrated infrastructure development. Back then, minister of regional development and public works Assen Gagauzov said that Bulgarian companies are free to participate in the distribution of EU infrastructure funding.

Bulgaria sees �2.3 B tourism revenue in 2008

Tourism revenue in Bulgaria is expected to reach 2.3 bln euros by the end of the year, Tsvetan Tonchev chairman of the Bulgarian Tourist Chamber, forecast, as quoted by Monitor daily. The number of foreign tourist expected to visit Bulgaria this summer will grow by 8%, according to Rumen Draganov, chairman of the Institute for Analysis and Evaluations in Tourism. The number of foreign tourists has risen by 4.5% so far, Draganov said. The number of foreign tourists who have visited Bulgaria since the start of the year is close to 3 million, Draganov added. The number of tourists from Romania and Russia registered the biggest increase. Germany still tops the ranking in terms of number of organized tourist trips. The number of German tourists went up by 6% year on year in the first six months of the year. Romanian tourists have increased by 7%, Draganov added. The number of Russian tourists who visited Bulgaria in the first six months of the year registered the highest increase of 23% on a annual basis, Draganov said.

Sofia among the cheapest cities in the world

Moscow is the most expensive city in the world for 2008 year for the foreign businessmen. The Russian capital is leader in this category for the third time, after Tokyo and London. This is shownby an investigation, cited by ‘Frankfurter Allgemeine Zeitung'. The most expensive German cities will be Munich, Berlin and Frankfurt. There have been examined the products, used by the contractors for the aims of the examination. New York has become cheaper. The losing position of the dollars has made the life of the foreigners in USA much more comfortable. The Bulgarian capital Sofia is among the cities, where the life is cheapest compared to other places throughout the world. It takes 97th position by expenses for the foreign undertakers. The inquiry defines Johannesburg, Kyoto and Karachi as the most profitable destination for the mobile businessmen as expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

Bulgaria's Mega Group to build �100 M oil refinery

 

Bulgarian petroleum products wholesaler Mega Group will build a 100 million euro ($159.2 million) oil refinery, the Economy and Energy Ministry said on Tuesday. "The project starts in July and will be completed in 2011," the ministry said in a statement. Initially, Mega Group will process watered-down oil products and will produce sovents, industrial gas oil and heavy fuel oil at the new facility. At a later stage the company will introduce a dehydration and desulphurisation unit and will add petrol, diesel, bitumen, lubricants and paints to its product range. The plant, to be located on an area of 78.6 hectares in Smyadovo, near the city of Shumen in northeastern Bulgaria, will have an annual processing capacity of 180,000 tonnes at the end of 2008. The capacity will be increased to 450,000 tonnes in 2009 and 1.5 million tonnes in 2010. Mega Group (www.megagroup.bg), based in the city of Varna, was set up in 1997.

Bulgarian-Israeli company Melina hires Turkey's Intertek to build �50 M shopping centre in Bulgaria

 

Bulgarian-Israeli company Melina said on Thursday it has hired Turkey's Intertek to build a shopping centre in Bulgaria's second largest city of Plovdiv worth more than 50 million euro ($78 million). The deadline for the completion of Markovo Tepe Mall, with a built-up area of over 62,000 square metres, was extended by a year, until the end of 2009, due to harder than expected excavation works, Melina said in a statement. Tenants have booked over 25% of the shopping centre, Melina said, adding that it expects that the mall will be fully rented in three months. Melina plans to launch the construction of some of its planned 12 retail centres in Bulgaria in the beginning of next year, the company's manager Jakov Niv told SeeNews without elaborating. Melina said in October it plans to invest up to 150 million euro in 12 retail centres in Bulgaria within three years. The company has already bought land plots in Plovdiv, Pazardzhik, Haskovo, Vratsa, Sliven and Dobritch, Niv said. The real estate market in Bulgaria has thrived in the recent years with foreign and local investors drawn by expectations for high yields after the country's accession into the European Union in 2007.

Bulgarian Fantastico opens �3.1 M store in Sofia

 

Bulgarian food retailer Fantastico cut the ribbon for a 6.1 mln Bulgarian levs ($4.9 mln/3.1 mln euro) supermarket in Sofia on July 21, 2008. The store is a greenfield investment and will service the Dragalevtsi and Simeonovo districts in the southern part of the city. The location benefits from heavy car traffic and the growing number of residents of the districts. The outlet will create over 100 jobs and will be open 24/7. It has an area of 3,100 sq m and an underground and above-ground parking lot. The Fantastico chain currently has 32 stores and plans to open more outlets in Sofia and other cities across the country. The chain has over 2.5 million clients a month and sees its turnover up by 30 pct year-on-year in 2008.

