불가리아 주요 경제뉴스 ( 17 – 24 OCTOBER 2008)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 17 – 24 OCTOBER 2008)

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Bulgarian government adopts economic reform programme 2008-2010

·         NEK to pump BGN 336 M into Belene NPP

·        Costs for construction of Belene NPP not to be added to electricity price

·        Belene nuke stirs discord in RWE

·        Bulgaria and Macedonia agree to complete by November high-voltage power transmission line between Stip and Chervena Mogila

·        Economy has run out of fuel

·        Russia could replace Bulgaria with Romania in South Stream pipeline project

·        Deputy PM: “Take it easy! South Stream will not bypass Bulgaria

·        Construction of the gas pipe Burgas-Alexandroupolis postponed

·        Bulgarians pay BGN 1.3 billion because of corruption

·        Three Bulgarians among the richest in eastern Europe

·        Top 50 in construction with BGN 2.7 B turnover

·        Business and syndicates unhappy with the price increase of gas

·        Billionaires sell their businesses in Bulgaria

·        Govеrnment and business to hold first crisis talks

·        Agriculture to be a priority in the state budget

·        No market for the agricultural production

·        Bulgaria ranks third among new EU members in internet access

·        Taxi services in Sofia increase by 25%

·        First Vietnamese workers hired in Bulgaria's Yambol

·        Sofia airport to attend to 3 million passengers in 2008

·        Czech export for Bulgaria up by 45% in 2008

 

 

 

 

INVESTMENTS:

 

·        Bulgaria's Economy Minister expects new investors in Bulgaria

·        Fraport to invest � 65 M in Bulgaria

·         Nestle Bulgaria invests � 7.2 M in Bulgaria

·        Overgas to invest BGN 38 M in 2009

·        Dunavgas EAD plans to invest BGN 6 M in 2009

·        Bulgarian lubricants maker Prista Oil plans �100 M investments

·        New investor in Kremikovtsi urgently needed

·        Foreign investments in Bulgaria down by 8% since global crisis beginning

 

 

COMPANIES:

 

·        Korean plant to be built in Gotse Delchev

·        Starbucks opens first Bulgarian coffee shop in November

·        Crisis to hit the leasing companies

·       Vinprom Yambol exports 50% of BG red wines

·        Bulgaria's Trace Group says ranked first to build � 97 M underground railway section

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

·        China urged to fight world crisis

·        Crisis crawls into Eastern Europe

·        Credit crunch response should focus on economy, not banks

·        Economist: Bulgaria vulnerable to effects of global financial crisis

·        Bulgaria sets 4.7% economic growth tagret in 2009 budget draft

·        Year 2009 will be really bad as regards finance

 

 

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

 

Bulgarian government adopts economic reform programme 2008-2010

The government has adopted a National Reform Programme for 2008-2010 and an action plan to go with it, the government information service said on Thursday, 23 October. The documents will be presented to the European Commission. They reflect the progress achieved so far, the economic growth and macroeconomic stability, as well as the need to build a competitive, energy efficient economy on the basis of these achievements. A restrictive fiscal and credit policy is placed in a clear-cut framework in the context of the global financial crisis. The programme takes into account the four recommendations of the March 2008 European Council and of the European Commission's Strategic Report of December 2007. They call for accelerated enhancement of administrative capacity in key areas of state governance; curbing the current account deficit and high inflation; improving the business climate; and improving the quality of the labour force and employment. The government has committed itself to three short-term priorities: a clear-cut anti-inflationary policy aimed to bolster financial stability; strengthening the capacity of the state administration; and improving the business climate. The potential of fiscal policy will be the main anti-inflationary anchor. The government will carry on limiting the public sector to 40 per cent to GDP and improving the structure of public expenditure. Spending in support of the potential for economic growth and export through investments in infrastructure, human capital and research will increase as a proportion of total spending. Incomes policy in the public sector will be pegged to the increase in labour productivity. The package of anti-inflationary measures comprises steps to increase competitiveness and restrict the influence of monopolies. The government will continue its efforts to build a responsible, transparent, efficient public administration, which provides quality services. To improve the business climate, offer easy access to the market and encourage effective competition, the government will implement a programme for better regulation adopted in April by simplifying or scrapping administrative requirements. With a view to improving the labour force and the employment rate, the government will increase the effectiveness of active policies in the labour market. To this end, the education system is being reformed to ensure better adjustment to the labour market's requirements.

NEK to pump BGN 336 M into Belene NPP

Bulgaria’s national power grid operator NEK will pay over BGN 336 million for the construction of the Belene nuclear plant, which should spring up in the Danube town of the same name, energy minister Petar Dimitrov said. The bulk of the amount comes from a EUR 250 syndicated loan from French bank BNP Paribas and own resources. A total of BGN 289.9 million has been absorbed so far with the project’s contractor, Russian company AtomStroyExport, pocketing some EUR 100 million. A further EUR 121.5 million will be spent by the end of the year on ordering the equipment, whereas the preparation of the construction site will cost BGN 60 million. In addition, NEK will boosts its capital by BGN 300 million and pump it into Bulgarian Energy Holding (BEH), a newly-created structure bundling Bulgaria’s key power generation assets. NEK’s expenses on the project are not borne by energy consumers because they are not a price-forming element, the minister said.

