BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 18 - 25 JUNE 2010 )
Sections/headline briefs:
MACROECONOMY:
· Russia: Snub of Belene NPP is EUR 1 B loss for Bulgaria
· Former Bulgarian PM says government planning to scrap Russian energy projects
· Bulgarian PM supports Belene nuke project, but at a revised price
- Bulgarian president defends ties, joint projects with Russia
- Turkish and Bulgarian presidents discuss energy security
- Germany appreciates Bulgaria as reliable and very good partner
- Bulgaria expects sizable grain exports to Israel and gulf states
· 11 bid to supervise Bulgaria’s Trakiya Highway lot 4
· Bulgaria set to start 2 highway construction tenders in October
· Fight over IT money in transport kicks off
· What is the cost of embassies?
· Bulgaria, Romania hourly labour costs increases among highest in EU
- Bulgarian Railways go wireless, plan to become profitable
- Switzerland to extend loans for projects in Bulgaria and Romania
INVESTMENTS:
· Greek investors flock to Bulgaria
· New business center to rise in Bulgaria's capital
· Bulgaria expected to regain peak levels of investments in 2016
· Investments in LUKoil Neftochim Bourgas AD in 2009 total BGN 280 million
COMPANIES:
· Greece's Goldair Handling enters Sofia international airport
· Bulgarian steelmaker initiates liquidation of assets
· Eolica resumes construction of 60 MW wind energy park near Suvorovo
· Bulgaria's Sofiyska Voda sale not wrapped up yet
· Hypo to shed off assets in Bulgaria
· Greece's Fourlis mulls second IKEA store in Bulgaria
· Bulgarian business creates green circle of companies choosing to get involved in policies for environmental protection
THE CRISIS:
· Bulgaria and Romania have worst GDP in the EU
· Ernst & Young: Bulgaria's GDP to contract by 1% in 2010
MACROECONOMY:
Russia: Snub of Belene NPP is EUR 1 B loss for Bulgaria
The losses for Bulgaria if the country makes a decision to stop for good the project to build a second Nuclear Power Plant in the Danube town of Belene can exceed EUR 1 B. The information was reported by the Bulgarian daily “Dnevnik, citing the Russian RBK agency and an anonymous Russian source close to the project.The off-the-record conversation had happened during the energy forum in Sankt Petersburg where Russian President, Dmitriy Medvedev, and his French counterpart, Nicolas Sarcozy, will sign Saturday the agreement to include the French “Electricite deFrance” (EDF) in the South Stream” gas line.The source has said Bulgaria had invested so far EUR 400 M in Belene while the signed contracts amount to EUR 700 M and the country would face monetary sanctions if in September the National Electric Company (NEK) fails to make payments for these contracts.According to the Russian energy expert, Bulgaria’s most pressing issue now is to find an investor to finish the construction of the NPP.“At the time Bulgaria kept 51% of the NPP, but the economic crisis brought problems with its financing and the cabinet now mulls what to do with its shares. Russia can buy anywhere between 20% and 80% of them, but would not be able to over political reasons. The Federation, however, would not lose anything from the freezing of the project and we can transfer our equipment from Belene to other NPPs in construction stage,” the source is quoted saying.
Former Bulgarian PM says government planning to scrap Russian energy projects
Socialist party leader and former Prime Minister Sergei [Sergey] Stanishev believes that the government is purposefully headed for winding up all energy projects connected with Russia. Speaking to an audience of socialist party supporters here late on Sunday, he said that such policy is "national treason" and "serves foreign interests".Stanishev also said that there is "a renaissance of nuclear energy across the world and a number of countries are beginning projects for building nuclear power plants". "The project for construction of the Belene N-plant is five-six years ahead of these in technological terms and it will be a sin to bury it," he added. He went on to catalogue the benefits of the project, including the expected opening of 7,000 jobs which is most important at a time of crisis.The ultimate result of the current government policy will be having to import electricity from Turkey in the future, in the socialist leader's words.He also said he does not share the incumbents' optimism about this country being in the process of emerging from the crisis. By contrast, he sees things worsening.He believes that the government has several scenarios for dealing with the shortage of funding next year: increase taxes, including VAT and individuals' income taxes, reduce wages in the public sector and, possibly, pensions, or borrow and sign an agreement with the IMF.
Bulgarian PM supports Belene nuke project, but at a revised price
President Purvanov wants a referendum on the shelved Belene nuclear project and an actualisation of the Budget, while Prime Minister Boiko Borissov said that in principle he does support the construction of Belene, Bulgarian media reported on June 18, Sofia Echo reported. only the previous week, Borissov told EU ambassadors in Sofia that Bulgaria would withdraw permanently from the Bourgas-Alexandropoulis gas pipeline project, and that Bulgaria would indefinitely suspend construction of the Belene nuclear power station because it was uncertain when there would be a return on the investment.However, on June 18, Borissov was reported as saying that he would support the construction of the nuclear plant only of there were coherent financial parameters for the project and a sound basis for return on investment, bTV said.Experts in the field have said that in order for the project to be implemented, several "strategic partners" are needed."The cost must be reduced. I am certain that we can construct the plant for less money than stated, and execute it in such way that we can sell the electricity afterwards as well," Borissov told bTV."For the moment, I reckon that the Russians are understanding about our concerns" he said. Borissov estimates that the total cost of the construction of the nuclear plant can be slashed by as much as 300 million euro.Earlier this week,fears that relationships between Bulgaria and Russia might sour because of Sofia's decision to pull out of the energy projects were dissipated by Bulgarian Foreign Minister Nikolai Mladenov."Relations between Bulgaria and Russia are excellent, based on extensive mutual co-operation, and not exclusively on one particular energy project," Mladenov said.Bulgaria media reports after the decision to withdraw from the project said that the real loser in the deal would be Greece. Reports claimed that Bulgaria and Russia wanted nothing to do with the pipeline and were waiting to see who would back out first.But Borissov was adamant that he would not put Bulgaria into any further debt over the project, regardless of how necessary it is for the country."I will not do what the former government did and and burden Bulgaria with further obligations. This is a European project, part of the European energy security plan. I have nothing against the Russians, but this costs money - and this is our money," he said.Meanwhile, the decision to scrap the construction of the Bourgas-Alexandroupoulis pipeline is final and according to reports, it will not be subject to a review. The decision was taken because of staunch resistance from residents of the Bulgarian Black Sea city of Bourgas and the surrounding region, Borissov said.