 

 

 

State invests BGN 10 M in reconstruction of 16 railway stations

 

The repair works on the railway station in Rousse will soon be finished, while the first stage of the reconstruction in Gorna Oryahovitsa is nearing its end. The second stage, which is to begin in a month's time, includes reconstruction of the departure lounge and the sanitary premises. The public space near Belovo railway station is to be ready in several days for the celebration of the station's 135 anniversary, Mr. Ginev added. A project has been selected for the Central Railway Station in Sofia and the work on it is soon to kick off. A preliminary investment survey as well as an analysis of the immovable property market have been carried out. The scope of the project, the construction parameters of the site around the station and the financial breakdowns have been fixed. At present, a detailed project and urban planning are being developed. There is an idea the construction right to the 14-decare land lot, which is assessed at BGN50MN, to be given to a private investor. There is a project for an underground car park on a total area of 15,000 sq m, as well as for two office buildings with stores and administrative premises. The first one will have 21 storeys and a total area of 42,000 sq m, while the second one will be an 8-storey one with a total area of 12,000 sq m. In order to win this right, the investor will have to carry out the reconstruction of the Central Railway Station in Sofia that is expected to come to nearly BGN35MN. This is the reason for the National Railway Infrastructure Company to envisage a 15-percent compensation. The tender for selection of a builder is expected to take place in January 2009, while the construction works should start in April next year. As the Banker weekly has already written, the scheme for Plovdiv railway station modernisation is almost the same as the one for that in Sofia, but in Plovidiv the project will be carried out on a much larger territory and -right in the centre of town. only the architectural project for the Plovdiv's station have been so far created, the first place being occupied by a project of the Plovidv-based company Arkont-A.

 

7 Malls under construction in Bulgaria's Ruse over Romanian shopping spree

 

Investors have started building seven malls in Bulgaria's Danube town of Ruse, targeting the 2 million Romanians who visit Bulgaria every year and often enjoy shopping sprees in the border town.Currently, there are no malls in Ruse but in the upcoming years three of them will be finished, Makler LTD representative Aleksandar Yordanov said in an interview with HotNews.ro. Yordanov declared that there are mainly Israeli investors who planned to build the malls mainly for the Romanians transiting Bulgaria. Moreover, many Romanians shop in Ruse monthly, saying prices in Bulgaria are 40% lower than those in Romania.Israeli investors plan to invest some 85 million euro to attract Romanian clients. At least two of the planned seven malls will be finished by 2010 and the total destined commercial space is 35,000 sq. meters.

 

Retail Center company to build shopping complex in Pleven

The Retail Center company will invest 10 mln euro in a complex of shopping outlets, eateries and cake shops in Pleven, Northern Bulgaria, said the municipal authorities. The three-level building will house 55 shops, four restaurants, a cake shop and service centers on a total area of 21,000 sq m. A 450-car parking lot will be available to the visitors of the complex. Retail Center is co-owned by Sofia estates 1, FairPlay International and Bulgarian Property Development.

COMPANIES:

 

Bulgaria's Litex Motors negotiates car assembly deals with China's Beiqi Foton, Great Wall

 

Bulgaria's Litex Motors is in talks with Chinese truck maker Beiqi Foton Motor and China's largest sport utility vehicle manufacturer Great Wall Motor to start assembling cheap vehicles in Bulgaria and sell them in the region, a Bulgarian official in charge of the project said on Wednesday. We are not thinking of European markets. We will plan an automobile that would match the purchasing power in Bulgaria and countries in the region," Ilia Terziev told SeeNews. Terziev, who is board member of Bulgarian diversified holding company Litex Commerce, could not give a timeframe for the signing of deals and declined to disclose financial details. Litex Motors plans to assemble cars from imported completely knocked down (CKD) kits under licence from China's Brilliance in the northern city of Lovech and distribute them on the Bulgarian, Romanian and Greek markets, according to Business Monitor International 's latest Bulgaria Automotives Report.Bulgaria's Corporate Commercial Bank (Corpbank) said in May it would put 1.6 million levs ($1.3 million/818,000 euro) into the establishment of Litex Motors, taking a stake of 8.0%. Litex Commerce is the other stakeholder in Litex Motors. Bulgaria, which joined the European Union in 2007, has no automotive production.