Costs for construction of Belene NPP not to be added to electricity price

The National Electricity Company (NEC) is not going to add construction costs it will provide for the Belene nuclear power plant to the price of electricity and electricity transfer, Economy and Energy Minister Peter Dimitrov said Friday during Question Time in Parliament. Any costs NEC has for maintenance of the current equipment for the Belene project, as well as costs for fixed tangible assets, are not price-forming, Dimitrov said. Project costs total more than 336 million leva (roughly equal to 168 million euro). Of them, 200 million leva are lent by BNP Paribas Bank and 141 million leva are secured from NEC's own funds. By the end of the year 121,500 million euro will be paid for equipment of the future N-plant whose production has a long lead time. Costs for the preparation of the construction site amount to 60 million leva. Of all costs for Belene from January 1, 2005, to December 31, 2008, which exceed 336 million leva, investments stand at 289,914 million leva, of which 215,520 million were paid to the contractor AtomStroyExport, and the rest, 74,394 million leva, to the Quality Management Programme, for the licensing of the site, to the financial consultant Deloitte and the technical, engineering and architecture consultant WorleyParsons, as well as for state fees, paid through the Nuclear Regulatory Agency. The Minister said that from 2004 to June 30, 2008, the state paid 46,150 million leva for equipment maintenance and conservation, and infrastructure maintenance. Dimitrov said that according to the EU rules this does not constitute state aid since it is not an investment on the part of the state, but costs made by NEC. Of the 250 million euro loan by Paribas, 100 million euro have been spent mainly on payments to AtomStroyExport for project management costs, Dimitrov said.

Belene nuke stirs discord in RWE

 

The construction of Bulgaria's second NPP in Belene (the Danube) turned out to be the apple of discord in the energy giant RWE, reported the German Die Welt.  The RWE were short-listed as the NPP strategic investor.  The company CEO, Jurgen Grossmann plans the company's participation in the project despite the resistance of RWE Supervisory Board.  Die Welt sources say that the decision on this participation had to be discussed at the sitting of the Board in the beginning of November. Die Welt specified that so far mostly the regional shareholders representatives were skeptical about the RWE participation in the construction of the Bulgarian NPP. "It has been rumoured that the mayor of Ruhr Area who is also member of the RWE Supervisory Board feared anti-nuclear demonstrations during the local elections campaigning," the newspaper reads.
The Macedonian MIA agency reported that the Deputy PM of Macedonia, Zoran Stavrevski would meet the Bulgarian Minister of Economy to discuss the opportunity for a Macedonian participation in the construction of the nuclear power plant.

 

 

 

 

 

 

 

Bulgaria and Macedonia agree to complete by November high-voltage power transmission line between Stip and Chervena Mogila

Economy and Energy Minister Peter Dimitrov conferred Wednesday with a Macedonian government delegation led by Deputy Prime Minister Zoran Stavrevski. The participants in the talks discussed the construction of the power transmission line between Stip in Macedonia and Chervena Mogila in Bulgaria, Dimitrov's Ministry said in a press release.The power grids connection at Stip and Chervena Mogila is part of the power infrastructure of European Corridor VIII and a stage of the strategy of the electricity companies of the Balkan countries to strengthen the power transmission systems in the region and facilitate the creation of a regional energy market.The participants in the talks said that completion of the power transmission line will be completed in November. on the agenda of the talks were also the construction of the Belene nuclear power plant and the possibilities for transiting of natural gas to Macedonia via Bulgaria.

 

Economy has run out of fuel

 

In an extensive interview for Pari Daily Dimitar Ivanov, professor in Sheffield Business School, makes analysis of the current financial situation in Bulgaria and abroad. According to him, the main characteristics of the crisis are the collapse of big financial institutions in the world, the fall of the investment banking model and the fact that almost all European countries developed bail-out plans similar to the American. Economies all over the world are literally freezing. Distrust and fear reign in society, banks give no credits.The crisis nowadays is totally different from the economy in the days of the Great depression. It shows how strongly bound the whole financial world nowadays is so the measures should be global.Bulgaria is in a pre-crisis economic and social situation. The first victims are the households and the small and medium-sized enterprises. Their economic activity will be strongly limited in future.Heavy consumption recession awaits Bulgaria. All European economies have already entered recession and the result will be standstill of export to Europe which, on its turn, will lead to drastic stop of our economic growth.In this situation Bulgaria should not postpone any more the development of anti-crisis programme pretending that nothing is happening.

Russia could replace Bulgaria with Romania in South Stream pipeline project

 

Russia may replace Bulgaria with its northern neighbour Romania as a partner in the South Stream gas pipeline project, a Russian daily reported on Monday.The head of Gazprom, Alexei Miller, met on Friday with the chief executives of Romania's state-owned gas pipeline operator Transgaz and gas producer Romgaz, and discussed the possibility to replace Bulgaria with Romania in the South Stream project in view of serious problems", Kommersant reported, quoting unnamed sources."Prospects of cooperation in undeground gas storage and the developing of existing transit capacities and creating new ones were discussed at the meeting,"Gazprom said in a statement on Friday.According to Kommersant, the concept of new transit capacities" included as radical a step as re-directing South Steam from Russia to Europe via Romania.An agreement between Bulgaria and Russia, signed in January, envisages that a 900-kilometre undersea line from Russia would come ashore at Bulgaria's Black Sea of Burgas. The pipeline, initially estimated at $10 billion (7.41 billion euro) will then go south to Italy via Greece and north to Austria via Serbia and Hungary. Bulgaria's demands for a stake in the pipeline operator, ownership on the pipeline in the section crossing the country and a say in the distribution of transit fees interfered with Moscow's plans for Russian ownership over the pipeline, said Kommersant. Gazprom's press service declined to comment on Monday. South Stream gas pipeline, to be jointly built by Gazprom and Italy's ENI, may see first deliveries in 2014, Sergei Korovin, deputy chief of Gazprom's international business department, told reporters in Sofia in a conference call from Moscow in June. The pipeline is projected to carry some 30 billion cubic metres of gas annually to help meet rising demand in Europe. The route challenges a key Azeri gas supply project of the European Union seen as an alternative to Russian supplies, Nabucco. Russia satisfies a quarter of the European Union's energy needs and opponents of South Stream say the pipeline would make the bloc even more dependent on Russian gas supplies.

