BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 12 - 19 MARCH 2010 )
Sections/headline briefs:
MACROECONOMY:
· Russia ready with financing for Bulgaria's Belene project by May
· New strategy to fix water sector problems
· Farmers and renewable energy investors divided over Dobruzha
· Bulgaria's largest wine expo opened in Plovdiv
· Bulgaria offers best eastern European outsourcing quality
· EIU: Bulgaria Euro adoption likely in 2014 earliest
· Qatari emir meets Bulgarian PM Borissov in Doha
· Enel confirms plans for Bulgaria thermal plant sale
INVESTMENTS:
· Razgrad authorities want a solar park constructed near the town
· Belgium company invests EUR 15 M in Bulgarian biofuels plant
· Bulgaria power utility EVN to invest BGN 100 M in new plant
· Bulgaria’s Kremikovtsi becomes business park
· Sparkassen Immobilien opens EUR 210 M trade centre in Sofia
· FDI in Bulgaria down by 86% in January
· AEBTRI chairman: Investors go where there is infrastructure
· Austrian companies desire to build Bulgaria's infrastructure
COMPANIES:
· French companies export business to Bulgaria lured by low taxes
· Indian drugs company Elder Pharmaceuticals ups Bulgaria stake
THE CRISIS:
· Expert: Bulgaria starts overcoming crisis in April
· Bulgarians save 36 billion in times of crisis
· Advertisement market shrinks 24.8% last year
· Bulgaria should tighten the belt
INTERVIEW:
· Bulgaria, Romania need to combat red tape to raise share of renewables in energy mix
MACROECONOMY:
Russia ready with financing for Bulgaria's Belene project by May
Schemes for Russia's funding for the planned 2,000 megawatt Belene nuclear plant on the Danube River will be prepared by the end of April, the country's energy minister has announced.“We are convinced that the Belene project, which is today a leader in the construction of a new generation of nuclear power plants will find a strategic investor,” Russian Energy Minister Sergei Shmatko said on Monday at his meeting with the Bulgarian Parliamentary Speaker Tsetska Tsacheva.Russia proposed last month to extend EUR 2 B of funding to Bulgaria for the construction of the stalled project until Sofia finds a strategic investor, even without corporate or state guarantees. According to unofficial information Russia plans to hold at least a 50% stake in the nuclear plant in exchange for the loan.Bulgaria, which is expected to reply to Russia by the end of this month, has made it clear that Russia's offer for funding will not be enough and that it will angle for a European investor.During their recent visit to Sofia, Russian Energy Minister Sergei Shmatko and Sergei Kiriyenko, head of the Rosatom state nuclear corporation, announced that Rosatom was ready to extend a loan and become a shareholder in Belene plant.Meanwhile Bulgaria's new center-right government, which has put the Belene under review due to rising costs, announced a tender for a new consultant after German utility RWE walked out of the project due to funding problems and Sofia decided to redesign it to attract new investors.The government has abandoned plans to cut its shares from 51% to 20-30% and will aim to keep a 50% stake in the multi-billion nuclear project, which has stalled over lack of funding.
