불가리아 주요 경제뉴스 (15 - 22 October 2010 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (15 - 22 October 2010 )

 

Sections/headline briefs:

 

MACROECONOMY:

 

• Government approves draft 2011 social security budget
• Current account turns to EUR 323mn surplus in Jan-Aug
• Net FDI fall 62.5% y/y in Jan-Aug
• Nuclear unit repair may bring power exports to 67% below plans by end-2010
• 40-Million Leva Rural Broadband Project to Be Implemented

 

 

INVESTMENTS:

 

·         Foreign Investment in Bulgaria with Marginal Up August - Report

·         EVN to build 32.5 MVA substation near Plovdiv

·         Slovenia's Mercator Announces EUR 80 M Bulgarian Investment

·         EBRD Board of Directors Pay Visit for Bulgaria Update

 

 

 

COMPANIES:

 

• Energy Holding, Gazprom to set up South Stream project company in month
• Eco Energy Windpower to build 150 MW wind power park near Dobrich
• Food chain Happy Bar&Grill plans expansion in Eastern Europe
• Bulgarian Steel Mill Stomana Regains Jobs Lost to Crisis
• Bulgarian Software Company Expands to Middle East, Japan

·         Russia's Mechel gets antitrust nod to fully acquire Toplofikatsiya-Ruse

• Net sales of car battery producer Monbat rise 40.4% y/y in September
• Sales of aluminium producer Alcomet rise 39% y/y in Jan-Sep

 

 

Articles:

MACROECONOMY:

Government approves draft 2011 social security budget

The government approved the draft budget for the social security system for next year, the council of ministers said on its website. The document is based on a 1.8% increase in pension contributions and keeps the current ratios paid by the employers and the employees at 60:40 despite the protests of the employers' organisations, which requested that contributions be equalised. Also, it takes into consideration the agreed 5.6% average hike in the social insurance thresholds as of Jan 1 and keeps the level of the minimum wage and the nominal wages in the budget sector unchanged as compared to this year. The social security system is expected to run a deficit of BGN 1.39bn (EUR 710.8mn, 1.8% of the projected full-year GDP) and will be financed by a subsidy from the republican budget. The document should be approved by the parliament to enter into power. We remind that the social partners failed to agree on the main parameters of the draft social insurance budget for next year.

 

Current account turns to EUR 323mn surplus in Jan-Aug

The CA balance was positive at EUR 612.8mn in August, expanding from revised EUR 517.8mn in July and EUR 98.8mn in August 2009, preliminary data by the central bank showed. The significant improvements in the past two months turned the CA deficit of EUR 289.8mn in Jan-Jul to a surplus of EUR 323mn in Jan-Aug, accounting for 0.9% of the projected full-year GDP. In Jan-Aug last year, the CA was negative at EUR 2.48bn or 7.1% of GDP. In our calculations, the 12-month CA gap for the period ending in August decreased to 1.9% of the GDP forecast as compared to the revised 3.3% of GDP at end-July and 9.9% of GDP at end-2009. The trade balance also turned positive in August and the surpluses of the net services and the net transfers rose further. The deficit of the net incomes is still declining driven mainly by lower return on investments of foreigners in the country. The financial account posted a EUR 346.5mn deficit in August as compared to a deficit of EUR 28.7mn a year earlier. The deterioration was due to outflow of foreign deposits in the amount of EUR 352.3mn and further repayment of external liabilities of EUR 73.2mn. Overall, the balance of payments was positive at EUR 11.5mn, as compared to the negative value of EUR 98.9mn a year earlier.