Deputy PM: “Take it easy! South Stream will not bypass Bulgaria

Regarding some publications for the “South stream” project the deputy prime minister Ivaylo Kalfin claimed firmly that the pipeline could not bypass Bulgaria and that things were going fine and the agreement was being observed. To remind, publications in the Russia media commented that Romania could substitute Bulgaria in the gas pipeline project.Except for the increase in the prices of fuel and natural gas there is no other reason for an extra rising of the price for heating, claimed also Kalfin.According to him the formula under which the price of gas is being calculated with several months delay of the prices of petrol is still not reflected in the price of the natural gas. Therefore a reduction could be expected in the future. The contract for gas supply marks the prices of the petrol products 9 months ago, specified the foreign affairs minister.

Construction of the gas pipe Burgas-Alexandroupolis postponed

The start of the construction of the gas pipe Burgas - Alexandroupolis is postponed until October 2009, Public Works Minister Asen Gagauzov announced, cited by Expert.bg, according to information by Reuters. According to him, the deadline for the start of the exploitation of the pipe is shifted until 2011.Gagauzov declined to reveal the reasons for these changes, but specified that there are no financial difficulties because of the crisis.The Russian side of the project - "Transneft", "Gazprom neft" and "Rosneft", declined to comment on the statement of the Bulgarian minister.According to experts, problems could have arisen because the shareholders of the Caspian pipe consortium, which is to become a major supplier of petrol, cannot reach an agreement on the doubling of the pipe's capacity.The construction of the gas pipe Burgas-Alexandroupolis had to start in the end of this year and the beginning of next year. Its length is 285 kilometers. The gas pipe, which will pass through the territory of Bulgaria and Greece, must reduce the quantity of petrol transferred with tankers through the busy straits the Bosporus and the Dardanelles.

Bulgarians pay BGN 1.3 billion because of corruption

Bulgarian tax payers have been robbed 1,3 billion levs because of corruption in public orders. This represents 2,4 percent of the GDP of the country, data from 2006 shows.The data was presented by Konstantin Pashev from the Association for management monitoring.He explained that this is the value of the over-pay of society for what it consumes as public goods and services because of corruption in public orders.The number does not represent the amount of bribes, which are being paid or the entire quantity of corrupt public orders."Losses from corruption of public orders are commensurate with the funds, which Bulgaria hoped to acquire in the first years of membership in the EU", Pashev commented.According to data from the President of the National association of municipal employees in Bulgaria Valentin Lazarov the new construction and repair works have the greatest corruption potential, as well as big projects, connected with the European funds in the sector.The data was announced during a conference for the reduction of corruption risks in the management of public orders.

Three Bulgarians among the richest in eastern Europe

Three Bulgarians have found their place in the Top 100 of Eastern Europe's richest people. Vassil Bojkov, Hristo Kovachki and Valentin Zahariev own billions in Bulgarian currency, according to charts in the Polish weekly newsmagazine Wprost. The richest of the Bulgarians, Bojkov ranks 61st thanks to his wealth estimated to US 1.35 billion. The energy boss and founder of Leader party, Hristo Kovachki has entered the Top 100 for the first time. Kovachki is placed on 98th place with his US$ 700 million. Valentin Zahariev, former owner of Bulgarian steel processing giant, Kremikovtsi found his way to the top 100, ranking 100th with a wealth calculated to US $ 680 million. The richest man in Eastern Europe is the Russian MP, Suleyman Kerimov who owns US $ 24,5 billion. Last year he was fourth but has gained lead thanks to a highly profitable purchase of shares in gas behemoth Gazprom and Sberbank.

Top 50 in construction with BGN 2.7 B turnover

The biggest companies in the construction business posted a total turnover of BGN 2.7 billion in 2007, the Chamber of Constructors in Bulgaria (CCB) reported. It ranked the 50 biggest companies in the branch in the annual ranking Top 50+. A total of 2,400 companies, members of CCB, took part in it. For the first time this year the classification was done on the basis of information from the public part of the construction business register for the last financial year. The rating is in four categories: high-type construction, transport infrastructure, energy infrastructure and in the area of public works and water-engineering equipment. The criteria taken into account are turnover, personnel and assets.
The biggest company in the branch is Glavbolgarstroy AD with turnover of almost BGN 228.9 million followed by Roads Holding with BGN 151.7 million. The two companies take the first positions in the sections high-type construction and infrastructure. According to Ivan Boykov, executive director of CCB, for now it is not likely a company from the infrastructure section to take the first place as the turnover of such companies is formed mainly from reconstructions due to lack of big infrastructure projects. The situation might change if Trakia highway is finished. In the other two categories, energy infrastructure and public works, leaders are respectively Enemona with turnover of almost BGN 56 million and Geotechmin with BGN 109.3 million.

Business and syndicates unhappy with the price increase of gas

Business organizations and KNSB (syndicate) demand that the Supreme administrative court rescinds the decision of the energy regulator for the new prices of natural gas from October 1 as unconstitutional.This was also demanded through another complaint on Tuesday by the Confederation of employers and industrialists in Bulgaria, the Bulgarian trade-industry court and KNSB.The State commission for energy and water regulation increased by 23.89% the price of natural gas, while "Bulgargaz" demanded 36.5% increase. Through a new application on Tuesday the repeal of this decision was demanded.The regulator's decision is not motivated and unfounded, the complaint points out.According to the filers of the complaint a methodology has not been developed for determining the percentage increase.The State commission has not informed the big consumers of the public discussion of new prices as well as the final decision on them.