Bulgarian president defends ties, joint projects with Russia
Relations between Bulgaria and Russia should not become hostage to the conjecture interests of the incumbent. Well-grasped national interest presupposes all working together for equal, mutually beneficial relations with Russia, President Georgi Purvanov said Monday [ 21 June] evening. Recalling a statement he made in 1997 as leader of the then opposition Bulgarian Socialist Party, he was speaking at the presentation of the book of Russian Chamber of Commerce and Industry President Yevgeny Primakov titled "The World Without Russia? Where Does Political Shortsightedness Lead to?" In the same statement Purvanov underscored that there was no alternative to Bulgaria's European integration and that the consensus of Bulgarian political forces on the matter was iron-clad."A year ago I told our Russian friends a bit provocatively that if they have to be cross with someone about the American bases, that someone would be me - something, which it is difficult to say in Moscow, but easy to say in Washington," Purvanov pointed out. "In Washington I would say that the Russian energy projects, which are not Russian projects but joint projects, correspond to the national interests, the European interests, and it is high time this is understood by all Bulgarian politicians, no matter what our differences, nuances in preferences, in emotions are," the head of state went on."These days people began talking that Bulgaria is taking a turn in foreign policy, but nothing is further from the truth," Purvanov said and pointed out that this country has made its strategic choice with the achievement of membership in the European and Euro-Atlantic structures. Bulgaria has no need of taking turns every four years, with the change of every new government.In his words, Bulgaria should be able - and there lies the skill of the diplomacy of a small country that has the ambition to gain a relatively high position in the European family - to combine well its correct conduct as an ally, the consistent, predictable conduct, with elements of continuity, with upholding national interests. Bulgarian diplomacy should have its own character," Purvanov said.He also pointed out that bilateral relations with Russia do not boil down solely to the subject of energy and underscored that the new quality in the intellectual and spiritual sphere, as well as in economic relations between the two countries should be found.Primakov, who delivered a lecture on the subject of "Russia in the Modern World" and received the Orpheus Prize of the Orpheus International Academy, later said he would want Bulgaria to participate in the development of the South Stream gas pipeline because the project is necessary to the whole of Europe. "But if it so happens that this does not come to be, we have alternative variants. We will not back down from this project, it will be implemented in one way or another," Primakov said, taking a question after the lecture. He pointed out that Russia sets great store by the construction of the pipeline.When speaking of energy security it frequently happens that only one aspect of the issue is considered. It is to Russia's interest too that the natural gas reaches consumers, that it receives money for that, Primakov pointed out. Russia is just as interested as the consumers of its natural resources -in other words, the interest is mutual and this energy security should be developed, taking into account the mutual dependence between producers and consumers, Primakov said.
Turkish and Bulgarian presidents discuss energy security
President Georgi Purvanov met with Turkish counterpart Abdullah Gul on Tuesday [22 June] in Istanbul, where he is among the participants in a meeting of state and government leaders of the South East European Cooperation Process (SEECP) and in the eighth edition of the Culture Corridors in South East Europe summit.During the meeting the two heads of state discussed various aspects of bilateral relations and ties in an international framework. The two leaders observed on the high level of contacts, underscoring the ascent of trade and economic ties and investments. They agreed that no issues in bilateral relations are insurmountable. The Bulgarian president reportedly said that a mixed committee on open issues in Bulgarian-Turkish relations - established on his proposal - should hold its second meeting the soonest possible at expert level.The two sides embraced the idea that dialogue take place within the framework of a high-level partnership council (consisting of the prime ministers and government ministers of the two countries) and following a second meeting of the mixed expert committee.Energy security and cooperation, and energy projects involving the two countries was another key issue for the meeting. Turkey agreed to President Purvanov's suggestion for a trilateral meeting of the gas companies of Bulgaria, Turkey and Azerbaijan to agree on the specific parameters of cooperation in the transportation of natural gas from Azerbaijan to Bulgaria.President Gul thanked the Bulgarian head of state for his invitation to visit Bulgaria and confirmed his readiness for a visit in October this year.President Purvanov offered his condolences for the loss of lives in a deadly attack in Istanbul earlier in the day.
Germany appreciates Bulgaria as reliable and very good partner
"Germany appreciates Bulgaria as a reliable and very good partner," German Foreign Minister and Vice-chancellor Guido Westerwelle said emerging from a meeting with his Bulgarian counterpart Nikolay Mladenov.Taking a question about Bulgaria's desire to join the Schengen area, Westerwelle said there should be a prospect for its accession to the area, adding that satisfying the criteria for it is something normal. Mladenov said that he and his German counterpart had discussed bilateral relations sharing the opinion that they are excellent in the political and in all other areas. Westerwelle's visit, the forthcoming visit Chancellor Angela Merkel is going to pay to Bulgaria, the series of parliamentary visits and the regular consultations between the foreign ministries of the two countries come to prove it, Mladenov said.Another focus of the Mladenov-Westerwelle conference was what Bulgaria is still to do in order to meet in full the criteria for membership of the Schengen area. Mladenov emphasized Bulgaria's resolution to resolve the problem of corruption and crime - in his words, "not for the sake of somebody else but for our own sake, not to please somebody in Berlin and Brussels but because this is a commitment which the Bulgarian government has made and which it will honour within its term in office."The two foreign ministers discussed the situation in the Balkans and the European prospects of Bulgaria's neighbours in the region.Bulgaria and Germany enjoy close relations, they have close cultural ties, too, Westerwelle said. There are about 12,000 Bulgarian students in the German universities - the second largest group after the one of the Chinese students.The Western Balkan countries can be integrated slowly in the EU but each one of them must satisfy the respective criteria, Westerwelle observed. Replying a question about the recent dialogue the Bulgarian government had with German investors in Bulgaria and the criticism Prime Minister Boyko Borissov targeted at some of them, Westerwelle said that the issue had not been discussed. He said both sides are interested in the achievement of transparence, as well as of administrative and investment safety. In his words, Germany is greatly interested in the further development of economic relations with Bulgaria, particularly in the energy sector.Mladenov also said that the issue had not been discussed but this could happen at the meetings which are yet to be held.In his words, both Bulgaria and Germany are law-abiding states, states which insist on transparence, on obeying the national law in every respect and on creating better conditions for the development of the business.
