BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 30 APRIL – 14 MAY 2010 )
Sections/headline briefs:
MACROECONOMY:
· China mulls participation in Bulgarian Nuclear Power Plant
· Bulgaria may lose Turkish energy market over Russian deal
· Bulgaria to keep just 130 hospitals in health system reform
· Too many strategies spoil water and sewerage sector
· Bulgaria's new car market down by 44% in April
· Construction on Bulgaria's Trakia Highway lot II section begins
· Bulgarian business warns against 'Renewable Energy Bubble'
- Bulgaria’s Environment Ministry and EBRD misled by Italian-Chinese consortium
- Bulgarian MEP promises restart of troubled hydro plant project
- Bulgaria’s ferrous metals sales plunge deeper into the red
INVESTMENTS:
· Real States to build EUR 200 M photovoltaic park in Bulgaria
· U.S. Basic Solar to buy 10 MW of solar modules from 1SolTech for Bulgarian project
· EUR 200 M Solar energy park to be built near the village of Apriltsi
· Enel Green Power unveils second wind farm in Bulgaria
· IWC Bulgaria granted top investor status for construction of 140 MW wind farm
· Spanish Electra to build 100 MW wind farm
· Russian Sintez to build 200 MW power plant
· Vivacom to invest EUR 6.6 M in network digitalisation by year-end
COMPANIES:
· Bulgarian firms to build 43-km water pipes
· BGN 2 M provided to finance Bulgaria's participation in Expo 2010
· Some 1 000 people visit Bulgarian pavilion in Shanghai for 1 hour
· New Schenker Sofia logistics terminal officially inaugurated
· Dundee Precious says Bulgaria mine expansion in full swing
· 6 companies bid for designing 3rd Sofia metro line
· EurOmax starts diamond drilling program in Bulgaria
THE CRISIS:
- CED: Bulgaria economy to contract by 3% in Q1
- Capital Economics: Bulgaria economy to grow by 1.5% in 2011
· Investment bait
Reported by:
Evgeni Mitev
Research Manager, KOTRA Sofia
Korea Trade-Investment Promotion Agency
Commercial Section of the Embassy of the Republic of Korea
MACROECONOMY:
China mulls participation in Bulgarian Nuclear Power Plant
China and Serbia are considering a joint participation in the project to build a second Nuclear Power Plant in Bulgaria’s Danube town of Belene, according to a Serbian minister. The news was reported Monday by the Serbian radio B92, citing the Serbian Minister of Energy and Mining, Petar Skundric, who is on a visit to China. Skundric had said after meeting the Chinese Deputy Commerce Minister, Gao Hucheng, that if the two countries reach a final agreement for the revitalization of blocks B1 and B2 of the Kostolac Thermoelectric Power Plant (TPP) this would create favorable conditions for joint participation in new energy projects. Hucheng, on his part, had voiced deep satisfaction from the talks about “collaboration in the nuclear energy system of a third country.”In their report B92 reminded that Serbia confirmed it interest in Belene during the recent trip of Bulgaria’s Prime Minister, Boyko Borisov, to Belgrade.In the beginning of February, China and Serbia signed a preliminary contract on power station cooperation including the revitalization of the two existing blocks B1 and B2 of the Kostolac TPP, each of 350 MW capacity, and increasing capacities of the open pit Drmno to 12 million tons of lignite per year, with the construction of the new block B3, by the turnkey system.
Bulgaria may lose Turkish energy market over Russian deal
Bulgaria might lose Turkey as an electricity export market as a result of the energy deals that the latter has signed with Russia, an expert has warned.“If the Turkish nuclear power plant which Russia is going to construct is cheaper that the one that we are hoping to build at Belene, we will lose the Turkish market,” said Ivan Hinovski, Chair of the Bulgarian Energy Forum, an NGO, as quoted by BGNES.“The sums and conditions of the Russian-Turkish deal for a nuclear plant in Turkey are still unknown to us,” the energy expert pointed out. He did stress, however, that the nuclear energy project in Turkey will not be realized very easily.“About 4-5 years ago Turkey asked Bulgaria to provide training for 100-120 nuclear specialists per year. Unfortunately, this project failed to materialize, which is an opportunity the Bulgarian business missed to take advantage of,” Hinovski revealed.
Bulgaria to keep just 130 hospitals in health system reform
Bulgaria will not shut but restructure hospitals as part of its long-anticipated public health system overhaul, said health minister Anna Maria Borissova.She explained that 130 active treatment hospitals will remain from the current total of 400 after the reform has been completed. The others will be transformed into establishments for after-care, long-term treatment and diagnostics.The decision on which hospitals will be used for after-care will be grounded on the availability of medical professionals.Borissova pledged that substantial resources will be allocated to after-care hospitals but did not reveal where the monies would come from. Deputy finance minister Vladislav Goranov already said no budget allocations have been made for this purpose. The National Health Insurance Fund (NHIF) pays no clinical paths for after-care.Borissova said further that Bulgaria’s health map outlining the types of hospitals and medical professionals needed in each specific region should be drawn up by the end of May or mid-June. The map will be based on population, age, disease and harmful factors in the region. Borissova highlighted as a daunting challenge for Bulgaria’s public health system the fact that one doctor leaves the country every single day as they are not satisfied with their job, their salary and public attitude.
