불가리아 주요 경제뉴스 ( 16 – 23 JANUARY 2009 )

 

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 16 – 23 JANUARY 2009 )

 

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Bulgaria president hits Asia for remainder of January

·        Bulgarian, Azeri presidents discuss power industry, energy security

·        EC: Bulgaria to expect 1.8% economic growth in 2009

·        Bulgaria presses EU on re-opening of nuclear reactors

·        Starting Kozloduy NPP unit is a protective measure

·        Bulgaria to profit $130 M if Kozloduy NPP is restarted

• EC Firmly against the restart of Kozloduy units 3 and 4

·        Bulgaria protected its national interests in energy package

·        Bulgaria's Energy Minister: We got gas, crisis over!

·        Varna-Caucasus ferry line to be opened in March

·        Over 169 million levs losses from the gas crisis

·        Bulgaria insists on cheaper gas from Russia

·        Bulgaria to ask for EU aid if gas crisis losses reach 0,6% of GDP

·        Pressure mounts on construction industry

·        Bulgaria construction sector moves from residencies and hotels to infrastructure

·        Bargaining reigns on property market

·        20% decrease of real estate prices in Sofia

·        Government decision on new Kremikovtzi investor due

·        EU opens Phare money tap to Bulgaria

·        Prospects of summer tourist season still unclear

 

 

 

 

 

 

 

INVESTMENTS:

 

 

·        State to lower investment floor to BGN 30 M

·        Non-ferrous metals plant KTsM to invest € 153.9 M until 2011

·        Burgas municipality to invest EUR 50 M in city transport

·        French Dalkia speeds up biomass project in Varna

·        Sparki Group to invest BGN 79 M

·        Symantec eyes investment in Rousse

• € 35 M to be invested in 2009 in Bourgas Airport, Varna Airport

·        Bulgaria earmarks € 9.2 M to upgrade Plovdiv Airport by mid-2009

·        Austria’s WBG to build biomass plant in Ihtiman

·        Austria’s DM opens first Bulgarian drug store

·        Bulgaria's Foreign Direct Investments decrease slightly in 2008

 

 

COMPANIES:

 

·        Technopolis pours BGN 12 M into third Sofia store

·        Siemens Bulgaria sales up 40% in 2008

·        American Express launches internet site in Bulgaria

·        Intracom Telecom signs contract with Bulgaria largest telecommunication company

·        A Chimimport company acquires Air Ban from DZI

·        New schemes for companies worth € 100 M

·        Kirov AD with 10% growth of turnover in 2008

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

·        Five Bulgarian ministries advance investments to tackle financial crisis effects

·        Bulgarian export is shrinking

·        Guardian: Financial crisis to bring "Sping of discontent" in Eastern Europe

·        Crisis nibbles away at Bulgaria’s tax revenue

·        Analysts warn of public investment

·        At least 3 years needed for Bulgaria to overcome the crisis

·        Vasil Vasilev, financial analyst at Karoll Capital Management: It’s raining bad news

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

Bulgaria president hits Asia for remainder of January

The Bulgarian President Georgi Parvanov is going to make formal state trips to three Asian countries, including Japan, by the end of January. According to the schedule provided by his press service, Parvanov is leaving for Azerbaijan Wednesday, where on Thursday he is going to have meetings with top Azerbaijani officials over energy, economic, and trade cooperation.This will be Parvanov's second visit to Baku in less than a year. In March 2008, Bulgaria's President had a three-day visit to Azerbaijan. This was followed by a visit of the Azerbaijan Foreign Minister Mamedyarov to Sofia in April, and a visit by Bulgaria's Economy and Energy Minister Dimitrov in June.Securing Azerbaijani natural gas for the EU-sponsored Nabucco gas transit pipeline has been the main topic of the extremely intensive Bulgaria-Azerbaijan contacts in the past year.Between January 25 and January 29, Bulgaria's President is going to have a four-day visit to Japan. Parvanov and the Bulgarian First Lady Zorka Parvanov will be welcomed by the Japanese Emperor Akihito and Empress Michiko, with whom they are going to have an official luncheon. Parvanov is also going to meet with Japan's Prime Minister Taro Aso, and with members of both chambers of the Japanese Parliament. He will open a Bulgaria-Japan business forum, and exhibition of Bulgarian Thracian treasures.Between May 13 and 16, Bulgaria will be visited by Princess and Prince Akishino, who is the second son of Emperor Akihito, and second in line to the throne. The visit will be part of the Japanese initiative "2009 - Year of Japan-Danube Friendship".After his trip to Japan, Bulgaria's President is heading straight to Vietnam, where he will be on a visit from January 29 until January 30 at the invitation of his Vietnamese counterpart Nguyen Minh Triet. Parvanov will meet with the Chair of the Vietnamese Parliament Nguyen Phu Chong, and with members of the Vietnamese Association for Friendship with Bulgaria.

Bulgarian, Azeri presidents discuss power industry, energy security

 

Bulgarian President Georgi Purvanov Thursday paid a working visit to Azerbaijan at the invitation of Azeri President Ilham Aliyev, Purvanov's Press Secretariat said. The two heads of State discussed questions concerning bilateral relations and economic cooperation.Special attention during the talks was paid to bilateral relations in the field of the power industry and energy security. Presidents Purvanov and Aliyev confirmed their earlier agreement on Azeri natural gas deliveries for the needs of Bulgaria and said that the competent companies of the two countries must immediately start negotiations.Purvanov and Aliyev concurred that the Nabuco project must be implemented because it offers European gas-importing countries a tangible diversification of supplies, but implementation of the project requires a greater activity in political respect.The two presidents also commented on the role and capabilities of the rest of the Caspian basin countries regarding the construction of the planned gas pipeline.Aliyev confirmed his participation in the "Natural Gas for Europe: Security and Partnership" Summit in Sofia in April 2009, and he described its subject as "topically relevant" and the holding of the forum as "timely."

