BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT (3 – 10 SEPTEMBER 2010 )
Sections/headline briefs:
MACROECONOMY:
· Romania, Bulgaria to develop joint hydroelectric power stations on Danube
· EU-Australia wine trade agreement enters into force on September 1 2010
· Bulgaria's wheat, barley exports near one million tonnes
· Bulgaria's exports to EU up 17.4% Y/Y in H1
· Bulgaria eyes Iran-Armenia railway line construction project
· Angela Merkel visits Rousse in October
· Registration…or liquidation
INVESTMENTS:
· Bulgarian delegation sets out to woo Chinese industrial zone investors
· Bulgarian Minister woos German investors in Berlin
COMPANIES:
· Italy's Enel to sell Bulgarian power plant in fall 2010
· International Investment Bank eyes Bulgaria
MACROECONOMY:
Romania, Bulgaria to develop joint hydroelectric power stations on Danube
The Romanian and Bulgarian authorities in the energy field are interested in developing hydroelectric power stations on the Danube river in partnership, according to a release issued by the Ministry of Economy, Trade and Business Environment (MECMA). Bucharest recently hosted the Romanian-Bulgarian working group in the energy field, which was presided over by Secretary of State with the Ministry of Economy Constantin Claudiu Stafie and Deputy Minister with Bulgaria's Ministry of Economy, Energy and Tourism Marii Kossev. The representatives of the two states emphasized the necessity of putting together the electric energy markets and the interconnection of the national systems of carrying electric power and gas. The two delegations also examined the progress made by and the evolution of the Nabucco project, which is a priority for both countries, and established the necessity that the two states should take a common stand to its implementation. Besides experts working with MECMA, the Romanian delegation included representatives of the National Energy Regulatory Authority as well as of the energy producing companies SNTGN Transgaz SA, CN Transelectrica SA, SC Hidroelectrica SA, SC OPCOM SA. The Bulgarian delegation included representatives of ESO, the operator of the electricity system, and Bulgartransgaz.
EU-Australia wine trade agreement enters into force on September 1 2010
A new agreement governing the wine trade between Australia and the European Union enters into force on September 1 2010, the European Commission said in a media statement. The agreement replaces one signed in 1994.The new agreement "safeguards the EU's wine labelling regime, gives full protection to EU geographical indications, including for wines intended for export to third countries, and includes a clear Australian commitment to protect EU traditional ｅxpressions," the European Commission said. The agreement also provides for the phasing out of the use of a number of important EU names such as Champagne and Port on Australian wines within a year of the agreement coming into force. "The agreement provides important safeguards for EU wine interests. It ensures the protection of Geographical Indications and traditional ｅxpressions for EU wines in Australia and beyond", the statement quoted Dacian Cioloş, Commissioner for Agriculture and Rural Development, as saying. "The agreement is a win-win outcome and achieves a balanced result for European and Australian wine makers. Crucially, we have obtained the commitment that Australian wine producers will phase out the use of key EU Geographical Indications and traditional ｅxpressions for wine. This is of utmost importance for European producers". The agreement provides for the immediate protection of other EU Geographical Indications for wines. For the use of some terms, phase out periods have been agreed. In particular, Australian producers will not be able to continue the use of important EU names such as "Champagne", "Port", "Sherry" and other European geographical indications, along with some traditional ｅxpressions such as, "Amontillado", "Claret", and "Auslese" from September 1 2011 onwards, in other words, a year after the entry into force of the agreement. The new agreement safeguards the EU wine labelling regime, by listing optional particulars which may be used by Australian wines (i.e. an indication of vine varieties, an indication relating to an award, medal or competition, an indication relating to a specific colours, etc.) and by regulating the indication of vine varieties on wine labels, the statement said. The new agreement also outlines the conditions for Australian wine producers to continue to use a number of quality wine terms, such as "vintage", "cream" and "tawny" to describe Australian wines exported to Europe and sold domestically. The agreement was signed in Brussels on December 1 2008. The Australian authorities informed the European Union on July 27 2010 that they had completed their ratification procedures. In 2009, EU wine exports to Australia were worth 68 million euro and Australian exports to the EU were worth 643 million euro. The ban in the agreement on the use of "important EU names" such as Port and Sherry is similar to a similar agreement agreed some years ago between the EU and South Africa.