Too many strategies spoil water and sewerage sector
Everything flows, everything changes, only the Government's attitude to water and sanitation field remains the same. The state smells bad, sometimes even stinks, but any new government first disowns everything that has been done before it and begins new reforms from scratch, and, of course, first of all - writes a new strategy. At the time of Ivan Kostov's Cabinet, the state devised a strategy for privatisation of water companies, which included even placing their shares on the stock exchange. Then came the Cabinet of Simeon Saxe-Cobourg-Gotha and in 2004 Minister of Construction, Valentin Tserovski, created a Strategy for the Development of the Water Sector by 2015. Two years later, the ruling tripartite coalition, gave birth to another "goundbreaking" document. This time it was given the pretentious name "National Strategy for Infrastructure Development". Now is the turn of the GERB party to try. "A National strategy for managing and developing water sector is included in the government programme for 2010 and the preparations for its development are already in an advanced stage. The procedure for selecting a contractor to develop the strategy has been opened. It is envisaged that this key document should be ready and proposed for adoption by Parliament by the end of this year," said Minister of Environment Nona Karadzhova in early April. In fact, the things are not quite as they are being described. The procedure for selecting a contractor has been opened, indeed, but it is in its infant stage - clarifications on the necessary documentation are still being carried out, as the Banker weekly found out. It is therefore difficult to assume that any company that may be chosen to develop the strategy will succeed in doing this job by the end of the year. In case we want quality work, of course. The latter, though, seems to be a must, since the Environment Ministry has earmarked a total of BGN 850,000 for the development of the document. Besides, to make it workable in the long run, its authors need to avoid the errors in past strategies None of them, for example, mentioned what is to be done immediately, within what time frame and where the funding will be provided from. "Water facilities are in quite unsatisfactory a state, and in some areas - in outright miserable conditions. Huge amounts are needed for maintenance, construction of new systems and overhauls of existing ones. Obviously we have to decide where from and how to provide these resources in the long run. Possible sources of funding are fees from users of water services as well as EU funds, loans from banks, and funds from the state budget. There are various options for attracting investments: public-private partnerships, concessions of part of facilities. But in order to decide how best to spend our limited financial resources, this strategy is necessary. The question now is how to select the best solution out of all possible scenarios," said Minister Karadzhova. Before we can get to the financial part, however, there is another problem to be solved - to clarify who owns what. on paper, this handicap is eradicated. At the end of June 2009, we saw the long-awaited amendments to the Water Act, which had to provide the legal basis for a comprehensive structural reform and reorganization of the water sector. They were prepared in extremely short deadlines in early March 2009, but after more than a year the Ministry of Environment and that of regional development have failed to reach an agreement on the bill for water and sanitation systems that was submitted to the Council of Ministers. The amendments to the Water Act established associations to manage the water supply and sanitation systems on a territorial basis. These include the mayors of all municipalities within the territory serviced by a water company and a representative of the state in the face of the regional governor. Decisions are taken by votes in 65:35 ratio in favour of municipalities. Participants in an association are required to prepare a list of all facilities that need to be built on the corresponding water supply and sewage network or the so-called "master plans". In simple terms, they are asked to provide a snapshot of the status of the respective facilities in the region and pinpoint what needs to be changed. However, since the adoption of the law even insignificant improvements have not been made, former Deputy Minister of Regional Development and current leftist Member of Perliament, Dimcho Mihalevski, told the BANKER. Mr Mihalevski played a major role in the adoption of the legal text, so that the country may avoid sanctions from the European Commission. "In the last months of our mandate we managed to negotiate a loan of EUR101 million with the World Bank, EUR33 million of which had to be used for increasing the capacity of municipalities for investment planning and especially for the preparation of the master plans. We had all necessary approvals from the World Bank and even carried out some pre-qualification of companies to develop plans. In late July they were ready with their financial offers, which have not yet been opened. The European Commission's General Directorate on Regional Policy wanted us to present our progress with the master plans by May 2010. I wonder what excuses can we find now," added Mr. Mihalevski. on this occasion, the head of the Office of the Minister of Environment and Water, Vladimir Stratiev, explained that at the end of September 2009, upon the recommendation of the Commission and with the initiative of the ministries of environment and regional development a working group was created to prepare the draft version of the "Roadmap for necessary actions, responsibilities and deadlines to be met by the respective institutions - the Ministry of Regional Development, the Environment Ministry, State Energy and Water Regulatory Commission, regional governors, municipalities and associations of water and sewage management companies". But yet at the initial expert review of the new texts it was found that certain statutory additions to this part of the act are needed. "The rejection of the entire bill for water supply and waste water management and replacing it with amendments to the Water Act, which only partially borrow the basics from the water supply and waste water management bill may not give full guarantee for comprehensive legal regulation of the industry," Mr. Stratiev claims. Whatever the reasons may be, putting order in the water sector was postponed again - at least until the end of this year. At best, no earlier than that will the strategy be ready so that it can finally become clear whether the current government will rely on associations of water companies or will think of another form of their management, for example, through creation of one or several national water companies. Without any doubt - this is not an easy task, whose solving, however, will probably require current leaders to realize that a denial of everything done so far is not the best approach. The most obvious proof of this is the present deplorable state of the country's water sector.
Status of water supply networks: * 98.9 percent of the population is servсed by centralized water supply systems managed by water companies. * The total length of the water supply network is 73,500 km. * 73 percent of networks are built of asbestos cement pipes. * 57 percent of networks were put in operation before 1970. * only 0.1 percent of the networks are newly built, while 0.3 percent have been upgraded. * The average water losses are 61.7 percent. * Around 44 percent of the drinking water for citizens is treated in 42 treatment plants for drinking water.