 

 

 

Balance of Payments, EUR mn, Analytical Report
	2009		2010
	Aug	Jan-Aug	Aug	Jan-Aug
CURRENT ACCOUNT	99	-2,476	613	323
Trade Balance	-257	-2,991	26	-1,350
-Exports of Goods	982	7,407	1,449	9,796
-Imports of Goods	-1,239	-10,398	-1,423	-11,146
Service Balance	416	1,074	578	1,563
-Tourism revenues	558	2,021	602	2,070
Income Balance	-106	-1,185	-69	-945
Net Current Transfers	46	625	78	1,055
FINANCIAL & CAPITAL ACCOUNT	12	1,007	-360	-695
Net FDI	162	2,038	102	765
- FDI inflows	187	2,119	105	836
- FDI abroad	-25	-81	-3	-71
ERRORS AND OMISSIONS	-210	302	-242	-419
OVERALL BALANCE	-99	-1,167	11	-790
Source: Central bank, preliminary data

 

Net FDI fall 62.5% y/y in Jan-Aug

Net FDI flows reached EUR 101.6mn in August and EUR 764.6mn in Jan-Aug, down by 37.2% y/y and 62.5% y/y, respectively, according to preliminary data of the central bank. FDI inflows went down by 43.8% y/y during the month, mainly driven by a reduction in the equity capital allocated to local companies with greatest contribution of those firms, which are not part of the real estate business or the banking sector. The decrease in the intra-company loans of non-banking companies also had negative impact to the decrease in the FDI inflows to the country. In annualised terms, the net FDI to CA gap ratio reached 309.5% as of end-August, rising from 181.1% at the end of July, as a result of the improved CA balance.

 

Nuclear unit repair may bring power exports to 67% below plans by end-2010

 

Electricity exports may run by 67% below plans by the end of 2010 as a result of the longer than expected repair at one of the units of the nuclear plant in Kozloduy, Economy and energy minister Traycho Traykov told reporters. In addition, the plans for power exports to Turkey of 160 MW in November and December will most likely fail, added Traykov, quoted by local newswire Mediapool.bg. The rehabilitation of the said unit was supposed to be completed by end-October but will continue by two more weeks. Last week, the state power grid operator, the National Electricity Company (NEC), said it expected revenues from electricity exports to Turkey to total between EUR 200mn and EUR 250mn in the period from November this year to the end of 2011. NEC has already called two tenders for power exports of 80 MW both in November and December and two lots of 250 MW for the whole 2011.

 

40-Million Leva Rural Broadband Project to Be Implemented

Sofia, October 21 (BTA) - A project for building broadband Internet networks will be launched under the Operational Programme "Regional Development", said Thursday Deputy Transport, It and Communications Minister Purvan Roussinov. He was addressing a BTA-hosted roundtable, entitled "Competition on the Market of Telecommunication Services and the Future of Broadband Internet to the Benefit of Consumers". The 40 million leva project will benefit over 500,000 people across the country who live in rural areas.

A working group drew up the 19 rural regions and the project concept which have been approved by the Consultative Council under the Transport, and Communications Minister.

While 4.2 per cent of the EU population uses mobile Internet, only 1 per cent of Bulgarians use it, said BTA Chief Secretary Evelina Andreeva. She also said that in 2005, 25 per cent of the country's population used the Internet against 30 per cent in 2010.

Andreeva added that the market of mobile services in Bulgaria is highly competitive, and that the average EU rate of penetration of mobile phone services is 121.9 per cent, while the rate in Bulgaria is 138.9 per cent.

The roaming tariff will continue to fall, nearing the zero rate in 2015, Zinaida Zlatanova, head of the European Commission (EC) Representation in Bulgaria told a BTA reporter.

Under the EC Digital Agenda Programme, one of the key initiatives under the Europe 2020 Strategy, the roaming and national tariffs for mobile services should converge, said Zlatanova. The EU roaming regulation was approved in 2007.

Representatives of telecom businesses called on the government to implement legislative changes to ease investments in the sector. According to businesses, it takes between one and three years for local authorities to legalize the telecommunications infrastructure, and the return period of investment is more than 20 years. They said that procedures for control and authorization of facilities in regard to electromagnetic radiation are very tight, slowing down the rate of investment in the sector.

***

Bulgaria invests much less in IT compared with other countries with a similar per capita GDP, said in early October Enrique Rueda-Sabater, director of strategy and business development for emerging markets at CISCO, quoted by "Dnevnik".