 

Turkey's Dogus Insaat, Trace Holding picked to build Sofia's second metro line

Turkish construction firm Dogus Insaat ve Ticaret and the Metrotrace consortium were picked to build Sofia's second metro line, Sofia mayor Boiko Borissov said on July 22, as quoted by website zagrada.bg. The offers were picked based on the price offered, with the lowest bids awarded the contracts, zagrada.bg said.Dogus Insaat, the construction subsidiary of Dogus group, one of Turkey's biggest privately-owned business conglomerates, offered the lowest price on the 3.8km stretch between Nadezhda flyover and Patriarh Evtimii Boulevard, which will have four stations. The company offered 329.1 million leva to build the stretch.Metrotrace, a consortium of companies from the Bulgarian construction group Trace Holding, wuoold build the 2.6km stretch between Patriarh Evtimii and Cherni Vruh boulevards, with three stations, for 142 million leva.The combined costs, at 471.1 million leva, are some 85.9 million less than the lowest prices offered in the first tender earlier this year, Borissov was quoted as saying.The bulk of the funding - 185.1 million euro, or 362 million leva - would come from European Union structural funds under operational programme for transport, which means that it has to be approved by the European Commission. The rest of the money would come from the Sofia and central government budgets.Unless other bidders file appeals filed within the next 10 days, the city hall would move to sign contracts with the firms involved, investor.bg quoted Borissov as saying.Construction work could start as early as September, Borissov added, as quoted by zagrada.bg, and would have to be completed within 45 months, which means that the second line of the Sofia metro should become operational in mid-2012.

 

 

Companies borrow BGN 1.3 B in June

Bulgaria's business has borrowed almost BGN 1.3 billion in June 2008, latest data of the Bulgarian National Bank with governor Ivan Iskrov show. Despite solid borrowing, the pace of crediting is gradually slowing down. The annual increase was 55.5% at the end of June 2008, compared with 59.3% the previous month. The total amount of money owned by companies to credit institutions in Bulgaria is BGN 27.67 billion. This is almost 62% of the total banking system portfolio in the country, which amounts to BGN 44.563 billion. Over the upcoming months the pace of lending may slow down even further, analysts said.

Bulgaria's private railway freight carrier buys 26 UK-made locomotives

 

Bulgaria's private railway freight carrier Bulgaria Railway Company BRC presented Tuesday its brand new UK-made locomotives, which it purchased recently for about EUR 21 M. Each of the new machines cost EUR 800 000. The investment was realized with a credit from Unicredit Bulbank. BRC was founded in 2004. It is Bulgaria's first private railway freight carrier, and is also licensed for services within the whole EU. It is owned by the Romanian company Grup Feroviar Roman and Agropolichym Jsc, which owned by the US company Acid & Fertilizers Group. BRC has bought the new locomotives as it expects to transport some 2 500 000 tons of goods in 2008, which is seven time more than it carried in 2007.

Bulgaria's Enemona teams up with Turkish businessman Fuat Guven to set up gas distribution company in Svilengrad

 

The Bulgarian town of Svilengrad said on Thursday it will team up with Turkish businessman Fuat Guven and Bulgarian construction-to-energy group Enemona to set up a gas distribution company. Guven will own 60% of the project company Svilengrad-Gas, Enemona will have 30% and the town will own the remaining 10%, the town located just off the border with Turkey said in a statement. It gave no timeframe for the establishment of the joint venture company which will have share capital of 1.96 million levs ($1.6 million/1.0 million euro). Guven is a 100%-owner of Bulgarian-based bank D Commerce Bank. Earlier this month Enemona set up a 90:10 joint venture with the town of Gotse Delchev, Nevrokop Gas, to provide gas distribution services in the town. Enemona plans to start gas distributing in Gotse Delchev by 2012. Based in the northern town of Kozloduy, Enemona started as an engineering company providing services related to the country's sole nuclear power plant located in the same town. It has been expanding its energy business since in the hope of capitalising on the sector's growth prospects.