New strategy to fix water sector problems
A national water company, on the analogy of the National Electricity Company, will most likely take control of the country's water companies, said last week Rossen Plevneliev, Minister of Regional Development and Public Works. The move is aimed at defragmenting the country's water sector, which is now highly divided, the networks are dilapidated and the most eloquent proof of this are the losses of the water supply system that vary to between 55 and 70 percent. The ownership of companies is also not clear, most often being divided between the state and municipalities, which in turn is the most serious obstacle for foreign investors to enter as concessionaires. "The water sector is fragmented and comfortly scattered across five ministries, each of which has different priorities. I do not know whether you will believe me, but in 2007 when we had drought and problems with water, Ministry of Energy didn't provide water for the needs of the population because it was producing electricity for export. From this perspective, Bulgaria may continue being a hungry and thirsty country because its water sector is not run well, " Minister Plevneliev said at a meeting with representatives of the Confederation of Employers and Industrialists in Bulgaria. Another alternative being discussed with the Ministry of Environment and Water is the setting up of larger water management companies, which corresponds to the Ministry's four Water Basin Directorates, namely Danube, Black Sea, Eastern Aegean and Western Aegean ones. The model will be embedded in the strategy, which is currently being developed by the Environment and Water Ministry. Such a document was drafted in 2004, at the end of the mandate of Saxe-Coburg-Gotha's Cabinet, but it was never debated at the Parliament. It will serve as basis of the new strategy, but the different institutions of the water sector can still not find the right formula to finally put it in order. It's nice that for the time being there are no indications for any disputes between the Regional Development Ministry and that of Environment as to which one of them should take responsibility for water management companies. "If I can get rid of water companies, I would be pleased at it. I will give them to the Environment Ministry and that's it. But if that fails to happen, I am ready to bear my cross," Minister Plevneliev added. Legislative changes to settle ownership of water operators were made under pressure from the European Commission and its main proponent was Regional Development Deputy-Minister of the tripartite coalition's cabient and present Socialist Party MP, Dimcho Mihalevski. It envisaged to group water management companies in terms of regions into associations so that they can apply for EU funds. So far, however, the adjustments have remained on paper only and most likely will not be implemented in practice.
Farmers and renewable energy investors divided over Dobruzha
A lengthy discussion between farmers and wind park investors regarding amendments to a proposed Agriculture Ministry amendment about arable land protection triggered controversy and division, Stroitelstvo Gradut weekly said on March 12 2010.The problem centres around the rich farmlands of northeastern Bulgaria, the region known as Dobruzha, where a number of wind parks have been constructed in recent years.The proposed amendments to the bill envisage that a ban is enforced so that no more wind parks are constructed on "rich arable lands" to preserve the parcels for the agricultural sector.The proposal was advocated by farmers in the Dobruzha region who want no more wind parks or solar panel parks erected on the rich soil of the northeast.According to Radoslav Hristov, head of the wheat producers in Bulgaria, if the Government does not act now to prevent more parks sprouting up in the region, "there will be no agricultural land left for cultivation and agriculture," Stroitestvo Gradut quoted him as saying.Investors in renewable energy sources, on the other hand, agreed that arable land should be preserved for the agricultural sector, but were "categorically against the ban being implemented if it only addressed the issue of wind parks exclusively".In an official stance from the Confederation of Employers and Industrialists in Bulgaria, and other associated companies in the industry, it says that the "proposed new amendments to the agricultural bill are discriminatory against the industry".
Bulgaria's largest wine expo opened in Plovdiv
Twelve contracts have been signed from the beginning of 2010 to date under the European programme for development of wine production in Bulgaria, worth in excess of 5.6 million euro, according to a deputy of the Zemedelie fund, as cited by Bulgarian Dnevnik daily on March 15 2010.The Vinaria 2010 exposition in Plovdiv, aimed at stimulating and develop the industry in Bulgaria, is currently underway. There are 35 additional projects worth about five million euro on the agenda pending evaluation.The Vinaria 2010 exposition strives to bring together leading companies from the sector relating to vine-growing and wine production. The event serves as a venue for exchange of information as well as the presentation of innovative techniques and technologies through its numerous conferences, seminars, presentations and business meetings, the event's official website said.Kalina Ilieva is the new executive director of the stately run Zemedelie fund, approved by the Bulgarian Prime Minister Boiko Borissov. Moreover, the fund also has two deputy executive directors, Svetoslav Simeonov and Fragomir Gospodinov.According to the agricultural fund Zemedelie, a total of 158 winery projects received approval and financial assistance last year, amounting to 21.1 million euro. The European programme, which will be operational until 2014, has a total budget of 112.6 million euro, Dnevnik said.Wine producers in Bulgaria may apply for the programme under three criteria: restructuring and conversion of their grape vineyards, insuring the annual produce and promotion of the product in third countries. The resource, which will be allocated in 2010, is set at 21.2 million euro, while in 2011, 22.3 million.