Condition of sewer systems: * on average, 69.4 percent of the population is serviced by sewerage systems operated by water companies. * About 95 percent of the population in 71 percent of urban areas uses sewage systems. * only 9 percent of the population in 2.5 percent of villages uses sanitation systems. * The total length of sewerage network is 10,400 km. * About 90 percent of the networks are built of concrete or reinforced concrete pipes. * Nearly 90 percent of the networks were put in operation before 1990. * Around 64 percent of the waste water is treated in 72 wastewater treatment plants. * on average, 41.1 percent of the population is serviced by wastewater treatment plants for waste water managed by water companies. * The total number of treatment plants for waste water, operated by water companies, is 72, of which 54 use secondary (biological) treatment. Source: Bulgarian Water Association
Bulgaria's new car market down by 44% in April
After very modest signs of recovery in the first quarter of 2010, in April Bulgaria’s new cars market returned to its staggering collapse.A total of 1 396 new vehicles were sold in Bulgaria in April 2010, which is a 44% decline year-on-year. There is also a drop on a monthly basis, as 1 478 new cars were sold in March 2010. A total of 5 352 new cars were sold in the first four months of 2010.Toyota has made a comeback as the most popular car brand in Bulgaria with 189 sales in April, and exactly 500 since January, according to data of the union of car importers. Peugeot comes second with 145 sales in April but are in the lead for the first four months of the year with a total of 555 sales.Ford ranks third with 131 new vehicles sold in April, and 509 since the beginning of the year.72 new motorcycles were sold in Bulgaria in January-April, a 40.5% drop year-on-year, and 208 new trucks and buses – a decline of 45%.
Construction on Bulgaria's Trakia Highway lot II section begins
The construction of Lot II of the Trakia Highway, the stretch from Nova Zagora to Stara Zagora has started, Bulgarian National Television reported on May 3 2010.The symbolic first sod would be turned at the Stara Zagora–Dimitrovgrad junction with Bulgarian Prime Minister Boiko Borissov, Regional Development Minister Rossen Plevneliev and Transport Minister Alexander Tsvetkov in attendance, the report said.Bulgaria's National Road Infrastructure Agency signed the contract with Magistrali Trace consortium on April 23 for the construction of the motorway's section.Magistrali Trace consortium, led by companies from Trace Group, one of Bulgaria's leading road-building companies, won the tender after it tabled the lowest bidding price at 137.9 million leva for the 32km stretch of motorway.The price offered by Magistrali Trace was about 100 million leva less than the second bidder, meaning that each kilometre of the motorway would cost about 2.2 million euro. By comparison, Trace constructed the section from Orizovo to Stara Zagora in 2007 for 2.4 million euro a km.The concept for a motorway from Sofia to Bourgas dates back to 1964, while the actual construction was launched in 1975. The Sofia – Plovdiv part of the motorway took 10 years to build.The stretch between Nova Zagora and Stara Zagora, 32km in total, is scheduled for completion by the spring of 2012.
Bulgarian business warns against 'Renewable Energy Bubble'
Bulgaria’s economy might suffer from the bursting of an emering bubble of renewable energy investments, according to the head of the Bulgarian Industrial Association, Bozhidar Danev.“The Bulgarian economy has been unbalanced in the recent years because of the stromy development of the construction sector; a similar bubble is now appearing with speculative investments in renewable energy sources” Danev said Monday as he presented research of BIA about low-carbon energy.“The construction sector sucked in the credit and human resources of Bulgaria and generated significant but rather unhealthy economic growth. It led to a time bomb in our financial system which still has not exploded. It also led to a rising deficit of our current account, which is extremely dangerous because the foreign direct investments in Bulgaria collapsed. Now because of unhealthy policies we are about to create a new bubble – renewable energy. We are going to finish off the Bulgarian economy by inflating this bubble,” warned Danev.According to the BIA research, the renewable energy sector in Bulgaria is plagued by speculative capital because of the privileges granted to the companies investing in the sector. According to Mihail Deliyski, Chair of the Association for Environmental Engineering, who spoke on the issue together with Danev, the Bulgarian state should focus on encouraging the use for renewable energy sources for heating and cooling, which it is not doing at present.“The state is currently subsidizing two types of renewable energy production – wind and solar parks, and only large-scale ones, which is a prerequisite for attracting foreign investors aiming to making quick profit,” Deliyski stated in order to support of Danev’s argument that speculators are entering the Bulgarian renewable energy sector.
Bulgaria’s Environment Ministry and EBRD misled by Italian-Chinese consortium
Publication: The Sofiaecho
Bulgaria’s Environment Ministry and the European Bank for Reconstruction and Development (EBRD) were misled into picking the consortium of Italy’s Idreco and China’s Insigma to install environmental upgrades at the state-owned Maritsa Iztok 2 thermal power plant, Bulgarian site Mediapool reported, quoting the European Union’s anti-fraud office Olaf.Olaf’s investigation, launched in February, was the result of complaints filed with the European Commission by the Italian subsidiary of French engineering group Alstom, itself embroiled in litigation with Insigma over technology licensing.According to Mediapool, the investigation, which has not been finalised yet, found that the Italian-Chinese consortium did not meet one of the criteria stipulated in the Bulgarian public tender, namely that bidders should prove their track record in the form of references from three power plants that have used environmental equipment installed by the consortium’s members for a period of at least two years.The references provided by the consortium, all from Chinese power plants, did not fully meet the requirements in that they fell short of the two-year period, the report said.This assertion would not come as a surprise to authorities in Sofia, with Economy and Energy Minister Traicho Traikov saying in February, shortly after Olaf’s investigation was launched, that "the Chinese-Italian consortium was not exactly honest in describing its previous experience with similar projects during the tender process".However, it appears that blame is now being assigned to the commission that evaluated the bids in the tender, because it failed to detail the failings of the consortium’s bid, focusing in its recommendation only on the fact that Idreco and Insigma offered to carry out the works for the lowest price, Mediapool said.