Billionaires sell their businesses in Bulgaria

"The world financial crisis is no longer a potential threat to Bulgaria's economy, but a clear and present danger. Businessmen are trying to sell their assets, but nobody wants to buy them," BIA Chairman Bozhidar Danev said. According to him, the decrease in the country's economic growth will be less than the expected four percent. "The demand is shrinking and this will lead to higher unemployment rate, lest some foreign procurements show up. Still, given a reasonable and adequate policy on the part of the Government, Bulgaria may take advantage of the current situation on the world markets by selling its cheaper goods in the countries affected by the crisis, where the consumption is shrinking," Danev said.He however says that neither the banking sector nor the Government seem to be taking any adequate measures.To his words, the retail lending should be restricted in the conditions of a world financial crisis.

 

Govеrnment and business to hold first crisis talks

The Bulgarian government and companies will meet for the first time since the global turmoil exploded to outline and seek ways to address possible negative implications.The conference The financial crisis: Bulgaria in the Global Economy will be held on October 28 by the Confederation of Employers and Industrialists in Bulgaria and Capital weekly.The forum will face Prime Minister Sergei Stanishev and deputy prime minister and interior minister Ivailo Kalfin with World Bank vice-president Kristalina Georgieva, Warren Coats, head of the IMF’s technical mission in Bulgaria during the introduction of the currency board, Fabio Ganzer, Shell international department head, and Ivo Prokopiev, CEIB chairman and publisher of Capital and Dnevnik, to name but a few. The conference will seek to explore the duration of the crisis, the impact of costly money on businesses, the challenges before the energy sector, the world’s new economic heavyweights and the relations between the EU and Russia.

Agriculture to be a priority in the state budget

Milk producers in Bulgaria have received BGN 64.5 million EU and national funds by September 1 and till the end of 2008 will get BGN 60 million more, the minister of agriculture and food Valeri Tsvetanov said in an interview for Pari Daily. The farmers will get BGN 140 million by the end of 2008. Food prices in the whole EU rise and this fact shows that agriculture should be a priority. I hope that in the new budget of the country this will be taken into account, the minister declared.

 

 

 

No market for the agricultural production

The market of the agricultural production in Bulgaria has dropped to nothing, alarm producers from the region of Dobrich. According to experts at the moment there is no buying out and the main reason is the lack of funding of the trade companies. At this stage the banks refuse credits to them or reduce the credits.The traders are still calm that this year's harvest is in the barns. In addition, the prices on the internal market are dropping down. Purchases are not made exactly for these reasons, writes “Narodno delo” newspaper.The trade with this year's wheat starts at levels 132-150 euro depending on the quality. There were quite a few deals at this price. At the moment the price of the bread wheat has fallen to 110 euro. There is not a single word about the fodder wheat.The deals for sale of sunflowers are also very few – initially 250 euro/ton. Currently the price is around 200 euro/ton but there is no real market.The good news is that for the first time the State reserve started buying at prices higher than the market ones. However, the quantities are limited. This could affect only the market in Northwestern Bulgaria because there deals are being made through Sofia stock exchange. At the moment the sunflower market has died out. It depends on the customs duties on the Turkish border. So far the duties for the import of the plant from Bulgaria to Turkey has not be waived.

Bulgaria ranks third among new EU members in internet access

55,1% of Bulgaria's population has Internet access, according to data of internetworldstats.com cited by the Pari Daily.This ranks Bulgaria 15th in the EU as a whole, and third among the new EU member states with only Slovenia (8th) and Estonia (11th) ahead of it. The number of Bulgarians with Internet access is estimated at about 4 million.The first three spots in the rankings are occupied by the Netherlands (90,1%), Sweden (77,4%), and Portugal (72,9%). Greece is ranked last with 35,3% of the population having Internet access.

Taxi services in Sofia increase by 25%

We are starting to readjust taxi counters in the beginning of November, Lyudmil Lazarov, head of the biggest taxi companies in the capital "Ok Supertrance" announced, "Trud" reports. The firm has already made a decision for the increase of prices, he specified.The new tariff for 1 kilometer during the day will be 0,74 levs, while the night tariff - 0,90 levs. The fixed tariff of 0,50 stotinki will be increased to 0,62-0,63 levs, while the price for stay will jump to 0,22 levs form the current 0,18 levs.The other tax companies in Sofia are ready to raise their prices as well.According to clients, however, taxi companies must not increase prices, because traffic jams in Sofia make the service more expensive anyway, while taxis profit well from the stay tax.

 

 

 

 

First Vietnamese workers hired in Bulgaria's Yambol

Bulgaria's factory "Promishlena Energetika" ("Industrial Energy") JSC located in the southwest city of Yambol has hired its first five workers from Vietnam, the Bulgarian Information Agency BTA reported Wednesday. These are the first Vietnamese guest laborers hired under a bilateral agreement between the governments of Bulgaria and Vietnam. Bulgarian firms may hire Vietnamese workers only if no Bulgarian citizens are available to fill the spots.The five Vietnamese will work as welders in the Yambol plant. They are between 21 and 33 years of age, and were selected among 100 candidates in Vietnam by two representatives of "Industrial Energy" JSC.The pay of the Vietnamese welders will be the same as the salaries of their Bulgarian colleagues, and they will have the same rights under the Labor, as well as social and health insurance. The employer is also providing them with apartments and lunch.According to the Industrial Energy JSC CEO Stefan Lazarov, his company was forced to hire the foreign workers over the increasing labor shortage in the region.