EC: Bulgaria to expect 1.8% economic growth in 2009

Realistically, Bulgaria's GDP growth would not go over 1.8 percent in 2009, but would get to 2.5 percent the next year, according to the preliminary economic prognoses of the European Commission. The expectations for 2009 are that Bulgaria's economy would be less active due to decreased internal demand and tightened crediting conditions; that inflation would drop from 12% in 2008 to 5.4% this year and 4.8% in 2010; that unemployment will grow from 6% in 2008 to 6.3% and 6.4% in 2010 and 2011.
In case, the presumption that the share of export and the prices would dwindle proves right, it would be normal if Bulgaria's trade deficit shrinks. The now current account deficit was to fall well under 20%, the EC's experts predicted for Bulgaria.

Bulgaria presses EU on re-opening of nuclear reactors

The Bulgarian parliament decided Friday to ask the European Union to consider the re-opening of two reactors at the country's sole nuclear plant in Kozloduy, closed for safety reasons since 2006.Parliament voted 140 to 48 in favour of a motion to request the EU Commission to examine the possibility of re-opening the two reactors, which were shut because of EU safety concerns hours before Bulgaria joined the EU on January 1, 2007.
The EU had sought the closure of the old but modernised VVER 440-megawatt reactors, which lacked stable confinement structures in case of a radioactive leak.In the parliamentary vote on Friday, there were 23 abstentions."The government has been instructed to examine, in cooperation with the (EU Executive) Commission, the possibility of restarting the reactors in line with EU law and in accordance with the technical possibilities and security requirements," the motion said. Sofia would also "ask the appropriate EU bodies to re-think their ruling that the reactors must be shut down in face of the international and economic crisis and the current energy supply crisis," it stated.Both Bulgaria and Slovakia were ordered to shut down their old nuclear reactors as a condition of EU membership but have talked about re-starting them again in the light of the Russia-Ukraine gas dispute. The crisis has hit Bulgaria especially hard as it relies almost entirely on Russian deliveries via Ukraine for its gas needs.

Starting Kozloduy NPP unit is a protective measure

Gas crisis would be over for Bulgaria when we start receiving gas from Romanian town of Isakcha. Then only 24 hours would be necessary to the gas to reach Bulgaria. Both Russia and Ukraine are responsible for the crisis and it is political, Bulgarian Minister of Economy and Energy Patar Dimitrov said to BTV channel.It is not true that we haven’t thought of alternatives before. We having talks with Greece for quite a long time, the Minister explained.We are watching about 357 enterprises in the country that are directly dependent of gas and the daily losses are about BGN 1,4 million, Patar Dimitrov said and added that we suffer losses from the gas crisis and we have rights to undertake protective measures, according to the EU pre-accession treaty. “Starting Kozloduy NPP unit is a protective measure and we have rights to do this as observing exactly that treaty”, Patar Dimitrov said.

 

 

Bulgaria to profit $130 M if Kozloduy NPP is restarted

Bulgaria would profit $130 million if one of the decommissioned units of Kozloduy NPP were restarted, said yesterday Ivan Genov - director of the NPP in an interview with Bulgarian National Radio. Kozloduy NPP has recycled nuclear fuel sufficient for 5 months, so in case the produced electricity is sold on the Balkan markets Bulgaria would be able to earn good money. If the electricity were to be sold in Bulgaria, the profit would be $100 million, stated Genov. Further on he announced that currently unit 4 is going through a preparation process and is being upgraded to meet the EU requirements. As of today talks will start for obtaining a licence from the Nuclear Regulatory Agency. This will allow reactivation of the unit in a week after the cabinet takes a decision.

 

EC Firmly against the restart of Kozloduy units 3 and 4

 

Brussels would not allow Bulgaria to switch on the NPP units in Kozloduy that were traded against the country's accession to the EU in 2007. The European Commission does not believe the re-start of units third and fourth could help Bulgaria solve the gas crisis problems in short terms, Ferran Tarradellas, Spokesman of the EU Energy Commissioner, Spiebalgs told the Bulgarian National Radio yesterday. He pointed out that the European Commission was doing the necessary for the real solution of the problem via immediate restoration of gas supplies. The spokesperson also said that by now no official demand had been received in Brussels for the restart of the nuclear units from Bulgaria. Sofia's stand on the reopening of the decommissioned units came in the words of Bulgaria's Prime Minister, Sergey Stanishev who said that the option was being considered closely but all sides of the issue should be taken into account."Reopening of third and fourth units means that Bulgaria will lose the compensations that Europe pays for their untimely decommissioning," said Bulgaria's Prime Minister Sergey Stanishev yesterday. He added that such an initiative may create tension between Bulgaria and the European Union and that analysis should be made on the Bulgarian projects and initiatives that would not be financed as a result of that tension. The Prime Minister believes the gas crisis was almost over. To his words very precise calculation of the possible economic profits and losses should be made if such a decision is made and reminded that the expiry date of the units is 2010. on the other hand Bulgaria's Minister of Energy, Petar Dimitrov told the bTV that the official pledge of the Bulgarian Government for temporary re-decommissioning of the fourth nuclear units would be submitted on February 10. To his words PM Stanishev will then present Bulgaria's stand in Brussels.

Bulgaria protected its national interests in energy package

The success of this country at the December European Council in Brussels, when the Climate - Energy Package was approved, is a result of the clearly formulated Bulgarian national interest, the good interaction with the Central and East European (CEE) countries and the active dialogue with the EU French Presidency and the European Commission.Prime Minister Sergei Stanishev said this Friday during Question Time in Parliament taking a question of Plamen Panayotov, Bulgarian New Democracy MP, regarding Bulgaria's positions on the agenda of last 2008 session of the EU member state leaders.The packages's initial variant proposed by the European Commission was too difficult for the Bulgarian energy sector and for the Bulgarian consumers as a price, Stanishev reminded. According to him, the energy package and the ambition of the EU to be a global leader in decreasing the carbon dioxide emissions, for increasing the share of the renewable energy sources (RES) and many other aspects has its price."This price was difficult for Bulgaria in the initial variant prepared by the European Commission and we, jointly with other eight CEE countries, formulated clearly our positions and this enabled us to carry out active and real negotiations on this issue," Stanishev said.Bulgaria has protected successfully its interests through defending the principle of solidarity regarding the redistribution of auction rights, which takes into account Bulgaria's contribution to decreasing green houses gas emissions in the 1995-2005 period.Fifteen per cent of this common package, which in its essence is a compensation for the CEE countries, is for Bulgaria, which ranks this country third after Poland and Romania.Among the achievements of this country in the energy package, Stanishev underscored the point of auction in electricity production, the derogation for the Bulgarian side - postponement of applying the plan by three years; setting 2016 as the time for a new meeting of reevaluation, as well as the start from much lower levels of auctioning the noxious emission quotas - from 50 to 30 per cent.