That way, both the Environment Ministry and EBRD were misled into awarding the contract to the consortium. The bank gave Bulgaria a 34 million euro loan to cover part of the total project costs, set at 85.6 million euro, but Bulgaria later exercised an option to increase the amount borrowed to 55 million euro, according to Mediapool.EBRD, which did not raise any objections during the tender process or afterward, has reportedly threatened to pull its funding should Olaf’s report find any irregularities in the tender proceedings. Separately, 36.2 million euro in funding secured for the project under the EU’s pre-accession aid programme Ispa have been frozen for the duration of the investigation.The plant must install desulphurisation equipment to meet EU environmental guidelines. Such equipment should have been in place at the time Bulgaria joined the bloc in January 2007, but the country was given a grace period until November 2011 for Maritsa Iztok 2, a deadline that could be missed because of the delay caused by Olaf’s investigation.In case the environmental installations are not operational by that time, not only would Bulgaria face infringement proceedings launched by the European Commission, but it would have to refund the money allocated by the EBRD and Ispa.Four of the plant’s six units already have desulphurisation installations, which became operational in 2008 and 2009 despite not securing the required permits until much later, according to reports in Bulgarian media. The contract with Idreco and Insigma is for the remaining two units of Maritza Iztok 2.The tender’s results have been challenged by Alstom, which put in its own bid, as an extension of the legal battle in Singapore between Alstom Power and Insigma. The French company gave Insigma in 2004 a licence to use Alstom’s technology. According to Alstom, the licence was valid only in Asia, but Insigma disregarded the terms of the agreement. After unsuccessful attempts to have the choice of Idreco-Insigma overturned by Bulgarian courts, Alstom lodged a complaint with the European Commission, which prompted the Olaf investigation. Accounting deficiencies. Maritsa Iztok 2 consistently reported high profit throughout 2009, a total 100 million leva for the full year, but at the same time accumulated 150 million leva worth of debt to coal suppliers, repairs contractors and its parent company, the Bulgarian Energy Holding (BEH), Mediapool said. At the same time, it was owed about 65 million leva by energy traders for electricity bought from the plant, Mediapool said, claiming to have seen the power plant’s full accounts.Nevertheless, company officials were optimistic that its own revenue could cover the lost external funding if the plant could secure a long-term guaranteed electricity sale deal with state-owned power grid operator and energy trader NEK, also a subsidiary of BEH, Mediapool reported. The current contract with NEK expires in mid-2010.It remains to be seen whether the country’s energy regulator would approve such a contract and at what price, given that Prime Minister Boiko Borissov in April criticised similar deals in place between NEK and US firm AES, which owns Maritza East 1 power plant, and Italy’s Enel, which owns Maritza East 3. The fees stipulated in those contracts were exorbitant and the Cabinet would seek to renegotiate the terms of the contracts, Borissov said.
Bulgarian MEP promises restart of troubled hydro plant project
The construction of the Gorna Arda cascade in Southern Bulgaria will be resumed in 2 months, vowed Bulgarian MEP and nuclear energy expert Vladimir Urutchev.“The new investor, the Austrian company EVN, which took over from the Turkish holding Ceyhan, has declared full mobilization in order to continue work on Gorna Arda; that is why I think the project will finally be realized,” stated Urutchev during a meeting with local residents near the city of Kardzhali, as cited by Darik Radio.He did mention, however, his expectation that the work will probably go at a slower rate at first because of possible financial trouble as banks are unwilling to give credits, and the firms executing the project will be relying on their own resources initially.Urutchev, who is a former top executive of the only operational Bulgarian nuclear power plant at Kozloduy, said the question of whether Bulgaria needed the second nuclear plant under construction at Belene was not on the agenda because of the steep drop in electricity consumption in the country and in Europe as a whole.“When the economy is revived and there is investor interest, the Belene NPP project will probably become a hot topic on the agenda. The interest in the consumption of this kind of electricity will probably rise in 10 years, not in 7-8 years as we earlier expected,” forecast the MEP from the European People’s Party and the Bulgarian rulers GERB.At the beginning of September 2009, Bulgaria’s new government sealed a letter of approval for the construction of the hydro power project on the Arda river, known as Gorna Arda (“Upper Arda”).This was a requirement for wrapping up of the sale of a 30,1% stake, owned by Turkey's CCG, part of the Ceylan conglomerate, to an Austrian consortium of EVN and Alpine Bau.The move was made after a trial in the International Court of Arbitration, in which Ceylan Holding filed claims for EUR 75 M against the other member in the joint venture - Bulgaria's National Electric Company NEK, was suspended for three months.The Turkish company was contracted to implement the project under an electricity-for-infrastructure swap deal Bulgaria and Turkey signed in 1998, during the term of the government of Ivan Kostov. The launch of the hydropower construction was delayed after the Turkish company ran into financial troubles.The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. It is planned to have an electricity production capacity of 160 MW.In the fall of 2009, Bulgaria’s Economy, Energy and Tourism Minister, Traicho Traikov, was cleared of any conflict of interests over the Gorna Arda hydropower project.The Parliamentary Commission for combating corruption and conflict of interests investigated Traikov after he was reported to them by the Bulgarian Socialist Party in September. They found unequivocally that Traikov had not done anything wrong regarding the Gorna Arda project.The reason was for the BSP signal was the decision of the Council of Ministers to approve the project investor for "Gorna Arda" company with the participation of Austrian EVN and Alpine. Before being appointed minister Traikov was procurator of the company EVN, but he was not part of the management bodies of the company. Traikov denied the conflict of interest reports because after his resignation from EVN his name was stricken from the trade register.
Bulgaria’s ferrous metals sales plunge deeper into the red
Bulgaria’s ferrous metal imports have almost halved to 138.5 million tonnes in the first quarter of the year compared with a year ago, showed figures by the Bulgarian Association of the Metallurgical Industry (BAMI).The latest numbers reinforce the downtrend that crippled markets through the entire 2009.Between January and March, exports shrank to 208.3 million tonnes, with long products suffering the sharpest drop to 80.5 million from 156.4 million a year earlier. on the other hand, exports of flat products picked up to 58 million tonnes from 51.9 million tonnes for the same period of last year.BAMI estimated that sales of ferrous metals and products collapsed by 41.9% year-on-year in 2009. Cast iron and oxygen converter steel founding has been suspended for a year after the idling of parts of steel behemoth Kremikovtzi.Bulgarian ferrous metal makers ship the bulk of their produce to Western Europe and the Balkans.Liquid steel manufacture surged to 191.8 million in the first quarter from 171.2 million in the corresponding months of last year.Rolled products output fell to 222.7 million from 254.5 million.The manufacture of products made of rolled ferrous metals slumped by 42.2% to 15.3 million tonnes in the first quarter of the year. Around 15.8 million of the total has been sold. Companies explained that most warehouses are full to the brim and they are therefore scaling down production.Rolled products exports added up to 9.1 million tonnes, with the entire output sold in the EU, according to BAMI. For the year-ago quarter, exports stood at 15.3 million tonnes and a fraction of it went to third countries.