 

 

 

 

 

 

 

 

 

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Export prices for Bulgarian wine do not cover production costs

Author: Magdalena Rahn, Sofia Echo

A little less than a month after Bulgaria sent its National Programme to Support the Viticultural and Oenological Sector 2008/2009 to 2013/2014 to the European Commission for approval, industry players met to discuss where things were going on July 17 2008 in Plovdiv.The seminar, entitled Development and Realisation of Successful Europrojects in the Field of Viticulture and Oenology, took place in the conference hall of Plovdiv municipality.Opened by Konstantin Madjarov, a member of the managing team of the National Vine and Wine Chamber, one of the main topics of the seminar was the necessity to increase funding to grape growers, and not just the winemakers themselves, PlovdivLive.com reported on July 17.“Surplus value from the sales of wine is not being seen in Bulgaria,” Madjarov said, continuing on to explain that the money paid to daughter companies in Bulgaria tended to reach only wine producers, leaving viticulturalists and vineyards in the dust.As reported by The Sofia Echo as far back as May 1 2006, grape growers in Bulgaria – be they individual farmers or co-operatives – have been having to fight for fair prices for their crops, if they can find buyers for them at all.In addition, once grapes become wine, the market worldwide has become so oversaturated that merchandising what has been bottled is only another hard sell.To top it off, the price for one exported bottle of wine – 71 eurocents, about 1.50 leva – only just covers the complete cost of production, PlovdivLive.com wrote.In 2007, Bulgaria produced 1.796 million hectolitres of wine, which comprised 788 000 hectolitres of table wine, 465 000 hectolitres of vin de pays and 72 000 hectolitres of quality wine, Rossitsa Goranova, executive director the the Executive Agency for Vine and Wine, said during a talk at the Association de la Sommellerie Internationale competition held at the Kempinski Hotel Zografski in Sofia in May 2008.Of those 1.796 million hectolitres, 1.125 million hectolitres of wine were exported in 2007, 912 000 hectolitres (81 per cent) of which was bottled. Russia was the recipient of 730 000 hectolitres (65 per cent) of the total amount of exported wine. It was followed by Poland (16 per cent), the UK (three per cent), Germany (2.8 per cent) and the Czech Republic (two per cent).Such figures go to prove how much capital Bulgaria has lost in doing what should otherwise be a profitable economic exercise.At the July 17 Plovdiv conference, Madjarov expressed his frustration with such realities, situations that he said could be ameliorated by expanding the fields into which Bulgarian wine reaches – namely, through wine tourism.As a side note, given Bulgaria's history, the country could be considered the birthplace of wine: the god of imbibing, Dionysus, also known as Zagrei, was a figure of ancient Thrace, and, there is archaeological proof of wine being made in what is now Bulgarian territory as far back as 6000 BCE to 3000 BCE.The recent creation of wine routes here has facilitated the touring of Bulgarian wine country; Madjarov hoped that such tourist opportunities would encourage holidaymakers local and foreign to visit other areas of the country, not just the mountains and the Black Sea coast resorts.Madjarov also recommended that less wine – but of a better quality – be produced.A report on the Plovdiv seminar by Darik Radio supported what Madjarov said on the issue of production of smaller quantities of better wine. According to their article, it was with such practices that Bulgaria would have a chance to be respected as a wine producing country on the European market.The European Union has funding for such projects, Nikola Hristovich from consultancy firm Finsys said at the seminar, as reported by Darik, with 3.24 billion euro being designated as available for these initiatives in the country.

Bulgaria exports 138 M Hl wine in January-September 2007

 

The Council of Ministers approved on Thursday a report on the status and the control in the vine-growing and wine-making sector in compliance with the requirements of an ordinance on the coordination of control over wines, spirits, distillates and spirits, the Government Information Service said.A total of 200,823 tonnes of grapes was processed in 2007 and 138,091,712 litres of wine were produced.Bulgaria's EU membership has a favourable influence on Bulgarian wine exports. In the first nine months of 2007, a total of 857,000 hectolitres of wine were exported, up 21 per cent compared to 711,000 hectolitres for the same period of 2006. Bottled wines took the biggest share of the wine exports for January-September 2007, about 80 per cent, followed by wines on tap. Russia was the biggest importer of Bulgarian wines and its shares stood at 68 per cent for bottled wines and 65 per cent for tap wines. Poland, the UK and the Czech Republic followed regarding bottled wines, while Germany, Moldova and Sweden were ranked after Russia regarding tap wines. The operational control regarding wines and products made from grapes and wine is carried out by the Executive Agency for Viticulture and Wine (EAVW), while control over spirits is exercised by the Economy and Energy Ministry.In 2007, 440 deeds for planting vines for wine were issued. Control was exercised also over all lands whose owners had applied to receive rights to plant or replant vineyards. EAVW experts performed a total of 448 checks of producers of wine and products from wine and grapes, while the Economy Ministry checked 45 producers of spirits and distillates in 2007.