BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT (19 - 26 FEBRUARY 2010 )
Sections/headline briefs:
MACROECONOMY:
· Construction of NPP Belene starts this autumn
· Bulgaria opens tender for consultant for Belene nuclear project
· EU to Bulgaria's President: No problem if Russia participates in Belene NPP project
· Bulgaria Finance Minister: No Belene nuclear plant without EU investor
· Bulgaria keeps at least 50% of Belene NPP
· Bulgaria to build second natural gas depot
· Ambassador Warlick: Bulgaria needs diversified energy supplies
· Bulgaria government receives EBRD support for water reforms
· Bulgaria to likely pay millions of euros for water projects
· Gabrovo city starts EUR 63.1 M water management project
· Bulgarian green energy is called into question
· Handelsblatt: Eurozone may benefit from Bulgaria's accession
· Bulgaria, Romania to be linked by new Danube ferry in April
· Bulgaria businessmen panic over foreign accounts probe
· Bulgarian scientists present new plant sorts at AGRA expo
· Bulgaria's largest tourist expo kicks off in Sofia
· Bulgaria faces meat deficit
· Bulgaria’s Agriculture Ministry forms body to save milk production
INVESTMENTS:
· Carrefour to invest EUR 200 M in five years in Bulgaria
· Bulgarian Spa City of Kyustendil to build EUR 5.1 M medical centre
COMPANIES:
· Apple Store arrives in Bulgaria
· Mobiltel revenue slumps by 7.9% for 2009
- Cellular operator Globul posts slight decline in 2009 profit
- Citigroup to advise sale of Bulgaria's tobacco giant Bulgartabac
THE CRISIS:
· Bulgaria residential construction down 45% in 3rd 2009 Quarter
· Crisis hit hard 58% of bulgarians
· PC market down 21% 2009
Articles:
MACROECONOMY:
Construction of NPP Belene starts this autumn
'The construction of NPP Belene will kick off this fall,' Russian energy minister Sergey Shmatko said on coming back from Sofia, where he took part in the talks on the financing of NPP Belene project. It was agreed that Russia will provide a loan to finance the activities on the energy project until a strategic investor is selected. According to Mr. Shmatko, the Bulgarian government might reach an agreement with Germanys RWE, who pulled out of the project last September. However, Bulgarias deputy energy minister Maya Hristova said the issue had not been discussed with the Russian delegation or the German energy company. Mr. Shmatko added that all problems between Moscow and Sofia concerning the realization of NPP Belene project had been solved and that Bulgaria was expected to present to Russia a plan for the financing of the Burgas-Alexandroupolis pipeline project. Sofia will hold the golden share in the Bulgarian-Russian joint venture for the construction of NPP Belene,Bulgarias economy minister Traykov said.
Bulgaria opens tender for consultant for Belene nuclear project
The Bulgarian Energy Holding (BEH) has invited the tender for a consultant to help it decide how to proceed and attract new investors for the planned Belene nuclear power plant.The project's consultant will be obliged to develop its economic model and proceed to the selection of investors, the update of the financial model, etc.Applicants in the tender can submit documents until Marchy 25, 2010. The winning bid is expected to be announced and contracted in June 2010.Notices about the procedure will be published in two of the most prestigious media in the world – the Financial Times and The Economist, as well as online on BEH corporate site.Bulgaria's new centre-right government, which has put the 2,000 megawatt Belene under review due to rising costs, came up with the idea to hire a new consultant after German utility RWE walked out of the project due to funding problems and Sofia decided to redesign it in the next year to attract new investors.Russia's state nuclear company Rosatom announced earlier in the week that it is ready to finance with EUR 2 B the multi-billion nuclear project in the Bulgarian Danube town of Belene, which has stalled over lack of funding.This was Russia's third offer to pour money into Bulgaria's second nuclear plant Belene after Russian Prime Minister, Vladimir Putin, gave the green light to a EUR 3,8 B loan at the end of May last year and Rosatom made another bid in December.Bulgaria's new government of the center-right GERB party has said however that it is not willing to provide any state guarantees for loans and is yet to decide how to push ahead due to purely economic terms.RWE's departure from Bulgaria's new Belene nuclear plant put extra pressure on government to find new shareholders while it redefines the scope of investment it needs.The new governmen plans to cut its shares in the project from 51% to 20-30%, which will still allow the country to keep its blocking quota.Belene's reactors are to be of the Russian VVER-1000 class, while the Western companies are providing instrumentation and control systems.State power utility NEK has a majority stake in the plant.
EU to Bulgaria's President: No problem if Russia participates in Belene NPP project
"The EU feels no worries regarding the participation of Russia in the construction of Belene NPP," Bulgaria's President Georgi Parvanov stated after his meeting with EU Commissioner for Energy Gunther Oettinger. Bulgaria's Head of State arrived in Brussels yesterday on a 2-day visit. After his first meetings in Brussels yesterday, President Parvanov commented that he insisted that Belene NPP project became a European project and that investors from France and Germany would be invited to the project. President Parvanov added: "Bulgaria's agenda is the approval of regulations for the quick payment of compensations for the pre-term decommissioning of Kozloduy NPP units." Mr Parvanov also discussed two other important projects - the Nabucco gas pipeline and South Stream. In his opinion, the stands of the EU and Bulgaria on these projects are alike. It is important that we seek more and different sources for Europe's gas supplies," Mr Parvanov went further. President Parvanov will have a meeting with the President of the EC Jose Barroso and with the leaders of the major parties in the EP.