Bulgaria's wheat, barley exports near one million tonnes
Exports of Bulgaria's new wheat and barley crop have so far reached 950,000 tonnes, a drastic increase from the year-ago level, show the latest data by the country's National Grain and Feed Service (NGFS).According to final figures, Bulgaria produced 3.7 million tonnes of wheat this year, of which some 550,000 tonnes was shipped to foreign markets, the bulk of it to the European Union (EU). For comparison, exports were 320,000 tonnes for the same period last year. Exports to third countries as at September 3 were slightly above 214,000 tonnes. However, the real amounts are much larger as the statistics only cover transactions worth more than BGN 250,000 (USD 162,500/EUR 128,000). Furthermore, barley exports stand at approximately 400,000 tonnes out of the 770,000 tonnes produced this year, according to the NGFS. This represents a 100,000 tonnes increase from the same period of 2009.
Bulgaria's exports to EU up 17.4% Y/Y in H1
Bulgaria's exports to the countries of the European Union in January-June 2010 increased by 17.4 per cent as from the like period of the preceding year and were reported at 8,000 million leva, the National Statistical Institute (NSI) said on Wednesday. Bulgaria's key trade partners were Germany, Italy, Greece and Romania accounting for over 61.8 per cent of the country's exports for the EU member states. Exports for Germany were 22.8 per cent up and, to Italy - 28.7 per cent up. Most tangible was the increase of exports to Luxembourg, Estonia and Slovenia. Exports to Denmark and the Czech Republic marked an increase of 62.6 per cent and 54 per cent, respectively. Exports to Portugal, Cyprus and Malta registered the most dramatic drop. In June 2010 exports to the EU reached 1,600 million leva, 36.2 per cent up as at June 2009. Bulgaria's imports from the EU equalled 9,900 million leva in the first half of the current year, which was 2.8 per cent up from the like period of last year. Largest was the increase of imports from Portugal - 58 per cent and from Spain, Romania and Malta, by over 40 per cent. Most tangible was the decrease of imports from Estonia, Switzerland and Finland. In June 2010 Bulgaria's imports from the EU countries increased by 9.5 per cent as at June 2009 reaching 1,900 million leva. This country's foreign trade balance for In January-June 2010 reported a trade deficit (export FOB - import CIF) of 1,900 million leva with the EU countries. The June 2010 deficit was 257.5 million leva. According to the Standard International Trade Classification, Bulgaria's exports in the first half of 2010 marked an increase, it being most tangible in the following sectors: Crude Materials, Inedible, Except Fuels and Machines and Machinery and Transport Equipment. There was a decrease of exports only in the sector Beverages and Tobacco. Regarding imports from EU, most tangible was the increase in Crude Materials, Inedibles, Except Fuels and Mineral Fuels, Lubricants and Related Materials. Most negligible was the increase in the sector of Machines and Machinery and Transport Equipment.
Bulgaria eyes Iran-Armenia railway line construction project
Bulgaria and Armenia have enormous potential for cooperation, said Bulgarian Minister of Transport, Information Technologies and Communications Alexander Tsvetkov, who is paying a visit to Yerevan within the framework of the sixth edition of the intergovernmental commission for trade, economic, scientific and technical cooperation, Regnum news agency reported. The minister said that Bulgaria eyes the construction project for the railways between Iran and Armenia. The project envisages a railway network of some 540 km between Iran and Armenia.
Angela Merkel visits Rousse in October
On October 11th, Germany's Chancellor, Angela Merkel will arrive in Rousse on the Danube. She has been invited by Rousse University the board of which decided to render her the title of doctor honoris causa at a special ceremony. On September 20 officials from Germany's Embassy to Bulgaria will travel to Rousse to arrange the details of the protocol of the visit. Chancellor Merkel is expected to stay in Rousse for no more than an hour and a half. Rousse University Rector, Prof Hristo Beloev stated that Rousse citizens will be able to watch the academic ceremony on plasma monitors installed in the downtown.