INVESTMENTS:
Real States to build EUR 200 M photovoltaic park in Bulgaria
Bulgarian company Real States has given the go-ahead to the construction of an 80 MW photovoltaic energy park worth some EUR 200 M near the southern city of Pazardzhik.The project will be funded by unnamed European commercial banks and is expected to create 250 jobs. The park is scheduled to be constructed in three phases up to 2014 and will spread over an area of 2000 decares.The first-stage of the project envisages the opening of a photovoltaic facility with a nominal capacity of 1150 KW.
U.S. Basic Solar to buy 10 MW of solar modules from 1SolTech for Bulgarian project
U.S. solar power plant development company Basic Solar will buy 10 megawatts (MW) of solar modules from U.S. producer 1SolTech for a solar power plant project in Bulgaria, Basic Solar said. We selected 1 SolTech to supply PV solar panels for this project because its products are of extremely high quality and high performance and because they are American made," Basic Solar president Rodney Kincaid said in a statement released on Monday. Financing for the deal was arranged by U.S.-based Balmoral Capital Holdings (www.balmoralcompanies.com), which is the financing arm of integrated solar power plant development company Balmoral Bulgaria SPV. The holding group focuses on identifying, financing and advising emerging growth companies.However, financial terms were not disclosed.U.S.-based Balmoral Capital Holdings entered the Bulgarian renewable energy market last year by signing a deal with local engineering company Apex Solar for the development of 18 photovoltaic power plants in the Black Sea country. The solar farms are being developed for panel delivery in early 2010. The different plants will be 1.0 MW to 5.0 MW for a total of 144 MW, Balmoral has said back in July 2009. Under the deal Apex Solar will install the plants and provide its engineering support for a 25-year period. Apex Solar (www.apexexperts.com) is expected to coordinate the building and installation of this and 50 photovoltaic power plants, now in various stages of development in Bulgaria. This is the first phase of a two-year process, Basic Solar said.This is an important deal for 1 SolTech as it validates the competitiveness of our U.S.-made products. It also demonstrates the value PV technology can bring to countries wanting to adopt renewable energy generation," co-founder and chief executive officer of 1 SolTech Sandy Fardi said in the Monday statement.The solar modules of 1 SolTech are rated investment-grade both in output power and their ability to withstand hail and wind damage, making them ideal for industrial and utility applications. 1 SolTech (www.1soltech.com) is one of the few U.S.-based developers and manufacturers of solar modules.The construction of solar and wind parks gained momentum in Bulgaria following the country's entry in the European Union in 2007. Bulgaria must cover 11% of its gross domestic energy consumption with electricity from renewables by the end of 2010, compared to less than 10% at the end of 2009, and should increase this share to 16% by 2020.
EUR 200 M Solar energy park to be built near the village of Apriltsi
The construction of a big solar park near the village of Apriltsi in southern Bulgaria has just started. The huge investment appears somehow strange against the background of continuous financial crisis and market stagnation. The first sod of the 80-megawatt solar energy park was turned a few days ago.The investor, Real Estate Company, is going to pour 200 million euro in the solar park near Apriltsi. The first stage of the construction is scheduled for completion by the end of August with the installation of 1,100 with a total capacity of 1.15 MW. The second stage of the solar park's construction is to be completed by 2012 and the third – by 2014. When constructed, the solar energy park will spread over 200 ha. "I am happy to give the start of this strategic energy project," Pazardzhik Mayor Todor Popov told the Standart."The project is really innovative and it will make the municipality of Pazardzhik one of the few municipalities in Bulgaria that have developed alternative energy sources on such a scale," he added. The main partner to Real States EOOD is the Austrian NET (New Energy Technology) which will participate with its know-how. The Austrian company has developed over 10 patents and its leader - Franz Schweighover started working with photovoltaic systems as long ago as 1980s. All the components to be installed are environmentally friendly and are fully recyclable. An electrical substation will be constructed in the middle of the facility where voltage will be transformed from 20 to 110 kilowatts and the electricity will be transported towards the electrical grid of the Bulgarian National Electrical Company. The first stage of the solar park will be integrated to EVN electrical network which is at about 2 km away. A special sort of low-growing grass will be sown under the panels because the higher-standing kinds may pose the risk of fire. The designers of the project and the investors have decided to let sheep graze in the terrain which will be fenced off from all sides. The sheep have been found out not only graze the grass but also flatten it.
This is the most environmentally-friendly way to produce electricity, project consultants pointed out. The new types of solar panels allow the production of energy from reflected light as well. The underlying fundamental idea is to eliminate the need of thermo-power plants which emit carbon dioxide and consume coal and to increase the use of renewable energy sources. Apart form anything else the basic cost of solar energy is the lowest.
Enel Green Power unveils second wind farm in Bulgaria
Enel Green Power, renewable energy arm of Italy's biggest utility Enel, put into operation its second wind farm in Bulgaria, doubling its installed wind capacity in the country, which already totals 42 MW.The new wind farm, located in the municipality of Shabla, consists of 7 turbines with a capacity of 3 MW each, for a total installed capacity of 21 MW. With an annual production of over 54.6 million kWh, the wind farm will be able to meet the energy needs of 19,000 households while avoiding the emission of around 45,000 tonnes of CO2 per year.“We are active in Romania and Greece as well, and consider this region as a very important development area with a strong Renewable Energy potential that matches the growing energy demand of the countries,” said Francesco Starace, President of Enel Green Power.In late 2008 Enel Green Power Bulgaria signed an agreement with Global Wind Power Bulgaria, a subsidiary of the Danish Global Wind Power, for the acquisition of the Kamen Bryag and Shabla wind projects.The company officially started operating its first wind farm in Bulgaria in October 2009. Kamen Bryag plant is located in the municipality of Kavarna and has an installed capacity of 21 MW.
