BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 26 MARCH – 9 APRIL 2010 )
Sections/headline briefs:
MACROECONOMY:
· World Bank to finance major Bulgarian projects
· Westinghouse may build nuclear reactor in Bulgaria's Kozloduy
· Chevron Digs for Gas in Bulgaria
· Bright skies for Bulgaria’s exporters for Q1 2010
· More exporters gear for better performance in 2010
· Growth of import by 3% prognosis shows
- Bulgaria among Europe leaders in shopping malls construction
· World Bank report: EU10 to register tangible economic growth in 2011
· Bulgarian hardware market collapses for 6th consecutive quarter
· Bulgaria cement consumption shrinks 40% Y/Y in 2009
· Experts clash on private investment in Bulgaria’s water sector
· Preferential prices for RES power still in place
- Renewable energy sources power share rises to 9.9% in 2009
- Bulgaria bans clean energy projects on arable land
- Wine sector yet to absorb EUR 10 M
- Public procurement in the medical sector – rules without justice
- International Fair Plovdiv: Change of focus, discounts to exhibitors
- Lukoil to complete USD 1 billion hydrocracking unit in four years
INVESTMENTS:
· Solarpo begins building 2 new solar parks in Bulgaria
· Lebanon to pour cash in Bulgarian resorts
· GEK TERNA group to invest EUR 500 M in Bulgaria real estate and energy
· Russian billionaire eyes Bulgaria's Mtel owner
· Russian billionaire to invest in energy projects in Bulgaria
COMPANIES:
· British corporations interested in Bulgarian railways
· Greek Fourlis group to open Bulgaria's 1st IKEA store 2011 end
· Bulgaria sells 50% in Telco Radio, TV systems
· Turkey's Ziraat Bank expands in Bulgaria
THE CRISIS:
· Bulgaria's dental tourism flourishes thanks to Crisis
· Bulgarian think-tank stresses e-government as anti-crisis measure
· Bulgaria's government approves package of 60 anti-crisis measures
· Retail trade in Bulgaria among worst performers in EU
MACROECONOMY:
World Bank to finance major Bulgarian projects
The World Bank (WB) could finance, jointly with EU funding, road rehabilitation projects in Bulgaria and provide technical assistance for development of the energy infrastructure in this country. This was in the highlight of the Washington meetings of Bulgarian Economy, Energy and Tourism Minister Traicho Traikov with WB President Robert Zoellick and Rudolf Jan Treffers, the leader of the WB Netherlands constituency group which includes Bulgaria, the Economy Ministry in Sofia said Wednesday. The meeting with the WB leadership was on the programme of Traikov's official visit to the US March 5-7. Attending was also Kristalina Georgieva, the EU Commissioner for International Cooperation, Humanitarian Aid and Crisis Response and a former WB Vice President. The WB promised to provide expert support in the preparation of Bulgaria's energy strategy, in the work on the large energy projects, in the reform in the social sector and the efforts to improve the business environment in Bulgaria. The WB President plans to visit Bulgaria in July 2010. In Washington D.C. and Pittsburg, Minister Traikov met with senior representatives of the US administration. Bulgaria's role in Black Sea energy infrastructure topped the agenda of his talks with Richard Morningstar, the Special Envoy of the US Secretary of State for Eurasian Energy, and with Jose W. Fernandez, the Assistant Secretary of State for Economic, Energy and Business Affairs. Traikov presented to Jose W. Fernandez a report on Bulgaria's progress in protecting intellectual property rights in 2009. The hosts commended the efforts of the Bulgarian government in fighting graft and organized crime. Economy Minister Traikov and Assistant State Secretary Fernandez discussed the opportunities for relaxing the access to the US market for goods included in the US quota regulations (for EU member states) and for scrapping the US visa requirements for Bulgarians.Bulgaria asked support from the US partners in finding a strategic investor for the construction of the Belene N-plant. It was one of the things discussed by Traikov at his meeting with Daniel B. Poneman, Deputy Secretary of Energy. Deputy Secretary Poneman expressed support for Sofia's efforts to diversify energy supplies by building new gas connections for liquefied and compressed natural gas. The two sides discussed the possibility of inviting Bulgaria to the next Global Nuclear Energy Partnership summit.During his US visit Traikov also talked with representatives of the Treasury Department, the Department of Commerce and the Office of the United States Trade Representative. The talks focused on easier access for Bulgarian merchandise subject to US import quotas. A trade mission will visit Bulgaria in September.Oil and gas giant Chevron is showing interest in the extraction of shale gas in Bulgaria, Traikov learned at his meeting with the corporation's Vice President, Ian MacDonald. It sees very good opportunities for extraction in Bulgaria and has an idea about the possible location of deposits. Geological exploration has already been done. Traikov talked about the development of the Bulgarian economy and opportunities for participation in international projects at a roundtable on growth, energy and regional cooperation, organized by the US Atlantic Council in Washington, DC. He had a working lunch with US business representatives and set forth the investment opportunities in major projects in Bulgaria.Traikov held a series of business meetings. The Westinghouse management presented the AP1000 nuclear reactor. The company showed interest in participating in a future tender for construction of new nuclear capacity at the Kozloduy Nuclear Power Plant. Westinghouse is ready to have its fuel licensed for use by Russian-made reactors in Bulgaria.Meeting with EnerSea Managing Director Paul Britton, Traikov discussed possible ways to transport compressed natural gas from Azerbaijan to Bulgaria across the Black Sea. With US Steel General Manager Scott Coleman, Traikov discussed possible US investments in the Kremikovtzi iron and steel mill.Traikov also talked with representatives of companies of the military-industrial complex. Steve Williams, the Lockheed Martin Director for Europe/Eurasia, discussed with Traikov possible ways for US companies to participate in offset programmes in Bulgaria. The company showed interest in the privatization of companies of the military-industrial complex, as well as in cooperation with Bulgarian companies. Honeywell presented to Traikov a model of investments in energy efficient buildings and said a regional customer service centre could open in Bulgaria. In 2009, Bulgarian-US trade was worth 455.3 million dollars, with a US trade surplus of 62.5 million dollars. Two-way trade fell over 41 per cent from 2008. Bulgaria exports to the US mostly industrial oils, foods and textiles, and imports coal, coke, ores, cars and telecommunications equipment. US investments in Bulgaria totalled 38.2 million euro in 2009. Also last year, more than 61,000 US tourists visited Bulgaria.