Bulgaria Finance Minister: No Belene nuclear plant without EU investor
The project to build the second Nuclear Power Plant (NPP) in the Danube town of Belene can materialize only if an European investor is selected.The statement was made by Finance Minister, Simeon Djankov, Monday.Djankov was firm the project is going to be scrapped if the State does not find European financing.On Friday, after meeting his Russian counterpart Sergey Shmatko, Bulgaria's Energy Minister, Traicho Traikov, announced Russia is going to grant Bulgaria a loan for the Belene construction.On that same day, the government announced the tender for selecting a financial consultant to help it pick a strategic investor in the Belene NPP.Traikov said after the meeting that a Russian EUR 2 B loan will be granted to Bulgaria without any corporate or state guarantees. The aim of the loan is to proceed with the construction phase of the project even though a strategic foreign investor has not been selected yet as the German company RWE withdrew in the fall of 2009.Djankov said Monday that the elimination of the request for state guarantees in order to conclude the deal is great success. Until the last offer in December, Russia insisted on such guarantees or a guarantee from the National Electric Company in order to grant the loan.
Bulgaria keeps at least 50% of Belene NPP
Bulgaria will own at least 50% of Belene NPP if by the completion of the plant's construction a strategic investor has not been found. Russia will have no more than 20% of the NPP, emerged from a statement by Bulgaria's Minister of Economy, Energy and Tourism, Traycho Traykov. Bulgaria's share can be lowered only if a large western strategic investor takes part in the project, according to Traykov. He believes that against the loan, which the Russians will provide for the construction of the plant, they will receive no more than 15 or 20% of the shares. The rest of the sum, which will go for financing the construction works will be restored by the strategic western investor which will eventually be drawn in the project.At the moment experts are working out the plan for financing the construction of "Belene" nuke, which will be offered to Moscow soon. The plan will include certain guarantees that a strategic investor from Western Europe will be involved in the project. If it happens that a foreign investor could not be found, there is no chance Russia acquires a bigger part of the future nuclear power plant. Bulgaria will hold 80% of the shares and Russia would posses no more than 20 percent. With such allocation of finances Russian funds would be recouped by the produced power. Minister Traykov stated that the construction of "Belene" NPP might start in the autumn. That is the most optimistic term considering that previously the project has to be approved by the Nuclear Regulatory Agency.
Bulgaria to build second natural gas depot
Bulgaria may build a second natural gas storage facility so as to prevent possible gas supply problems in the future. This idea was put forward by Head of State Georgi Parvanov during his visit to Brussels. "The construction of the gas storage facility may be carried out by the Solvey Company, which plans to explore a salt deposit in Bulgaria. If constructed the depot will make Bulgaria practically impermeable to future gas supply shocks," Mr. Parvanov said. Earlier, he decorated Mr. Alois Michielsen, Executive Vice President at Solvay Pharmaceuticals with Madara Horseman first degree, one of Bulgaria's highest state insignia. Following talks between Parvanov and EC President Barroso, it emerged that over the next twelve months the European Commission will allocate 2.3 billion euro to finance 44 priority energy projects across the EU. "Bulgaria is one of the countries that may apply for financing under this program," Barroso said. "Thus, your country will contribute to the bloc's energy security," he told Parvanov."We regard Russia as an important energy partner, and Bulgaria - as a stable member state that may be the backbone of a prosperous region," Barroso went on. Finally, he praised President Parvanov for his commitment to the debate on the 2020 EU development strategy.
Ambassador Warlick: Bulgaria needs diversified energy supplies
Speaking at a business lunch organized by the American Chamber of Commerce in Bulgaria on Thursday, US Ambassador James B. Warlick said Bulgaria needs to have diversified energy supplies and to rely on multiple sources for its energy needs. He outlined the prospects of US-Bulgarian economic partnership. Ambassador Warlick stressed that decisions about energy supplies would influence not just Bulgaria, but the entire region as well. Ambassador Warlick said: "Currently, Bulgaria is undeniably dependent on a single supplier for the vast majority of its energy needs. This would be a dangerous situation for any country, no matter who the supplier was. Diversifying those sources is a long and hard road." He also underlined the importance of transparency in the energy sector, saying that it ensures stability of supplies, facilitates implementation of effective strategies for diversification, reduces corruption, promotes competitive pricing and encourages foreign direct investment (FDI). Regarding FDI, he said it depends on the rule of law. Ambassador Warlick discussed the IT sector, Bulgaria's future eurozone membership, biotechnology, renewable energy sources and energy security."Bulgaria has avoided the economic calamity, political instability and IMF bailouts that many in Europe have experienced," the US Ambassador said. He noted that "the government of Prime Minister Boyko Borissov has put fighting organized crime and corruption at the top of its 'to-do' list". "It has promised to tackle the culture of impunity, which tarnished the image of Bulgaria in Brussels and around the world," the Ambassador said, adding that the government had scored certain successes, and that the European Commission had recognized this progress by releasing once-blocked funding streams. "But there is still much more work to be done," he said. Ambassador Warlick said he would like to see more Bulgarian companies seize opportunities to invest in the United States.As regards Bulgaria's eurozone membership, Ambassador Warlick said the country should be proud of what it has accomplished: the lowest 2009 deficit in Europe, being the only country in Europe likely to balance its budget in 2010, and perhaps the only country to meet all of the Maastricht criteria this year. "These undeniable black and white statistics are a tremendous argument for your speedy acceptance in the eurozone," the US Ambassador said.Talking about the IT sector, Ambassador Warlick said that "some of the world major IT companies have established technical and service support call centres in Bulgaria, taking advantage of its talent pool". He put this down to the fact that 20 per cent of the population speaks a foreign language and 20,000 IT professionals are employed here, putting Bulgaria third in the world in terms of certified IT professionals per capita and eighth in the world in terms of absolute numbers. The Ambassador also suggested that Bulgaria will become "an IT hub and leader in this region if it invests in educating and training Bulgarians on up-to-date technologies and management practices that will grow the talent pool".As to biotechnology, Ambassador Warlick said that if "the right decisions are made now, Bulgaria could use its status as a recognized leader in classical biotechnology as a launching pad to become a path breaker in modern biotechnology". Regarding renewable energy, Ambassador Warlick said that "with Bulgaria's tradition of technical prowess and its geographical location, terrain and climate, we could see an expanded Bulgarian-American economic partnership based on cooperation in renewable and alternative energies".