Bulgaria's Energy Minister: We got gas, crisis over!

Bulgaria's Minister of Energy and Economy Petar Dimitrov announced Wednesday that the austerity measures in natural gas consumption would be lifted as of 2 pm the same day, January 21."We have gas, the crisis is over", the Minister declared explaining all technical conditions to do away with the restrictions were available as Russian gas had started to flow in full-speed after Russia and the Ukraine resolved their gas pricing dispute.Dimitrov also said it would take the heating utility companies a while to switch back from oil to gas, and that some of them were actually planning to continue using oil as it was more profitable for them.The Minister announced that Bulgarian companies had incurred direct losses of over BGN 180 M because of the gas shortage crisis. However, Bulgaria could sue for compensations only with the three Gazprom subsidiaries that are its suppliers; it could not have any claims against the Ukraine because the two countries had not natural gas transit contracts.The Bulgarian Ministry of Energy and Economy is not going to disband its Emergency Staff for dealing with the gas crisis because it wanted to have its officials analyze the situation in detail, and to figure out the mistakes that were made in securing alternative energy sources.

Varna-Caucasus ferry line to be opened in March

Ferryboat line between Varna and Port Caucasus on the Kerch Strait in Russia will be opened at the beginning of March this year, Simeon Ananiev, head of Railway Administration Executive Agency in the Ministry of Transport, said for Pari. The contract is for cargo till the end of 2009 using Russian private carriages. With the opening of the new line price for cargo of containers will become cheaper by USD 500 per carriage.

Over 169 million levs losses from the gas crisis

The losses, calculated by companies up to the present day, are about 169 263 699 levs. This was announced by the Economy Minister, cited by BTA.These are the direct losses, which different companies incur, the Minister specified. By the end of the day the Crisis headquarters will choose the consumers, which have the greatest need of receiving natural gas.Now the big question is that Russian gas flows in the network, so that we can release bigger quantities to consumers.Gas is most urgently needed in fertilizer and metallurgical factories, Dimitrov added.Among the consumers, who urgently need an increase of deliveries, are the companies "Stomana" (Pernik) and "Agropolichim", as well as some greenhouses and animal farms, in which there is a heating crisis.Dimitrov added that starting tomorrow morning the regime of gas will be changed, so that the industrial consumers in greatest need receive more blue fuel. The Minister specified that for now central heating companies can continue working on black oil, because if natural gas is delivered to them, the needs of the industry will have to be limited, which is not a good idea.

Bulgaria insists on cheaper gas from Russia

"Bulgaria will insist on a gas price discount in the price of gas as a compensation for the blocked supplies during the gas row," Bulgaria's PM Sergei Stanishev stated yesterday.
A day earlier, Bulgaria's Minister of Economy and Energy, Peter Dimitrov said it was possible that Bulgaria would demand a 8% discount of the gas price. The Director of Bulgargaz, Dimitar Gogov, explained it was hardly possible that Gazprom would agree on signing a direct contract but there was a possibility for a change in the components of the formula which calculated the price of gas. "First of all, it is necessary to make exact calculations of the losses caused by the gas row. The calculations will be presented to the EU, Russia and Ukraine," PM Stanishev explained. According to the calculations made in Bulgartransgaz, due to the crisis, Bulgaria missed to receive over 123 million cubic meters of natural gas from the daughter companies of Gazprom."We shall make joint efforts with the other affected countries to seek compensations," Stanishev added further.
In Stanishev's opinion, the most effective instrument is the common stand of the EU member states.

 

Bulgaria to ask for EU aid if gas crisis losses reach 0,6% of GDP

 

Bulgaria's Minister of Energy and Economy Petar Dimitrov said Thursday that the government would ask the European Commission for aid if the country's losses from the recent natural gas shortage crisis top 0,6% of its GDP.The Minister announced in the Parliament that the Bulgarian economy had lost over BGN 197 M from the gas cutoff resulting from the Russia-Ukraine pricing dispute. However, he also said that sum was expected to grow as the losses were still being calculated.Of the 406 large-scale industries that the Ministry has been monitoring, 266 have reported direct losses from the gas cutoff.The Chair of the Parliamentary Energy Committee Ramadan Atalay from the ethnic Turkish Movement for Rights and Freedoms (DPS) predicted that the losses of the Bulgarian economy might reach BGN 500 M.Atalay announced the Energy Committee had decided in favor of talks with the European Commission for the restart of the two shut reactors of the Kozloduy Nuclear Power Plant. Units 3 and 4 of the plant were turned off on January 1, 2006, in accordance with Bulgaria's EU accession treaty.The motion of the Committee in favor of starting talks on the reactors' reboot was supported by the Bulgarian Socialist Party and DPS from the governing three-way coalition, and by the centrist Bulgarian New Democracy party, the far-right Ataka party, and the right-centrist Movement "Forward".The rightist Democrats for Strong Bulgaria and Union of Democratic Forces as well as the National Movement for Stability and Progress, which is part of the governing coalition, were against the measure claiming it would likely lead to sanctions against Bulgaria by the European Commission.