Bulgaria offers best eastern European outsourcing quality
Bulgaria is among the leading European countries, in terms of the cost and quality of the outsourcing services the country offers. A joint analysis by Colliers International and AT Kearney concluded that Bulgaria held the top position for outsourcing possibilities among the 12 European countries surveyed. The other countries were: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia and Ukraine. The country competes internationally in the top 15 countries, with its combination of attractive locations for outsourcing and offshore activities. The assessment was based on criteria as financial attractiveness, the overall economic climate and the availability of a skilled workforce.
EIU: Bulgaria Euro adoption likely in 2014 earliest
Bulgaria's aspirations to join the euro zone may be rewarded in four years' time, according to a leading expert from The Economist's analytical unit.“The Bulgarian government will hope to join ERM II later in 2010, although Mr Borisov has admitted that the aim to adopt the euro by 2013 will be a struggle. We anticipate that Bulgaria may get to adopt the euro in 2014 at the earliest,” Toby Iles, an analyst for Central and Eastern Europe at the Economist Intelligence Unit (EIU), said in an interview for Novinite.com.He pointed out that the Greek crisis could harm Bulgaria's euro zone bid as EU policymakers, who had already shown a tendency towards a very strict application of the Maastricht criteria for euro adoption, will now cast an even warier eye not only on these criteria, but on a broader set of parameters. These are likely to include the sustainability of external balances and broader measures of the economy's performance and competitiveness.According to Toby Iles Bulgaria's recent fiscal prudence is a major positive for its bid to enter ERM II and then adopt the euro.“Nevertheless, it is no secret that some established euro members have concerns about admitting faster-growing economies to the euro club, owing to the perceived greater risk of imbalances, which may undermine confidence in the single currency. The Greek crisis is likely to exacerbate these cautious tendencies,” the analyst pointed out.
Qatari emir meets Bulgarian PM Borissov in Doha
Qatar’s emir, Sheikh Hamad bin Khalifa al Thani who will receive Bulgaria’s Prime Minister, Boyko Borissov in the capital of the Emirate, Doha next week has repeatedly demonstrated Bulgaria has a special place in his heart. In 2007 he supported France’s efforts towards the rescue of the Bulgarian medics from the Libyan prison. For his contribution to the favorable solution of the issue and for his intentions to develop the Emirate’s relations with Bulgaria in the sphere of economy, while on a visit to the country in 2009 the emir was awarded Stara Planina order with a ribbon. Then he expressed a wish that the bilateral cooperation would be developed in all aspects and a number of agreements were consequently signed. Sheikh Hamad bin Khalifa Al Thani is one of the most affluent heads of state in the world thanks to the control he has over the oil and gas deposits of Qatar. The Emirate’s deposits of natural gas are the third largest in the world after those of Russia and Iran and the oil deposits are believed to contain 15 millionbarrels.
Enel confirms plans for Bulgaria thermal plant sale
Italian energy giant Enel is considering the sale of its 73% stake in Maritsa East 3, a coal-fired plant which has a capacity of 908 megawatts, the company executive director has confirmed.“We are not happy with the Bulgarian market and that's the reason for our decision. I believe that Martisa East 3 will be much more efficient if managed by an integrated player, who has already stepped in Bulgaria. Such a player will have much bigger chances to benefit from the plant,” Fulvio Conti told local Darik Radio.Conti stressed that the buyer should not underestimate the value of the plant, which is why Enel has launched a bidding competition.“A rival company has already expressed interest in the sale,” Fulvio Conti said.A year ago Enel increased the capacity of Maritsa East Three plant to 908 megawatts, up from 840 MW, and also put new desulphurisation installations on the plant's four units.Experts comment that that the potential buyer is probably eying a 100% stake in the plant, in which the state owns a 27% stake. The rumors were fanned by a statement of Energy and Economy Minister Tricho Traykov, who recently announced that the state can land EUR 200 M from the sale of its stake in the plant.The plant is located in the Maritsa East lignite coal mining complex in southern Bulgaria, which generates 30% of the country's electricity. Enel also owns seven wind parks of 3 megawatts near the Black Sea coast.Enel said its 2009 earnings rose 2% on revenues earned in its overseas investments which offset decreases in electricity demand in its key Italian market.The company full-year net profit rose to EUR 5.39 B from EUR 5.29 B a year earlier.Revenues were up 4.7% to EUR 64 B from EUR 61 B.