Sofia airport to attend to 3 million passengers in 2008

For a third year in a row Sofia airport shows financially stable figures. For 2006, the profit after taxes was BGN 23 million, in 2007 - BGN 21 million, Plamen Stanchev, executive director of the airport, said for Pari Daily. For the eight months of 2008 it is BGN 16 million, which makes us believe that for the whole year the profit will be not less than BGN 22-23 million. By end-December 2008 the port will have attended to over 3 million passengers.

Czech export for Bulgaria up by 45% in 2008

The Czech Republic increased export for Bulgaria for the eight months of 2008 by 45 % to EUR 450 million, the first secretary on trade and economic issues of the embassy said. The import includes mainly automobiles, TV engineering, tyres etc. Bulgaria exports for Czech Republic iron, steel, synthetic rubber etc. The investor interest of Czech companies is mainly in modernisation and development of transport and energy sector, infrastructure and programmes connected with high technology.

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

Bulgaria's Economy Minister expects new investors in Bulgaria

 

"I do hope that the financial crisis will not affect Bulgaria very much and I even dare think that Bulgaria will profit from the situation," Bulgaria's Minister of Economy and Energy Peter Dimitrov said in the coastal city of Varna. To his words, there will not be an ebb of foreign investments due to the favorable business climate in the country. "The European banks are now experiencing certain differences and that's why many companies may decide to rebase their capacities in Bulgaria. These will be businesses that Bulgaria has never expected to have in its territory.Very important negotiations are going on in the sector of the renewable energy sources - the project provides the construction of solar parks.Statistical data show that in August, the output of Bulgaria's industry decreased by 13,4% - one of the first symptoms of the oncoming financial crisis. Financial analysts say that the prices will go down, following the decrease in the prices of crude oil.Before representatives of the business Minister Dimitrov presented an operational program for the development of the competitiveness of Bulgaria's economy in the period 2007-2013. Seven hundred million levs would be allotted under the program by the end of the year. The negotiations with the European Investment Fund about the allotment of 200 million euros are coming to an expected finalization.

Fraport to invest � 65 M in Bulgaria

Fraport Twin Star Airport Management AD, the concessionary of Bourgas and Varna airports, will invest EUR 65 million in the two new passenger terminals, CEO of the company Andreas Helfer said for Pari Daily. Fraport initiated company for founding a special fund to stimulate air companies to keep their flight to and from our sea capital all the year round. The company has invested EUR 15 million in modernisation so far.

Nestle Bulgaria invests � 7.2 M in Bulgaria

 

The food manufacturer Nestle Bulgaria has invested EUR 7.2 million in modernisation of production in the country, the company announced. The strategic brand in the chocolate business of the company is Kit-Kat chocolate dessert which appeared for the first time on our market in 2008. Nowadays, over 16.9 million bars are sold annually in Bulgaria and the company re-launched the dessert which is its first re-launching in the world for the last 10 years.

 

Overgas to invest BGN 38 M in 2009

 

Overgas Inc. will invest BGN 38 million in 2009 in its projects for gasification, the board of directors of the company with chairman Sasho Donchev decided on a meeting on Friday, October 17. Since the beginning of its activity the company has built 1,800 km of gas installations and the plans are in 2009 to exceed 2,000 km. In this way the blue fuel will reach 250,000 households in Bulgaria. Despite the rise in the price, gas remains the cheapest source of energy.

 

Dunavgas EAD plans to invest BGN 6 M in 2009

Dunavgas EAD, Bulgarian gas providing company, operates in 24 municipalities in North Central Bulgaria. Survey shows that between 55% and 70% of the people living in the towns there want to use natural gas. The programme for the developing of the company for 2009 plans to build almost 40,000 m of pipelines and investments at over BGN 6 million. The company is trying to attract young specialists to work there, the executive director Stoyan Manolov said for Pari Daily.