 

Pressure mounts on construction industry

The crisis in the construction sector is aggravating on both sides of the Atlantic, showed the latest data about the US and Europe.Housing starts in the EU fell by 1.6% in November compared to October, when they rose 0.5%.Bulgarian companies broke ground on 6.1% fewer new properties month-on-month in November, ranking the country among the bloc’s worst performers after Portugal (- 0 6.5%) and Slovenia (- 20.3%), according to statistics of Eurostat, the EU's statistical office.On an annual basis, however, Bulgaria’s new-built construction market expanded 2.4% in the year through November, although slowing down from 14.9% in October and 17.1% in September.Housing starts in the eurozone dropped 4.7% for the 12 months, with the UK reporting a 6.3% fall and Spain slowing September’s staggering 24% plunge to 9.7% in November.Yet another bleak forecast came true in America yesterday when the Commerce Department unveiled a 16% monthly drop in housing starts for December, hitting a 50-year low, down 33% from the summer of 2007.Building permits in the US, an indicator of future projects, were also at a record low.“The housing industry continues to confront unprecedented downward pressure,” Jeffrey Mezger, CEO of KB Home, one of the biggest US construction companies, told Bloomberg.

Bulgaria construction sector moves from residencies and hotels to infrastructure

The exact losses incurred by the construction sector as a result of the global financial crisis would be known in April after the Bulgarian Construction Chamber completes their report.The information was given by the Chamber's Director Ivan Boykov.According to Boykov, the situation was the most critical on the Bulgarian Black Sea Coast where many constructions projects have been halted.The Director further pointed out that the construction sector was diverting from hotels and residential buildings to infrastructure projects from the EU operational programs. Despite the crisis, just in December ,140 new construction firms have been listed in the Bulgarian trade register.The crisis is affecting adversely mostly small and medium-size companies and they are letting many of their workers go, Boykov explained, adding that big companies were likely to keep their qualified teams of workers, which would guarantee the high quality of construction works in the country.

Bargaining reigns on property market

The year of 2009 started well for the people who want to buy properties in Sofia. Those who have money in cast can bargain and get unseen discounts. According to brokers, most sellers are ready to offer up to 20% drop of initial price and purchases without bargain are rare.Analysts from Yavlena real estate agency say that prices fell in all residential districts of the capital. The market in the south part is the most stable with high demand and the least drop of prices of 5-15% to EUR 1,050-1,250 per sq. m, while in the most prestigious and central parts there is almost no dip of the prices but purchases do not exceed EUR 2,000 per sq. m. The greatest slump have been in the west and north residential regions that registered 10-20% reduction of prices to EUR 700-800 per sq. m at the beginning of 2009 compared to the same period of 2008. There are two types of customers on the market: those that urgently need a housing place and those with cash that want to invest in properties. In both cases the aim is to reach the most attractive price. The main source of cash is the purchase of land in the holiday resorts and big cities that have to be invested in something, Mladen Mitov, analyst from Yavlena real estate agency, commented. Grey economy in the country is a fact that holds 50% of the market, i.e. incomes are not announced thus increasing the cash resources.

20% decrease of real estate prices in Sofia

In the end of 2008 and the beginning of this year the price of real estate in Sofia has decreased by up to 20% compared to the first months of last year. At the moment, deals are being done mainly for two reasons: either the buyer has an urgent need of real estate or the seller needs money, brokers comment. The rest are waiting.Most significant is the decrease in northern residential districts of Sofia like "Levski" and "Nadejda". There, the decrease of prices in the end of 2008 reaches almost 20%.If in the beginning of last year real estate was sold on average at about 900 Euro/square meters, at the moment is about 700-750 Euro/square meter.In the end of 2008 the decrease of prices in Western residential districts is between 10 and 20%. For example, if the average price of real estate in "Lyulin" in the beginning of 2008 was 930 Euro per/square meters, in the end of the year it is 800 Euro/square meter. There is a decrease of prices in Eastern residential districts as well, mostly in "Mladost".Brokers comment that panel properties and apartments in an initial stage of construction have almost disappeared from the market. The reason is that at the price of a panel apartment, one can find a new apartment and construction has almost stopped completely.

Government decision on new Kremikovtzi investor due

The decision of Bulgaria's Ministry of Economy and Energy to pick up one of the two main bidders for the Kremikovtzi steel factory is due Wednesday. The Ministry and the plant's bondholders are bound to choose the new operator of Kremikovtzi between the Ukrainian company Smart Group and the Brazilian CSN as the trade unions have set a condition that the decision be made by January 21, or otherwise the workers' protests are going to be resumed. With the announcement of the new investors, the first fresh supplies of raw materials are expected to be received at the factory by the end of the week, which will be used to restore its production. Kremikovtzi's manufacturing operations have also been reduced tremendously because of the shortage of natural gas that Bulgaria experienced as a result of the Russia-Ukraine gas dispute. Bulgaria's Energy and Economy Minister Petar Dimitrov has promised that the first larger gas supplies the country would get on Wednesday would used to fuel up the metallurgical and fertilizer factories.

EU opens Phare money tap to Bulgaria

Bulgaria stands a chance to receive some of the frozen by the European Commission funds under the Phare program. Well-informed sources told the Standart that Mr. Michael Leigh, Director-General for Enlargement, had sent a letter to Bulgaria's Ministry of Finance, the Ministry of Regional Development and Public Works and to the office of Meglena Plugchieva, Deputy PM in charge of EU funds management, in which he writes that Bulgaria achieved certain progress in the absorption of EU funds over the past few months. The Standart also learnt that the Bulgarian Government would start negotiations over the unblocking of the EU funds frozen by the European Commission under the Phare program. EU experts are carrying out the one in a row review of the absorption of funds under the Phare program in the poorest and, reportedly, most corrupt member of the EU. The official report of the European Commission will be ready at the end of this month, when Mr. Leigh is expected to arrive in Sofia and the Bulgarian politicians will try to negotiate at least partial defrost of the frozen EU funds. The Bulgarian authorities will try to convince Brussels that all necessary measures against the mismanagement of EU funds under the Phare program have been taken.According to a recent publication in the European Voice, Brussels may decide to defrost some of Bulgaria's financing under ISPA, the larger part of which is meant for the construction of the Lyulin highway. The article further reads that the European Commission may decide to unblock 115 m euro of frozen EU funds following signals that Bulgaria has executed efficient reforms in its executive agency "Roads". The Bulgarian News Agency BTA has been informed by official sources that representatives of the European Commission are to visit Bulgaria on January 28-30 and discuss the problems with the frozen financing under the ISPA program.