INVESTMENTS:
Razgrad authorities want a solar park constructed near the town
Razgrad municipality, in the northeast of Bulgaria, will offer parcels spanning a total of 38ha to investors wanting to construct a solar panel park in the region, according to deputy mayor Lyubomir Tsonev, as quoted by Dnevnik daily on March 12 2010. Reportedly, the "region has been assessed by the local administration and the project has received an ecological grade allowing for construction to go ahead".According to Ministry of Environment authorities in Rousse, "the construction of the wind park near Razgrad would have zero negative effect on the region's natural characteristics," Dnevnik said."We have chosen lands which are neither used by the agriculture sector, nor are they thickly forested," Tsonev said."We have already been supplied with an assessment from experts, saying that the construction of this park will cause no damage to nearby forests."The area chosen by the administration in Razgrad is near the industrial zone of the town. Reportedly, the area has enough space for a solar panel park with a 70 megawatt capacity to be erected. Additionally, its proximity to the existing national electric grid infrastructure is also seen as advantageous.According to Tsonev, investors from Bulgarian and foreign companies have already expressed an interest. Negotiations will begin after the town council decides on the municipality's role in the project.
Belgium company invests EUR 15 M in Bulgarian biofuels plant
The construction of a new plant for the production of biofuels will begin by the end of 2010 in Bulgaria's southern city of Kardzhali.The information was provided by Yves Crits, CEO of the Belgium company 4Energy Invest, which specializes in renewable energy by creating and managing a portfolio of small to middle-sized locally embedded projects that transform biomass into energy.Crits is in Kardzhali on the invitation of the Member of the European Parliament, Vladko Panayotov. The CEO arrived with the goal to purchase wood and to survey possible locations for the new plant.The Belgium investment is estimated at EUR 15 M. The project will provide about 40 new job positions for workers and additional openings for people, who will deal with the delivery of the wood.The technology to turn wood into energy is an innovation never used before and the only similar factory so far is located in Belgium. Crits says the technology and the production will reduce the carbon dioxide emissions in Bulgaria in light with the EU legislation.The biofuels will be used for the heating of buildings, production of electric power, and in different industrial productions.
Bulgaria power utility EVN to invest BGN 100 M in new plant
Bulgaria’s Austrian-owned power utility EVN announced it planned to invest BGN 100 M in a new electricity and heating plant.The new power plant will be constructed by EVN Bulgaria near the Plovdiv North Heating Plant.The new facility will be fully funded by EVN, announced Jorg Sollferner, Manager of EVN Bulgaria Toplofikatsia EAD.EVN has picked Siemens to execute the project after a tender. The Manager of Siemens Bulgaria, Boryana Manolova, has stated that the company will hire Bulgarian firms as subcontractors, as cited by BGNES.The ground breaking ceremony of the new plant is planned for June 2010; it is supposed to be fully operational in the fall of 2011.Sollfelner said the new plant will run on natural gas, and will be 20% more efficient than the existing Plovdiv North Power Plant.In his words, the production of electricity will help stabilize the electricity supply in the region. EVN is the electricity distribution company for South-central and Southeastern Bulgaria.According to the Manager of EVN Bulgaria Toplofikatsia, the new facility will be more-environment friendly, and will use latest technology, which guarantees it will operate for 20 years without failures and repairs.
Bulgaria’s Kremikovtsi becomes business park
Bulgaria’s Kremikovtsi plant may become a Wall Street on the Balkans – PM Boyko Boirssov have set off for Qatar to meet local businessmen and present to them an ambitious project for the construction of a financial and industrial center in the place of the dead copper-smelter from the communist era. Borissov is the first Bulgarian PM to pay an official visit to Qatar on March 21-24, when he will also visit Kuwait.