Currently, Bulgaria ranks at the top EU-wide in terms of the quality of the broadband service. However, access to the global web remains difficult for many Bulgarians. The majority of Internet providers are based in larger cities, while rural areas lack infrastructure and Internet services.

Eurostat data show that at the end of 2009, Bulgaria ranks last among EU countries in terms of access to broadband Internet, with 26 per cent of users. In comparison, the average EU number is double, at 56 per cent. PK/P

 

INVESTMENTS:

Foreign Investment in Bulgaria with Marginal Up August - Report

Figures show the drastic drop of FDI to Bulgaria 2009-2010, but just a marginal decrease in reinvested profit.

There has been a slight raise of foreign investments in Bulgaria for August, reported the Association for the Promotion of Foreign Investments. This information, reported by the Bulgarian National Radio, comes after a long time of steady dropping of FDIs to the crisis-hit country. According to data from the Bulgarian National Bank, investments for the frist eight months of 2010 have been just 40% of the amount for the same period 2009 and totalled just EUR 830 M. A large part of the companies investing are regarding their investments as strategic, report the Association, with a large part of investments coming from reinvested profits. The real estate sector, despite a considerable absolute drop, still has a considerable share of 20%. FDIs for 2010 are expected to total EUR 1.2 B, according to forecasts by the Association for the Promotion of Foreign Investments.

EVN to build 32.5 MVA substation near Plovdiv

 

The local subsidiary of Austrian energy company EVN launched construction works on a 32.5 MVA stationary electrical substation near the village of Tsaratsovo in the southern part of the country close to the second largest city of Plovdiv, the company said on its website. The investment is estimated at BGN 6.6mn (EUR 3.4mn) and is expected to improve the quality of the power supply in the region. Siemens Bulgaria will construct the facility, which should start operations by the end of 2011. At the end of August, EVN launched the construction of a new cogeneration unit with a combined production capacity of 50 MW in Plovdiv. The investment is estimated at BGN 100mn (EUR 51.1mn). The unit is to become operational by the end of 2011. EVN supplies electricity to 1.6mn customers in Southeast Bulgaria.

Slovenia's Mercator Announces EUR 80 M Bulgarian Investment

Mercator opened its first Bulgarian hypermarket in Stara Zagora in 2009. The Slovenian company Mercator is going to invest EUR 80 M in a store chain in Bulgaria by 2012. Mercator-B EOOD, which isMercator's local subsidiary, announced Wednesday that it has put EUR 4 M into the opening of the first "Roda" megamarket in Bulgaria. The Roda store in Sofia is scheduled to open next week on an area of 4000 square meters; it will employ 100 people, announced Branko Micic, manager in Mercator-B EOOD. By the end of 2010, the Slovenian company plans a total investment of EUR 10 M in Bulgaria in four Roda stores. The second Roda megamarket will open in November 2010 in the new Varna Towers mall in the Black Sea city Varna. The third will be in Galeria Mall in Stara Zagora. The existing Mercator hypermarketin Stara Zagora will also be rebranded as a Roda store. Micic said the goal of Mercator was to achieve a 3% market share in Bulgaria by the end of 2012. "Roda is one of our strongest brands in Southeastern Europe because it takes into account the local demand in terms of prices, product range, and services," he explained. The Roda megamarkets will be targeting both end consumers and retailers, and the two target groups will have access through different entrances and will be served by different staffs.