Prospects of summer tourist season still unclear

The prospects of the summer tourist season are still unclear due to the global financial crisis, according to Albena Resort CEO Krassimir Stanev, BTA reported. "We expect a reduced number of tourists from the European market, however if the decrease is between 2 and 15% compared to the last season, it would not be a catastrophe, Stanev said. He added that there is good interest in bookings for Albena at the current tourist exchange in Stuttgart, Germany. Many Romanian tourists have also booked Easter holidays in the resort.According to Stanev, the big issue is how the Russian market would react under the conditions of a global financial crisis. In 2008, the Russian tourist share reached 18%. Russian tourist operators, which are Albena's counterparts, report a depression, even outflow of tourists from Bulgaria's winter destinations. There is a risk that part of the Albena hotels, offering a total of 15,000 beds, might remain closed. Stanev said that the resort will be happy to maintain last season's results, when 160,000 tourists spent vacations there.An extraordinary general meeting of Albena AD on Sunday decided to buy 99.99% of the capital of Intersky company for the total price of 22.577 million leva. Intersky, which owns an airport at the Lesnovo village near Sofia, is part of Albena Holding AD. The meeting adopted also a proposal of the Directors' Board of Albena AD to sell 47.83 per cent of the capital of Albena Invest Holding for 26,700.701 leva at a share price of 10.15 leva. Buyer of the shares will be Albena Holding AD.By these two transactions the management structure of the companies will be simplified and a better opportunity for concentration of capitals will be created, Stanev explained. According to him, the transactions will be finalized for a period between three months and one year.The Lesnovo Airport runway is to be enlarged to enable landings and taking-offs of aircraft of over 5,700 kg. Night landing equipment will be installed as well. A park for owners and users of light and superlight aircraft will be constructed on the free 23 ha within the airport infrastructure, the Board of Directors said.

 

 

 

INVESTMENTS:

 

State to lower investment floor to BGN 30 M

The Bulgarian government will lower the investment promotion threshold to BGN 30 million from 70 million at present and suspend the class A and B division, under proposed legislative changes. The announcement was made by deputy energy minister Yavor Kuyumdjiev, whose ministry will table the proposal with the Council of Ministry by end-January. The measures aim to beef up investment support, which was so far extended mostly to large-scale projects of over BGN 70 million, the official said. Just above a dozen investors received government help last year due to the high threshold, showed an analysis of InvestBulgaria, the local investment promotion authority. Under the current legislation the state backs first-class certificate awardees, who develop projects worth at least BGN 70 million, with building adjacent infrastructure. Second-class investment certificates offer fast-track administrative support to investors who pump at least BGN 20 million. The proposal will also put down to BGN 4 million from BGN 7 million the threshold for high-tech investments. The registration procedure for Bulgaria’s state-run industrial zone development company should be wrapped up by the end of the month. The first half a dozen zones should emerge by the middle of the year. However, businesses took the planned amendments with a pinch of salt due to the fuzzy selection criteria about zone locations. The first industrial zones should be built in areas with high jobless rates, said Kiril Asenov, manager of window coverings manufacturer Arexim, noting that industrial employment in the southern town of Smolyan has shrank to about 1,000 people from 16,000 in the last twenty years.

Non-ferrous metals plant KTsM to invest € 153.9 M until 2011

 

Non-ferrous metals refinement plant KTsM Plovdiv will receive a first-class investment certificate tomorrow for a BGN 301mn (EUR 153.9mn) project for modernisation and expansion of its production capacities. The upgrades are to be completed until October 2011. The plant will install the new equipment at its current site in the southern city of Plovdiv without interruptions of the production process. The project will open 120-135 temporary and 145 permanent jobs. The company has prepared a prospect to launch 10 to 15% of its capital on the stock exchange but the project was delayed due to the economic crisis. At present, KTsM Plovdiv runs capacities to manufacture 75,000 tons of zinc, 118,000 tons of sulphuric acid and 65,000 tons of lead annually, according to company’s information. It accounts for 80% of the country's zinc and lead production and exports more than 90% of it mainly to Greece , Turkey and neighbouring Balkan countries The net profit of the company fell to BGN 15.4mn in 2007 from BGN 68mn in 2006.

Burgas municipality to invest EUR 50 M in city transport

The southern Black Sea city of Burgas is planning to apply for financing in the tune of EUR 50mn under the operational programme for regional development of the EU. The funds will be invested in modernisation of the city transport network. The plans comprise extension of the trolleybus network by 19 kilometres, purchasing of 20 new trolleybuses and 100 new buses, improvement of the transport system and construction of city railroad system. The pre-project preparation is expected to finish by end-2009 and the project will be submitted for approval next year.

French Dalkia speeds up biomass project in Varna

Dalkia Varna, the former Varna district heating company, will not curtail investment plans under pressure from the ongoing global financial crisis, said executive director Ilia Nikolaev. The company wil pour BGN 2 million to replace the pipelines in its heating energy transmission grid and a further BGN 1.5 million to expand the network and hook in new customers. The firm currently heats some 12,000 households.Dalkia will speed up its project to build a biomass-fuelled installation, said the company’s chief executive, Dominique Duda.The facility was to go online by the year’s end but the start will be most probably put off until 2010, according to the official.The plant will have a rated capacity of 5 MW and feed on straw or pure woodchips.The new unit and the co-generation facilities opened in Varna last autumn will cut natural gas consumption in the city to the lowest possible level, under company estimates.Under a new pricing strategy aimed at collecting outstanding debts and encouraging loyal payers, as of this month Dalkia Varna will offer a 5% discount for buildings where more than 80% of the households use central heating. Customers who pay their bills by the end of each current month will get a further 10% price discount. Unpaid bills have generated Dalkia Varna a loss of BGN 1.2 million, interest excluded, the utility said.