Bulgaria government receives EBRD support for water reforms
The European Bank for Reconstruction and Development is to assist the Bulgarian government in the next planned stage of reforms to the water and waste sector.The EBRD will provide consultancy support on structuring the relationship between in the key stakeholders and developing a model service contract between the Regional Water Companies (RWCs) and the local communities.The overall objective of the assignment is to assist the Bulgarian Ministry of Regional Development and Public Works in developing the necessary regulatory framework and procedures to be applied to regulate the relationship between the newly established Operating Companies and the Water and Sewage Associations.The Government of Bulgaria endorsed a Strategy for Water Supply and Sewerage Management and Development back in 2004. It identified main issues for the sector and presented a broad financing plan to address investment and rehabilitation needs.The establishment of the independent State Energy and Water Regulatory Commission (SEWRC) in 2006 was a strategic regulatory development. The Water Regulator was authorized to review and approve 5-year business plans, as submitted by the Regional Water Companies (RWCs), and to regulate tariffs.The adoption of a new package of amendments to the existing Water Act was the next key step in reforming the water sector in Bulgaria.The amendment to the Water Act introduced separation of the ownership of assets from the right to operate those assets. At present, the RWCs are owners and operators of the assets. Under the amended legislation the assets' ownership will be transferred to the Water and Sewage Associations (to be established) that will include representatives of the central and local governments.The Ministry of Regional Development and Public Works will remain responsible for supervision of the sector, and would be in charge of development of required by-laws and approval of the restructuring programs of the state owned RWCs.The envisaged new law will promote commercialization of the RWCs by making the water companies and operators accountable to the local authorities and the community for their performance.
Bulgaria to likely pay millions of euros for water projects
After the tumult incited by the swaps of low-value private forests for under-priced state ones and the eventual huge sanction Brussels will impose on Sofia, in the future we may expect to hear more often about the missing water purifying stations in towns of more than 10,000 in population that have to be completed until the end of this year. The question is about a total 70 facilities of the kind whose construction is significantly lagging behind and because of which until March 2011, the latest, our country will be subject of punitive procedure for millions of euros, according to Ecology Minister Nona Karadzhova. What is ridiculous here is that the European Commission's requirements have been known since the time when Bulgaria started negotiating on its EU accession. The country has even developed a strategy for water purifying stations thanks to which the Environment Chapter has been closed. However, up to the present there are dozens of towns and would-be prestigious mountain and sea resorts that keep on discharging their wastewaters directly into the rivers or into the Black Sea. Moreover, still during the last week it became clear that Sofia will be forced to give back money to Brussels since the country's previous government has signed contracts under ISPA through direct negotiations, not though contests as the law reads. The EU regulations strictly prohibit such moves since they restrict the free competition. A financial adjustment of EUR11 million will be imposed on six contracts, Deputy-Minister of Environment and Water Ivelina Vassileva said February 11, 2010. The state will thus have to take this money out of its budget, of which EUR4.7 million will be given back to EC. "I think we have to talk about political responsibility, not about personal one, since all these are political decisions," Vassileva added. And because of delayed implementation of water projects, Bulgaria will not be able to adopt another EUR200 million under the Instrument for Structural Policies for Pre-Accession (ISPA) that have been earmarked exactly for the water sector. According to EU regulations, the deadline for the programme is set at December 31, 2010. In other words, if a certain facility is not completely finished until this date, the funds that have been invested into it will not be reimbursed. Nevertheless, EC will "grant" us a further 12 months for completing the construction works before forcing us to give the money back. This means that all the payments over this additional 12 months will be national ones and Bulgaria will not be allowed to ask EU for reimbursement at all. And if the certain facility is not put into operation even after these 12 months, the state will have to pay back all advance and interim payments under ISPA. This is the case with the integrated projects for water cycles in Sofia, Smolyan, Varna, Balchik, Shoumen, Sliven and Kyustendil, whose implementation was far below 50% as at end-2009. The total value of these projects exceeds EUR287 million, of which EUR163.3 million have been granted under ISPA. However, the money that has been really paid totals just EUR45.1 million. Thus, although that on 11th of February Deputy-Minister Ivelina Vassileva cut the tape of the waste water purifying station in Smolyan, the town's overall water project remains highly risky. So far, just some 30% of it has been completed and this means that the construction works will hardly finish until December 31, 2010. Therefore, all sums to be paid after this date have to come from the state budget. It is expected the rehabilitation and extension of Smolyan's water-and-sewage network, including the replacement of nearly 45 km of water conduits and construction of 15 km of drains, to finish at end-February 2011, the earliest. For the time being, less than 10% of EUR23.7 million have been paid under the contract with the subcontractor Kopasa-Ponsstroy-Vod. The situation in Varna is even more complicated. The reconstruction of the city's water purifying station kicked off just a week ago, on the 4th of February. The project, estimated at more than EUR11.9 million, will be implemented by Hydro-Transstroy consortium. Prognoses are that just some 60% of these funds will be paid until the end of this year. The same is the situation with the contract with Hydrostroy AD-Varna for the reconstruction of the city's water-and-sewage network, which will cost EUR5.65 million. At the best, it is expected to have 80% of its financing paid until the deadline. Besides the above two projects, Varna's water cycle further includes the transformation of Asparuhovo water purifying station into a water pumping one, as well as the construction of a water conduit to pass through the Varna Lake's bed. They, too, are lagging