 

EBRD Board of Directors Pay Visit for Bulgaria Update

The EBRD was created in 1991 to help former communist nations in their transition to market economies. A delegation of the EBRD Board of Directors will be visiting Bulgaria during October 20-22 to obtain up-to-date information on developments in one of the bank's countries of operation. During the visit members of the EBRD delegation will meet the Bulgarian authorities, including the President Georgi Parvanov, Prime-Minister Boyko Borisov, and members of the Bulgarian government. The EBRD directors will also hold meetings with representatives of local NGOs, international financial organisations operating in Bulgaria, as well as representatives of the business and diplomatic communities. The purpose of the visit is to get an update on Bulgaria's investment priorities and the EBRD's involvement in the context of the forthcoming country strategy. The discussions between EBRD Board Directors and government representatives are expected to focus on the bank's role in supporting public and private sector investments as well as on Bulgaria's investment climate. The EBRD has stepped up its activity in the region and is expected to invest close to EUR 500 M in Bulgaria's private sector by the end of 2010. Since the beginning of its operations in Bulgaria the EBRD has invested overEUR 2 B in various sectors of the country's economy, mobilising additional investment in excess of EUR 5 B.

 

 

 

COMPANIES:

Energy Holding, Gazprom to set up South Stream project company in month

State-controlled Bulgarian Energy Holding (BEH) and Russian gas major Gazprom are to set up a joint company for the construction of the South Stream pipeline for natural gas transit from Russia to Southeast and Central Europe and Italy in a month, the economy ministry said on its website after a meeting between economy and energy minister Traycho Traykov and Gazprom CEO Alexey Miller on Friday last week (Oct 17). The company, in which BEH and Gazprom will hold equal stakes, will secure the investment, run the project and own the pipeline on the territory of Bulgaria. The pre-investment research is expected to start soon. In July, Traykov and Russian energy minister Sergey Shmatko signed the project roadmap, comprising the deadlines and the specific stages of the pre-project research (to be completed by end-2011) and the setup of the joint project company between Bulgaria and Russia. The latter was expected to be established by end-2011, most probably in February. The price of the pipeline on the territory of the country has been estimated at USD 835mn (half of which will be covered by Bulgaria and the remaining amount will be paid by Russia) and is to be updated after the pre-project research is prepared. Gas supplies in the amount of 63bn cubic metres per year under the project will start from the Beregovaya compressor station in Russia and will reach Bulgaria through the Black Sea. The pipeline network on the territory of the country will have two extensions to Serbia and Greece. The total investment is to reach EUR 25bn as compared to the initial plans of EUR 10bn. Field works on the South Stream project are to start in 2013 and be completed in 2015. Full capacity is to be reached in 2018.

 

Eco Energy Windpower to build 150 MW wind power park near Dobrich

Locally-owned Eco Energy Windpower has applied for a 25-year power producer licence at the state energy commission, the regulator said on its website. The company intends to build a 150 MW wind power park near the northern city of Dobrich. The first stage of the project, for which the company has applied, comprises the installation of 21 wind power generators with a 2.5 MW capacity each until October 2011. The overall project is to be completed by November 2012. Eco Energy Windpower has signed a contract with the state power grid operator NEC to link the installation to the national electricity system. The investment value has not been unveiled but the company has said it intended to use own resources and a bank loan. 

Food chain Happy Bar&Grill plans expansion in Eastern Europe

Local food chain Happy Bar&Grill plans to open new restaurants in Turkey, Romania, Macedonia, Serbia, Russia and Ukraine under franchising agreements, local Dnevnik daily reported. It has not unveiled the number of the new restaurants planned, but said it had already started negotiations with potential partners. The company plans to open two new franchised units in the country as well, in Stara Zagora and Blagoevgrad. At present, Happy Bar&Grill runs 27 units in the country and one in Barcelona in Spain. It estimates the initial investment value at EUR 470,000 for a unit of up to 500 sqm and EUR 640,000 for a unit of up to 1,000 sqm. The first restaurant of Happy Bar&Grill was opened in 1994.