Registration…or liquidation
New Year’s Eve at the end of 2010 could be a gloomy time for foreigners who fail to re-register the companies that they set up as vehicles to buy property in Bulgaria. The bar on foreigners owning land in Bulgaria has made it common practice for property to be bought through private companies. However, the Government has ruled that all companies set up before January 2008 must be re-registered. This is a result of Bulgaria bringing its practices regarding company records into line with European Union practice. An earlier deadline to do so has been extended to December 31 2010, but concern is mounting that many could fail to meet the deadline, or the system could be overwhelmed in a last-minute rush. The consequences of failure to re-register are serious, including the loss of assets – including homes bought in the company’s name – a fine, and the costs of winding up the company, because under Bulgarian law the owner must pay for the liquidation. The rules are applicable to companies whether they are trading or not. Any assets held by a company that fails to re-register would, by law, be sold by public tender. Already there have been reports of backlogs in the processing of re-registrations in Bulgaria’s Commercial Register. On the internet, a large number of lawyers, consultancies and other services are offering – for varying fees – to assist people to re-register their companies. Professional help may be essential, especially for those who do not understand Bulgarian or who are unfamiliar with Bulgarian legal procedures. The Registry Agency’s website, bra.bg, is available solely in Bulgarian. Re-registration is a multiple-step process, and if done through an intermediary, will require the conferring of a power-of-attorney. Estimates vary about how long the process takes, with most sites offering services saying that currently it is a matter of some weeks. Other steps to be covered include, once re-registration is completed, the filing of annual financial statements for 2007, 2008 and 2009 in the Company Register. Another option is to liquidate the Bulgarian company instead of re-registering it, although this would also put the owner under pressure to dispose of assets and, of course, pay the costs of liquidation.
INVESTMENTS:
Bulgarian delegation sets out to woo Chinese industrial zone investors
Bulgaria’s Deputy Economy Minister Evgeni Angelov is heading a high-level Bulgarian delegation to China to attract investors for the future industrial zone inBozhurishte near Sofia. Angelov together with other officials such as the management of the state-owned National Company “Industrial Zones” will be in the People’s Republic of ChinaSeptember 8-September 9, presenting the business project for the industrial zoneto be built close to Sofia on a plot of a former military air field. The Bozhurishte Industrial Zone is expected to be used primarily by Chinese companies; it is supposed to be managed jointly by the Bulgarian government and Chinese partners. The Bulgarian government came up with the project in the spring of 2010. In June, Bulgaria’s Economy Minister Traicho Traikov made visit to China, announcing afterwards that companies from the People’s Republic have made clear their interest not only in building and managing an industrial zone in Bulgaria, but also in leasing a Bulgarian airport. Traikov was recently on a week-long visit to China where he met with a number of representatives of the Chinese authorities and large industrial companies including Jin Yonghui, the Director General of the Department of Commerce of Zhejiang Province; Zhao Hongzhu, the secretary of the CPC Zhejiang committee, and a member of the 17th Central Committee of the Communist Party of China, and PRCCommerce Minister Chen Deming. During his visit the Bulgarian Minister said he had generated interest with Chinese companies and authorities in setting up a joint industrial zone on 190 hectares of former army lands at Bozhurishte near Sofia. “In China, we signed an agreement with the Zhejiang Province. This is a province of 50 million people, and we would like to commit its authorities to the futureindustrial zone near Bozhurishte because they had expressed interest in anindustrial zone near Sofia,” Traikov announced in June. Back then he also said that a delegation of the InvestBulgaria Agency, a government body in charge of relations with foreign investors, and of the National Company “Industrial Zones” will be visiting China in the fall for concrete talks with Chinese companies for the building of the future industrial park at Bozhurishte. “Our representatives will be talking with two types of companies. The first type are companies that specialize in the management of industrial zones. I met with PRC’sCommerce Minister Chen Deming, who is a great specialist on the management ofindustrial zones. He himself has managed such a zone and was very interested in this matter. So these will be Chinese companies that can partner with Bulgaria’s National Company “Industrial Zones” in order for both sides to generate a profit fromBozhurishte. The other type are Chinese companies that are already keen to become “clients” of the zone by building greenfield plants and logistics building,” Traikov explained. He added that if a Chinese company is selected to partner with the Bulgarian state company “Industrial Zones” in the management of the Bozhurishte industrial part, it will probably provide some of the capital for the building of the new zone. Bulgaria’s Economy Minister also announced that Chinese investors are considering a concession of a Bulgarian airport. He refused to specify which is the airport in question but said it could be used for importing Chinese goods into the EU. “One third of all goods produced in China are exported through air cargo, and Bulgaria can get a share of this one third,” he said. Thus, the follow-up delegation of the Bulgarian government to China led by Deputy Minister Angelov will take part in a forum entitled “The Business Week of Zhejiang Province" in the city of Hangzhou. Angelov will meet with Lu Zushan, Governor of the Zhejiang Province, and Jin Yonghui, the Director General of the Department of Commerce of Zhejiang Province.