Sparki Group to invest BGN 79 M

Bulgaria's machine building company Sparki Group will invest BGN 79 million between 2009 and 2011. In 2008, the plant got investor's A class certificate for its new production capacity in the factory in Rousse worth BGN 59 million. The project will be finished in three years and will open 220 working positions. Since 1997, Sparki AD Rousse has invested a total of BGN 30.8 million. The other BGN 20m will be invested in Sparki Eltos-Lovech.

Symantec eyes investment in Rousse

Symantec, the global security software developer, is studying investment options in Bulgarian Danube town of Rousse, said deputy mayor Aleksandar Nedelchev. The company was brought to Bulgaria by Sutherland Global Services, the Indian international professional services company, who vowed to put together an investment plan for the town they visited last year. The Indian firms Sofia office employs more than 100 people working on a project for the worlds intrusion prevention and security risk management company McAfee.

 

 

 

 

€ 35 M to be invested in 2009 in Bourgas Airport, Varna Airport

 

The concessionaire of the airports in the Black Sea cities of Varna and Bourgas, Fraport Twin Star Airport Management, will invest about 35 million euros in the Bourgas airports, Chief Technical Director of the company Karl Mai said. The power supply equipment will be overhauled and a noise monitoring system will be installed. By the end of the year the Bourgas Airport should also have a new office building and a new terminal, Mai said. In 2008 a total of 1,936,853 passengers passed via the airport, Bourgas Airport CEO Kalin Barzov said. The greatest number of foreign passengers were again Germans, followed by Britons and Czechs. Passengers from Russia grew by 38 per cent, meaning they exceeded the number of Swedish tourists passing via the airport. Last year saw growing numbers of passengers from the Netherlands, Israel, the Czech Republic and Poland, Barzov said.In 2008 a total of 122,348 passengers using domestic flights were serviced at the Varna Airport, or 53 per cent more than in 2007, the Varna Airport said in a press release. However, the total number of foreign passengers handled at the airport dropped by 6.10 per cent, attributed to the reduction of chartered programmes to the Northern Black Sea. The greatest was the drop in the number of passengers to and from Germany, nearly 14 per cent. However, at 342,350, Germans continue to take up the greatest share of foreign tourists passing via the airport. Passengers from Britain and the Nordic countries decreased too, unlike Russians whose number increased by 13.64 per cent compared to 2007. There was also a slight increase in the number of passengers from Israel, Austria, Hungary and Poland. The press release says the situation with regular international flights to and from Varna is stable and services continue.

Bulgaria earmarks € 9.2 M to upgrade Plovdiv Airport by mid-2009

 

Bulgaria on Wednesday earmarked 18 million levs ($11.9 million/9.2 million euro) in budget funding for the modernisation of the airport in the country's second-biggest city Plovdiv. The allocated funding will be invested by June to improve passenger and cargo services in an attempt to stimulate tourism and industrial manufacture in the area, the government said in a statement. The Plovdiv Airport caters primarily to charter tourist traffic generated by nearby ski resorts Pamporovo and Borovets between December and April. Bulgarian industrial and financial group Alfa Finance Holding holds a 58.08% stake in the airport and the remainder is held by Bulgaria's Transport Ministry.

 

Austria’s WBG to build biomass plant in Ihtiman

Austrian company WBG has tested its EUR 4 million biomass power plant, which will heat public and private buildings in the town of Ihtiman, near Sofia, Ilko Yotsev, managerial agent of the firm’s Bulgarian unit, told Dnevnik.The facility will have a rated capacity of 3 MW that may be expanded to 10 MW and run on 10,000 tonnes of wood waste a year.The investor has deployed an eight-kilometer heating distribution network and has installed a cutting-edge plant room control technology.Heating will reach the first consumers within ten days from testing completion, according to Yotsev.Tariffs will be some 30% lower than those of Bulgaria’s conventional gas-fired heating utilities, under company estimates.The company plans to have 20 MW of biomass energy capacities across the country to help reduce its dependence on gas supplies, said Yotsev.The new plant is operated by local firm Bio Energy.

Austria’s DM opens first Bulgarian drug store

DM Drogerie Markt, the Austrian retailer of household medicinal supplies, beauty, bath and baby care products, will open its flagship Bulgarian store in end-January, the company said. The pharmacy will be spread on a 400 sq m area in Mall Vidin in the northwestern town of the same name. The chain will pour EUR 3 million into the launch of eight to ten stores in Bulgaria, with next locations due in Bourgas, Plovdiv and Yambol. By 2010 the company will step in each town with population of more than 40,000.

Bulgaria's Foreign Direct Investments decrease slightly in 2008

The Director of the InvestBulgaria Agency Stoyan Stalev said Thursday that in 2008 Bulgaria had attracted almost EUR 6 B in foreign direct investments, the Pari Daily reported.The exact data is not available yet but the prognosis of the Agency coincides for FDI of almost EUR 6 B coincides with that of the Bulgarian government.Thus, in 2008 Bulgaria registered a slight decrease in the amount of FDI that it had the previous year, 2007, when the Bulgarian economy attracted the record EUR 6,5 B.Stalev also declared that Bulgaria still had an enormous potential for attracting foreign direct investments even in 2009, which is expected to be very hard because of the effects of the global financial crisis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

 

Technopolis pours BGN 12 M into third Sofia store

Local white and brown goods retailer Technopolis broke ground on its third store in the Bulgarian capital. The BGN 12 million project should rise in Nadejda district in October. It will offer more than 25,000 items on a 3,500 sq m area. The company’s next store will open in Veliko Tarnovo. Last year Technopolis opened in Montana its 21st outlet in the country. Bulgarian electronics retailers reported a 20% rise in revenue on average for 2008, but said sales slumped in the last months of the year as banks became reluctant to lend.

Siemens Bulgaria sales up 40% in 2008

German company Siemens reported a 40% rise to BGN 340 million in sales from Bulgarian operations in 2008. Last year the company supplied 25 electric trains to the national railway carrier BDZ and took part in the overhaul of the capital’s underground network and in a railway project. The firm implemented an energy efficiency contract in the town of Pernik, a joint project with French industrial and medical gas maker Air Liquide.