Bulgarian Steel Mill Stomana Regains Jobs Lost to Crisis

Bulgaria's largest operational steel-maker Stomana Industry has announced it would hire 100 new workers. According to Tomcho Tomov, HR Manager of the plant based in the city of Pernik, the plant is starting to regain the jobs it had to shed as the economic crisis kicked in. Back in November 2008, the company owned by the Greek Tempo Metal laid off about 300 workers. "Under the agreement with the syndicates we as employer committed to re-hiring the laid-off workers in the event of favorable market conditions. We are now starting to honor our commitment gradually," Tomov stated. In his words, the new dynamics on the international markets are helping Stomana Industry regain positions. The 100 new jobs will be for metallurgy workers. Stomana Industry is now the largest Bulgarians steel-maker in operation, after the Kremikovtzi plant in Sofia, which is the only larger one, has run into bankruptcy.

 

Bulgarian Software Company Expands to Middle East, Japan

Musala Soft, a leading Bulgarian software company, announced it is participating in a project for leadingQatar telecom QTel. Experts of Musala Soft, in conjunction with partners from US-based TIBCO, are working to improve and integrate functionalities in the QTel system. Musala Soft president Elena Marinova comments that this is a part of an expansion campaign to the Middle East and the rest of Asia. "The global economic environment is a stimulus for controlled investment and diversification of business to new regions such as the Near East and Japan," said Marinova. As part of that campaign, Musala workers participated in the EU ICT Business Mission in Tokyo in September and will take part in GITEX 2010 in Dubai over this week. Musala Soft specializes in business integration platforms and the management of business processes, and has worked for telecoms such as Vivacom, M-Tel, mobilkom austria group, and Swisscom. It also develops mobile phone applications using different operational systems.

 

Russia's Mechel gets antitrust nod to fully acquire Toplofikatsiya-Ruse

Bulgaria’s competition regulator said it has allowed Russian metals and energy group Mechel to buy the 51 per cent it does not already own in heating and power utility Toplofikatsiya-Ruse from Slovenia’s Holding Slovenske Elektrarne. The antitrust watchdog has concluded that the full acquisition of Toplofikatsiya-Ruse will not affect the competition in the energy sector of Bulgaria. Currently, the utility holds 2.8 per cent of the electricity market in the country, according to data of the energy regulator. The Russian group, which specialises in the production of iron ore concentrate, nickel, steel, ferroalloys, heat and electricity, is active mainly on the markets of Russia, Romania and Lithuania. In Bulgaria Mechel sells black and bituminous coal, chiefly to Toplofikatsiya-Ruse. Mechel will buy the Bulgarian utility through its Swiss-registered unit Mechel International Holdings. When the Russian company entered the equity of Toplofikatsiya- Ruse in 2007, recently after it has been privatised by its Slovenian peer, it said that it planned to increase its holding.

Net sales of car battery producer Monbat rise 40.4% y/y in September

The net sales of Bulgaria's largest car battery producer Monbat increased by 40.4% y/y to BGN 18.5mn (EUR 9.5mn) in September and by 59.6% y/y to BGN 128.4mn in Jan-Sep, according to information posted on the website of the local stock exchange. The pre-tax profit of the company dropped by 2.8% y/y to BGN 1.87mn in September and thus its increase since the beginning of the year narrowed to 15.9% y/y to BGN 15.3mn in Jan-Sep. We remind that Monbat was forecasting its pre-tax profit to jump 30.5% y/y to BGN 17.2mn in Jan-Sep on a net sales hike of 58.7% y/y to BGN 127.6mn.

 

Sales of aluminium producer Alcomet rise 39% y/y in Jan-Sep

The sales of the largest Bulgarian manufacturer of aluminium products Alcomet, based in the north-eastern city of Shumen, increased by 39% y/y to BGN 166mn (EUR 84.9mn) in Jan-Sep or 35,000 tonnes, the company said on the website of the local stock exchange. The producer added that it had finalised a deal with Italian MINO S.p.A., valued at EUR 7.5mn, for a new installation, which is expected to raise the productivity, reduce the unit value of the production, and improve the quality. It is also to strengthen the market positions of Alcomet in Europe. The local company Alumetal controls 73.25% of the producer and Turkey's FAF Metal Sanayii ve Ticaret holds 16.9%. In July, Alcomet announced plans to increase its production capacity by 30-35% in 2010 and 2011.