behind and will not be completely finished until the end of this year. And the most complicated situation is that in the capital Sofia where, according to Finance Ministry data, only 9% of EUR40.5 million has been paid until the end of 2009. The Environment and Water Ministry says none of the contracts will have its funds paid to the full until end-2010 and they have therefore be considered a state engagement. In fact, the reconstruction of the water purifying station near Kubratovo, for which nearly EUR30 million have been earmarked, started less than a month ago (16th of January) and until December 31, 2010 it will have not more than 25% of its funds paid. The remaining 75% have to come from the state budget. And there are no prognoses on the development and implementation of the October 2009 contract with Trace Group Hold for the construction of water conduits and sewers. The contract, estimated at EUR8.2 million, envisages one of Sofia's sewers to be extended, a new sewer to be built, as well as Rila water-conduit to be rehabilitated. Contracts for the reconstruction of the main sewer at Buckstone Boulevard, as well as the replacement of the main water-conduit of Dragalevtsi basin and the construction of two more sewers are yet to be signed. Moreover, the state has to find a subcontractor for the design and construction of the water purifying stations at Mala Tsarkva and Pasarel. The construction works at Sliven and Kyustendil water projects are also to finish after the deadline since the funds adopted there amounted to just 11% as at end-2010. Both sites are considered highly risky since none of the contracts may boast of having adopted all funds until the deadline expires. What is more, a subcontractor for the construction of Sliven's water purifying station is yet to be assigned. Although being a bit more advanced as compared to others, the contracts in Shoumen, Targovishte and Balchik, too, will not finish in time and will need state money. The remaining projects for water purifying stations in towns of more than 10,000 in population are being financed under Environment Operational Programme. Until the end of 2009, only 30 contracts have been signed under it, five of which (in Svoge, Kaolinovo, Kardzhali, Straldzha and Dulovo) have been terminated on the insistence of Brussels. And another 12 contracts are for water supply, not for purification of wastewaters. It is good that for the time being Sofia is not threatened of being forced to pay back money under this programme since its deadline expires in 2013. Moreover, the rulers took measures for speeding up the signing of new contracts and put exactly the big towns' water purifying stations as top priority. We don't have to forget, however, that according to Bulgaria's commitments to EU, until December 31, 2014 the country has to build a further 380 water purifying facilities in towns of between 2,000 and 10,000 in population. But if the Government doesn't embark on this task right now, the state will likely have to pay million of euros.
Gabrovo city starts EUR 63.1 M water management project
The central city of Gabrovo started an integrated project for its water cycle. The total value is estimated at BGN 123.5mn (EUR 63.1mn), BGN 117.5mn of which are provided by the country’s environment operational programme and BGN 23.5mn are state budget aid. The funds should be utilised by mid-2015. The project is to open 250 new jobs. It comprises replacement of water pipelines, adding new sections of the city to the sewerage system, rehabilitation of the sewerage network and the water and wastewater treatment plants.
Bulgarian green energy is called into question
Applications for Construction of Eco Power Plants Are Still Far from Reality There are too much funds that are shared out in the energy sector under the form of energy sales, and public orders for supplies and repair works. And the lobbyist interests and commissions that are shared behind the scene are therefore quite huge. Bulgaria, too, is not an exception of the general trend, starting with the sector's denationalization where some of the biggest privatization deals were realized. Then the investor's interests came and it turned to purchasing electricity and selling it on the free market. And currently the construction of power plants that use renewables is on the agenda. The eco power plants have many advantages. These plants are inexhaustible energy sources, they don't harm the environment and don't cause climate changes. However, the green energy's high purchase prices is what attracts most the local investors. And this electricity, the law reads, has to be purchased from the National Electric Company (NEC) and the country's electricity distribution companies. The investors have one more stimulus - as from 2013 all factories, power plants and heating plants in the European Union will have to pay for each tonne of carbon dioxide they discharge into the atmosphere. Currently, the companies owe money only for the additional amount of harmful emissions that exceed what the Ecology Ministry allows. The bulk of the big companies that entered the local marked were already quick on the uptake. It is not a coincidence that Italian Enel (which owns Maritsa East III thermal power station), AES (which is currently building a new power plant on the site of Maritsa East I thermal power station), and EVN (which keeps the Southern Bulgaria's electricity grid, as well as Plovdiv Heating Company), were among the first investors with their own projects on renewables. Moreover, quick-witted designers, too didn't missed to avail themselves of the opportunity and tried to speculatively sell their designs showing no real investment intentions. According to official data, 112 projects for wind power plants with a total capacity of 8,950 MW, as well as another 33 projects for photovoltaic plants with a total capacity of 1,877 MW have been sold. Thus, the total capacity comes to 11,000-12,000 MW, which equals to the energy generated by six new nuclear power plants, but the designer teams are keeping on developing more projects. Agriculture Ministry has a huge number of applications that have come from the Ministry of Environment and Water for changing the status of cropland where new eco power plants are to be built, mainly in the region of Dobrudzha and along the seashore (Shabla and Kavarna). Until the end of January 2010, the status of 11,500 decares of agricultural land has been changed from first to fourth category and there are nearly 500 applications for a further 7,500 decares. And despite the alarming statistics, there are unprocessed applications for the change of status of the same amount of croplands. However, paper applications differ a lot from the reality. So far, only two contracts have been signed for purchasing electricity from wind farms with a total installed capacity of 191 MW and another four contracts for solar power plants with total capacity of 7 megawatts. "There are three key points when realizing such a