Bulgaria expects sizable grain exports to Israel and gulf states
Bulgaria is hoping to get BGN 1 B from the exports of grain from the 2010 harvest,Agriculture Minister Miroslav Naydenov has announced.Naydenov, together with two of his predecessors Krastyo Trendafilov and Ventsislav Varbanov gave start to the harvesting of the crops on Thursday near the northwestern town of Byala Slatina.“Minister Mladenov wished for a bountiful harvest and placed BGN 1 coin in an ear of wheat. Director of the State Agriculture Fund Kalina Ilieva did the same thing. The Chair of the National Association of Grain Producers Radoslav Hristov placed a coin of BGN 0.5, wishing for higher market prices of the grain,” announced the press service of the Bulgarian Agriculture Ministry.Bulgaria’s wheat production in 2010 is expected to be between 3.6 and 3.9 million tonnes; of those, some 2 million tonnes will be exported as will be over 1 million tonnes of barley, corn, and other grain crops.Countries such as Israel, Qatar, and Kuwait are expected to be the major clients of Bulgaria’s grain producers, Minister Naydenov announced while also shying away from commenting on the grain prices in Bulgaria in order not to affect the domestic market. He did underscore the fact that the international market prices are a key factor for the domestic grain price.In order to prove that the Bulgarian farmers have modern equipment, the Agriculture Minister participated in a “harvester rodeo” in the fields near Byala Slatina.Riding in a brand-new harvester purchased with funds from the EU Rural Development Program, Naydenov and State Agriculture Fund head Ilieva beat another olderharvester. The Minister revealed official data showing that 3.2% of all agricultural equipment in Bulgaria was replaced with new machines in 2010 so far.The National Association of Grain Producers has demanded that money from the unpopular measures of the EU Rural Development Program be redirected to the modernization of farms. Agriculture Fund head Ilieva said Bulgaria had asked the EC to approve this shift.
11 bid to supervise Bulgaria’s Trakiya Highway lot 4
Eleven bidders will vie to supervise the construction of the last 47.7 km section of the Trakiya highway, Lot 4, which will link the city of Yambol and the town of Karnobat.This emerged on Tuesday after the technical offers were opened at Bulgaria’s Road Infrastructure agency.Thirteen companies filed bids in the tender for the construction of the stretch, which is projected to cost about EUR 146 M.Construction works of what is the last stretch of the highway are scheduled to start in September.Though still under construction Trakiya is the Bulgarian highway project which is closest to completion. It will connect the capital Sofia with the Black Sea city of Burgas. A total of 328 km of the 443-km highway have already been built.
Bulgaria set to start 2 highway construction tenders in October
Bulgaria's Regional Development Ministry is set to open the tenders for the construction of the Maritsa and Struma highways in the fall of 2010.On Friday, the Ministry will approve the environmental assessment of the Maritsa Highway, linking the city of Plovdiv to the Turkish border, Regional Development Minister Rosen Plevneliev announced. This will pave the way for opening the respective construction tender in October.He stated that the tender for the other highway, Struma, which will link Sofia to the Greek border, is expected to open at the same time.In his words, the Ministry is still working on the project for the construction of its Lot 3, between Blagoevgrad and Dupnitsa, and in order to create the project, the Bulgarian government will seek technical assistance from the European Commission.Plevneliev revealed that the Ministry is preparing an application for EU funding for the Hemus Highway (linking Sofia and Varna through Northern Bulgaria) from the Union's 2014-2020 financial framework.“The Hemus Highway is a very difficult project. The missing section between the Bulgarian cities of Shumen and Yablanitza is 245 km and it would need a funding of approximately EUR 1.2-1.3 B. It will take at least 2-2.5 years to draft the project and then we will consider two or three options,” Plevneliev said.In his words, it is very difficult to apply public-private partnership to the Hemus Highway because this model usually works for the busiest and most lucrative roads like Maritsa, Trakiya and Struma. Plevneliev said that his Ministry is working on this case with the European Bank for Reconstruction and Development.“Of course, this is the option that works – EU funds, programs from January 1, 2014, and full preparation on our part, so that we do not repeat the mistakes from 2007, 2008 and 2009. These three years passed by with only 0.36% absorption of EU funds,” he said.The Minister has also said that the revised 2010 budget provides BGN 180 M for payment of construction projects.In his words, BGN 32 M will be set aside for the 30 km section from the Maritsa Highway, another BGN 30 M will be spent on the southern part of the Sofia Beltway; the repair of the Brussels Boulevard in Sofia will cost BGN 15 M, and BGN 50 M are foreseen for expropriation.Apart from the BGN 180 M, the Bulgarian government has approved on Wednesday the allocation of BGN 86.1 M for the finishing of Lyulin Highway. In this way the cost of the highways is raising to EUR 185 M, instead of the initial EUR 138 M. The additional funding is over continuous disputes of the Bulgarian government. with the project executer, the Turkish construction company Mapa Cenghiz.“If we haven't reached a consensus for this amount with the executers, the project could have reached EUR 250 M. They had a right to ask for more money because Bulgaria delayed the issuing of the construction permit, and the expropriation of the land,” Plevneliev said.
