불가리아 주요 경제뉴스 (19 - 26 November 2010 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (19 - 26 November 2010 )

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

• Parliament adopts 2011 budget with deficit at 2.5% of GDP
• Business climate improves by 0.3pps m/m in November
• EC expects economy to grow by 2.6% and 3.8% in 2011 and 2012
• Russia sticks to proposed Belene nuke price, demands 30-40% stake
• Bulgaria Slowly Overcomes Recession
• Bulgaria presents new tender requirements for Maritsa motorway construction
• Struma motorway construction tender scheduled for 2011

 

INVESTMENTS:

• Bulgaria, Kuwait to Set Up Joint Venture for Investments in Agriculture
• Serbian Delta Maxi to invest EUR 51mn in hypermarkets in Bulgaria
• Italy's Acegas to invest EUR 7mn in Radomir gas distribution network

 

COMPANIES:

• Bulgaria's NEK Plans To Invest 40.9 Mln Euro in Power Grid in 2011
• Belgium-based Unit Group Launches Three Wind Turbines in Bulgaria
• Belene nuke attracts 3 foreign investors, estimated at EUR 6.298bn
• Mobiltel gets nod from anti-trust body to acquire Megalan, Spectrum Net
• Turkish Unit Group launches 29.6 GWh wind park near Shabla
• Soda ash maker Solvay Sodi plans EUR 122.7mn investments in next three years

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Parliament adopts 2011 budget with deficit at 2.5% of GDP

The parliament passed the 2011 budget, which envisages a budget gap of BGN 1.9bn (EUR 971mn) or 2.5% of the projected full-year GDP. The macro frame is based on projections for a 3.6% real GDP growth in 2011, driven by exports and a gradual recovery of domestic demand. The planned budget revenues are raised by 5.3% y/y to BGN 25.8bn or 33.5% of GDP. Expenditures are expected to decline to BGN 27.8bn or 35.5% of GDP, from 37.7% in 2010.

 

Business climate improves by 0.3pps m/m in November

The total business climate indicator improved by 0.3pps m/m in November after dropping by 1.2pps m/m September, the monthly survey of the National Statistics Institute showed. The business climate in industry improved by 1.1pps as compared to October, due to slightly more optimistic expectations of managers about the business situation of enterprises over the next six months. Assessments of the production activity however pointed out to a decrease and intentions for additional personnel cuts. The business climate indicator in the construction sector rose by 3.1pps m/m. Managers saw improvement in the present construction activity however they expected worsening business situation over the next 6 months. The business climate in retail trade also improved although expectations were more moderate as compared to a month ago. The business climate indicator in the service sector was the only one that deteriorated in November (down by 4.2pps m/m). Reasons for the decrease were worsened managers’ assessments and expectations about the business situation of enterprises as well as registered drop in demand for services and lay-offs over the past three months. The uncertain economic environment was recognised by all managers as the main factor that had a negative influence on activity, followed by financial problems and low demand.

 