American Express launches internet site in Bulgaria

American Express and Post Bank launched Monday the Bulgarian internet site for the American Express credit card at www.americanexpress.bg.The Bulgarian site is the newest American Express site, among sites in over 80 different countries. In Bulgaria, the American Express credit card is issued exclusively by Post Bank.On the new site, consumers can find complete information about all products and services, offered by American Express and fill an electronic credit card application.Since the beginning of the partnership between Post Bank and American Express, the bank has issued over 190,000 American Express Credit cards to Bulgairna customers.The American Express services in Bulgaria, provided through Post Bank, include 24-hour services, including weekends in Bulgaria and abroad, a 55-day interest free period, travel and insurance assistance, fraud protection and special deals worldwide.The first American Express credit card, aimed at successful professionals, has been introduced in 1958. In 2008, the card celebrated its 50th anniversary. Data from the company shows that currently there are over 86 M active American Express Credit cards all over the world.

Intracom Telecom signs contract with Bulgaria largest telecommunication company

 

Intracom Telecom, part of the SITRONICS group signed a contract with the Bulgarian Telecommunication Company (BTK) for the building of a GSM telecommunication infrastructure for the BTK network.The contract for the project, valued at BGN 30 M, was signed Tuesday through the company's affiliate Intracom Bulgaria. The expected deadline is two years from now with Intracom Bulgaria providing services and materials for the extension of the mobile telephone (GSM) network of BTK.BTK is the leading Bulgarian telecommunication operator and, with its 7,000 professionals - one of the biggest employers in the country. BTK offers a wide variety of services: landline and mobile phones, high-speed internet and data transfer. BTK has 2,1 million landline phone customers, 1,3 million mobile phone ones and 240,000 ADSL internet users.Intracom Telecom is a leading manufacturer and provider of telecommunication systems in Eastern Europe, the Middle East and Africa. Since June 2006, Intracom is managed by the Russian JSC SITRONICS with 51% of the shares while Intracom Holdings Group Greece maintains 49% of the shares.Intracom Bulgaria is an affiliate of Intracom Telecom, dealing with design and delivery of projects in the areas of telecommunications, mobile phone networks, IT, public administration, banking and finance sectors. The company is supplying telecommunications equipment to BTK and the mobile provider "Globul" and is striving to become the leading provider of information and telecommunication services in Bulgaria.

 

A Chimimport company acquires Air Ban from DZI

 

Chimimport subsidiary Bulgarian Aviation Group has acquired the air carrier Air Ban from the DZI insurance company, a statement of the insurer revealed. Bulgarian Aviation Group has acquired the helicopters and emergency transportation license of the company, the Dnevnik Daily informed. Transferred shares form 85,25% of Air Ban capital but the price was not announced. The deal was closed on December 12th last year but was not announced in the media or the BSE bulletin, despite the fact that DZI still holds the statute of a public company.

New schemes for companies worth € 100 M

In 2009, schemes for EUR 100 million under Competitiveness Operative Programme will be opened, minister of economy and energy Petar Dimitrov announced. Projects will be accepted from the second quarter. Two are the schemes to offer gratuitous help: for starting innovative companies and for introduction of innovative processes, products and services, amounting at EUR 10 million each.

Kirov AD with 10% growth of turnover in 2008

Kirov AD, a leader in professional and construction facilities business, realised sales volume of BGN 203 million in 2007, which is by 85.52% more compared to previous year. For 2008, turnover was BGN 220 million, which is 10-percent growth compared to 2007. The company took fifth place among the 50 most innovative companies in Bulgaria in Business Week ranking for 2007 and was among Superbrands Top 50 in the country for 2008.

 

 

 

 

 

 

 

 

 

GLOBAL FINANCIAL CRISIS ANALYSIS AND NEWS:

 

Five Bulgarian ministries advance investments to tackle financial crisis effects

Bulgaria's Prime Minister Sergey Stanishev met Wednesday with the teams of five of his Ministries discussing their investment programs for 2009, which are supposed to mitigate the effects of the global financial crisis on the Bulgarian economy and society.The government's investment program is part of its Plan for Economic Stability and Progress crafted in December 2008 in order to deal with the negative consequences that Bulgaria is suffering from the global financial and economic crisis.Bulgaria's 2009 Budget allocates BGN 5,6 B for capital spendings, which are to be used for creating jobs, guaranteeing employment and business sustainability, and enhancing the country's economic growth.The five Bulgarian ministries whose representatives presented their investment programs to Stanishev Wednesday were the Ministries of Education, Labor and Social Policy, Transport, Health, and Environment and Waters.Bulgaria's Education Ministry is going to spend about BGN 100 M for repairs of student dormitories and university buildings as well as of high schools all across the country. The Ministry of Labor envisages the creating of 18 500 new jobs, 9 000 of which will be for unskilled labors, mainly by through its Beautiful Bulgaria program for public works and restoration of buildings. Bulgaria's Health Ministry is going to invest about BGN 196 M in improving the conditions in major hospitals including medical research centers around the country. BGN 150 M of these are supposed to come from EU's Regional Development Operational Program. The investment program of Bulgaria's Transport Ministry provides over BGN 518 M for 33 major projects, including the modernization of the Plovdiv Airport, the recycling of old railway cars, the modernization of major railway stations and the electrification of certain railway lines. Almost BGN 200 M will be provided from the Ministry's budget, and the rest are to come from the ISPA Program and the Transport Operational Program. Bulgaria's Environment Ministry is providing for several large-scale construction projects of water reservoirs, and waste-processing plants.

Bulgarian export is shrinking

Global financial crisis has delivered a severe blow to the Bulgarian export. In December, 11.771 export customs declarations were processed, which is 552 declarations less (4.25 percent) compared with the same period of the last year, shows the report by the Customs Agency. The gross worth of the Bulgarian exports has also dwindled - from 1 billion BGN in December 2007 to 861.3 million registered a year later, the Agency's experts told The Standart. This data doesn't take into account goods that are exported to the EU member states. As far as Bulgaria is an EU member such deals are considered as EU inter-member arrangements and the Customs Agency doesn't have information on them. The actual losses Bulgaria' export suffers from the financial crisis will become clear after a full version of the report by the National Statistical Institute is made public. The economic crisis in Europe compels many countries to cut down imports from Bulgaria. This will for sure affect the structure of the country's export as a whole.