Kremikovtsi’s site appears very attractive to investors with its well-developed infrastructure and relative proximity to the airport. Sheikh Tariq Bin Faisal Al Qasimi, Chairman of Emirates Investment Group, first showed interest in investing in the former copper smelter two years ago, when Borissov was still mayor of Sofia. In 2009, Qatar’s Emir Sheikh Hamad ibn Khalifah Al Thani visited Bulgaria at the invitation of President Georgi Parvanov and also had talks with Boyko Borissov. During their talk, the Emir suggested that the state of Qatar may pour cash in the NPP Belene project, but this does not mean that Sofia has stopped searching for a European investor.
Sparkassen Immobilien opens EUR 210 M trade centre in Sofia
Austrian real estate group Sparkassen Immobilien opens today the trade areas of the business centre Serdika Centre in the capital city of Sofia . The trade areas occupy 51,000 sqm and the investor reports that 99% of the 210 shops have already been rented. The project, estimated at a total of EUR 210mn, is run in cooperation with German ECE Projektmanagement, who will manage the centre. The office areas are to be completed by the end of the year. The business centre is located on a total of 85,000 square metres.
FDI in Bulgaria down by 86% in January
The Foreign direct investment (FDI) in Bulgaria amounted to EUR 52.9 million (0.2% of GDP) for January 2010, compared to EUR 391.7 million (1.2% of GDP) attracted in January 2009, preliminary data of the Bulgarian National Bank (BNB ) show. The figure represents an 86-percent year-on-year increase. The attracted Equity Capital (acquisition/disposal of shares and equities in cash and contributions in kind by non-residents in/from the capital and reserves of Bulgarian enterprises and receipts/payments from/for real estate deals in the country) for January 2010 amounted to EUR 3.4 million, which was 6.4% of the foreign direct investment.It decreased by EUR 85.1 million compared to that attracted in the same period of 2009 (EUR 88.5 million, 22.6% of total foreign direct investment). The receipts from real estate investments of non-residents amounted to EUR 7.7 million compared to EUR 37 million for January 2009.The other capital, net (the change in the net liabilities of the direct investment enterprise to the direct investor on financial loans, suppliers' credits and debt securities) was positive, amounting to EUR 26.7 million in January 2010, compared to a net other capital amounting to EUR 270.8 million in the same period of 2009.According to preliminary data, the Reinvested Earnings2 (the share of non-residents in the undistributed earnings/ loss of the enterprise) in January 2010 are estimated at EUR 22.8 million compared to EUR 32.5 million in the same period of 2009.By country, the largest investments in Bulgaria for the reporting period were those of Greece (27.3% of the total foreign direct investment), the United Kingdom (19.6%) and Germany (11.6%).According to preliminary data in January 2010 Direct investment abroad increased by EUR 1.9 million compared to an increase of EUR 7.9 million in January 2009.
AEBTRI chairman: Investors go where there is infrastructure
Investors are highly influenced of the infrastructure. Is there no infrastructure, they flee and go to where there is, Chairman of Management Board of the Association of Bulgarian Enterprises for International Road Transport and Roads (AEBTRI) Georgi Petrov said in an interview with FOCUS News Agency. In a well-developed infrastructure, there is a growth of economy. In his words - transparency is necessary and to be known that the money they are allotted from infrastructure for transport should go to maintenance of roads and fuel taxes should also go into infrastructure development. He gave an example that the network of highways in Portugal, which has around 10 million inhabitants, has reached 5 000 kilometers in recent years. According to statistics currently there are 418 kilometers of highways in Bulgaria. I hope construction of Trakia Highway will be completed as soon as possible, he said. As regards the cleaning of winter roads there is inefficiency - money is being spent, but there is no adequate service. Cost for maintaining the roads are made and snow-plows work in snow, but much later, when the traffic of people who go to work is very busy and the access of machinery to clean the snow becomes impossible, Georgi Petrov added.