IWC Bulgaria granted top investor status for construction of 140 MW wind farm
The company IWC Bulgaria VP 5, owned of German companies Siemens and Windkraft Nord, will build 140 MW wind farm Lozenets by 2013.In the end of April, minister of economy, energy and tourism Traycho Traykov awarded Investor Class A status to IWC Bulgaria VP 5.The wind farm Lozenets will have 59 wind turbines, and it will be built in Krushari municipality. The cost of the project is estimated at some 200 million euros. Annual output of the farm should reach 350 GWh.
Spanish Electra to build 100 MW wind farm
Spanish company Electra Holding plans to build 100 MW wind farm in central Bulgaria. The company said it had already acquired land for the project.Electra has initiated its activities in Bulgaria six months ago. In the end of 2009, the company said it wanted to invest 650 million euros for purchase and development of renewable energy projects in Bulgaria in period of four years. Electra wants to raise necessary funds from investors.Companys officials announced investments in wind, solar, biomass and hydropower plants. The company already purchased projects for construction of wind farms with overall output of 480 MW, for 10 MW-biomass power plant and for project for production of 30,000 tons of bio diesel per year.Spanish company has been active in Spain, Romania and Mexico.
Russian Sintez to build 200 MW power plant
Russian Sintez Group plans to build 200 MW power plant in Bulgaria. The project was discussed by executive director of the company Andrey Karolev and deputy minister of economy, energy and tourism of Bulgaria Maya Hristova during the meeting in Sofia.Sintez has been involved in development of similar power plant in Macedonia. This particular CCGT plant will have 200 MW of electricity output and 160 MW of heat output.
Vivacom to invest EUR 6.6 M in network digitalisation by year-end
The country's largest telecom services provider Vivacom, previously BTC, announced plans to invest BGN 13mn (EUR 6.6mn) in the digitalisation of its landline network by the end of the year. The total investment in digitalisation is to reach some BGN 100mn since 2004. The company will digitalise 150,000 analogue posts by the end of 2010, thus bringing digital coverage to 97.2%, and will further facilitate fixed-line number portability. The net consolidated profit of Vivacom surged 64.5% y/y to BGN 34.6mn in Q1 though revenues declined by 8.3% y/y to 219.3mn. The telecom is controlled by Cayman Islands-based Bridge Partners, after the company's previous owner, insurer AIG, agreed to sell part of its asset management and investment advisory business to Bridge Partners.
COMPANIES:
Bulgarian firms to build 43-km water pipes
Bulgarian consortium Ecostroy Dimitrovgrad has won a EUR 2.037 million contract to repair and construct a 43-kilometre water pipe network on the left bank of Maritsa River in Dimitrovgrad. The facility is scheduled for completion within 93 days. Experts say similar projects usually span between 18 months and two years. The tie-in is led by Stara Zagora-based BGS Group and includes also Haskovo-based Monolit and Sofia-based Akvapartnyor. PK 2000 – AKVA has been appointed supervisor of the project.
BGN 2 M provided to finance Bulgaria's participation in Expo 2010
The Economy, Energy and Tourism Ministry said on Tuesday it has provided over 2.2 million leva (over 1.12 million euro) to finance Bulgaria's participation in Expo 2010 in Shanghai, China.Bulgaria is a traditional participant in international Expo shows. The organization of the national participation in Expo 2010, including the building of the national booth, has been assigned to the International Fair of Plovdiv.Тhe Ministry statement comes a day after the news media quoted the Plovdiv Fair management as saying that the Bulgarian participation in Expo 2010 is about to fail because the Economy Ministry had not provided funding.Expo 2010 will be held between May 1 and October 31. Its theme will be "Better City, Better Life". More than 200 participants, including countries, international organizations and leading companies, are expected at the show.The theme of the Bulgarian national participation in the show is "City of Shared Heritage". The Bulgarian booth occupies an area of 324 square metres, as large as the Bulgarian booth at Expo 2008 in Zaragoza, Spain. The concept of the Bulgarian national presentation in Shanghai is centred on the meeting of the times in the cultural space of the Bulgarian city. The key element is the combination of the historical and cultural heritage with modern life in the city.A total of 2,231,650 leva has been provided to finance the Bulgarian participation in Expo 2010, including 1,321,650 leva from the budget of the Economy, Energy and Tourism Ministry and 910,000 leva in additional financial aid from China. Considering the current financial crisis, this is the largest possible amount of financing which the Bulgarian State can provide for the country's participation in the show, the press release says.Originally, the financing was set at 4,685,156 leva. In the spring of 2009 the Economy, Energy and Tourism Ministry asked the Finance Ministry for additional financing, but it was not provided.The money provided from the national budget for Bulgaria's participation in the previous Expo, in Zaragoza in 2008, was 3,028,275 leva.
Some 1 000 people visit Bulgarian pavilion in Shanghai for 1 hour
Some 1,000 people visit Bulgarian pavilion for one hour at EXPO 2010 held in Shanghai. Some 2,00 brochures are handed out at the same time."We shall not let that the Bulgarian state closes pre-term its pavilion at EXPO 2010 in Shanghai," stated Bulgaria's Minister of Economy, Energy and Tourism, Traycho Traykov who arrived in the city of Plovdiv for the opening of the spring edition of Plovdiv Fair. Minister Traykov explained that no additional financing for Bulgaria's promotion at the EXPO 2010 will be released but the Bulgarian state will seek other options to promote the country during the high forum.