 

 

 

 

Guardian: Financial crisis to bring "Sping of discontent" in Eastern Europe

 

The effects of the global financial crisis are going to bring heightened social strife, political destabilization and even racial tensions in much of Eastern Europe, including Bulgaria, Romania, and the Baltic, according to the UK newspaper The Guardian. In a review article, the paper summarizes the effects of the recent street protests in Lithuania's capital Vilnius, Latvia's Riga, and Bulgaria's Sofia, and states that Romania is going to be next Eastern European state to see mass street protests.The paper cites the opinion of a Romanian media executive, and various data suggesting pending massive job cuts in Bulgaria's northern neighbor, to support its prediction that Romania would be hit by a wave of street protests."We are fed up with living in the poorest and most corrupt country. This unique protest unites the people in their wish for change and their wish to live in a normal European country", The Guardian quotes the statement of the Bulgarian students and farmers, which organized protests in Sofia over the last week, adding that the severe natural gas shortage Bulgaria was suffering as a result of the Russia-Ukraine dispute was exacerbating the situation.

 

Crisis nibbles away at Bulgaria’s tax revenue

A collapse in tax revenue triggered by the ongoing worldwide financial and economic meltdown put a heavy question mark over Bulgaria’s 2009 budget. The problem was recongnised by both key units tasked to replenish the treasury – the National Revenue Agency and the Customs Agency.Value-added tax revenue, which speaks for the biggest portion of 47% of the total, threatened to sink deep below the target.Customes Agency executive director Hristo Kulishev said in his annual report on Monday that imports have marked a steep drop since the year’s start to levels of a few years ago, and January’s VAT revenue are seen coming BGN 100 million short of the target.Experts of the agency said it will be seen by the end of February if revenue will start to recover or fall further.If January’s pace continues, full-year VAT revenue may be BGN 1.2 billion less than planned. For comparison, the sales tax generated BGN 4.03 billion out of 2008’s total indirect tax revenue of almost BGN 7.5 billion, under preliminary data.Corporate taxes and taxes for physical entities will also show disappointing data at the end of the first quarter, forecast a source of the agency speaking on condition of anonymity.Although grim data continues to stream in, the budget will not be revised, the Finance Ministry told Dnevnik. But experts do not rule such an option after July’s general elections.The current budget has two buffers worth a combined BGN billion against the effects of the global economic downturn. The budget surplus target is set at 3% of the expected gross domestic product, or BGN 2.19 billion.The Government also cut down by 10% the planned non-interest ministry expenses saving BGN 2.9 billion.Budget 2009 came under seething criticism, especially for what businesses, analysts and opposition called a far-fetched economic growth of 4.7%. The European Commission on Monday projected the growth pace will slow down to 1.8% but still the country will suffer much lesser consequences than most other EU newcomers and avert recession.

 

 

 

 

 

Analysts warn of public investment

Bulgaria should further cut down on expenditure in case the global economic deterioration turns out to be harder on government revenue, macroeconomists told Dnevnik after revenue institutions said they might miss their targets. Georgi Angelov of Open Society Institute said revenue is threatened by the recession the EU says looms over the eurozone. Lachezar Bogdanov of local think-tank Industry Watch said revenue might collapse only in a catastrophic scenario which is highly unlikely. The Customs Agency’s grim forecast for a BGN 1 to 1.2 billion slump in value-added tax revenue from imports may only be fulfilled if imports sink by more than BGN 5 billion. one condition for the latter is sharp drops in exports and gross domectic product, something which is out of the way at the moment. In case a further reduction in expenditure is needed, the Government should cut down on public investment, said Georgi Ganev of Center for Liberal Strategies, who was strongly critical of the Government’s spending plan from the very onset.According to Bogdanov, the government should also trim aid to state-owned companies such as railway carrier BDZ, the postal operator and the heating utilities. Public property sell-offs and privatisation deals may also help fill in the financial gaps.

At least 3 years needed for Bulgaria to overcome the crisis

The first symptoms of Eastern Europe's overcoming of the financial crisis will be felt in the middle of next year.This was forecasted by the Italian economist Andrea Kasini, who is a Chair of the European club in the Bulgarian commercial-industrial chamber.Bulgaria, however, needs at least three more years to return to the previous rate of its economy, the financier forecasts.According to him it would be good if the country uses the EU funds more effectively, increases its competitiveness and ties salary increases to productivity.These are just a part of the measures, which will help the economy of the country in the conditions of a world financial crisis.In the period 2007-2013 the country has the opportunity to receive over 6 billion Euro from the EU.If these funds are used, this will equal about 5% of GDP for the years up until 2012. According to financiers this flow of capital can significantly relieve the enormous commercial deficit on the current account.

 

Vasil Vasilev, financial analyst at Karoll Capital Management: It’s raining bad news

 

As if the rainy weather during the last few days has brought a new rain of bad news about the condition of Bulgarian economy, as well as considerably higher risks for the country’s near future, Vasil Vasilev said for The Trud daily. only within a few days some of the most popular international institutions have drastically revised their forecasts concerning Bulgarian economy for 2009 and 2010. Italian rating agency UniCredit, Moody’s and The Economist Magazine were among them. The result of the ‘rain’ of negative scenarios for our economy did not delay and investors in Bulgarian shares have started selling their portfolios again. This led to two consecutive days of falling stock exchange indices on Tuesday and Wednesday. SOFIX’s drop of 5,3% for two days was accompanied by unusually large trade volumes. The most liquid shares suffered most. Among them were FIBank – 19% average drop for two days, Petrol with over 15%, Euroins – 15%.Yesterday the stock exchange was affected by the investor’s ‘overseas’ moods and US optimism during the last trade session in particular, where the main index S&P registered a 4,5% uptake. As a result, SOFIX appreciated, but at low trade volumes.