project. These are Environmental Impact Assessment (EIA), change of the status of croplands (where eventually no plant may be built in the end), as well as procedures on connecting the facilities to the energy grid," Kostadinka Todorova, head of Renewables Directorate at the Economy and Energy Ministry, said. "The problem pertaining to the grid connection is extremely grave," Kaloyan Kanev, managing associate at Euro Energy Consult, believes too. He told BANKER weekly that, for example, in Northeastern Bulgaria where the bulk of the now operating wind parks are, there are a number of new applications, but the grid cannot be overloaded. According to the Renewables and Biofuels Act, NEC and the electricity distribution companies are obliged to earmark in their annual investment and repair programmes money for further development of their networks that are related to promoting the production from renewable and alternative energy sources. However, this requirement was realized in practice as late as last year. "Investors consider joining the electricity grid as very risky. Even a preliminary contract with NEC or with an electricity distribution company cannot guarantee they will join the network and this, in turn, prepares the ground for corruption. It is normal the investor himself to build the connection to the grid, but it is not right to force him to rehabilitate the electrical pipes as the electricity distribution companies are currently demanding. Everybody should be responsible for is own duties. Moreover, there is not enough information about the free capacities in the different regions of the country," Kanchev added. To cut the long story short, the mess has spread all over the sector, but the good news nevertheless is that despite the lobbies the Borissov Cabinet shows it is willing to put the things in order. "After talking to officials of the Economy, Energy and Tourism Ministry, as well as to representatives of the business and non-governmental organizations, we decided to introduce a new approach in the consideration of applications for building power plants that use renewables. We believe that this approach will have better effect as compared to temporarily ceasing the projects," Ecology Minister Nona Karadzhova told BANKER weekly. "The new approach includes scrutinization of the projects, with infrastructure and access to electricity grid at the head. The requirements pertaining to information and documentation that the investors have to prepare will be tightened and the regional administrations are already aware of this. First, the investment proposal will be considered in its wholeness, i.e. a wind farm, solar power plant or hydro power plant will be assessed together with its technical infrastructure, including roads, electrical pipes to the network and all that is needed for such a facility to be put into operation. When applying for new projects, the investors will be required to specify where the electrical cable routing will pass through. And building a wind farm will require a 12-month measuring of the wind force. Moreover, it will require information about the facility's cumulative effect, i.e. its effect in comparison with other approved or already existing energy sources in the same region," Minister Karadzhova emphasized. only several days ago Deputy-Minister of Agriculture and Foods Preslav Borissov explained that amendments to the Farmland Preservation Act (to be soon discussed at the Parliament) envisage the croplands' status to be kept unchanged. The reason is that the big farmers in Dobrudzha repine that the wind farms impede them from tilling their land with modern agricultural machines, as well as that the gravel around the facilities deteriorates the humus. No doubt, the new measures will puncture the balloon of many would-be investors. And after the screening it will become clear who will gain from the green energy and who will be sent on a wild goose chase. BANKER KAPE: In Bulgaria, the arrangements for obtaining a licence for building eco power plants are extremely liberal. Currently, the main goal of the sector's regulator, the State Energy and Water Regulatory Commission (SEWRC), is to prove the potential of the eventual investor for building the concrete facility. To this end, the Licence Regulation has to be amended, including further requirements for the project's financial security and preliminary contract for joining the national electricity grid. Moreover, the Energy Act, too, needs some amendments and the requirements for connecting an eco power plant to the grid should also be clear enough. Such plants have to pay additional taxes for connection to the grid. These taxes (actually needed for the construction of additional capacities) are currently paid by the electricity distribution companies.
Handelsblatt: Eurozone may benefit from Bulgaria's accession
Letting Poland, Bulgaria, or Estonia adopt the euro might have a positive effect on the stability and image of the single EU currency, according to the German paper Handelsblatt.The Polish economy which once was a synonym for chaos and mismanagement has been utterly transformed to become the only EU economy generating positive economic growth in a time of recession, Handelsblatt points out as cited by the Bulgarian paper Dnevnik.It adds that, likewise, Bulgaria which has long been regarded as very corrupt to the extent that its EU funding was blocked, is today the only EU member state meeting the Maastricht budget criteria.Handelsblatt says that unlike Poland, Bulgaria, and Estonia, Latvia, Romania, and Hungary, which were saved from bankruptcy by IMF and EU bailout aid, would not be suited to join the Eurozone for a while.The article points out that if Poland, the Czech Republic, Estonia, and Bulgaria join the Eurozone, this is only going to strengthen the common European currency. It contrasts these Eastern European states as posing less of a threat to the stability of the euro than Southern European states.It says that the Eastern European countries are politically stronger oriented towards growth and budget discipline that the Southern European states, and that Poland, Bulgaria, and Romania can rely on an increasing amount of EU money to modernize their economies and infrastructure unlike Spain, Greece, or Portugal.According to the Handelsblatt article, the adoption of the single European currency for countries whose currencies are pegged to the euro such as Bulgaria should happen quickly because of its benefits and few disadvantages.In addition, foreign investors in the Eastern European states have counted on the fact that the respective countries would adopt the euro within shorter periods of time. It is also going to allow local producers to use their comparative advantages, while the euro is going to get a proof of its reliability badly needed for the financial markets.The Handelsblatt article points out that the countries queuing to join the Eurozone should not be made to pay for the troubles of the Greeks or the Spanish.