Fight over IT money in transport kicks off
Tens of millions of euros will be poured in the transport system of Bulgaria in the next few years. In this case it comes to funds provided for the construction of so-called intelligent management and coordination of the traffic, that reduces harmful environmental impact. And as usual, when a lot of money is at hand, the stakes are very high. The first "sign" came at the beginning of last week when the Minister of Transport and ICT, Alexander Tsvetkov, launched the project "Establishment of River Information System on the Bulgarian part of the Danube (BULRIS) whose first phase is to be finalised by 2011. BULRIS is part of the Pan-European navigation system for providing efficient and safe navigation on inland waterways. In Bulgaria's part of the Danube such a technology has not been implemented, which places Sofia in a disadvantaged position compared to other EU countries, since the state is not included in the general exchange of information. If the Government is not ready by 2013, it will be fined by the European Commission. The project is funded under the Transport Operational Programme which has earmarked EUR7.5 million for the project. Following a tender procedure the initial contract has been awarded to BULRIS 2009, in which the Bulgarian company CM Sys holds 48 perecnt of the capital, while Technologica controls a 20-percent stake; Croatian Center za Razvoy Unitarne Plovidbe holds 18 percent; and state-owned enterprise Telecommunication Construction and Rehabilitation owns the remaining 14 percent. The consortium will have to make feasibility studies and projects, to develop a tender documentation and carry out a tender procedure for the actual construction of basic infrastructure of the river information system. Then comes the contest for selecting the builder, which phase will cost another BGN15 million. This sum, however, is only a drop in the sea. The third phase of construction of management information system for the maritime vessel traffic (VTMIS) is yet to be implemented.
What is the cost of embassies?
Publication: Banker Weekly English
By the end of June, Bulgaria's Foreign Ministry is to complete the assessment of country's embassies abroad. Some of them, especially those that are regarded as least needed, in all likelihood will be closed. If one finds the political will to do so. The facts are as follows: 65 percent of the Ministry of Foreign Affairs' budget goes to support the country's missions around the world. This sum comes to about BGN 80 million a year. Bulgaria has 115 foreign offices: 86 embassies, 7 permanent representations, 20 consulates general and two diplomatic offices. Missions to be closed In diplomatic circles it is rumoured that the number of offices proposed for slicing is at least 15, while it is also expected that at least three consulates will also terminate their activity. Foreign Ministry spokesperson, Maria Cherneva, said that the Ministry has so far not proposed any of the missions for closure or restructuring. That move may be expected next month the earliest, upon completion of the audit that is being carried out in Bulgaria's embassies and consulates. Foreign Minister Nikolay Mladenov said that a special matrix will be used to categorize all embassies. He explained that some countries that we have diplomatic missions to are Sofia's strategic partners, in other ones the Government has economic interests, while in the rest there is potential for developing cooperation. There are, however, places, where the state can save money from shutting diplomatic missions, by transferring accreditations to other locations. According to the estimates of diplomats and officials from the Foreign Ministry, the missions that will wind down are those in North Korea, Ghana, Zimbabwe Sudan, Mongolia, Cambodia, Thailand, Indonesia, Niger, Ethiopia, Angola, Venezuela, Yemen, Tunisia, Argentina and Pakistan. Financial constraints will likely lead to a reduction in the number of housekeepers, technicians, clerks and accountants from other embassies, too. Six ministries will decide the fate of the embassies. Apart from the oppinion of the Foreign Ministry, there will be taken into account the positions of the Ministry of Economy, Ministry of Culture, Ministry of Defence, Ministry of Social Affairs and the Interior Ministry, plus the reports of the secret services. The final decision will be taken by the Security Council presided over by the Prime Minister, Vesela Cherneva told the Banker weekly. Some of the properties owned by the missions that are no longer needed will be sold out. Diplomatic turmoil By the end of the year the mandates of certain ambassadors come to an end. This is the case for Sofia's top diplomats in Serbia, Netherlands, Norway, Sweden, Finland, Hungary, the Czech Republic, Poland, Croatia, Bosnia and Herzegovina, Mexico, Chile, Brazil, Russia, Ukraine, Armenia, Lebanon, Jordan, Egypt, Libya, Algeria and South Africa. Country's diplomats in Spain, Cuba, Vatican, Lithuania, Morocco and Switzerland have reached their retirement age. It is not yet known whether Bulgaria will have a mission in Iraq. Four new ambassadors are awaiting accreditation upon a proposal from the Cabinet. The procedure was resumed after a break of several months due to the conflict between President Georgi Parvanov and former Foreign Minister Rumyana Zheleva. Deputy Foreign Minister Marin Raykov was proposed to become an ambassador in Paris to replace Mrs. Irina Bokova, who had been voted Director General of UNESCO. Mr. Raykov has already served one mandate in the French capital. Mr. Rakovski Lashev, who had been the secretary of Bulgaria's Mission to the UN in Geneva, was appointed Ambassador to Skopje. Mrs. Elena Poptodorova will again take over the country's mission in Washington, replacing Mr. Petkov, who resigned along with his colleague from Ankara, Mr. Branimir Mladenov, after last year's scandals around the voting papers. Mr. Krassimir Tulechki, who has been the country's representative in Kosovo since last autumn, will now go to Turkey. Mr. Tulechki has had experience in several crisis regions. He served as the Ambassador of Bulgaria to Afghanistan, and in 1998 as head of the country's mission to Ethiopia, he participated in the negotiations for releasing Bulgarian seamen kidnapped in Somalia. Mr. Tulechki was the Ambassador to Kabul before Sofia closed its mission there in June 1993 when the civil war broke out. Mr. Tulechki's position in Kosovo will be occupied by the country's former ambassador to Albania, Bobi Bobev, who is currently working at the Institute for Balkan Studies at the Bulgarian Academy of Sciences. Mr. Plamen Grozdanov will probably stay for another year in Russia, while the Ambassador in Prague, Zdravko Popov, is expected to return to his previous job heading again the Diplomatic Institute.