Westinghouse may build nuclear reactor in Bulgaria's Kozloduy
US energy giant Westinghouse is interested in building a seventh reactor in the Bulgarian nuclear power plant Kozloduy.This has become clear after Bulgarian Minister of Economy, Energy, and Tourism, Traicho Traikov, met with representatives of the Westinghouse management, the Economy Ministry press center announced.Traikov is a on three-day visit to the USA (April 5-7), where he has had meetings with US government officials and American companies.The management of Westinghouse has presented to the Bulgarian Minister its new generation nuclear reactor AP1000 which can be erected in three years, and has a high level of protection.Westinghouse has made it clear it is interested in participating in a future tender for the construction of a new 1000 MW reactor in the Bulgarian nuclear power plant Kozloduy which has four inactive 440 MW reactors and two working 1000 MW units, all of which are Soviet-made.The US energy company has also told Traikov that it was ready to obtain a license so that its nuclear fuel could be used for the Russian reactors in Bulgaria.
Chevron Digs for Gas in Bulgaria
The US industrial giant, Chevron Corporation, one of the world's six 'super major' oil companies has expressed interest in extracting shale gas in Bulgaria, emerged after the meeting of Bulgaria's Minister of Economy, Traycho Traykov with the company's Vice President, Ian MacDonald in Washington. Chevron Corporation estimates as very good the opportunities for extracting the alternative fuel in Bulgaria and has ideas where exactly the deposits could be discovered.Geological research has been made already.
Bright skies for Bulgaria’s exporters for Q1 2010
Bulgarian exporters are expected to turn in a nice performance as domestically-focused firms are seen digging themselves deeper in the ditch in the first quarter of 2010. As companies prepared to file their first-quarter reports, most analysts and fund managers predicted exporting producers will exhibit good results as foreign market are recovering faster. “Demand is picking up on the foreign markets, which will pump up exporters’ sales. Some of them have also streamlined expenses, which will increase their return on profit,” Dimitar Bakalov, portfolio manager at KD Investments, told Dnevnik. His opinion was echoed by Kamelia Lazarova of Karoll, who said exporting machine building, metallurgical and chemical enterprises are likely to notch-up year-on-year gains. The outlook is just the opposite for companies whose sales hinge on domestic consumption amid persisting stagnation in spending by companies, households and the government. “I think these companies will show worse results,” Bakalov said. Exports is the sole factor shoring up the economy at the moment, with a portion of exporters already having shown clear signs they are coming out of the doldrums. Car batter maker Monbat unveiled an year-on-year rise in sales for the fourth running month in February, expecting sales will bounce back by almost 32% for the full year. The net profit will surge by 56.7% in 2010, according to the company’s executives. Holding company Stara Planina Hold is also back to positive territory, expecting an over 30% jump for the first quarter from the same period of 2009. Analysts make mixed projections about banking reports. “Some of them will continue to demonstrate strong results, while others will probably continue to reel under the weight of bad loans,” Lazarova predicted.
More exporters gear for better performance in 2010
Another batch of Bulgarian exporters have sent out a new sign for recovery as they outlined their 2010 guidance. Drug maker Sopharma and lead and zinc smelter OZK said they expected sales to gain 15% and 20% this year, respectively. The pharmaceutical firm already rounded off a health 2009. Both companies pegged their optimism on continuous recovery of the European recovery and global markets. Sopharma forecast in its annual report last week that it would post zero growth for 2010 amid the still rickety global economic conditions. But yesterday the company unveiled an expected 37% rebound in sales for March alone and 20% for the entire quarter compared with the same period of 2009. The company also updated its full-year outlook, seeing a 12% to 15% increase in sales on an annual basis. The upbeat forecast is backed by a strong performance on export markets, which generated a staggering 83% year-on-year rise in March. Exports picked up 32% between January and March. Kardjali-based OZK says sales are poised to bounce by approximately 19.4% on an annual basis for 2010 to clear the BGN 150 million mark. The company said the increase hinges mostly on the rebound in lead and zinc prices on commodity exchanges. In physical terms, the company expects a slight contraction thanks largely to tough carbon emission targets. OZK is currently implementing a EUR 120 million investment to dial up its production capacity, while reducing its harmful emissions. The project had been stalled for two years under the former government due to bureaucratic bottleneck.
Growth of import by 3% prognosis shows
Bulgaria's import and export would increase in 2010. The expected growth rate compared to 2009 is by 3 percent and 1,5% respectively, reads a report prepared by Business Monitor International on the sphere of water transport of freights in Bulgaria. The increase would have a positive effect on the work of Bulgarian ports. For example the prognoses for port Varna are for 2,4% growth of tonnage of the total freight turnover during the year.This week would be issued the data for Bulgaria's trade turnover for February. The information for January showed a yearly drop by 5% in import, while the export has marked a 13% growth compared to January 2009.
Bulgaria among Europe leaders in shopping malls construction
Bulgaria is among the five European states with the largest amount of commercial space under construction, according to a report of Cushman&Wakefield.The report distributed Friday by the company’s partner in Bulgaria, Forton International, says that in 2009 when the European market of commercial space registered a 19% decrease, Bulgaria ranked fifth in Europe with some 600 000 square meters of “shopping malls” space under construction.The ranking is topped by Russia which is followed by Turkey. The Cushman&Wakefield Report says that the opening of the new shopping malls in 2010 and 2011 will lift Bulgaria up in the ranking of commercial space per 1 000 persons; Bulgaria is currently the next to the last in Europe with only 28,2 square meters of commercial space per 1 000 persons.According to the report, in 2009 Bulgaria and Croatia registered the largest percentage growth of commercial space.“Some 300 000 square meters of commercial space are to be opened in 2010. This is an enormous amount for the scope of the Bulgarian market,” commented Sergey Koynov, CEO of Forton International. However, he expects that the opening of the some of the shopping malls under construction will be delayed by the limitations imposed by the economic crisis such as the reduced demand for stores for rent.“The commercial centers that have been opened since the beginning of the year have shown that the consumers in the big cities are still active. The concerns and caution of the merchants are mostly connected with the condition of the consumers in the smaller towns,” said Dimitar Kiferov, Commercial Space Manager at Forton International.The major conclusion of the Cushman&Wakefield report is that the European market of shopping malls has seen its greatest downturn in 15 years. only 7,4 million square meters of commercial space were opened in Europe in 2009, a 19% drop, which is expected to be even worse in 2010 when only 6,1 million square meters will be inaugurated. However, the shopping malls construction is expected to hit rock bottom only in 2011.