Bulgaria, Romania to be linked by new Danube ferry in April
A new ferry line connecting Bulgaria and Romania across the Danube River will be launched officially on April 2, 2010.The ferry boat complex connecting Bulgaria’s town of Nikopol and Romania’s Turnu Magurele is going to be opened in April, according to Valeriy Zhelyazkov, Mayor of the Nikopol Municipality.Zhelyazkov has announced that at the end of last week, a successful test of the Romanian platform for passengers and freight was carried out.The distance between the two ferry stations is 800 m. It will take 8 minutes to cross the Danube River for the Romanian ferry boat, which, according to the Nikopol Mayor.The Bulgarian Port of Nikopol is first going to use an older ferry boat to be provided by Bulgarian River Shipping, Jsc, which will be making the distance in 15 minutes. Later, a brand new ferry boat is planned to be purchased.The Romanian ferry boat will be able to fit six trucks, and will be traveling at least twice daily.Crossing the Danube on the Nikopol - Turnu Magurele ferry will cost EUR 2 per person one-way, EUR 12 per car, and EUR 90-100 per truck.The investment in the construction of the Nikopol – Turnu Magurele complex is EUR 10 M.
Bulgaria businessmen panic over foreign accounts probe
Bulgarian businessmen have been calling the National Revenue Agency (NAP) offices to find out if their accounts abroad will be searched for, NAP Executive Director Krasimir Stefanov reported Saturday.Stefanov said that NAP offices have been receiving 17 calls over the past week from worried businessmen who say they are enquiring about the Agency’s plans on behalf of a friend.He added that talks in relation to access to Bulgarians’ accounts in Switzerland and Liechtenstein will start at the beginning of March and that it has not yet been decided whether Bulgaria will pay Germany for providing the information for them.
Bulgarian scientists present new plant sorts at AGRA expo
Bulgarian scientific institutes from around the country have presented new sorts of fruit, vegetables, and grain at the International Agricultural Exhibition “AGRA” in Plovdiv.The Plovdiv Fruit-Growing Institute has come up with a new sort of nectarines, whereas the Agricultural Institute in the southern town of Karnobat has presented new sorts of barley that resist harsh conditions and have better qualities for beer production.The Maritza Institute of Vegetable Plants has developed a new sort of tomatoes that look like grapes in shape and size, and are said to have favorable effects in cancer and aging prevention, and the Institute of Soil Science “Nikola Pushkarov” has presented natural geocomposites to combat soil erosion.The Paulownia sort of trees which comes from China was officially introduced in Bulgaria during the AGRA Expo. It is fast-growing, and said to be very good for producing biofuel, biomass, and forage.A total of 44 new sorts of plants developed by Bulgarian and foreign institutes were presented during the first day of the AGRA Expo.The international forum will be open in the city of Plovdiv until February 27, 2010.
Bulgaria's largest tourist expo kicks off in Sofia
The 27th edition of Bulgaria’s largest tourist fair, “Holiday/SPA EXPO 2010” is opening on Thursday.The expo, which is taking place in the National Palace of Culture in Sofia, will be opened by Ivo Marinov, Deputy Economy Minister who is in charge of tourism.It is organized by PRIM EXPO together with the Ministry of Economy, Energy, and Tourism, and a number of tourist association and NGOs.Some 350 firms in the tourist sector are taking part in the expo, including companies from Greece, Cyprus, Italy, Tunisia, Turkey, and Israel.The stand of Bulgaria’s Economy Ministry is one of the largest, and will be presenting several tourist destinations from around the country.The 27th edition of the International Tourism Fair “Holiday/SPA EXPO 2010” will continue from February 25 until February 27, 2010.
Bulgaria faces meat deficit
There is a deficit of fresh pork and beef in Bulgaria because the local production is insufficient, Minister of Agriculture and Food Miroslav Naydenov admitted. The crisis in livestock breeding sector was thus officially placed on the public agenda, although its ill success started about a dozen of years ago. In a market economy, a deficit is a virtually unknown phenomenon because no matter what the shortage is it may quickly be compensated by either increased imports or by boosting the local production. In the case of meat, however, Sofia's only option for a long while has been only one - an increase of imports. The number of animals reared in the country continued to decline in 2009 according to figures of the Association of Meat Processors. The largest drop was registered in porkers whose number went down by 17.3% year-on-year to 625,400. Sows now number only 57,300. And industrial production of beef, too, has decreased by 6 percent. At the same time, Bulgaria follows the global trend of increasing meat consumption which is salient in Europe and the United States. This trend, in turn, leads to increased production in the food processing industry. For example, 2008 saw a 30%-rise in the consumption of sausages in Bulgaria over the previous year, while the year-on-year augmentation for 2009 came to 18 percent. The insufficient meat for processing and higher local prices have stepped up imports. In 2009, beef imports remained unchanged from the previous year at about 15,000 tonnes. on the other hand, pork imports jumped significantly by 14% year-on-year, inlcuding chilled, frozen, salted and smoked pork and bacon. Poultry meat imports were also on the rise generating a 22-percent leap. The bulk of the imported meat has come from EU-countries. Additional incentive for the imports were the decreased prices in the EU - in 2009 they fell to some EUR130 per 100 kg carcass weight, a decrease of 11% year-on-year. For comparison, in 2009 the purchase price of pork in Bulgaria stood at BGN 2.50 on the average per one kilogramme of live weight, but in conditions of a shrinking supply of animals. It seems that imports will remain more attractive to meat processors. The question is whether the imported products are of sufficient quality. There are countries that allow the use of growth hormones while rearing animals. This practice is forbidden in Bulgaria and it depends only on the import controls whether Bulgarians will actually consume such meat or not. Representatives of the Agriculture Ministry promised to intensify the checks, but the practice from recent years gives little grounds for optimism. Since the price and packaging of imported meat is much more advantageous for the processors, what has left for the Bulgarian breeders is to place their produce on the domestic market where there has been severe competition in recent years between pork and chicken. In this dispute broilers have more advantages. They are cheaper and can be consumed anytime of the year, while pork has its strong and weak seasons. This, in turn, leads to difficulties in rearing animals for meat production and to a gradual but steady reduction of their number. Estimates are that by the end of 2010 the consumption of pork will decline by additional 8-10% as compared to last year. Note: Data provided by State Commission for Commodity Exchanges and Wholesale Markets.