Austrian companies desire to build Bulgaria's infrastructure
Over 20 Austrian companies have expressed strong interest in participating in the construction of the Bulgarian road and railroad infrastructure.Companies such as Alpine Bau, Deco-Tech Handeks, Evronik Para-Chemie, Strabag, Terra-Mix, VAE have taken part in the Bulgarian “Transport Infrastructure” forum and have stated their desire to be included in projects in the country.Austrian Ambassador to Sofia, Gerhard Reiweger, pointed out Bulgaria must benefit from the Austrian experience in absorbing funds from the EU operational program “Transport”. The country currently lacks good projects, which is the main reason why it misses on European financing, according to Reiweger.Bulgaria's Ministry of Regional Development is working on modernization and repairs of highways and first class roads, connecting Bulgaria to international thoroughfares, according to Deputy Regional Minister, Georgi Pregiov.Pregiov reported that Bulgaria must realize projects in the amount of EUR 990 M by 2013 from the EU program. In the 2014 – 2020 period the country will receive an additional EUR 1.3 B in EU financing.
COMPANIES:
French companies export business to Bulgaria lured by low taxes
The lower taxes in the EU’s poorest member state have attracted many French companies to export their business to Bulgaria. At least twenty French companies have moved their businesses to Bulgaria because of the low flat tax of just ten percent, said Milka Goergieva, director of the consulting agency. Businessmen from other European countries have also registered their companies in Bulgaria to save money on the lower taxes here. For example, the corporate profit tax in France ranges between fifteen and thirty-five percent set against only ten percent in Bulgaria. Most of the companies that have moved their business to this country are in the sectors of textile and food processing or organic farming. Many French owners of SMEs have calculated that production costs here are several times lower than that in France.
Indian drugs company Elder Pharmaceuticals ups Bulgaria stake
Indian drug makers ‘Elder Pharmaceuticals’ has announced that it will increase its stake in Bulgarian subsidiary 'Elder Biomeda' to 61% for USD 12 M.Elder Pharmaceuticals currently holds 51% in Elder Biomeda but the Mumbai based firm will now increase its board presence to five seats from the earlier two in the seven-member board, giving a complete control of the company. It will also appoint a new CEO.In 2008, Elder Biomeda AD acquired an 100% stake in three small Bulgarian healthcare companies belonging to the Biomeda group through a share-swap deal. The promoters of Biomeda group subscribed to 49% equity of Elder Biomeda AD as part of the sale.Elder Biomedia is among the top 10 distributors and manufacturers of oral drugs in the Bulgarian pharmacutical market.
THE CRISIS:
Expert: Bulgaria starts overcoming crisis in April
Bulgaria’s economic recovery will start in April 2010, according to Tsvetan Simeonov, Chair of the Bulgarian Chamber of Commerce and Industry. “Bulgaria’s economy has seen harder times. If the GERB party lives up to its campaign promises – not to increase taxes, to reduce the administration – we are not going to be in the situation of some of the neighboring states,” Simeonov told Pro.bg TV apparently referring to the situation in Greece.Simeonov has slammed the Borisov Cabinet for its policy to delay payments it owed to private companies, and to pay immediately only to those who give up 10% of the state debt to them.The Bulgarian Chamber of Commerce and Industry, together with the major trade unions, have insisted that the government publish a schedule of paying out the money it owes to private businesses that executed public procurement orders. This would allow the firms to apply for credits, Simeonov said.In his words, when drafting the 2010 budget, the government did not take into account the possible drop in the level of revenue which occurred in the first months of the year.The BCCI favors strongly the idea of the Finance Minister, Simeon Djankov, that state employees should pay their health insurance on their own because this will improve the equality in the labor market.
Bulgarians save 36 billion in times of crisis
At the end of 2009 the financial reserve of Bulgarian households was 36 billion levs (1 euro = 1.95 levs) and its yearly growth is increasing to 7%, a research of Industry Watch shows. In an unstable situation regarding job possibilities and income coinciding with still high interest rates on bank deposits the people save more. In bank accounts Bulgarians hold 59,000 deposits of over 50,000 levs each, as the total amount on the big saving accounts is 6.9 billion levs or 28% of the deposits of physical persons. The increased level of savings is connected with a drop in the number of households with debts. In 2009 the stability parameters of the currency board showed better results and the trust of households in the bank system has grown, reads the research.