World Bank report: EU10 to register tangible economic growth in 2011
Bulgaria and Romania are the only EU10 countries where the foreign investments did not drop below 2% of the GDP, according to the EU10 Regular Economic Report of the World Bank.The Report, which has been released in Warsaw, Poland, says the EU’s newest member countries – the EU10 – are set to return to growth in 2010 and 2011 but growth rates will be lower than the one they had before the financial crisis hit them.The combined economic growth of the EU10 states is forecast to be 1.6% in 2010, and 3.6% in 2011, after the region registered a 3.6 decline in 2009.“While the EU10 region is set to outgrow the EU15 region in both 2010 and 2011, the recovery is weak compared with pre-crisis rates, and it will take until the second half of 2011 before real output will regain its pre-crisis level,“ the World Bank says while also pointing out that the EU10 has continued its gradual recovery at the beginning of 2010 in line with the recovery of the EU15.However, the recovery of the EU10 that can be expected in 2010 is described as “modest”.According to government projections, Poland, Slovakia, Lithuania, Romania, and the Czech Republic are leading the recovery in 2010, the World Bank points out while stressing that “only in 2011 will all EU10 countries experience growth.““While the recovery in the global economy is under way, the outlook for the EU10 region remains uncertain. Unemployment is still rising and is expected to decline only in 2011. In view of the weak recovery, companies are likely to postpone hiring of new workers until growth expectations are firmer, especially since many businesses reduced the average per worker work hours during the crisis. In addition, some EU10 countries, including Bulgaria, Czech Republic, Romania, and Slovakia, have begun consolidating their governments because of fiscal pressures and a desire to make public administration more efficient,” said Kaspar Richter, Senior Economist in the World Bank’s Europe and Central Asia Region and lead author of the report. The unemployment rates in the EU10 rose from 6.5% in June 2008 to 9.5% in January 2010, increasing from 2.9 million to 4.6 million persons. Governments in all EU10 countries, with the exception of Romania, project higher unemployment in 2010 than in 2009.From June 2008 to January 2010, unemployment rates increased by around 16 percentage points in Latvia, around 10 percent in Estonia and Lithuania; and less than 4 percentage points in Slovakia, the Czech Republic, Hungary, Slovenia, Bulgaria, Poland, and Romania.“The crisis has re-emphasized the importance of supporting growth through structural change, as envisioned in the EU’s new Europe 2020 strategy for smart, sustainable, and inclusive growth. Boosting potential growth would limit the fiscal deterioration resulting from the crisis, and would help to tackle the tough task of dealing with globalization, energy deficiency, climate change, and population aging. The reform agenda ranges from increasing labor force participation and strengthening higher education and innovation, to cutting red tape and reducing costs for doing business,” said Thomas Laursen, Country World Bank Country Manager for Poland and the Baltic Countries. The World Bank Report says that Bulgaria’s decline of consumer demand has led to a decrease of its exports from 83% of the GDP in 2008 to 58% of the GDP in 2009.While Bulgaria saw its foreign direct investment drop from 33% of the GDP in 2008 down to 6% of the GDP in 2009, it is still the only country in addition to Romania where they are above the 2% of the GDP level, unlike the other EU10 countries.
Bulgarian hardware market collapses for 6th consecutive quarter
Bulgaria's hardware providers are struggling as their sales are down for a sixth quarter in a row according to a report for the last quarter of 2009 of the market research agency CBN Pannoff, Stoytcheff and Co. All major distributors of hardware on the Bulgarian market are registering knock-down decreases. The report points out the expected laptop sales in Bulgaria are failing to materialize, and even the sales of mobile phones are down. The analysis concludes that entire sectors of the Bulgarian hardware market are struggling for survival and the latest one to be hit hard by the crisis being the market of printers. The market research agency, however, has pointed out that the situation seems to resemble a W-shaped curve with the downturn in hardware sales in the last quarter of 2009 being a second bottom. Thus, the Bulgarian hardware market is expected to reach at least zero growth in the second quarter of 2010.
Bulgaria cement consumption shrinks 40% Y/Y in 2009
Cement consumption in Bulgaria has dwindled by 40% to 2.6 million tonnes per year in 2009, the Bulgarian Association of Cement Industry (BACI) said quoting official statistics. “It’s been a tough year, plants come off and on line, workers are laid off or sent on a leave,” BACI chairman Vladimir Stariradev told Dnevnik, predicting the slide will continue through 2010. Three cement producers operate on the Bulgarian market including Titan Zlatna Panega, Holcim and Italcementi Group. Cement is also shipped from Romania and Turkey. Two years ago, Bulgaria’s cement consumption hovered around 4.7 million tonnes. Now the industry pins its hopes on major infrastructure projects, mostly backed by European financing, to get it out of the mess. “Unfortunately, there are still no visible signs of a serious uptake in the use of European money, whereas state money is as scarce as hen’s teeth,” Stariradev told state-run news agency BTA. In July 2009, the Commission for Protection of Competition (CPC) launched a probe into BACI on cartel suspicion. The regulator said it expects to come up with a decision within six months. The toughest punishment is a fine of BGN 150,000 on the association.