Bulgaria, Romania hourly labour costs increases among highest in EU
Hourly labour costs in the euro area rose by 2.1 per cent in the year up to the first quarter of 2010, compared with 1.7 per cent for the previous quarter, EU statistics office Eurostat said.In the EU271, the annual rise was 2.2 per cent up to the first quarter of 2010, compared with two per cent for the previous quarter.The two main components of labour costs are wages and salaries and non-wage costs. In the euro area, wages and salaries per hour worked grew by two per cent in the year up to the first quarter of 2010, and the non-wage component by 2.1 per cent, compared with 1.6 per cent and two per cent, respectively, for the fourth quarter of 2009.In the EU27, hourly wages and salaries rose by 2.3 per cent and the non-wage component by 1.9 per cent in the year up to the first quarter of 2010, compared with 1.9 per cent and 2.5 per cent, respectively, for the previous quarter.The breakdown by economic activity shows that in the euro area hourly labour costs rose by 1.8 per cent in industry, 2.1 per cent in construction and 2.2 per cent in services in the year up to the first quarter of 2010.In the EU27, labour costs per hour grew by 1.8 per cent in industry, 1.4 per cent in construction and 2.5 per cent in services.
Among the EU member states for which data are available for the first quarter of 2010, the highest annual increases in hourly labour costs were registered in Bulgaria (+10.5 per cent) and Romania (+7.4 per cent), Eurostat said.The highest annual decreases were observed in Lithuania (-11 per cent), Latvia (-7.2 per cent), Estonia (-5.5 per cent) and the Czech Republic (-3.1 per cent).
Bulgarian Railways go wireless, plan to become profitable
Free wireless will be provided at the five busiest train stations in Bulgaria, the Minister of Transport, Information Technology and Communications announced.Minister Alexander Tsvetkov officially launched the new service at the train station of the Bulgarian Black Sea city of Burgas on Friday.The free Internet access will be enjoyed by more than 37 000 passengers every day going through the train stations of Sofia, Burgas, Varna, Plovdiv, and Gorna Oryahovitsa.“This is the first step towards the modernization of the railway. The second would be to provide free wireless in the trains,” Minister Tsvetkov said, adding that by the end of the year, free access will be provided in 15 more train stations in Bulgaria.The Minister added that the modernization of the Bulgarian railway includes the rehabilitation of the railway tracks so that the trains can achieve a maximum speed of 160km/h.All these measures are part of the Bulgarian railway operator BDZ's plan to become a successful company by 2014. For more than 20 years, Bulgarians have avoided traveling by trains because of their low quality.On Thursday, Tsvetkov told the Bulgarian TV channel Pro.BG that saving BDZ from bankruptcy was the priority for his Ministry in the beginning of the cabinet's mandate.“Now BDZ's revenue is increasing. Thanks to the measures we took up, its expenses have gone down by BGN 7 M,” Tsvetkov said, adding that private investors show a huge interest towards renovating the buildings at some train stations.The Bulgarian National Company Railroad Infrastructure announced Monday it officially halted the public tender for the rehabilitation of the railroad between the cities of Plovdiv and Burgas.On Friday, however, Minister Tsvetkov announced the tender will be repeated so that the submitted bid does not exceed the amount, stipulated by the Ministry of Transport.
Switzerland to extend loans for projects in Bulgaria and Romania
The government of Switzerland approved Wednesday two framework agreements for loans extended by Switzerland to Bulgaria and Romania as part of the country's contribution to the EU enlargement, the Swiss web site swissinfo.ch said.Bulgaria will receive 76 million Swiss francs and Romania, 181 million francs. The loans were approved by the Swiss Parliament in December 2009. The funds are meant for joint financing of projects targetting the reduction of economic and social disparities between old and new EU member states.Back in 2007 Switzerland set up a fund of 1,000 million francs for reduction of the disparities in the enlarged EU with the accession of the ten new member states in 2004. The amount was increased by 257 million francs for Bulgaria and Romania who joined the EU in 2007.
INVESTMENTS:
Greek investors flock to Bulgaria
Greek investments in Bulgaria are up significantly during the first quarter of 2010 on annual basis.The report was published in the Greek business newspaper “Imerissia,” cited by the Bulgarian news agency BTA.Greek investors brought to Bulgaria in the first three months of the year EUR 37.5 M compared to the mere EUR 500 000 during the same period last year. According to experts, the boom is attributed to the financial crisis in Greece where businessmen now prefer the market in a neighboring country to their own.In the first half of 2009, Greek investments in Bulgaria hit their bottom low in the last several years – only EUR 70 M compared to EUR 297 M in the first half of 2008, Imerissia writes.Meanwhile, the trend of reduction of Greek imports in Bulgaria continued in the first quarter of the year while Bulgarian export managed to overcome the negative drift of 2009.According to data from the Greek National Statistics Office, the volume of trade between the two countries in the first three months of 2010 is EUR 414 M, which is a reduction of 3.1% on annual basis.Greek export to Bulgaria is down by 6.4% (EUR 206.7 M) while Bulgaria’s export to Greece is up 1%.
New business center to rise in Bulgaria's capital
The groundbreaking ceremony for a new business center in the Bulgarian capital was held on Wednesday. The office center project, designed by Sofia-based Arhikom, headed by Vasil Komitov, will be developed by Austrian company Immorent.The 10-story building, at the intersection of Todor Aleksandrov Boulevard and Balgarska Morava Street, will have a total area of 10340 sq. m. Investments poured into the project amount to EUR 13 M.The Austrian company Immorent refused to disclose the renting levels of the offices, saying that they expect the market to undergo a considerable change until the opening of the building, scheduled for the end of 2011.“We know that there can be no development if we don’t trust the market. We would like to express our trust in Bulgaria’s market with the launch of this project,” said Gertrud Meisel-Ortner, member of the Managing Board.She expressed belief in the potential of the real estate market in Central and Eastern Europe and Bulgaria in particular, even though the boom is over. In her words the market in Bulgaria will start to rebound in 2012. Immorent Aktiengesellschaft operates as a subsidiary of Erste Group Bank AG, which was established in Vienna in 1970.