EC expects economy to grow by 2.6% and 3.8% in 2011 and 2012

The EC published its autumn forecast revising Bulgaria’s GDP growth projection to -0.1% this year from zero growth in the spring forecast. Economic recovery is expected to gain momentum by the end of the year, driven mainly by strong export growth and replenishing of inventories. Domestic demand will however continue to contract due to tight credit market conditions, falling FDI inflows and continuing household and corporate balance sheet adjustments. The positive developments in net exports are expected to compensate the decrease in domestic demand and will also contribute to improvement of the CA deficit which is forecast at 3.25% of GDP in 2010, down from 6% in the May forecast. The projections of the Commission for 2011 and 2012 are for an accelerating recovery (2.6% in 2011 and 3.8% in 2012), driven by both external demand and a pickup of domestic demand. The latter will stimulate imports but the contribution of net exports to growth is expected to remain positive over the period. Investment and private consumption will also return to positive territory, supported by credit easing, higher employment and absorption of EU funds by the end of the forecast period. The CA deficit is projected to remain unchanged or to slightly decline further as a result of projected gains in competitiveness stemming from further deceleration in nominal wages and the only partial recovery in employment. In view of the currency board arrangement, the adjustment depends on the supply-side response and the ability of the economy to shift to the tradable sector. EC sees the risks to the forecast broadly balanced. on the positive side, foreign capital inflows may turn larger than expected which would support domestic demand and the recovery in investment. on the negative side, due to deteriorating fiscal balances, the country may finds it difficult to withstand persistent negative developments. In addition, the servicing of the external debt may crowd out domestic demand thus correcting faster the external imbalances but at the price of slower recovery. Under the assumption for no change of government’s policies, the year-end budget deficit is projected at 3.8% of GDP (up by 1pp from the earlier forecast) while expectations are that in 2011 and 2012 decline to slightly below 3% and 2% of GDP, respectively. Risks with negative effect to the budget might be lower than expected impact of some revenue-raising measures as well as a further increase in social spending. 

EC forecast for Bulgaria
	2007	2008	2009	2010	2010	2011	2012
				May forecast	November forecast	November forecast	November forecast
GDP (%, y/y)	6.4	6.2	-4.9	0	-0.1	2.6	3.8
HICP (year-average, %)	7.6	12	2.5	2.3	2.9	3.2	3.1
Unemployment (year-average, %)	6.9	5.6	6.8	7.9	9.8	9.1	8
CA balance (% of GDP)	-20.1	-20.6	-8.4	-6	-3.3	-2.5	-2.3
General budget balance (% of GDP)	1.1	1.7	-4.7	-2.8	-3.8	-2.9	-1.8
Public debt (% of GDP)	17.2	13.7	14.7	17.4	18.2	20.2	20.8
Source: European Commission

Russia sticks to proposed Belene nuke price, demands 30-40% stake

Russia confirmed its previous statement that the construction of the 2,000 MW Belene nuclear power plant by the Danube river cannot be implemented at a price below EUR 6.4bn and demanded a 30-40% participation in the project, investor.bg reported quoting Rosatom general manager, Sergei Kirienko. The Rosatom subsidiary, AtomStroyExport, which was hired to build the NPP, had previously offered a price of EUR 4bn. Kirienko pointed out that the inflation index has raised the actual price of the project to EUR 6.7bn and that delaying it further would additionally raise the price. By its completion, the project cost might soar to EUR 8-9bn, Kirienko said. He added that the agreed price was calculated at minimum profitability. Kirienko said that construction works could begin in September 2011 while the first unit could start energy production in 2016. Kirienko will visit Bulgaria on November 30 to negotiate on the project. In February 2008, AtomStroyExport signed a EUR 4bn preliminary contract to build the plant and a few months ago requested an increase of the price by EUR 2.5-3.5bn. Later on Russia offered a price of EUR 6.3bn, which economy minister Traicho Traikov said was not acceptable. In September 2009, field works on the nuclear plant were frozen after Germany's RWE withdrew from the project, which was the reason for Bulgaria to seek a financial consultant for the construction. It hired earlier in November UK bank HSBC to advise the construction. Bulgaria is currently operating two 1,000 MW units in its Kozloduy nuclear power plant by the Danube river, providing between 25% and 30% of the country's power production. The country had closed four of the plant's 440 MW generators, two of which in early 2003 and two in the last day of 2006.