Experts clash on private investment in Bulgaria’s water sector
Bulgaria’s water sector benefits from a good regulatory framework but selling off state-owned assets would be a hard task to accomplish and the government should act very carefully, said Karsten Rasmussen, who monitors Bulgaria in the Commission's Regional Policy Directorate General. Speaking at the Strategic Infrastructure Management and Development annual conference hosted by Capital weekly and Stroitelstvo Gradat weekly, Rasmussen pointed out that the EUR 1.3 billion European cash pot eliminates the need to bring in private investors. He advised that portable water sources should be operated by the industry ministry, whereas municipalities should be in charge of sewage networks. Rasmussen highlighted as a bad example of public-private partnership Sofia utility Sofiyska Voda. He explained that the utility is not working under optimal framework conditions and the system is not fit for such operations. His opinion flew in the face of Iliyana Tsanova, senior banker at the European Bank for Reconstruction and Development (EBRD), who said the Sofia water utility is a good example of public-private partnership but the European Commission (EC) was being very fussy when it came to private absorption of grants.
Preferential prices for RES power still in place
The support mechanism for promoting power from renewable energy sources (RES) is still in place, said State Energy and Water Regulatory Commission Chairman Angel Semerdjiev at a public discussion Tuesday on prices of RES power. Under the Renewable and Alternative Energy Sources and Bio-fuels Act, the State Energy and Water RegulatoryCommission sets preferential prices for the sale of RES electrical power by March 31 each year.A report by a working groups indicates that the preferential prices for RES power have been recalculated on the basis of 80 per cent of the average selling price in 2009. The preferential price of photovoltaic power will be reduced by over 3 per cent. Hydroelectric power will go up by nearly 0.5 per cent to over 5 per cent, estimates by SEWRC experts show. Wind power will increase by 1 to 3 per cent.Power from wood matter will remain unchanged, while electricity from plant matter will go up by nearly 2 and 1 per cent respectively. Power from plants, using indirectly waste energy, will cheapen.Preferential prices for RES power have to have a boosting effect. Holding down prices tends to have a negative effect. Representatives of RES power companies rallied behind the idea.Kenneth Lefkowitz of the AmCham Bulgaria said that between 4 and 6 billion euro are needed in order for Bulgaria to achieve in 2020 its target of 16 per cent share of RES power in the overall consumption. According to Lefkowitz, the new ordinance on the prices of RES power sends a bad signal to investors. Paula Naydenova of Diamond Solar Devnya said that the decrease of photovoltaic power raises the credit risk for such projects and cools off investors' plans.The Confederation of Employers and Industrialists in Bulgaria were surprised as to why only photovoltaic power was decreased. They said that this move made a foreign investor freeze plans for the construction of 20 MW photovoltaic modules. The regulator explained that all prices were adjusted based on the rate of inflation. Photovoltaic power was decreased by 3 per cent, because photovoltaic technologies are becoming cheaper.
Renewable energy sources power share rises to 9.9% in 2009
Power generated from Renewable Energy Sources (RES) accounted for 9.9 per cent of gross domestic power consumption in 2009, indicates a report by Economy, Energy and Tourism Minister Traicho Traikov on the implementation of the national indicative targets for consumption of RES power, presented to the Council of Ministers on Wednesday. In 2008, RES power had a 7.3 per cent share in overall consumption. This represents a 26 per cent increase, while overall electricity consumption slumped by 4.5 per cent. The national indicative target, set out in Bulgaria's EU accession treaty, states that RES power should make up 11 per cent of gross domestic energy consumption in 2011. RES power is generated from biomass, water, solar, geothermal and wind energy.The report says that it could be achieved if certain conditions are met. These include drafting a strategic environmental assessment of RES development, a change in the statute of agricultural land on which RES facilities are built, and a link up of RES capabilities to the national grid on a priority basis.In 2009, 221 MW wind power facilities were built. Bulgaria's largest wind farm St Nikola (156 MW) started operating in late 2009. Installed capacity of photovoltaic facilities increased by 0.03 per cent to 5.7 MW between 2007 and 2009. Also operating are two biofuel cogenerators with an output of 1.9 GWh.In 2009, RES-generated power was 3,711 GWh, or 8.7 per cent of gross electricity production.RES power generators use several project-funding schemes: the Bulgarian Energy Efficiency and Renewable Energy Credit Line, a European Investment Bank energy efficiency program, the Operational Program for Competitiveness, the Rural Development Program, the Enterprise for Management of Environmental Protection Activities, and the EC ELENA initiative.
Bulgaria bans clean energy projects on arable land
The Bulgarian government yesterday voted new legislation prohibiting renewable energy development on arable land.The bill, which sparked an outrage with the industry, is now making its way into Parliament. Under the amendments, renewable energy projects will not be allowed in irrigation and farm lands included in categories one through four, a move aimed at protecting Bulgaria’s arable land. Farmers cheered at the new bill following recent complaints by the major grain producers that wind farms interfere with modern farming equipment and spoil the soil. However, renewable energy developers have slammed the proposed changes as discriminatory, saying they do not apply for other types of construction. “It’s outrageous that only renewable energy development should be restricted,” Stoyan Tenchev, chairman of the Ecoenergy association of independent energy producers, told Dnevnik. Velizar Kiryakov, chair of the Bulgarian Renewable Energy Association, suggested that the restriction should be only imposed on land included in categories one and two, dubbing the new measure conflict of interest. According to the bill, a centralised commission will be put together to judge renewable energy project on a case-by-case basis for all category types. Furthermore, specific deadlines will be set for each phase of the construction process. The Ministry of Agriculture explained the measures were designed to prevent land purchases for speculative use. The farming ministry said more than 11,000 hectares of land has been converted for renewable energy development.
Wine sector yet to absorb EUR 10 M
Having filed projects for just some EUR 12 million versus a total allocation of EUR 21 million for 2010, Bulgaria’s wine-growing sector will get extra time until July 1 to apply for government subsidies. only EUR 6 million worth of contracts have been signed so far. Bulgaria’s State Fund Agriculture said a further 35 projects with a combined price tag of some EUR 5 million submitted since January are being processed. Last year, the fund put pen to paper on 146 contracts worth north of EUR 15 million. Over EUR 91 million should be dished out between 2009 and 2014.