Bulgaria expected to regain peak levels of investments in 2016
According to an optimistic scenario for the development of Eastern Europe, Bulgaria could regain the peak levels of investments achieved in 2007 and 2008 in 2013, or in 2016, according to a feasible scenario, the Executive Director of the InvestBulgaria Agency, Borislav Stefanov, told reporters Thursday during a meeting with media about the competitive advantages of Bulgaria as an investment destination. The forum was organized by the InvestBulgaria Agency and the American Chamber of Commerce in Bulgaria, AmCham. Stefanov corroborated his forecasts with a report by PriceWaterhouseCoopers which says that in 2003-2008 the amount of foreign direct investments in Eastern Europe increased five-fold. For Bulgaria the strongest year investments-wise was 2007 with 9,000 million euros, and 2008, 6,000 million euros. Stefanov said that in 2010 investments in the traditionally attractive sectors, such as finance, construction and trade, decrease. He recalled than in 2009 alone foreign investments in trade dropped six-fold. At the same time, however, these sectors will continue to play a major role in the overall composition of direct investments, albeit not with the same force as in the past three years when they made up more than 70 per cent of all investments. The feasible share of the three sectors would be 35-40 per cent, Stefanov said. Investments in real estate in the first quarter of 2010 stood at 45 million euros, he said. Stefanov said that in the future the InvestBulgaria Agency will favour investments in sectors with high added values, such as industry and services. He said that by July 7 the cabinet is expected to approve draft amendments to the implementing regulations of the Promotion of Foreign Investments Act which provide further reliefs for investors.
Investments in LUKoil Neftochim Bourgas AD in 2009 total BGN 280 million
The investments in the LUKoil Neftochim Bourgas oil refinery in 2009 stood at 280 million leva, it emerged during the annual General Meeting of Shareholders in the company. The report on the performance of the company by the Chairman of the Managing Board, Sergey Andronov, says that the oil refinery posts a balance sheet loss after the payment of 176 million leva in taxes. The company has no overdue payments to the budget. In 2009 the oil refinery processed 6,278,00 t of oil, with a target quantity of 6,810,000 t. The General Meeting of Shareholders passed a resolution not to distribute profits and not to pay dividends for 2009.
COMPANIES:
Greece's Goldair Handling enters Sofia international airport
Greek operator Goldair Handling has been granted a license to provide full passenger and ramp ground handling services at the Sofia International Airport, Greek press reported.Bulgaria’s Transport Minister has given a license to the company’s Bulgarian subsidiary since Sofia International Airport is very alike to the Greek airports well known to Goldair Handling with its almost 25.000 departures per year, including both scheduled and charter flights.Goldair Handling is thus the only Greek-owned company engaged in full handling services in two neighbour countries, Cyprus and Bulgaria."This new investment is part of a regional development strategy to countries with the same traffic structure of Greece,” says Kallinikos, Executive Vice President of Goldair Handling, as cited by TravelDailyNews International.The company initially plans to invest EUR 12 M in the airport.Goldair Handling , with total investments of over EUR 50 M, currently employs more than 1,000 people in Greece and 400 employees outside the country.
Bulgarian steelmaker initiates liquidation of assets
Bulgaria has initiated the liquidation procedure of its bankrupt steel producer Kremikovtzi after numerous unsuccessful attempts by the company’s administrator to rescue the mill, a Kremikovtzi representative tells Steel Business Briefing.It remains unclear how Kremikovtzi’s assets will be sold, but the most likely scenario is that they will be auctioned off separately, SBB is told. No potential investors have declared an interest in the assets so far.Kremikovtzi had been operating a continuous caster and producing around 10,000 tonnes/month at its hot strip mill until liquidation began, traders tell SBB. Bulgaria will now need to import 100% of its HRC requirements.The administrator first submitted a recovery plan for the plant in June 2009 but this was rejected by Kremikovtzi’s creditors. A final version of the plan was submitted in January this year, requesting that payment of some BGN 695 M– owed by the steelmaker to the Bulgarian government and state-owned companies – be rescheduled over the next eight years.However the Sofia City Court rejected the recovery plan in February after Bulgaria’s finance ministry refused to approve the rescheduling.Kremikovtzi shut down its blast furnaces in October 2008 after Ukrainian company Vorksla Steel terminated a tolling agreement with the company. Since then it has searched for investors – with various multinational companies expressing interest – but has been unable to find a new owner.
Eolica resumes construction of 60 MW wind energy park near Suvorovo
Eolica Bulgaria, majority-owned by Spanish renewable group Enhol, will resume the construction of its 60 MW wind energy project near Suvorovo, 25 km inland from the Black Sea coast, as of July 1. Field works were temporarily suspended due to bird migration. The wind park will comprise 30 turbines and should start operations by the end of this year. The total investment in the project is estimated at EUR 108mn, of which EUR 60mn are a syndicated loan from the EBRD. The facility will provide electricity to 7,000 households and will prevent emissions of 56,000 tons of carbon dioxide annually. The project received first class investment certificate in 2007.
Bulgaria's Sofiyska Voda sale not wrapped up yet
The deal for the sale of several European water supply and treatment businesses from United Utilities, including Bulgaria'sSofijska Voda, to France's Veolia Environnement, the world's biggest listed water company, is yet to be finalized, it emerged on Wednesday.“The deal for the sale has not been completed yet. When this happens the new owners will have a meeting with Sofia mayor Yordanka Fandakova and the chair of the municipal council Andrey Ivanov,” said Irina Savina, deputy mayor.She added that the municipality has received a letter from Sofijska Voda, which assured that the company will stick to its investment program and continue the close dialogue with Sofia municipality.The French utility will take a 58% stake in Sofiyska Voda, the company operating water supply and treatment services for the city of Sofia in Bulgaria, which serves 1.3 million inhabitants.It will also buy 26% of Tallinn-based AS Tallinna Vesi and a third of Aqua SA, which provides water for the Polish city of Bielsko Biala.Veolia will also take over a number of outsourcing, industrial engineering and infrastructure contracts in the UK to boost its position in the country's non-regulated water sector, as well as taking stakes in Scottish waste treatment contracts.The price of the deal is some EUR 199 M.