Bulgarian lubricants maker Prista Oil plans �100 M investments

Bulgarian motor and industrial lubricants producer Prista Oil plans to invest at least 100 million euro ($134.3 million) in ambitious expansion in the next three years and expects its sales to grow by an average annual 25-30% in the next three to five years, a senior company official said. The company will aim to expand in production, distribution and marketing of lubricants through acquisitions, strategic partnership deals or greenfield investments, seeking to become a leading European player on the market, managing board chairman Plamen Bobokov told SeeNews in a recent interview. All options are possible. However, we will focus on takeovers and mergers, and I don't exclude long-term partnerships. In case it proves to be not the right business platform, we will undertake greenfield investments in new capacities," Bobokov said. Most probably this will be the scenario on which we work in regard to Russia, but it is still at an early stage. Meanwhile, we have an investment plan to build a logistics base in Georgia but it needs more studying," Bobokov said without elaborating on the company's plans in Russia. He added that regarding Georgia, the political and security situation there must calm down first. Georgia sent troops in August to retake the rebel region of South Ossetia, which rejected Tbilisi's rule in '91-'92 after months of skirmishes with separatists. Russian forces moved into Georgia in response, driving the Georgian troops out of the rebel region, after which it recognised the region as independent. Prista Oil is currently working on six projects which it expects to carry out by the end of next year. If all six happen - good, and if they don't happen - again good - we always have back-up options. But in any case, if we keep to the 85%-success rule, the necessity of funds we will need is roughly 100 million euro for the next three years," added Bobokov without specifying the projects. The company will focus on two main pillars under its three-year business plan - creating a pan-European network of plants with a total combined processing capacity of 450,000 tonnes of ready products and sales of at least 250,000 tonnes a year; and marketing, which will have two sub-pillars - establishing a mutli-brand network aimed at placing the company as the most preferred partner and directly entering the original equipment manufacturers (OEM) market on which it is already present indirectly through a partnership with U.S. Chevron Texaco. The company's units have a current combined processing capacity of 250,000 tonnes of ready products and sales of 100,000 tonnes a year. We intend to sign long-term partnership deals in the Western Balkans and in Greece, and I hope that the signing of the deals in Greece is a question of less than a month," Bobokov said. Last month, Prista Oil became an exclusive distributor of transformer oil for U.S. lubricants maker Ergon through its European subsidiary, Ergon Europe, covering most of the southeast European states and Turkey.The company closed 2007 with a three-fold increase in consolidated net profit of 22 million levs ($15.1 million/11.2 million euro) and a 48% rise in consolidated sales of 303 million levs. It sold 75,000 tonnes of lubricants, 60% more from 2006. Achieved results give us grounds to expect consolidated sales of around 380 million levs in 2008 and a net profit of 35 million levs. For each of the next three to five years, we expect a growth [in sales] of an average 25-30%," Bobokov said. We now need strategic partners in marketing and we are already in talks with a world famous company in that direction," Bobokov said without giving any names. However, the company expects its share of the domestic market to fall - but not to below 50% - from the current 55% due to the high level of competitiveness. In other markets the company sees its market share stable or rising. In Turkey it is expected to reach an 11% market share by the end of the year, compared to just 3.0% at the end of 2007. In Romania, it estimates its market share at 14-15% and in Serbia it will grab a 30% share this year, which is its first year of operations there. In Hungary, it says it has a stable market share of 5.0%. Prista Oil (www.prista-oil.com) has a network of four base oil storage and shipping terminals with a combined capacity of 52,000 cubic metres - two terminals in Korfez, Turkey; one in Odessa, Ukraine, and one in Varna, on the Bulgarian Black Sea. It has three plants - two in Bulgaria and one in Turkey, and co-operates with the blending at Belgrade's oil refinery, Rafinerija Nafte. Prista Oil is the majority shareholder in Bulgarian blue-chip car battery maker MonBat. U.S. investment adviser Gramercy and U.S. Marsdale International are the main shareholders in Prista Oil's sole owner - the Dutch-registered Prista Oil Group B.V.

New investor in Kremikovtsi urgently needed

"A new investor or strategic partner to Kremikovtsi is urgently needed," the plant's bankruptcy officer Tsvetan Bankov said. A day earlier, Kostyantin Zhevago's Vorskla Steel announced that they would leave from Kremikovtsi and would cancel the contract for outsourcing. At present, Vorskla Steel is Kremikovtsi's only creditor. But the situation on the market has changed since June, when the contract with Zhevago's company was signed - metals have gone thirty or thirty-five percent cheaper. "The contract with Vorskla Steel has not been canceled yet and the company is still fulfilling part of the commitments it took. Kremikovtsi is not going to shut down; we are looking for ways out of the crisis," Bankov said."A financial rescue plan for Kremikovtsi will be voted only after the creditors assign a new strategic partner," Bankov went on.
However, potential investors in the plant are very hard to find because of the global financial crisis.

 

Foreign investments in Bulgaria down by 8% since global crisis beginning

 

The foreign investments in Bulgaria have gone down by 7% to 8% since the beginning of the global financial crisis, according to Georgi Ganev, Director of the Center for Liberal Strategies.Ganev spoke before Darik radio on Monday.The total amount of foreign investments in Bulgaria for the first eight months of 2008 is about EUR 1 B less when compared to the same period of 2007, Ganev explained, adding that data was preliminary, and is announced before the 2008 actualization, while the numbers always go up significantly after such actualization. The 2007 data has been actualized, meaning that the difference would be lesser at the end, according to Ganev."I would not be surprised if the final difference would end up being in the vicinity of EUR 0,5 B on a EUR 6 B basis, or 7% to 8% - this is a serious amount, but not too drastic," Ganev concluded.

 

 

 

 

COMPANIES:

 

 

Korean plant to be built in Gotse Delchev

Korean company, producer of lamps using new technology, plans to build a plant in the town of Gotse Delchev in southwest Bulgaria. For several months now Korean specialists have been investigating the possibilities for investing in the region. Their desire is the production of the new plant to supply the countries in Europe. The lamps will be suitable both for inside and outside use.

Starbucks opens first Bulgarian coffee shop in November

Starbucks will open its first Bulgarian coffee shop at the beginning of November 2008 in Sofia, a media statement said on October 21 2008.The chain will enter the country through one of its franchisers, Greek firm Marinopoulos Bros, and the coffee shop itself would be operated by Marinopoulos Coffee Company Bulgaria. This will be the first of many other coffee shops in Bulgaria, the statement said.The coffee shop will be on the corner of Vassil Levski Boulevard and Gurko Street, across the garden of the Soviet Army monument. The premises used to house one of Pizza Hut's first franchises in Bulgaria, but the restaurant was closed down earlier this year. Marinopoulos' initial plans were to have the first Starbucks shops open in mid-2008, targeting a strong presence in Sofia, from where the chain would expand to other big Bulgarian cities, according to reports in Bulgarian media in November 2007.Starbucks enters Bulgaria years after some of its European competitors have done the same. First in the market segment was onda Coffee Break, an Irish-Bulgarian venture in which Greek fund Global Finance now owns the largest stake, followed last year by Costa Coffee.

Crisis to hit the leasing companies

 

Bit by bit the leasing companies increase the interest rates of newly purchased cars. Other leasing companies wait to see the effect of the financial crisis. The year 2009 will be probably the hardest for the leasing companies. They will experience some serious difficulties and due to this will be forced to shrink their volumes, The Trud Daily reports.

 

Vinprom Yambol exports 50% of BG red wines

 

Vinprom Yambol, Bulgaria's producer of wine with 80-year long tradition, has been exporting its production for more than 30 years. It is the company with the highest export rate of red wines in the country, the executive manager Krassimir Avramov said for Pari Daily. The competition on the market is very strong but the company relies on the best technologies that help meet the high quality requirements.