Public procurement in the medical sector – rules without justice
Publication: Investor BG Analyses
April 7 2010
Public procurement is frequently a matter of controversy as the way it is conducted is not always clear. This is the case not only in the government administration sector but also in the country’s medical sector. The last revealed scandalous case which led to the demission of the Health Minister – Bozhidar Nanev, was about a contract for vaccinations with Rosh Bulgaria which, according the public prosecutors, was unprofitable. If we look into the cases of separate hospitals, the analysts suspect even wider range of possibilities for dealing without the participation of the interested organizations. That’s especially common in the cases where capital expenditure for the medical sector is being used. According to the hospitals’ assigners of public procurement, the suppliers are exercising a huge impact on the hospitals. Snezhana Kondeva – Vice Director of the University Hospital explains that this practice is mostly detrimental to the small health centers because they suffer the most from the delay of the procurement if they appeal in the court. She claims that the suppliers of technical devices use the small hospitals to get rid of recycled machines. The suppliers of medical consumptives are exclusively offering Chinese and Korean products. There is no big interest in the supply of medicaments due to the insufficient quantities. Another problem that Kondeva mentions is the open-type procurement. All firms can participate with no regard to their financial and technical resource for execution as well as the quality of the products they offer. That is a market niche for small dealers. In most cases the dealing is directly made and the complex evaluation of the supplier is adapted to the case. The pressure for the middle-size hospitals is concentrated on indicators that would discriminate the concurrence. Most of the firms would not respond to these indicators and would be eliminated from the public procurement. However, the most significant pressure is exercised on the regional, national and university hospitals, also says Kondeva. The decisions are taken outside the hospitals themselves. The market is divided between the large firms. They know even before the hospitals’ representatives the amount of capital expenditure that will enter the accounts of the hospitals and exactly what will have to be spent. Thus these firms calculate an excessive profit. They offer products and services from the low-price sector and present their features as relevant to the high-price sector. In this way the funds, assured by the state budget are fully spent. The assigners that object to these dishonest practices encounter difficulties of another character, too. That would be the administrative system for appealing public procurement. The prediction of Snezhana Kondeva is that the vicious circle of the unfavorable impact of the firms and the inadequate reaction of the health sector assigners will not be interrupted due to objective reasons. The financial crisis and the limited budget funds would just reduce the dimensions of the unregulated repartition in the medical sector.
International Fair Plovdiv: Change of focus, discounts to exhibitors
"Business Meets Business" is the motto of the International Spring Fair, which will be held in Plovdiv on May 11-16. The fair is marking its 30th anniversary in a new format, which will ensure a more successful participation to local and foreign companies. In the past the fair put an accent on the presentation of goods and services to end consumers, but now the participants themselves suggested that businesses and business contacts should be the real focus, said the Fair's Director Ivan Sokolov.To help businesses at this time of economic crisis, the management has offered exhibitors discounts of up to 50 per cent. This is designed to help above all small and medium-sized companies, which were quite active at the specialized exhibitions earlier this year.Boats & Sports Expo is the most attractive of the six special exhibitions which will take place during the fair. The other events are an exhibition of municipalities, a Business Consulting Zone, an Impression Salon des Arts and an International Competition for Fair Posters.
Lukoil to complete USD 1 billion hydrocracking unit in four years
Russian oil company Lukoil is to complete the construction of the USD 1bn hydrocracking unit in its local refinery Lukoil Neftochim, located in the southern Black Sea city of Burgas , in four years, managing board chairman Sergey Andronov told a press conference. The facility will employ 300 workers. Lukoil rejected rumours in the local press that it may close the Burgas refinery and dismiss workers . In December 2009, the company announced plans to invest USD 250mn in repairs and upgrades of the petrochemical production at the refinery and spend USD 22mn on the development of its network of filling stations across the country in 2010. Lukoil Neftochim is the largest refining and chemical processing plant on the Balkans. It employs some 2,200 workers. Lukoil Neftochim exports half of its production to neighbouring Balkan countries and reportedly covers 80% of the motor fuels demand in the country.
INVESTMENTS:
Solarpo begins building 2 new solar parks in Bulgaria
The biggest solar panels manufacturer on the Balkans, Solarpro Holding, begins the construction of 2 new solar parks in the Bulgarian towns of Malko Tarnovo and Devnya.The news was reported by the company in a press release to the media. The ground breaking ceremony in Malko Tarnovo was held Sunday. The park there will be located on an area of 112 decares and its planned capacity is 2.4 Mwp. The terrain is a former industrial area, which has been cultivated, according to the company's policy to preserve farming lands and protected areas.The Malko Tarnovo park will be built in 8 months and will connect to the country's electric power network by the end of 2010.The park is owned by Alfa Energy Malko Tarnovo, which is part of Alfa Energy Holding while the latter, along with Solarpro form Solarpro Holding, is a subsidiary of Kaolin AD.Several weeks ago, Solarpro began the construction of a solar park in the town of Devnya with a capacity of 5 MWp.By the end of 2010, Alfa Energy Holding is planning to build 2 more photovoltaic parks with a minimum planned capacity of 20 MWp.The company's first completed project is located in the village of Yankovo, near the city of Shumen. The project is the largest solar park in Bulgaria with a capacity of 2.4 Мwp and was connected to the network of the Е.ON. Electric power supplier since February 2010.Solarpro is a photovoltaic (PV) modules producer and supplier, engineering, procurement and construction (EPC) for PV power plants construction and operation and maintenance (O&M) provider. It is the leading Bulgarian a-Si thin film PV modules producer and solar power plant (SPP) system integrator. Solarpro is the first Bulgarian producer of photovoltaic cells and modules. The company also provides EPC and operation and maintenance services for solar power plants.Solarpro has been awarded Class A Investor Certificate by the Bulgarian Investment Agency.
Lebanon to pour cash in Bulgarian resorts
Lebanon is ready to invest in Bulgaria's tourism, while Bulgarian companies may bid for infrastructure and real estate projects in the Arab country. This emerged after yesterday's meeting of Bulgarian PM Boyko Borissov and his Lebanese counterpart Saad Hariri.