Bulgarian Minister woos German investors in Berlin
Bulgaria's Regional Development Minister Rosen Plevneliev is presenting investment opportunities at a forum in Berlin on Tuesday. The "economic dialogue" forum "Bulgaria-Germany – New Opportunities for Trade, Cooperation and Investments in Bulgaria" is organized by the Bulgarian Embassy inGermany, the German-Bulgarian Chamber of Industry and Commerce(DBIHK), the Association of German Chambers of Industry and Commerce and the German Agency for Commerce and Investments with the aid of the German Federal Ministry of Economy and Technologies. Plevneliev, who is a former manager of the German construction and a real estate company Lindner in Bulgaria, will be presenting the economic situation in the country as well as specific investment opportunities. According to the Bulgarian Regional Development Ministry, the aim of the forum is to boost not only the economic ties in the private business sector but also the political relations and the cooperation within the NGO sector. The Bulgaria-Germany forum in Berlin is lasting the entire day on Tuesday - from 9 am until 4:30 pm CET.
COMPANIES:
Italy's Enel to sell Bulgarian power plant in fall 2010
CEO of Enel SpA, Fulvio Conti, has said the Italian company will sell its stake in Bulgaria's Maritsa East 3 power plant in the fall of 2010. Conti has made it clear, as cited by Bloomberg, that Enel plans to sell gas distribution assets in Spain by September, and its Bulgarian coal-fired power plant shortly after that. Bloomberg reminds that Enel is selling assets to help reduce debt by EUR 45 B in 2010. The Rome-based company said in May it planned to sell EUR 7 B of assets including a stake in its Green Power unit by the end of October. Conti said on August 23 he plans to make "at least" EUR 3 B euros from the disposal of Green Power. However, he has declined to give a value for the sales in Spain and Bulgaria. In late July, Austria's utility EVN, which already owns EVN Bulgaria, an electricity distribution company in south and southeast Bulgaria, has confirmed it is holding talks for the acquisition of a majority stake in the Maritsa East 3 coal-fired power plant. The Executive Director of Italy energy giant Enel, Fulvio Conti, announced in March that the company is considering the sale of its 73% stake in Maritsa East 3. "Enel is currently holding talks with many companies and EVN is just one of them," a spokesman for the Austrian company said in July. British utility International Power, US power producer AES Corp. and Russia's state power trader Inter RAO are also said to have shown interest in acquiring Enelmajority stake in Maritsa East 3. A year ago Enel increased the capacity of Maritsa East Three plant to 908 MW, up from 840 MW, and also put new desulphurization installations on the plant's four units. Experts comment that the potential buyer is probably eying a 100% stake in the plant, in which the state owns a 27% stake. The rumors were fanned by a statement of Energy and Economy Minister Traicho Traikov, who recently announced that the state can land EUR 200 M from the sale of its stake in the plant. The plant is located in the Maritsa East lignite coal mining complex in southern Bulgaria.
International Investment Bank eyes Bulgaria
The International Investment Bank, formed as an initiative of the Soviet Union in 1970, has started to actively invest in the countries of the former Eastern Bloc, including Bulgaria. The Russian RBC Daily has reported that the International Investment Bank, together with the International Bank for Economic Cooperation, is planning to invest up to EUR 500 M in different projects. About EUR 9 M have already been invested in construction of commercial properties in Slovakia. Bulgaria and Mongolia are also on the list to receive funding for construction of commercial properties in the near future. RBC Daily also reported that two projects, a commercial property in Bulgaria and a hotel in Mongolia, have been started. According to the Russian media, the investments for each project will be up to EUR 10 M.