Hypo to shed off assets in Bulgaria
Austrian Hypo Alpe Adria plans to withdraw from half of its markets, including Bulgaria, according to media reports. The bank is believed to be looking to sell assets in Ukraine, Bulgaria, Italy, FYR Macedonia, Montenegro, Hungary and Germany, while sticking to its business in Austria, Slovenia, Croatia, Serbia and Bosnia and Herzegovina. The first reports of the planned withdrawal surfaced in April, when the move was said to be part of the bank's strategy to strengthen its its business. The bank is also expected to sell the assets, not related to its banking operations, including its hotels and tourism activities. The bank is expected to post EUR 411M loss in 2010 and will turn to profit no earlier than 2013. Meanwhile the European Commission expressed doubts about whether nationalised Austrianbank Hypo Group Alpe Adria can work out its vast portfolio of non-performing loans. The regulators, which have to approve aid by member states, prolonged their temporary permission of Austria's Hypo bailout as they continued the investigation into the troubled lender's restructuring plan."At this stage, the Commission has, in particular, doubts whether the bank ... will be able to tackle the challenges from the weak asset quality in its portfolio," the Commission said in a statement.
Greece's Fourlis mulls second IKEA store in Bulgaria
Greece's Fourlis Group, a franchisee of the world's largest furniture retailer IKEA, said it is exploring opportunities for building a second IKEA store in Bulgaria, possibly in Varna, on the Black Sea coast.As you know, IKEA in Sofia is under construction. We are exploring opportunities in other cities like Varna," the group's executive chairman Vassilis Fourlis told SeeNews in a emailed interview.It is early to asses the investment for any other future store," he added.Fourlis, which kicked off the construction of the first IKEA store in Bulgaria earlier this month, plans to build more in the country of 7.6 million people. The first IKEA store worth approximately 50 million euro ($61.4 million) will be built in the capital Sofia. It is sheduled for completion by the end of next year.Covering an area of 30,000 square metres, the Sofia store will be the biggest IKEA store of Fourlis Group. It will offer 7,500 products that cover any kind of home furnishing and is expected to attract more than 1.6 million visitors during its first year of operation.Our decision to enter the Bulgarian market and invest 50 million euro in times of recession demonstrates clearly our trust in the Bulgarian economy. We believe that an investment of this size will be very beneficial to the Bulgarian economy, not only in terms of direct investment, but also with the opening of new jobs," Fourlis said.The company plans to employ approximately 350 people for the IKEA store in Sofia.When IKEA enters a new market it increases the competition and the market itself. There is an increase in home furnishing interest; thus the whole industry grows," Fourlis said.These are our expectations for Bulgaria as well. We believe that Bulgaria will present signs of recovery in the next years," added he.Fourlis Group (www.fourlis.gr) is a franchisee of the IKEA brand for Greece, Cyprus and Bulgaria. The group, whose parent company is Fourlis Holdings, commenced its business back in 1950. It is active in retail and wholesale and its products portfolio include retail sale of home furnishings through the IKEA brand, of sporting goods through the Intersport stores chain in Greece, Cyprus, Romania and Bulgaria, and wholesale sale of electric and electronic appliances through the representation of brand names like General Electric, Liebherr and Korting.In 2009 the group reported a 37.5 million euro adjusted net profit last year, up from 37.1 million euro in 2008. Its sales fell to 751.7 million euro from 784.5 million euro.
Bulgarian business creates green circle of companies choosing to get involved in policies for environmental protection
A business forum was held on Thursday entitled, "The Green Exit from the Crisis. Clean Nature for Fresh Economic Growth". one of the organizers of the event, the Manager magazine, launched the creation of a "green" circle of companies willing to get involved in green ideas and policies for the protection of nature and the environment. Each of the participating companies will assume concrete commitments to pursue policies and activities dedicated to the green future of Bulgaria and the green exit from the downturn.Former European Commissioner Meglena Kuneva said at the forum that the Bulgarians "have no right to postpone ecology in Bulgaria". She urged the business to play a key role in tackling the challenge.Environment and Waters Minister Nona Karadjova said that protection of the nature and environment is a "horizontal" undertaking, meaning that everybody has to take part. "Otherwise we will be the last extinct species on Planet Earth," she said.Commenting the "green" exit from the downturn she said that such is the long-term perspective in Bulgaria as well as in Europe. The idea is to shift from polluting to environmentally-friendly productions and waste recycling.
THE CRISIS:
Bulgaria and Romania have worst GDP in the EU
Bulgaria and Romania once again fare badly in a recent Europe-wide survey of GDP per capita performance, occupying the last two places in the European Union with 41 and 45 per cent of the EU average respectively.Only Serbia with 37 per cent, Bosnia and Herzegovina and Albania with 30 and 27 per cent, respectively, fare worse than Bulgaria and Romania, and none of these countries are yet EU members.The latest Eurostat statistics, based on preliminary estimates for 2009, gross domestic product (GDP) per inhabitant expressed in purchasing power standards (PPS) varied from 41 per cent to 268 per cent of the EU27 average among members.Luxembourg dominates the 2009 GDP per capita top list with 268 per cent of the average for the EU 27, followed by Ireland with 131 per cent, the Netherlands with 130 per cent, Austria with 124 per cent, Sweden with 120 per cent, and the UK and Denmark with 117 per cent.Slovenia, the Czech Republic, Malta, Portugal and Slovakia were between 10 per cent and 30 per cent lower than the EU27 average. Hungary, Estonia, Poland and Lithuania were between 30 per cent and five per cent lower.