Saad Hariri emphasized he would encourage the businessmen in his country to invest in projects in Bulgaria, as the EU country offers good investment opportunities. on his part, PM Borissov said that the Hariri are an old and much respected family, and when a Hariri guarantees for a particular country, the Arab world is open for it."We will work to restore our traditionally good relations with the Arab countries, which have been somehow neglected over the past two decades," he added. During their meeting yesterday, Hariri and Borissov agreed to start a direct airline between Lebanon and Sofia."A direct airline between two countries is a sign for the positive development of their bilateral relations," Borissov said also. From the balcony of his office how a church, a mosque and a synagogue coexist in perfect harmony in the very heart of Sofia.
GEK TERNA group to invest EUR 500 M in Bulgaria real estate and energy
The Greek group of companies GEK TERNA intends to invest about EUR 500 M in real estate development and energy production in Bulgaria over next 1-2 years.This has been announced by Konstantinos Lamprou, Group Communication and Marketing Director, GEK TERNA Group of Companies, in an exclusive interview for the Greek Survey of Novinite.com (Sofia News Agency).Lamprou has also told Novinite.com that 80% of the major real estate project of GEK TERNA’s Bulgarian subsidiary ICON, named “3TOPS” and located on the Bulgaria Blvd has been sold out.The downtown skyscraper-type business center “City Tower” currently constructed by GEK TERNA is expected to be completed in 2-3 years, the Greek manager said.Lamprou has made clear his company’s optimism for the recovery of the Bulgarian economy.“In contrast to commercial properties, we believe that the housing sector in Bulgaria suffers a considerable lack of quality options and when the offerings by primarily developers with serious economic problems are absorbed, then good housing complexes in good areas will prove a very attractive and successful investment,“ he told Novinite.com.
Russian billionaire eyes Bulgaria's Mtel owner
Russian billionaire and oligarch Vladimir Yevtushenkov is seeking to buy Telekom Austria AG, the company, which owns Bulgaria's first and biggest mobile operator Mtel, Kronen Zeitung reported, citing unidentified sources.Yevtushenkov may be willing to pay “considerably above” market value of EUR 4,5 B, Vienna-based Kronen said.According to the report the deal will be conducted by Russia's financial and telecommunications giant AFK Sistema, in which Yevtushenkov is a majority shareholder with a 62.1% stake.Sistema also owns Russia's leading mobile operator MTS Mobile TeleSystems and is believed to purchase Telekom Austria shares on the stock exchange, should Austria’s state assets agency, which manages the country’s 27% stake in Telekom Austria, refuses to sell them.“There is no privatization mandate and therefore no talks are taking place,” said Anita Bauer, a spokeswoman for Austria’s state assets agency, as cited by Bloomberg agency.Telekom Austria spokeswoman Elisabeth Mattes referred to the company’s owners.
Russian billionaire to invest in energy projects in Bulgaria
Russian billionaire and senator Leonid Lebedev expressed his readiness to invest in energy projects in Bulgaria through his company Syntez Group. Mr. Lebedev has already constructed a power station of 230 megawatts in Skopje and now he intends to build a similar station in Bulgaria, too. So far, Leonid Lebedev has spotted the town of Yambol for his project. Apart from the energy sector, Mr. Lebedev has interests in the development of nano technologies. Together with the Rector of Veliko Tarnovo University, Plamen Legkostup and Investbank, Mr. Lebedev has established a foundation for the development of nano technologies in Veliko Tarnovo. For its development, the academic center uses the financial support of Lebedev and the potential of young scientists from the town of Veliko Tarnovo. The daughter company of Syntez Group in Bulgaria - Balkan Utility, together with scientists from the Bulgarian Academy of Sciences has worked out a unique lamp for street illumination. It contains light-emitting diodes and consumes very little electricity. The invention even surprised the representatives from Siemens. Russian companies buy the products en masse to illuminate the streets of whole regions in Russia.
COMPANIES:
British corporations interested in Bulgarian railways
Representatives of British companies have met this week with the management of the Railway Infrastructure company to discuss opportunities for cooperation, it was reported by representatives of the national company. The UK delegation was made acquainted with the kinds of activities performed by Bulgaria'a Railway Infrastructure company, with the status of the company, the technical parameters of the railway network in the country as well as with projects financed from EU funds. The interest is fully justified, since a total of EUR580 million or 28.95 percent of the Transport Operational Programme's entire budget will be provided to improve the situation of the railway infrastructure in the country. The project for electrification and overhaul of the stretch between Svilengrad and the Turkish border, will cost EUR35 million. Three other major projects will probably be launched this year. About EUR320 million is expected to cost the modernization of the line Sofia - Vidin, which is now in extremely poor condition and a train trip between the two cities takes six hours, provided that the distance is not more than 200 kilometres. Renovation of the Sofia - Plovdiv line will cost EUR125 million and is pending while another EUR100 million will be allocated to repair works on the Sofia to Pernik and Radomir line. Undoubtedly, EU funds are quite attractive. That is proved by the core activities of companies who have sent representatives to Bulgaria. Composite Systems Ltd is engaged in project management, preparation of tender documents, analysis of tenders and development software. Spitfire Consultancy Ltd. offers consulting services in the effective management, sustainable development and corporate training and retraining of staff. Weld - a - Rail Limited are experts in rail welding activities and supplies of ancillary equipment, while Serco Group are advisors to government bodies, regulators, local authorities and transport operators for complex solutions in the field of public transportation.
Greek Fourlis group to open Bulgaria's 1st IKEA store 2011 end
Bulgaria’s first IKEA store will be opened in Sofia in the last quarter of 2011, announced George Alevizos, Finance Manage of the Greek group of companies Fourlis.In an exclusive interview for the Greek Survey of Novinite.com (Sofia News Agency), Alevizos said the economic crisis has not delayed the opening of the IKEA stores in Bulgaria. The Fourlis company is IKEA’s franchisee for Bulgaria and several other Balkan countries.“We believe to the cyclical aspect of any crisis and Bulgarian economy will return soon in positive growth rates and it is very important when this happens, we will be there ready to offer a better everyday life to the many people in the local market,” the Fourlis manager stated.Alevizos told Novinite.com that Fourlis intended to open at least one more IKEA store to be located near the Black Sea city of Varna, and might also consider opening a third store within the next 5 years.The Greek manager praised the working relations that the Fourlis Group has with Bulgarian authorities and said that any potential traffic issues with the Sofia IKEA store will be resolved.