 

Bulgaria's Trace Group says ranked first to build � 97 M underground railway section

 

A consortium led by Bulgarian construction firm Trace Group said on Thursday it has been ranked first to build a 2.15-kilometre section of the underground railway system in Sofia with its bid of 185 million levs ($124.7 million/97 million euro), value added tax excluded.[The consortium] will build two metro stations and an underground parking facility under the Tsarigradsko Chaussee boulevard," the company said in a statement.The tender will officially close on November 1 and the consortium, Metro Trace, only is the first-ranked bidder for the time being, the head of the Metropolitan underground railway operator, Stoyan Bratoev, told SeeNews.Metro Trace will start building another 2.6-kilometre stretch of the underground with three stations worth a total of 142 million levs in December, the statement said.Trace Group has already completed one of the eight operating metro stations in Sofia, a city of more than 1.5 million people according to unofficial estimates. Metropolitan currently operates a single 10-kilometre underground railway, serving some 75,000-80,000 passengers daily.The underground railway system of the Bulgarian capital is planned to reach some 31 kilometres in 2012, when it is expected to serve more than 420,000 passengers per day.Shares in Trace Group closed 0.8% down at 54.1 levs on Thursday.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

 

 

China urged to fight world crisis

 

The global financial crisis expectedly dominated the agenda of the 7th summit of the state leaders of the countries members of the Asia-Europe Meeting in Beijing with a call on China to do more to tackle the global financial crisis.Representatives from the 43 countries attending the summit were hoping Friday that China can help shape reforms in the world's financial system and address economic imbalances."We swim together or we sink together," Jose Manuel Barroso, the president of the European Commission declared, calling for tighter Asia-Europe co-operation in order to survive the crisis."I very much hope that China can make an important contribution to the solution to the financial crisis. It's a great opportunity for China to show a sense of responsibility." Bulgarian President Georgi Parvanov is also in China for the two-day meeting.Mr Parvanov is scheduled to speak during the third session of the forum, which is dedicated to energy security and dialogue among countries.The Bulgarian President is also scheduled to meet the President of Indonesia and the Premiers of Vietnam and India.

 

 

Crisis crawls into Eastern Europe

Having shifted to the Old Continent, the eye of the global financial storm moved above the former Soviet states in Eastern Europe facing Bulgaria with some of the biggest trouble in the region. After vigorously denying that the country was anywhere near the crisis, Bulgarian policymakers owned up to the risk that the contagion may spread over.RBC Capital Markets, the corporate and investment banking division of Royal Bank of Canada, said in an analysis released on October 17 that the financial systems of Kazakhstan and Latvia were the most vulnerable to the turmoil in terms of bank reserves, current account gaps and private loans. Bulgaria was fourth on the list of 15 Eastern European and former Soviet countries and first among the Balkan states.Nevertheless, Prime Minister Sergei Stanishev said the Bulgarian banking and financial systems were stable and liquid enough and met high European criteria.And yet he admitted the crisis was threatening to have an indirect impact on the Bulgarian economy because almost 65 per cent of its exports go to the European Union, which is on the brink of recession.Risks for Bulgarian banks might only come from outside but the Europe-wide measures adopted by the EU minimise the danger for the Bulgarian financial system, the Prime Minister said.In the meantime, the Bulgarian Finance Ministry lowered its economic growth projection to under six per cent and said investments and employment will slow down.Hungary is the best example looming large on the horizon with investors scrambling out of the market, as foreign creditors want local banks to quickly pay back, and the banking system implodes.In Russia, the local divisions of UniCredit, Raiffeisenbank, OTP and ING returned nearly USD 10 billion (7.41 billion euro) to their headquarters at a time when the country is sinking into the deepest crisis in a decade.Danske Bank analyst Lars Christensen has said that a "new Iceland" could be in the making, referring to the collapse of the Icelandic banking system and the nationalisation of its lenders, and warned that many of the Eastern European countries lacked the financial capacity and the technical expertise to bail out their beleaguered banks.The bad news is that even if we get away with the blackest scenario, economic growth would slow down sharply next year, macroeconomic research consultancy Capital Economics forecast.Citigroup said Bulgaria, Romania and Ukraine would feel the pinch before Central Europe and were even facing the prospect of negative economic growth.

 

Credit crunch response should focus on economy, not banks

Bulgaria's Government should focus its response to the financial crisis sweeping the globe by strengthening the competitiveness of Bulgarian firms, which would keep the economy going, rather than worry about the banking system, macroeconomists said on October 21.Bulgaria's banking system was stable and the country's lenders were in no danger of going bankrupt, the co-chairperson of think-tank Center for Economic Development Alexander Bozhkov told a round table discussion in Sofia.The real economy, however, needed urgent measures to boost competitiveness. "The main problem that is already obvious is the dropping investment. The crisis will hurt not the small and medium-sized enterprises, but the big companies, because they are more dependent on foreign markets," he said.Without investment, which in recent years has covered Bulgaria's current account gap fully, the deficit would become a much more pressing problem. Slowing down investment would also curtail exports growth, limiting revenue growth for local companies and reducing the likelihood of increased wages.The way to stimulate the real economy was not by implementing a few drastic measures, but a slew of "trivial" ones, which in their sum would improve the business environment and cut red tape, Bozhkov said. "So far, investment has been coming in not because, but in spite of regulations", which were often cumbersome and time-consuming, he said.Bulgaria could no longer lure investors with the prospect of high returns, which stemmed from its status as an emerging economy catching up with Western peers, according to Bozhkov. "Bulgaria is not an emerging market anymore after joining the European Union. It is a developed market that investors compare to other neighbouring developed markets," he said.Bulgaria's strong economic growth in recent years has been fuelled by borrowed money, but with the credit crunch making financing scarce, the Government should take a more central role in stimulating the economy, the head of the leftist-leaning Institute for Economics and International Relations, Gancho Ganchev, said.As a periferal economy, Bulgaria was experiencing a delayed reaction to the global crisis, but was likely to suffer a bigger impact when the storm finally hit, he said. To counter the effects of the crisis, the Cabinet should abandon its reserves-building policies and stimulate business to alleviate the impact.Specifically, it should make its reserves available to banks to stimulate consumption, while limiting government spending and focusing it on infrastructure upgrades to give the economy a lift.