Bulgaria’s Agriculture Ministry forms body to save milk production
Bulgaria’s Ministry of Agriculture has formed a crisis headquarters in a move to cope with pressing issues in the country’s milk producing sector.The crisis center is headed by Agriculture Minister Miroslav Naydenov, and also includes the head of the State Agriculture Fund Kalina Ilieva, the head of the National Veterinary Medical Service Yordan Voynov, several other government officials, as well as one representative from each of the major business associations of Bulgaria’s milk producers. The total number of the crisis headquarters’ members is 15.The business associations in the sector have pledged readiness for all-out support of the government measures to cope with the issues of the milk producers which include low milk prices, subsidies that are lower than the EU average, and utilizing opportunities for sustainable agriculture, among others.
INVESTMENTS:
Carrefour to invest EUR 200 M in five years in Bulgaria
Europe's largest retailer Carrefour plans to invest EUR 200mn in Bulgaria in five years, according to information of and Greece ’s Capital.gr. Carrefour intends to open 20 stores in the country, unnamed sources of local Investor.bg reveal. A year ago, Carrefour opened its first unit in the southern Black Sea city of Burgas and announced plans to open hypermarkets in Sofia , Plovdiv , Varna , Ruse , Stara Zagora , Pleven , and Dobrich as well. Carrefour is the world’s second largest retailer running more than 16,000 stores in 32 countries employing above 490,000 employees.
Bulgarian Spa City of Kyustendil to build EUR 5.1 M medical centre
The Bulgarian spa resort city of Kyustendil plans to invest 10 million levs ($7.0 million/5.1 million euro) in a medical treatment and recreation centre by next year, aiming to capitalise on its mineral water, mild climate, and the scrapping of visas for citizens of neighbouring Serbia and Macedonia, the city mayor said. Final assessments of the project are under way, the design projects should be ready by March and the tenders for selecting the builders are planned to be held in April, Petar Paunov told to SeeNews in a telephone interview from Kyustendil. In May, as weather warms up, construction works will kick off," he added. All say that deadlines are too ambitious. The recreation centre faces an end-November deadline for completion, so that it could start functioning early next year," Paunov said. Kyustendil, inhabited since 8,000 years ago, has a population of some 50,000. Its hot mineral water springs and wells have been used since Roman times to heal gynecological, neuralgic, pulmonary, traumatic-orthopedic and rheumatic diseases and diseases of the musculoskeletal system. The city attracts around 100,000 tourists a year. The project calls for the revamp of existing buildings and the construction of new facilities for medical treatment, recreation of sportsmen, spa tourism and education purposes. The project will include a medical centre with with facilities for balneology, physiotherapy and kinesitherapy with a built-up area of 4,000 square metres and 120-150 beds in the city's downtown. The project also features a 1,200-square metre medical centre for treatment of patients who had suffered a brain stroke. The centre will have a yard of of 3,000 square metres for recreation exercises and a nearby accommodation unit with 250 beds. Kyustendil, located close to Bulgaria's borders with Macedonia and Serbia, plans to be the sole investor in the project but does not rule out partnership options. In order to meet deadlines, our intentions are for the municipality to be the investor. Partnerships are welcome, of course," Paunov said and added that there have been requests for partnership from abroad. The city plans to apply for European Union funding to cover part of the investment cost of the project. Bulgaria joined the bloc in 2007. We don't have any doubts that now it is the right time for investment in this project as prices of construction works and equipment are 30% lower than they were two years ago," Paunov said. The construction industry was the sector of the Bulgarian economy that was hardest hit by the global financial crisis and economic downturn with sales in 2008-2009 a far cry from the double-digit growth recorded in 2004-2007. Kyustendil will use the know-how of Bulgaria's Military Medical Academy (www.vma.bg) in Sofia for developing its medical centre. For me, in addition to the good basis and the perfect conditions that we will offer, the key is the good management, in which the Military Medical Academy has long-standing traditions," Paunov said. Kyustendil, known for its mild climate influenced by the Mediterranean, is located at an hour-and-a-half drive southwest from the Sofia international airport. It lies less than 20 kilometres from the border with Serbia and less than 25 kilometres from the border with Macedonia. The recent introduction of visa-free travel for nationals of the two ex-Yugoslav republics means that 300,000 to 400,000 more people can visit Kyustendil yearly, Paunov said. The European Union scrapped entry visas for citizens of EU-aspiring Serbia, Montenegro and Macedonia in December of 2009. "There are [health] funds ready to immediately send patients for treatment," Paunov said.
COMPANIES:
Apple Store arrives in Bulgaria
The Apple store for iPhone, iPod Touch, and soon iPad, applications is officially on the Bulgarian market.The store will allow Bulgarian customers to register for free, download thousands of games and applications for business, entertainment, productivity, and more, and pay with credit cards issued in the country instead of looking for different creative ways, such as using an address in Romania, as it has been until now.The launch of the App store in Bulgaria is simultaneous with the launch in 12 other countries such as Macedonia, Jordan, Kenya, and Madagascar.App store currently offers over 140 000 applications, some free and some paid, and has locations in 90 countries around the globe.In Bulgaria, the mobile operator Globul is the official distributor of the iPhone, but there isn't yet any data about the number of iPhones in the country.