Bulgaria sells 50% in Telco Radio, TV systems
The Bulgarian Telecommunications Company, which was recently rebranded as Vivacom, has signed an agreement to sell 50% of its broadcasting division - National Unit Radio and TV Systems (NURTS) - to international financial investor Mancelord Limited.The price of the deal has not been disclosed.The national telecom has submitted for approval the deal documentation to the telecom watchdog the Communications Regulatory Commission (CRC).The new joint venture’s main focus will be development of the digital network infrastructure of the company in order to position it as a competitive player on the digital broadcasting market in Bulgaria, Vivacom said."NURTS needs a financial injection that will help us implement our strategic investment program associated with the introduction of digital television and radio broadcasting. This transaction will help us to turn the company into a nationwide modern multiplex service provider," said Bernard Moscheni, CEO of Vivacom.Mancelord Limited is represented in Bulgaria by Bromak Ltd., majority shareholder in Bulgaria’s Corporate Commercial Bank Ltd.International investment bank Lazard has advised Vivacom on the deal.The deal comes nearly two years after BTC Group and Austria's Oesterreichische Rundfunksender (ORS) signed a preliminary agreement for NURTS acquisition, which term expired on 2 June 2009.The Austrian company has repeatedly said that negotiations for NURTS acquisition are continuing after this date and a cancellation decision has not been taken.BTC decided to sell NURTS to Austria's ORS in December 2008. The price of the deal was not disclosed, but according to insiders ORS paid EUR 80 M for a majority share in the company and pledged to invest another BGN 100 M in an upgrade of the radio and television towers.The deal for the sale of BTC National Unit Radio and TV Systems (NURTS) stumbled in March last year after the regulatory authorities, the Communications Regulation Commission, said it needed four more months to give it the green light.NURTS covers nearly all of Bulgaria with its network of radio and television broadcasting services. It has a key position on the analogue broadcasting market through its network of TV towers and retranslation facilities covering the entire territory of the country and transmitting the programmes of the major TV and radio operators.Since 2006 it has been developing in Sofia an experimental DVB-T multiplex for transmission of digital terrestrial television.Bulgaria has to wrap up the analogue television switch-off by December 2012.
Turkey's Ziraat Bank expands in Bulgaria
Turkey's Ziraat Bank opened a new branch in Bulgaria on Wednesday in the town of Kardzhali, where the population is consisted mostly of ethnic Turks.This is the bank's third branch in the country following branches in Sofia and Plovdiv.The branch will help solve money transfer problems that Kardzhali people, especially those who have dual citizenship, have faced, bank officials said, as cited by the Turkish Weekly.Ziraat Bank had started operations in Bulgaria in 1998. It plans to open three more branches in Bulgarian cities Varna, Burgas and Razgrad.Ziraat also operates in other Balkan countries, Greece, Macedonia and Bosnia and Herzegovina.
THE CRISIS:
Bulgaria's dental tourism flourishes thanks to Crisis
Dental tourism is an increasing trend with more and more foreigners who combine a holiday to Bulgaria's Black Sea coast with a visit to the dentist.Bulgaria, especially the bigger cities along its Black Sea coast, has started to cash in from a growing number of foreigners, the majority of whom Britons and Greeks, who cannot get treatment on the NHS or cannot afford to pay huge bills for going private, doctors say.“The global economic crisis increased the demand for lower prices, which dentists in Eastern Europe and Bulgaria in particular offer,” says Ventsislav Stoev, chairman of the Dental Tourism Association in Bulgaria.According to him the crisis provides a new opportunity for Bulgaria to develop further its dental tourism, which has already 20 years of history.Dentists in the southwest Bulgarian cities of Sandanski and Petrich have reported a massive influx of Greek clients who prefer to come to Bulgaria for treatment because the quality of service is "just as good but considerably cheaper".According to local media reports Greek dental tourism is so popular that clinics in Petrich have already started writing their working hours in both Bulgarian and Greek. It is mainly working class Greeks who go there; some of them also speak Bulgarian.Bulgaria is a preferred destination due to the low-cost, high-quality dental care. Prices that local dentists charge are about seven times lower than those in Great Britain.Data shows that 35,000 Britons a year travel overseas for dental work and nearly 60,000 searched online for information on dentists.Britons can save up to 70% by travelling overseas for dental treatment - before accommodation and flights are taken into account.
Bulgarian think-tank stresses e-government as anti-crisis measure
Bulgaria must speed up the introduction of e-government services in order to reduce the spending on its cumbersome bureaucracy, according to the Sofia-based Institute for Market Economy (IME).The IME says in a statement Friday that Bulgaria’s budget difficulties have made the optimization and increasing the efficiency of the state administration an absolute priority.It cites a survey of the Organization for Economic Cooperation and Development of 16 of its members which included the introduction of e-government in their anti-crisis programs.The IME points to a number of domestic and international analyses showing that the administrative services in Bulgaria are low-quality, and that they present substantial obstacles for doing business and for fueling corruption, partly thanks to the low level of transparency.The Institute emphasizes the fact the use of electronic signatures by the state administration when dealing with citizens and businesses would reduce significantly the scope of these issues.The statement declares that despite all government programs and initiatives, Bulgaria still does not have a full-fledged and fully operational electronic government.It identifies the following problems: Bulgaria’s e-government systems is currently functioning in patches and does not adhere to the respective legal provisions; the Bulgarian institutions do not have an operational infrastructure for communicating among themselves; most of them do not offer e-government services; the state institutions “do not (wish to) use electronic signatures”; there is a shortage of information about the benefits of e-government.The IME is insisting on a boost of e-government in Bulgaria following the principle, “free e-government services – double-priced services at the counter”; it also says that the institutions which do not use electronic signatures must face severe sanctions.