 

 

 

 

Economist: Bulgaria vulnerable to effects of global financial crisis

The poorest EU member states Bulgaria and Romania are highly vulnerable to the effects of the global financial crisis, according to a Friday's article of the Economist dedicated to Eastern European economies.The article points out that economic growth in Bulgaria remained high but that the country was plagued by huge imbalances. These include its current-account deficit, which stood at 24% in 2008, as well as the negative effects of potential bursting property bubbles and corporate bankruptcies.In the section entitled "The Price of Corruption, the article points out that the EU might be unwilling to come up with a bailout plan for Bulgaria should the need arise because of the failure of Bulgarian authorities to crack down on corruption and organized crime.According to the author, greatest problem in Eastern Europe was not the financial troubles but the corruption and incompetence of the political leaders, who did not manage to govern effectively even in times of bustling economic growth.

 

 

Bulgaria sets 4.7% economic growth tagret in 2009 budget draft

 

Bulgaria has set a 4.7% economic growth target in its budget draft for 2009, significantly lower than previous forecasts of over 6.0%, in view of expected repercussions of the global financial crisis in the country, 24 Hours daily reported on Friday. Concerns that the crisis will affect Bulgaria's economy are mirrored in the budget draft. It has a GDP growth target of 4.7%," 24 Hours quoted unnamed sources as saying. Earlier this month, Deputy Prime Minister Ivailo Kalfin forecast economic growth of 5.0% to 5.5% next year, cutting previous government projections for 6.0%-6.5% growth.The International Monetary Fund and Italy's UniCredit banking group have both projected that Bulgaria's economic growth would slow down to 4.2% in 2009. The government expects growth of 6.2%-6.5% in 2008, Economy Minister Petar Dimitrov said in August. The ex-communist state of some 7.6 million people, which is running a huge current account deficit and operates a currency board regime that prevents the central bank from lending to the government, has pledged to stick to rigid fiscal policies, including the maintaining of a budget surplus of more than 3.0% of the projected GDP, in order to offset external shocks.

 

Year 2009 will be really bad as regards finance

The financial crisis will not be quick to go and will not spare Bulgaria , believes Professor in Economics, Jacques le Cacheux. Jacques le Cacheux is a notable French professor, giving lectures in a big number of prestigious universities, some of them Sciences Po and the Stanford University in Paris. Thanks to the kind cooperation of the French Institute in Sofia and France's Embassy to Bulgaria, Professor Le Cacheux commented for the Standart on the world financial crisis.

 

Professor Le Cacheux, the world is going through a financial crisis. Is this crisis different from previous such predicaments and if so in what way?

 

The crisis we are experiencing today is definitely different. Firstly because it is of a worldwide scale and secondly because it is deeper than those before. The crises of the past were localized in either a definite part of the globe or affected a definite type of a market. Today the whole world is affected, all financial and banking markets.

 

What is going on today is often likened to the Great Depression that started in 1929. Do you agree with such a comparison?

To a certain extent I do, because of the banks' bankruptcies, the crashes at the stock exchanges in different countries, the investors' panic, the lost of trust, all these strongly remind of the events in the beginning of last century. Of course there are differences.

 

Can we say that the world is on the threshold of a new financial order, of a new epoch?

 

This is not easy to predict. Everybody says nothing will ever be the same but such statements are abundant at any crisis. The future will depend on whether the crisis will be really a deep one and whether it will take long or not. If it is soon over, the majority will want just to forget about what has happened. I think, though, that this crisis will take a long time at least a year in any case. So, 2009 will be really a bad year, everywhere - in Europe and in the USA and for the world economy. Because when the two main markets of the world economy go wrong, its general condition cannot be good.So,I believe this crisis will not be a short one. The question is what the political will of the governments and especially those in Europe will be. So far no coordination on the common rules for the banks has not be achieved in the EU.

Will the crisis make a deeper impact on poorer economies such as the Eastern European?

It's not for certain yet there will be a deep impact. What is certain though, is that there will be negative consequences. And I can't imagine Bulgaria or other countries like it could avoid these consequences. But will there be a deeper impact. Bulgaria's economic growth rate might slow up and yet remain positive despite all. Bulgaria is very open to the EU. And if the EU suffers economic issues, it would inevitably take the Bulgarian economy down as well. Moreover, the Bulgarian industry depends mostly on the EU. And because the Bulgarian social welfare system is far less generous than the French one or any other Western European one, the consequences will be most severe on the poorer part of the population. There will be a rise in the rates of both poverty and unemployment.

What is the future of Bulgaria's economy?

I'm not an expert on Bulgaria so I couldn't say whether my prognosis would come true. Generally speaking, if the economies of the old EU members retain lower growth rates over a prolonged period of time, there will surely be bad effects on the economies of the rookie member countries. The situation, however, depends also on the way governments manage the crisis. Besides, if Bulgaria absorbs the EU infrastructure funds quickly, demand will increase alongside the competitiveness of the economy.