New Schenker Sofia logistics terminal officially inaugurated
Schenker officially opened its new and modern logistics terminal officially on May 4, even though the facility has been operational since the beginning of March 2010. The complex, which is in Bozhourishte, near Sofia, is close to the international road linking Sofia and Belgrade, just 20 minutes from the centre of the capital.The new Schenker facility is a 10-million euro complex, spanning more than 48 000 sq m of land, with a logistics warehouse of 3000 sq m, an office complex of 3500 sq m, a 2000 sq m cross-docking hall, both equipped with 30 loading bays with hydraulic ramps.According to the media statement, the buildings are equipped with state-of-the-art security technology and fire safety systems, in what is one the most modern such facilities in the region.Schenker EOOD is part of DB Schenker – a leading international provider specialising in integrated logistics services. The firm provides an array of services, from transport, freight and logistics services – land, air and sea freight, shipping along the Danube, railway transport, combined and multi-modal carriage."In our region, we are relying increasingly on rail-ports – terminals where we can implement inter-model solutions that are profitable for our customers," Elmar Wieland, Chairman of Schenker & Co AG, Vienna, responsible for activities in Bulgaria, said on the company's website."Our Sofia site will open up new business opportunities thanks to its location and equipment," Helmut Schweighofer, managing director of DB Schenker in Bulgaria added.Reportedly, the complex will be implemented for both national distribution within Bulgaria and for transportation to and from Bulgaria, thus integrating the Sofia terminal completely within the DB Schenker's European network system.
Dundee Precious says Bulgaria mine expansion in full swing
Toronto-based Dundee Precious Metals Inc. has confirmed that the expansion of the Chelopech mine in Bulgaria is fully underway and on schedule.“The Chelopech mine/mill expansion is fully underway, on schedule and on budget. We are looking forward to an exciting year which will see significant advances in the Chelopech expansion,” said Jonathan Goodman, President and CEO, as the company announced its results for the first quarter.The company said a recent court decision in Bulgaria to revoke the project's environmental impact assessment likely means the proposed metals processing facility will be shelved.But it stressed that the court decision doesn't affect its mine/mill expansion to 2 million tonnes a year that is currently underway at Chelopech.The company reported a net loss of USD 48.3 M in its first quarter of the year, up from a net loss of USD 4.9 M in the year-ago period.In a statement released late Tuesday, the international mining company said the net loss includes net impairment provisions of USD 50.6 M related to the proposed Bulgarian metals processing facility in Chelopech.Dundee said Chelopech recorded a gross loss from mining operations of USD 1.9 M in the first quarter compared to a gross profit from mining operations of USD 5.8 M in the first quarter of 2009.It said the decrease in gross profit was mostly due to a delay in a concentrate shipment because of congestion at the Port of Bourgas, Bulgaria.Toronto-based Dundee is an international mining company engaged in the acquisition, exploration, development and mining of precious metals in Bulgaria and Armenia, with exploration activities in Serbia.
6 companies bid for designing 3rd Sofia metro line
Six firms have applied to be selected to plan the thrird line of the subway of the Bulgarian capital Sofia.The tender includes researching the traffic and transport intensity as well as drafting a project for building a “Light Metro” line from the Knyazhevo Quarter through the downtown of Sofia to the Botevgradsko Shose Blvd near the Levski Quarter.The “Light Metro” is a rail transport concept in some European countries, also known as a medium-capacity system, an intermediate system between light rail and heavy rail.The firms applying carry out the engineering design of the third Sofia Metro line are Poiri Infra, Germany; Metroproekt Praga Jsc, the Czech Republic; Metro Consultant IBERINSA – Eurotransport MKIE; Mott Mcdonald Ltd, UK; Proetechno SA; Eptisa Servicios de Ingenieria, S A.Three other companies have also submitted applications for the tender but have failed to observe the deadline.The third metro line in Sofia will be long about 21 km. To save money, the Sofia Monicipality is considering the light metro option which most likely will entail ground rail at the two ends of the line, and an underground section in the very downtown of the city.The Sofia Municipality has made estimates about light and regular metro lines for three slightly different routes.The cost for the light metro option is between EUR 260 M and EUR 310 M, and the cost of the regular, underground metro line would be between EUR 780 M and EUR 850 M.At present, the Sofia Metro has only one operational line, and another one under construction.
EurOmax starts diamond drilling program in Bulgaria
Canada-based mining company has started a diamond drilling program at its Breznik Gold Project in Bulgaria.The program which will total seven holes and approximately 1,000 metres is designed to test the continuation of the currently identified mineral resource.If successful, the drilling will double the strike length of mineralization at the EurOmax project in Breznik to the west of Sofia, the company announced adding that once the drilling is completed it intends to apply for a Commercial Discovery Certificate under Bulgarian mining law.More than one kilometer of the mapped strike length of the vein system near Breznik remains untested, and drilling is expected confirm the potential for the extension of previously identified high grade mineralization to the west, states EurOmax.EurOmax Resources Limited is a Toronto Venture Exchange Listed company maintaining portfolio of gold and base exploration projects in South Eastern Europe.In 2004, the Bulgarian government issued two licenses to the company, the 98 square km Breznik permit and the Rakitovo permit which covers 83 square km.The Breznik permit covers a 3 500 meter by 1 500 meter hydrothermal system which is both intensively altered and host to widespread gold mineralization. Placer gold deposits have developed on the flanks of the system.Mineralization is hosted by Late Cretaceous andesite intruded by porphyry stocks and dikes. Importantly the license lies within the Banat-Srednogorie Cu-Au belt which hosts large gold and copper deposits within Bulgaria and neighboring countries, according to the EurOmax website.