Bulgaria's government approves package of 60 anti-crisis measures
Bulgaria’s Cabinet has approved the package of 60 anti-crisis measures negotiated with the country’s business sector and trade unions over the recent weeks.The members of the Council for Tripartite Cooperation made up of the government, six employers’ organizations, and the two major trade unions have been negotiating for more than two weeks on how best to tackle the effects of the crisis on the state budget and the national economy.The anti-crisis program signed formally by the business sector, the trade unions and the government on Wednesday morning is focusing mostly on austerity measures and privatization and concession deals shying away from proposed tax increases.The Finance Ministry has estimated that its anti-crisis program needs to generate or save a total of BGN 1,5 B whereas the package of measures on which the three social partners shook their hands is expected to have a total effect of BGN 1,63 B.Bulgaria is not going to increase the VAT but will introduce a “luxury tax” in order to generate state revenue, the government, business sector, and trade unions agreed.Bulgaria’s state administration is expected to save BGN 450 M from the 2010 budget by reducing their staff and their additional expenditures, announced Dimitar Manolov, deputy chair of the Podkrepa Labor Confederation. It provides for a 10% cut in public sector spending including salaries in institutions which had failed to reduce their staff by 15% as was prescribed by the Finance Ministry in the fall. Another measure provides for the freeze of a planned hike in pensions of widows and people over the age of 75.The privatization of state-owned minority shares through the Sofia Stock Exchange is expected to bring a revenue of at least BGN 200 M. The package provides for the privatization of state minority stakes in 55 companies, ranging from power utilities to arms producers.Bulgaria expects to generate BGN 350 M from the sale of its unused Greenhouse gas quotas under the Kyoto Protocol, said Teodor Dechev, Chair of the Union for Economic Initiative.Bulgaria’s government is also planning to sell 10% of the 1,3 million decares of state-owned land which is currently not utilized; the other 90% will be given to concessionaires. These two measures are expected to raise BGN 160 M for the state budget.The Tripartite Cooperation Council has decided in favor of the much debated “luxury tax” focusing on its moral dimensions, i.e. making the wealthy assume a greater portion of the burden of the crisis, rather than expecting much revenue from it.Thus, the new tax will be levied only on homes worth more than BGN 300 000, and on cars worth BGN 70 000. It will consist of paying double the current dues on such properties and vehicles.The most contentious anti-crisis measure turned out to be the taxing of the insurance companies. The government originally planned to levy taxes on the income rather than on the profit of the insurers. According to EU directives, Bulgaria is supposed to levy taxes on the premiums of the insurance companies in 2012, and the government and the Insurers Association are starting to discuss the options of introducing the tax earlier.The businessmen, syndicates, and ministers agreed to make the unemployment benefits 60% of the gross salary that a person received before they were laid off.A 10% tax on sums won in lottery and gambling games is also expected to raise budget revenue.Bulgaria’s Prime Minister Boyko Borisov has pointed out that one of the key measures was the payment of BGN 550 M of state debt to private companies within 15 days. The money will be raised through a bond issue of the Bulgarian Development Bank.The issuing of bonds by the Bulgarian Development Bank is designed solely to raise money which can be paid immediately to private companies for public procurement procedures they have executed.The Borisov government delayed paying some BGN 1,5 B to businesses at the end of 2009 in order not to generate high budget deficit. The repayment of the state debt has become a hot issue at the beginning of 2010.The anti-crisis package of the Bulgarian government is expected to be voted in Parliament on Thursday.
Retail trade in Bulgaria among worst performers in EU
Retail trade in Bulgaria decreased by 12.4 per cent between February 2009 and February 2010, according to EU statistics office Eurostat – putting the country among the biggest losers in retail trade on an annual basis.In February 2010, compared with January 2010, the volume of retail trade decreased by 0.6 per cent in the euro area (EA16) and remained stable in the 27-member EU bloc.In January, retail trade fell by 0.2 per cent and 0.4 per cent, respectively.In February 2010, compared with February 2009, the retail sales index declined by 1.1 per cent in the euro area and by 0.7 per cent in the EU27. Monthly changes: In February 2010, compared with January 2010, "Food, drinks and tobacco" fell by 1.6 per cent in the euro area and by 1.3 per cent in the EU27. The non food sector rose by 0.2 per cent and 0.6 per cent, respectively.Eurostat said that among the EU member states for which data are available, total retail trade fell in 13 and rose in seven.The largest decreases were observed in Portugal (-3.4 per cent), Estonia (-2.3 per cent) and Slovenia (-1.7 per cent), and the highest increases in the United Kingdom (+2.2 per cent), Malta (+0.9 per cent) and France (+0.6 per cent). Annual changes: In February 2010, compared with February 2009, "Food, drinks and tobacco" fell by 3.1 per cent in the euro area and by 2.7 per cent in the EU27. The non food sector grew by 0.7 per cent and 2.1 per cent, respectively.Among the member states for which data are available, total retail trade fell in 14 and rose in six. The largest decreases were observed in Lithuania (-17.1 per cent), Latvia (-13.3 per cent) and Bulgaria (-12.4 per cent), and the highest increases in Austria (+3.2 per cent), Malta (+3.1 per cent) and the United Kingdom (+2.8 per cent). GDP figures: On April 7 2010, Eurostat released GDP figures, showing that in the euro zone, GDP was stable while EU27 GDP increased by 0.1 per cent during the fourth quarter of 2009, compared with the previous quarter.In the third quarter of 2009, growth rates were +0.4 per cent in the euro area and +0.3 per cent in the EU27. In comparison with the same quarter of the previous year, seasonally adjusted GDP declined in the fourth quarter of 2009 by 2.2 per cent in the euro area and by 2.3 per cent in the EU27, after -4.1 per cent and -4.3 per cent, respectively, in the previous quarter. In the fourth quarter of 2009, among member states for which seasonally adjusted GDP data are available, Estonia (+2.5 per cent) recorded the highest growth rate compared with the previous quarter, followed by Slovakia (+2 per cent) and Poland (+1.2 per cent). Industrial producer prices: In February 2010 compared with January 2010, the industrial producer price index rose by 0.1 per cent in both the euro zone and the EU. In January, prices increased by 0.7 per cent and 0.8 per cent, respectively. In February 2010 compared with February 2009, industrial producer prices fell by 0.5 per cent in the euro area, but rose by 0.4 per cent in the EU27.