 

Bulgaria Slowly Overcomes Recession

 

Reuters
The European Union's poorest member Bulgaria is slowly recovering from a deep recession which has slashed incomes and increased unemployment, hitting the popularity of its centre-right government. Delayed reforms and uncertainty over economic policies are eroding support for the minority government of Prime Minister Boiko Borisov, though it still looks stable as it enjoys support from rightist parties and the opposition is weak. The economic crisis coupled with hidden deficits revealed in April forced the Balkan country to abandon plans for quick euro zone entry, and left the cabinet struggling with yawning fiscal shortfalls. The government needs to deliver results in fighting corruption and organised crime to maintain EU trust and win investor confidence and ensure swift entry into the EU border-free Schengen area. Below are the main political risks for Bulgaria.
WEAK RECOVERY

Bulgaria plunged into recession last year when the global economic slowdown scared away foreign investors and forced businesses to significantly cut operations. The economy contracted 4.9 percent in 2009. Rising exports have helped the emerging economy out of recession since the second quarter, but a slow recovery in external demand and a tightening in external commercial credit are likely to keep growth at zero rates this year. The government says the economy will grow by 3.6 percent in 2011, but many analysts see slower growth of about 2 percent as the real estate and construction boom which underpinned previous expansion is unlikely to be repeated.
If growth remains weak, tax revenues will be lower than expected and social spending probably higher, scuppering government plans to halve the budget deficit to 2.5 percent of GDP next year and increasing its debt burden. The country still has hefty fiscal reserves, but weaker revenues may also force it to seek urgent financing on external markets at high cost. The cabinet froze salaries and pensions and cut ministry spending by about 20 percent in 2010, but overall expenditure is projected to be higher as it tries to avoid protests and maintain spending for healthcare and infrastructure.
It plans to maintain tax levels next year and keep spending unchanged to avoid further drops in domestic demand and encourage growth. It however plans to increase social security payments by 1.8 percent to back its indebted pension system.

 

Bulgaria presents new tender requirements for Maritsa motorway construction

Bulgaria raised the requirements for the participants in the new tender for the construction of the Maritsa motorway after the previous contractor, Moststroy, declared insolvency, Dnevnik daily reported, quoting regional development minster Rosen Plevneliev and his deputy Georgi Pregiov. The tender has not been published officially yet, but the announced requirements include experience in the construction of highways and solidarity in case one of the consortium participants fails to fulfill its contractual obligations. The tender winners should be chosen by May 2011. The construction works are scheduled to begin in July 2011 and finish in two years, Plevneliev said. The Maritsa highway will link the Trakia motorway with the border checkpoint with Turkey, Kapitan Andreevo. The tender includes two lots with a combined length of 67km, stretching from Orizovo to Harmanli, southeastern Bulgaria, and estimated to cost EUR 209mn. The first lots is a 31.4km section between Orizovo and Dimitrovgrad, estimated at EUR 104mn. The second lot, worth EUR 105mn, will be 35km long, linking Dimitrovgrad and Harmanli. 

 

Struma motorway construction tender scheduled for 2011

The construction tender for the entire motorway Struma will be called in 2011, the chairman of the roads infrastructure agency, Bozhidar Yotov announced. The announcement comes shortly after regional development minister Rossen Plevneliev had said that the tender will take place in November 2010. The motorway construction should be completed by end-2013. The Struma motorway connects Sofia with the border with Greece and is part of the Pan-European transport corridor 4.

 

INVESTMENTS:

Bulgaria, Kuwait to Set Up Joint Venture for Investments in Agriculture

Sofia, November 28 (BTA) - Bulgaria and Kuwait will set up a joint venture for investments in agriculture, the Agriculture and Food Ministry said.

Agreement to this effect was reached by Agriculture Minister Miroslav Naydenov and Bader Al-Saad, Managing Director of the Kuwait Investment Authority, at a meeting in Kuwait City. A final decision must be taken by the two governments. The agreement is expected to be signed by Prime Minister Boyko Borissov and the Amir Sabah al-Ahmad al-Jabir al-Sabah, who will be visiting Bulgaria in March. Bulgaria will contribute agricultural land and equipment to the joint venture, and will offer know-how, while Kuwait will provide financial resources. Naydenov said this would be the first Kuwaiti investment in Bulgarian agriculture. So far Kuwait has financed primarily infrastructure projects .