THE CRISIS:
CED: Bulgaria economy to contract by 3% in Q1
Bulgaria’s gross domestic product (GDP) will shrink by 3% on an annual basis during the first three months of the year, analysts from a local think-tank have forecast.The country will not manage to recover until the third quarter of the year, when it will record a 2-3% growth, according to the Center for Economic Development (CED).The experts expect the economy to grow by about 1% by the end of the year as compared to the previous one.“Bulgaria’s economy is on its way to overcome the first cyclic crisis in its recent history”, Georgi Prohanski, CED head, said at a press conference on Monday.He added that there are symptoms of a structural crisis in the economy, which will stifle aspirations for a higher growth in GDP even if the European economy starts to recover from the crisis more quickly.According to Prohanski Bulgaria’s high economic growth over the last few years can be attributed to the developments in the construction and real estate sectors, as well as the huge amounts of foreign direct investments there.“The biggest challenge that the country faces in these times of crisis is the development of the industry production, where the government should aim to attract foreign investors,” CED head said.Asked about Bulgaria’s prospects to join the euro-zone entry mechanism ERM II and adopt the single currency, Prohanski said the government should continue to assign top priority to this goal.He recommended that the government aim for a balanced budget, which is a key requirement for the euro adoption, by a cut in administrative spending, rather than by an increase in the value-added-tax (VAT).“Should the government approve a VAT hike, the average annual inflation levels for the country will jump to 4-5%, instead of 2-3%,” Prohanski said.The centre-right government, which swept to power after the July elections, approved last month an austerity package that would help fill a potential gap of BGN 1.6 B. It includes the introduction of a luxury tax, floating minority stakes in state-owned companies and a possible bond issue.It will decide on Wednesday whether to increase value added tax (VAT), which now stands at 20%, by up to four percentage points to 24% in a bid to boost revenues and keep down the deficit.The government has pledged to stick to a tight fiscal policy and keep the deficit below 3 % by the end of this year. Last month it was forced to froze plans to apply to join the bloc's exchange-rate mechanism over a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet.The financially unaccounted procurement deals has increased the 2009 gap to 3.9% of gross domestic product (GDP) from an initial 1.9% under the EU rules.
Capital Economics: Bulgaria economy to grow by 1.5% in 2011
Given the scale of the headwinds facing the economy, Capital Economics has said they are sticking to its below-consensus forecast for the Bulgarian economy to contract by 1% this year and grow by 1.5% in 2011.“What's more, the pace of recovery thereafter is likely to be very slow,” it said.Bulgaria, Romania and Hungary are the eastern European nations whose financial markets are most exposed to contagion from the Greek debt crisis, Capital Economics said.The European Commission said last week that Bulgaria’s economy is likely to start to recover towards the end of 2010 under the impact of the international cycle.“Although the growth rate might be slightly higher than in other EU countries, in 2011 it should remain well below the pre-crisis average, thus temporarily slowing the catching-up process” Brussels experts said.Bulgaria’s government expects the economy to grow about 1% in 2010 after shrinking 5.1%. That compares with an estimated 0.2% contraction in Hungary, and growth rates of 0.6% in Slovenia and 1.3% in the Czech Republic.
Investment bait
Publication: www.sofiaecho.com
The two cornerstones of Bulgaria’s economic growth in the five years before the global economic crisis were consumption and investment – both foreign direct and domestic.The crisis caught up with Bulgaria late, in the last quarter of 2008, but in the first full year of recession, investment was down 26.9 per cent, according to Bulgaria’s statistics board. To spur a fresh inflow of funds, the Cabinet now plans to lower the thresholds for incentives offered to prospective investors.It was the most effective way for the Government to stimulate the economy, employment and Budget revenue, Economy Minister Traikov said."We have envisioned up to 10 per cent of investment in manufacturing industries and up to 50 per cent of investment in research and development and high-tech to be rebated after the projects reach a certain stage," Traikov said on May 11, as quoted by Bulgarian-language media.Specifically, that meant the point when at least half of the minimum amount stipulated for the investment was reached or when the investment project entered its fourth year.There would be no funds allocated for such spending in the 2010 Budget, but the amended regulations would give investors a clear framework to plan in advance, Traikov said."It might look like unnecessary spending, but I believe that 90 per cent of the work depends on that. Right now, companies do not have enough cash to invest because of the credit crunch," Traikov was quoted as saying.It was not immediately clear, however, how the promise of future subsidies would help alleviate the cash squeeze now.The focus of the changes were lower thresholds to secure investment certificates entitling their holders to Government incentives. To secure a class A certificate, investors would have to commit 20 million leva to a project, down from 32 million now, and for a class B certificate the threshold was reduced from 16 million leva to 10 million.For high-tech production facilities and investment in areas with high unemployment, the thresholds would be set at one third of the standard rate, while investment in high-tech services would need to meet a threshold set at one fifth of the standard amount, according to the summary of the amendments, posted on the Economy Ministry’s website.Furthermore, Bulgaria would certify "priority investment projects" that were outside the sectors now subject to the investment incentives regulation. The threshold for such projects would be 100 million leva investment and the creation of at least 200 jobs, with several exceptions – for industrial areas the requirements were 70 million leva invested and 100 jobs, while for technology parks it would require 30 million leva and 50 jobs.However, that opened the door for types of projects – construction of shopping centres, golf courses and hotels – that were explicitly taken off the list of recipients of state incentives at the height of the construction boom, Sega daily reported. The Sofia Echo was unable to confirm the report. Provided that such projects met the financial and job creation requirements, they would once again be eligible for investor certificates, which include facilities such as the acquisition of land without tender at tax valuation (as opposed to the generally higher market prices) and free infrastructure, as the state would cover the cost of roads and utilities connections, Sega said.The infrastructure incentive exists now as well, but its implementation has often been criticised by investors because in its current form, it requires the company to build the connections and then be refunded, but the regulations do not stipulate any deadlines for the rebates.