Advertisement market shrinks 24.8% last year
The net advertisement market has declined by 24.8% to BGN 390mn (EUR 199.4mn) last year, chairperson of the advertisement agencies chamber Krasimir Gergov informs. Worst-case scenario envisages 7-10% contraction this year but the market may also remain unchanged. The net expenditures for advertisement per capita have fallen to BGN 52.4 last year as compared to BGN 68.9 in 2008. The gross expenditures were respectively BGN 136.3 in 2009 and BGN 157.7 in 2008. The gross internet advertisement market rose by 4% to BGN 33.4mn decelerating from 76% in 2008 and 50% in 2007, significantly below the forecast for 20-40% growth from one year earlier. The internet advertisement market accounted for 3.2% of the total last year. The gross and net TV advertisement market dropped by 20% and 28% last year and accounted for about 60% of total. The gross media advertisement market declined by 7% but in net terms the contraction is to reach 38%. The respective prices went down by 20-35% last year. The gross value of the radio advertisement market rose by 28% but its net amount is forecast to drop by 37%. The budget for external advertisement shrank 32% last year and the capacity utilisation of the advertisement facilities dropped to 57-60% last year from 75-80% in 2008. The prices charged by advertisement agencies was by 40% lower last year compared to 2008. The food, cosmetics and drinks makers have increased their expenditures on advertisement but the telecommunications and pharmaceutical businesses have cut their respective spending.
Bulgaria should tighten the belt
Leading Bulgarian economy experts known as the Macro Watch group have recommended as a whole that the government should be more disciplined in its policies.Macro Watch, which is an Open Society Institute project, participated Sunday in public discussion entitled, “The Risks of Recovery.”“All decisions of the Bulgarian government must be subordinated to achieving the goal of entering the Eurozone,” said Georgi Prohaski, Chair of the Center for Economic Development.In his words, the benefits of being in the Eurozone are steep decline of the interest rates, attracting more foreign investments, releasing the money from the fiscal reserve and using it for the “Silver Fund” (a state retirement fund), and pushing forward with a retirement system reform.Prohaski has pointed out that despite the expected economic growth of over 1% in 2010, the state revenue is not going to go up. He thinks that in mid 2010, the government has to set up a fiscal buffer, and to update the state budget in case the planned revenue is not collected.He also stated that the Cabinet has to freeze the pensions and budget sector salaries, and to give up on the ideas of lowering social security payments and the VAT. He further warned that if the currency peg in Bulgaria is somehow compromised, all economic units using credits in euro but receiving their income in Bulgarian leva, will be facing bankruptcy.According to Lachezar Bogdanov from the Industry Watch think tank, the government has to figure out which state expenditures are absolutely vital.He said the budget revenue is not lower than it was in 2009 but that the state spending has seen increases in all spheres.“We don’t see any belt tightening despite all talk of Finance Minister Simeon Djankov about the meatless pizza (i.e. a metaphor Djankov used for Budget 2010 – editor’s note),” Bogdanov stated.He has emphasized the fact that it was primarily the private sector which bore the brunt of the economic crisis by losing 160 000 jobs, and said it was time for the public sector to absorb some of the effects of the crisis.Open Society economist Georgi Angelov said at present the Bulgarian state budget could not afford any additional expenditure. He pointed out that on the international financial markets the risk premiums for Bulgaria are being lowered, and that the interest rates of the Bulgarian foreign debt stand at about 6%, down from the peak levels of 8%. Angelov stressed that the economic processes in Bulgaria were similar to those in the Eurozone but that they came with a three-to-five-month delay.Economist Georgi Ganev from the Sofia-based Center for Liberal Strategies forecast a recovery of the Bulgarian economy only after the middle of 2010 but pointed out that its effect will be felt only in 2011.Economist Dimitar Chobanov from the University of National and World Economy in Sofia has expressed concern over the proposed construction of the Belene Nuclear Power Plant. He refuted the claims that the Belene NPP was essential for Bulgaria saying that in 2009 Bulgaria exported electricity for BGN 500 M even without a second nuclear plant. In his words, the feasibility of the proposed EUR 8 B investment in Belene will be doubted for a long time to come.Georgi Ganev believes that a number of secrets with respect to the Belene NPP project have not been revealed. He said the Bulgarian state had no business plan about it, and criticized those who said that the project cannot be terminated because Bulgaria has already spent over EUR 1 B on it.