Mobiltel revenue slumps by 7.9% for 2009
Bulgarian cellular operator Mobiltel booked a 7.9% drop in 2009 revenue, parent company Telekom Austria said in its annual report. The group, which has subsidiaries in Austria, Bulgaria, Belorussia, Serbia and Croatia, saw revenue dip by 7.1%. For 2008, Mobiltel scored a 3.9% increase in revenue. In nominal terms, Mobiltel’s revenue plunged to EUR 614.7 million from EUR 667 million for 2008, with the worst performance delivered in the final quarter when the carrier posted an 11.4% fall. EBITDA (earnings before interest, tax, depreciation and amortisation) dropped by 11.8% to EUR 327.1 million. Mobiltel CEO Andreas Maierhofer pinned the decline on macroeconomic deterioration, claiming the slump in foreign direct investment (FDI) and mounting unemployment has dealt the company the hardest blow. Mobiltel retains a 50% share of the domestic market, with a customer base of 5.3 million, Maierhofer said. Contract subscriber numbers rose to 59 percent from 51.4 percent as Bulgaria forced all pay-as-you-go users to register their SIM cards. However, some 800,000 Mobiltel customers have not yet fulfilled the requirement. The carrier will pump EUR 100 million in Bulgaria in 2010, the company said.
Cellular operator Globul posts slight decline in 2009 profit
Cosmo Bulgaria Mobile, a unit of Greece's Cosmote, which runs the local Globul mobile operator, reported a 4.3% drop in its operating income before depreciation and amortisation (OIBDA) to BGN 366 million. The company attributed the decline to the unfavourable economic conditions, tough competition in the mobile phones sector and the continuous reduction in retail rates. Revenue slipped by 2.6% to BGN 877 million. Contract subscriber numbers rose by 1.5% to 2.1 million compared with year earlier, accounting for 55 percent of the carrier’s total customer base of 3.9 million. Globul’s average revenues per user shrank to B38.7 million. The performance was in unison with parent company Cosmote, which saw its 2009 revenue slump by 6.9% year-on-year to EUR 3.04 billion. The company cited the reduction in interconnectivity prices in all markets where it operates. on Wednesday, Globul’s closest rival -- Telekom Austria-owned Mobiltel -- unveiled a 7.9% decline in revenue to BGN 1.198 billion.
Citigroup to advise sale of Bulgaria's tobacco giant Bulgartabac
Bulgaria’s Privatisation Agency has appointed Citigroup Global Markets Limited to advise the sale of state-run tobacco behemoth Bulgartabac.European investment banking arm of US-based financial services giant Citigroup beat Raiffeisen Investment – Kamburov, which ranked second, Russia’s Renaissance Securities, which came third, and a tie-in between investment brokerage KBC Securities N.V. and Tokushev Associates.Citigroup declined to comment, saying does not have enough details about the selection.The company will pocket 1.018 million euro to carry out a legal analysis, make a sell-off assessment as well as organise and maintain a webpage. It will get 1.6 per cent of Bulgartabac’s sale price.
THE CRISIS:
Bulgaria residential construction down 45% in 3rd 2009 Quarter
Construction permits for residential buildings issued in Bulgaria in the last quarter of 2009 are down 45% while housing units inside them are down 70% year on year.The data was published by the National Statistics Institute (NSI) Monday.There is a significant reduction in office buildings construction as well – permits are down 37%.1 343 residential permits have been issued between October and December 2009 for a total of 3 900 apartments. The most permits – 155 have been issued for the Burgas Region, followed by the cities of Sofia – 150, Plovdiv – 143, and Varna - 128. The most residential units, however, will be built in Sofia – 773 and Varna – 604.63 permits for office buildings have been issued in the last quarter of 2009, the most of them in the city of Blagoevgrad – 11, followed by the city of Dobrich – 8.Last week, Eurostat, the statistical office of the European Union, published data showing the largest construction decreases in the EU for 2009 were registered in Bulgaria (-33,3%).
Crisis hit hard 58% of bulgarians
Over half of the Bulgarians have been affected directly by the crisis and have been limiting the consumption of some goods and services, shows a survey of Pragmatica agency made in the beginning of 2010. About 60% of the respondents affirm they feel the tangible effect of the crisis on their way of life. For comparison - in the beginning of 2009 that number hardly reached about 32%.Bulgarians are pessimistic in their expectancies for coping with the situation and overcoming the crisis in the next couple of years. Every fifth thinks that the situation will improve at the end of 2010 or in 2011 and a little bit over one fifth of the respondents have no clear vision when could be expected the 'end of the crisis'.According to the majority of the polled Bulgarians aged between 18 and 65 and living in towns with population over 25,000 citizens the current economic events are "very important" regarding the future development of this country
58% of the respondents report a drop in their income compared to the previous year.Every third household has decreased its expenses for heating, electricity, food and water.The expectancies for 2010 are incomes to continue to dwindle and consumers to limit their consumption.
PC market down 21% 2009
Bulgaria’s PC market has contracted by 21.5% in 2009, according to the latest estimates by local industry researcher IDC. For the fourth quarter, the decline is deeper than Central and Eastern Europe’s average. The raging economic crisis has dealt a blow to both businesses and households, IDC said. The sector’s total performance is marred by sales of desktop computers, which slid 29.5% year-on-year as price pressure speeding up the fall. Portable computers have seen a 16.2% reduction. HP, Acer and Asus led the pack in 2009, capturing over 40% of total sales.