Serbian Delta Maxi to invest EUR 51mn in hypermarkets in Bulgaria

 

Serbian retailer Delta Maxi opened its first Tempo hypermarket in Bulgaria and said it will invest BGN 100mn (EUR 51mn) in the launch of more outlets in the country, Dnevnik daily reported. The company plans to open hypermarkets in every town with a population of over 100,000 people, Delta Maxi International’s executive director Alexander Teich said. The Serbian company entered the Bulgarian market in 2007, when bought the retail chain Piccadilli. Since then Delta Maxi has invested BGN 240mn in the retail chain which now operates 40 outlets. It plans to increase the number of Piccadilli outlets to 50 in 2011, investing some BGN 40mn. Delta Maxi invested BGN 40mn in the first Tempo hypermarket, which is located near the central railway station in the capital city of Sofia. It covers an area of 30,000 sq m and employs 450 people. 

 

Italy's Acegas to invest EUR 7mn in Radomir gas distribution network

 

Italy’s Acegas will invest through its subsidiary Rila Gaz EUR 7.05mn in the construction of a gas distribution infrastructure in Radomir, western Bulgaria, Dnevnik daily reported quoting a company statement. The 56.5km network should be built by 2013. The constructions works will take place in two stages: the first one, worth EUR 5.3mn, envisages the construction of 20.5km network in 2011; the second stage, estimated at EUR 1.75km, will provide 36km in network by 2012. The new infrastructure will service 6,900 households and over 100 enterprises and public works. Rila Gaz won a 35-year gas distribution licence in western Bulgaria back in 2005. Its contract provides for the construction of 870km in gas distribution network and 150 km in additional infrastructure units for about EUR 130mn. Due to delays in the investment programme schedule, the energy watchdog fined Rila Gaz with BGN 40,000 and threatened to revoke its licence in case of further incompliance with the contractual obligations. The next locations in which the investment programme will be carried out are Sandanski and Vratsa.

 

 

 

COMPANIES:

Bulgaria's NEK Plans To Invest 40.9 Mln Euro in Power Grid in 2011

SOFIA (Bulgaria), November 29 (SeeNews) - Bulgarian power grid operator NEK plans to invest 80 million levs ($54.2 million/40.9 million euro) in the country's power grid in 2011, local media reported on Monday. The investment is part of the company's 150 million levs investment programme for next year, daily Monitor quoted NEK's executive director, Krasimir Parvanov, as saying. A total of 17 million levs will be allocated to urgent rehabillitation works on water power plants, he added. Parvanov expects NEK to end 2010 with a net profit of some 100 million levs thanks to the company's anti-crisis programme and an increase in electricity exports.

Belgium-based Unit Group Launches Three Wind Turbines in Bulgaria

SOFIA (Bulgaria), December 1 (SeeNews) - Belgium-based energy company Unit Group said it has launched three turbines with a combined capacity of 9.0 megawatts (MW) at its wind farm in northeastern Bulgaria. Two more turbines with a combined capacity of 1.6 MW are expected to become operational in May 2011, the company said in a statement. The wind farm, located in the Shabla municipality, will have a total capacity of 10.6 megawatts. It is Unit Group's first project in Bulgaria. "The wind farm will produce 29,600 megawatt hours of electricity annually, enough to cover the needs of 10,300 households, and at the same time it will save around 24,400 tonnes of carbon emissions," Unit Group said. Unit Group (www.unit.com.tr) focuses on energy projects involving natural gas, electricity generation, investment, distribution and trade in Turkey, Eastern Europe, and the Middle East. It also has investments in the tourism sector in Turkey.