INTERVIEW:
Bulgaria, Romania need to combat red tape to raise share of renewables in energy mix
Publication: SeeNews
European Union members Bulgaria and Romania need to streamline their administrative procedures to enhance the development of green energy and meet the targets for raising the share of renewable sources in their energy production, a senior official of the European Bank for Reconstruction and Development said. "There are general obstacles like slow and in some cases over-complicated administrative procedures and bureaucracy. It is very important for both countries to develop their plans taking into account the potential environmental impact on preserved areas of these developments which could undermine their positive effect," Senior Advisor, Power and Utility Team, EBRD, Milko Kovachev, said in an exclusive interview for SeeNews. He spoke prior to the 6th International Congress and Exhibition on Energy Efficiency and Renewable Energy Sources to be held in Sofia next month. "There is also need to expand some of the policies to support renewables, for example in heat production and mobility, which are an important part of achieving the national goals," said Kovachev. Bulgaria must cover 11% of its gross domestic energy consumption with electricity generated from renewable energy sources by the end of 2010 from less than 10% now and should increase that share to 16% by 2020. Its northern neighbour Romania should increase that share to 24% by 2020. Here is what else Kovachev told SeeNews:
Q. What obstacles are Bulgaria and Romania facing on the path to meeting their green energy targets by 2020?
A: There are no specific obstacles for Bulgaria and Romania to achieve their respective targets for the share of renewables penetration in their final energy mix by 2020. However, the countries have to prepare their National Action Plans by June 2010 and show how they will meet those targets.
Q: What is the potential of Southeast Europe in developing clean energy?
A: Southeast Europe has a great untapped potential for renewables with its unused hydro, biomass and solar potential. Energy efficiency, however, remains the top priority for this region. The region is reach in forests and agricultural land with associated biomass production. The region is as well a mountainous one and has still unutilised hydro potential which could be further developed.
Q: Which of the countries in the region has the biggest potential to attract investments in green energy?
A: An important prerequisite for investors is the availability of stable economy and good business climate. A specific prerequisite for renewables is the availability of stable, predictable and well functioning legal and regulatory framework and institutions supporting renewables. From this point of view Bulgaria is offering quite an enabling framework for investments in wind, small hydro and solar PV electricity generation; Romania with its well developed green certificates support scheme seems to be more and more attractive for investors, Turkey with its sizeable market and reforms has also great potential in wind and solar energy. The remaining countries from the region are on their way to setting appropriate enabling framework, for example Serbia recently approved a set of feed-in tariffs which might prove to be investment-friendly for renewables.
Q: What investments in renewables in the SEE region are expected in the following years?
A: It is difficult to predict the size of investments. Investor interest, however, has shifted in the last year from the more mature and saturated renewables markets like Germany, Denmark and Spain toward the emerging markets and in particular the region of Southeast Europe and Central Europe.
Q: Do the countries of the SEE region have the potential to produce green energy equipment?
A: The region has a long tradition in production of components for hydropower plants and small turbines, solar panels, as well as small and medium-sized biomass heating boilers. It could be observed, however, that more initiatives are popping up in an effort to take part in the production value chain of newer renewable technologies as solar panels and heat pumps. But still the majority of new technologies are imported.
NOTE: The EE & RES Business Event in Southeast Europe organised by Bulgarian-based Via Expo Ltd. (www.viaexpo.com) will be held in Sofia from 14th to 16th April 2010.