Ernst & Young: Bulgaria's GDP to contract by 1% in 2010
The imminent threat of default may have passed, but the crisis is far from over in the Eurozone, according to Ernst & Young's quarterly Eurozone Forecast (EEF). The EEF has revised its forecast for the region's growth down to 0.8% this year and 1.3% for 2011. Furthermore, unless the Eurozone seriously tackles structural reforms that are the root of the massive challenges it faces, the risks of an economic "lost decade" like that of Japan in the 1990s are significant, particularly for countries in Southern Europe.Marie Diron, Senior Economic Advisor to the Ernst & Young Eurozone Forecast said, "The repercussions of the sovereign debt crisis will mean economic growth in the Eurozone being 1-2.5% lower per annum than in the US over the next five years. The impact on jobs is just as striking. While during 2010-14, the US economy will generate more than 10 million new jobs, employment levels will barely change in the Eurozone."Mark Otty, Area Managing Partner, Europe, Middle East, India and Africa for Ernst & Young said, "The sovereign debt crisis has hit an already fragile Eurozone economy very hard. Businesses across Europe will look to their governments and to the pan European institutions for firm leadership and policy coordination. Muddling through is simply not an option if Europe is to be a long term contender on the world economic stage."Given the more drastic deficit reduction plans in Greece, Spain and Portugal that were announced in May, the two-speed Europe that the EEF highlighted in its April forecast is now expected to be even more marked. While GDP growth in the principal Eurozone countries in Northern Europe (Germany, France, the Netherlands and Belgium) is expected to average 1.7% per year in 2010-12, EEF predicts negative growth of -0.1% per year in the same period in Southern Europe.As a result GDP per capita in Greece will fall from 89% of the Eurozone average in 2007 to 83% in 2012. In Spain, it will fall from 93% of the Eurozone to 88%, a relative level last seen in 1998.Diron said, "The South is heading not for just one or two bad years but for several years of very low, or even negative growth. Although Ireland, which is often included with its Mediterranean neighbors, will bounce back from 2011, Greece, Spain and Portugal are not expected to get back to their pre-crisis levels of activity until 2014."Despite its earlier structural reforms, a currency board system and sound financial policies, which delivered healthy economic growth prior to the global downturn in late-2008, Bulgaria suffered a 5% fall in GDP in 2009 and the year-on-year decline was still 4% in Q1 2010. Private consumption remains very weak, down 6.8% on the year in Q1, as the unemployment rate has risen to 10% and consumer confidence is depressed. Q1 also saw fixed investment down 15.8% compared with a year earlier, despite signs of a slight improvement in business confidence.Given the weak start to the year, GDP is forecast to contract again this year, by about 1%, with households and firms remaining cautious until it is clear that the recession is over. For 2011, we forecast modest growth of 3.6% before a stronger pick-up to around 6% in 2012. But there is a mounting risk that tighter fiscal policy - following the revelation that the 2010 budget deficit will be close to 5% of GDP compared with the original budget target of 0.7% - will keep growth below these forecasts, especially given the problems elsewhere in Europe. Although Bulgaria's low debt ratio and currency board provide some protection against contagion from the southern European crisis, the weak EU economy (which takes 60% of its exports) will weigh on growth prospects over the next few years. And with many Bulgarians working in Greece, Italy and Spain, workers' remittances (equal to 3.3% of GDP) fell by 12% in 2009 and will remain weak.The government still hopes that the lev, currently pegged to the euro, will join ERM-II sometime in 2011, with Eurozone entry targeted for 2012. But given the current debt crisis in the EU and the possible ramifications for future entrants (especially those that have had Greek-style problems in reporting accurate fiscal data), 2014 appears to be a more realistic date for ultimate euro entry.The forecast suggests the outlook in Northern Europe is relatively optimistic for two main reasons. Firstly, countries like Germany and the Netherlands enjoy strong competitiveness levels, after years of robust productivity growth and wage moderation and they are in a good position to reap the benefits of a robust recovery at the global level.Secondly, while significant, the fiscal adjustment that is needed in the North is manageable and governments can push ahead with deficit reductions without impacting growth substantially.EEF expects the euro to fall to US$1.05 by the end of next year, before rising back slightly as Eurozone growth picks up. In effective terms, against a basket of currencies representing the Eurozone trade structure, this means that the euro will depreciate by around 20% from its peak at the turn of the year.Diron explained, ongoing worries about the fiscal sustainability of some Eurozone countries, and their reluctance to tackle the underlying problems, are weighing heavily on the euro. The euro currently stands at under US$1.20, its lowest value since early 2006 and nearly 20% below its value at the beginning of 2010."Given the weaker growth outlook and the absence of inflationary risks, EEF believes that the ECB will keep interest rates on hold until mid-2011. This will not be a business-led recovery either. EEF is forecasting a further 2.8% drop in business investment in 2010 after a dramatic 14% drop last year. From 2011 onwards the forecast does predict moderate growth in business investment but even by 2014 the level will not recover to pre-crisis figures.Uncertainty about the economic outlook will encourage companies to postpone new hiring. There will be no fall in the unemployment rate across the Eurozone until 2012 and even with a modest decline to 9.4% by 2014 that is still 2% higher than in 2007. The number of unemployed will rise further, to peak at around 16.8 million in the first half of next year from under 16 million currently.Together with cuts in benefits and/or tax increases in many countries, these combined factors imply muted income growth. As a result, private consumption is forecast to be broadly flat this year at last year's depressed levels. Even in 2011, consumption growth is still forecast below 1%, gradually increasing towards 1.8%.According to EEF, monumental reforms will be needed to ensure that wide-ranging imbalances and structural weaknesses are addressed. Furthermore, the sovereign debt crisis has exposed fundamental flaws in the Eurozone's institutions that require policy coordination to achieve a more sustainable monetary union.Diron concludes, "While restoring sustainable public finances is necessary, the current trend to cut deficits in a very rapid manner, even in countries that do not have any problems to finance their deficits and refinance their debt, risks being counter-productive. In particular, countries that can afford to reduce their deficits more gradually should do so in order to help sustain growth in the Eurozone in general and in the South in particular."