 

Belene nuke attracts 3 foreign investors, estimated at EUR 6.298bn

The maximum price for the construction of Bulgaria's second nuclear power plant Belene was set at EUR 6.298bn, Dnevnik daily reported. The companies that will invest in the nuclear plant are Russian Rosatom, Finnish utility Fortum Corp and French technology consultancy Altran Technologies. Serbia might also join the project after recently expressing interest in up to 5% participation. Serbain PM Mirko Cvetkovic is reportedly going to visit Bulgaria soon. Meanwhile, Bulgaria signed memoranda of understanding with the three companies, which agreed on the creation of a project company for the plant. Bulgaria's National Electricity Transmission Company (NEK) will hold 51% stake in Belene, Rosatom - 47%, and Altran and Fortum - 1% each. Fortum will have the option to raise its stake to 25%. NEK CEO, Krasimir Paravnov, said the project company should be set up in four months. The construction contract on the other hand should be ready in six months, Parvanov added. In February 2008, AtomStroyExport signed a EUR 4bn preliminary contract to build the plant and a few months ago requested an increase of the price by EUR 2.5-3.5bn. Later on Russia offered a price of EUR 6.3bn, which economy minister Traicho Traikov said was not acceptable. In September 2009, field works on the nuclear plant were frozen after Germany's RWE withdrew from the project, which was the reason for Bulgaria to seek a financial consultant for the construction. It hired earlier in November UK bank HSBC to advise the construction. Bulgaria is currently operating two 1,000 MW units in its Kozloduy nuclear power plant by the Danube river, providing between 25% and 30% of the country's power production. The country had closed four of the plant's 440 MW generators, two of which in early 2003 and two in the last day of 2006. 

 

Mobiltel gets nod from anti-trust body to acquire Megalan, Spectrum Net

Bulgaria's leading wireless telecommunication services provider MobilTel (M-tel) got the permission of the state antitrust commission to acquire two local cable operators Megalan Network and Spectrum Net, the regulator said on its website. Although the deal will affect the market concentration, it will not result in a significant market presence of Mobiltel, the watchdog explained. In October, the parent of MobilTel, Telekom Austria, announced plans to buy Megalan Network and Spectrum Net for EUR 72mn, including a final payment of EUR 14.5mn in 2011, depending on the performance of the companies. Megalan Network is the biggest Internet provider in the capital Sofia (50% territory coverage and 57,500 clients) and owns both cable and optical networks. It also offers digital TV services. Spectrum Net is an Internet-based telecommunications company, claiming to be the largest alternative telecommunications operator in the country after the acquisition of alternative landline and Internet company Orbitel several months ago. It offers its services to 31,600 clients mainly in the business segment. Its MPSL network covers the whole territory of the country and provides access to 90% of the population.

 

Turkish Unit Group launches 29.6 GWh wind park near Shabla

Turkish energy firm Unit Group launched three wind turbines with an installed capacity of 3 MW each near Shabla, on the Bulgarian Black Sea cost, econ.bg reported. Another two turbines with a combined installed capacity of 1.6MW will be put into operation by May 2011. The wind park will have an annual output capacity of 29,600 MWh. Wind is the second most important renewable energy source for Bulgaria, whose wind potential according to the EU is estimated at 2,200-3,400MW. The installed wind capacity as at end-2009 stood 335.3 MW, economy ministry data showed. 

 

Soda ash maker Solvay Sodi plans EUR 122.7mn investments in next three years

Bulgarian soda ash maker Solvay Sodi plans to invest close to BGN 240mn in production upgrade and expansion by the end of 2013, Dnevnik daily reported. Next year, the company will invest BGN 26mn in the modernisation of its soda ash production plant in Provadia and of the slag dam in Padina, CEO Vander Vorst aaid. In 2012, Solvay Sodi will invest BGN 52mn in the construction of a new distiller. Investments for 2013 will total BGN 160mn and will be allocated in its coal-fired power plant in Devin in order to introduce the European Union's environment protection standards. Solvay Sodi, located in the northern Black Seatown of Devnia, is the biggest soda ash producer in Europe. It exports 90% of its output mainly to the Middle Eastand Asia. Majority owner of the company is the Vienna-registered consortium Solvay Sisecam, which comprises Belgian chemicals and drugs group Solvay, Turkish glass group Sisecam and the European Bank for Reconstruction and Development.