불가리아 주요 경제뉴스 (23 - 30 March 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (23 - 30 March 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

Ø  Bulgaria Quits Belene Nuclear Power Plant Project

Ø  Business sentiment in Bulgaria improves by 2.3pps in Mar 2012

Ø  Bulgaria Contracts 70% of Total Funding under Operational Programmes

Ø  Bulgaria’s finance ministry reports improving budget position in Jan-Feb, 2012

 

 

INVESTMENTS:

Ø  China Set to Invest in Bulgaria's Infrastructure, Renewable Energy

 

 

COMPANIES AND INDUSTRIES:

Ø  Only 9% of enterprises in Bulgaria use renewable energy – survey

Ø  Bulgaria’s Elatsite Med to bid for Romania’s largest copper mine - report

Ø  LUKERG Renew Gets Clearance To Buy Three Wind Park Operators in Bulgaria

Ø  Commercial vehicle sales in Bulgaria up 26.3% y/y in Feb 2012

Ø  Schneider Electric to install 39 MW of PV plants in Bulgaria

Ø  Rubin, Glass Industry buy 63.6% of Serbian Srpska Fabrika Stakla for EUR 35mn

Ø  Bulgaria's Devnya Cement Launches 160 Mln Euro Production Upgrade

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria Quits Belene Nuclear Power Plant Project

Bulgaria's Belene Nuclear Power Plant will not be constructed, the country's Deputy Finance Minister Vladislav Goranov announced on on Wednesday. A natural gas power plant will be built in the Danube town of Belene instead, Goranov told reporters after Wednesday's Council of Ministers sitting. The nuclear reactor already assembled by Rosatom subsidiary Atomstroyexportand originally meant for Belene will be placed in Bulgaria's sole nuclear power plant, Kozloduy. On Thursday, Bulgaria's newly appointed Economy and Energy Minister Delyan Dobrev will travel to Moscow in order to inform Russia of his country's decision to scrap the project. The construction of the 2000 MW plant by Atomexportstroy had been delayed with annexes 15 times. At the end of last week, Bulgaria's Prime Minister Boyko Borisov said in a TV interview that Belene would never remain just a Russian-Bulgarian project and would not go forward without a European or American investor. A few days ago, his Deputy, Finance Minister Simeon Djankov, admitted that Bulgaria has "almost given up on the project." Russia's state-owned nuclear corporation Rosatom had made it clear it is ready to agree on yet another extension of the contract with the Bulgarian government for the construction of the Belene nuclear power plant. The currently active extension of the 2006 deal between Bulgaria's National Electric Company NEK and Rosatom's subsidiary Atomstroyexport was set to expire at the end of March 2012. In October 2011, Bulgaria and Russia reached an agreement to extend the negotiations over Belene nuclear project by another six months as of the beginning of October amidst continuing haggling over its price and feasibility. The greatest issue over which Bulgaria and Russia had been haggling for the past two years under the Borisov Cabinet was the price of the project, with Russiainsisting it should be no less than EUR 6.3 B, while Bulgaria was demanding a price of no more than EUR 5 B. After selecting the Russian company Atomstroyexport, a subsidiary of Rosatom, to build a two 1000-MW reactors at Belene and signing a deal for the construction, allegedly for the price of EUR 3.997 B, with the Russians during Putin's visit to Sofia in January 2008, in September 2008, former Prime Minister Sergey Stanishev gave a formal restart of the building of Belene. At the end of 2008, German energy giant RWE was selected as a strategic foreign investor for the plant. The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out. In November 2010, shortly after a visit to Sofia by Russian PM Putin, Bulgaria'sNational Electric Company NEK and Russian state company Rosatom signed a memorandum providing for a final fixed price for the two reactors of EUR 6.298 B. According to the non-binding memorandum expiring on March 31, 2011, Bulgaria's NEK would have had a share of 51% in the Belene NPP, Rosatom – a share of 47%, Finnish company Fortum - a share of 1%, and French company AltranTechnologies - a share of 1% with an option to increase it. Serbia had expressed interest in acquiring a share of 5%-10%. In mid-March 2011, apparently acting on concerns caused by the situation in Japan's Fukushima NPP after the recent devastating earthquake there, the European Commission confirmed that it wanted to reexamine the Belene NPP project - once Bulgaria finds an investor for it - even though it already approved it back in 2007.

 

 

Business sentiment in Bulgaria improves by 2.3pps in Mar 2012

The composite business sentiment indicator increased by 2.3pps in monthly terms to 15.33 in March almost recovering to its January level, the monthly survey of the national statistics institute shows. The improvement follows 2.4pps deterioration in February. In annual terms, the business climate turned to growth of 0.2pps after contractions in the previous two months. In March, the sentiments were more optimistic on the back of the retail business and the services. The sentiments in the manufacturing and the construction sector remained unchanged from a month ago. Still, all surveyed sectors project improvement in the coming months. None of the sectors expect the prices to go up. IntelliNews Comment: Despite the improvement in March, the business sentiments indicator remains far below its long-term average and is also lower than the average for the last 12 months. It indicates that economic growth will slow down this year, which is expected by the government and the international institutions as seen in the downgrade of their projections for this year. 

 

Bulgaria Contracts 70% of Total Funding under Operational Programmes

As at March 16, Bulgaria has contracted 70.2 per cent of the total funding available under the operational programmes, the press office of EU Funds Management Minister Tomislav Donchev said on Friday, citing latest data from the Lothar system about EU funds absorption targets and performance. The operational programmes are in force until 2013, after which a new programming period begins.

 

Bulgaria’s finance ministry reports improving budget position in Jan-Feb, 2012

The finance ministry informs in a note on its website that the budget position has improved by BGN 185.4mn (EUR 94.8mn) in Jan-Feb. According to already released figures, the above statement implies that the budget deficit has narrowed by 24.7% y/y since the beginning of the year to reach some BGN 565mn in Jan-Feb or 0.7% of the projected full-year GDP as compared to 1% of GDP a year earlier. Tax revenues have risen by 13.5% y/y in Jan-Feb, including more than 30% y/y surge in VAT revenues. Tax revenues in Jan-Feb accounted for 14.5% of the annual target as compared to 13.3% a year earlier. Non-tax revenues have also improved and were 16.1% of the planned for this year, up from 14.3% of the last year’s forecast. At the same time, total expenditures have increased by just 4.8% y/y since the beginning of the year. Thus, the ministry concludes that reported data does not prove any need for budget revision for the time being. The statement comes as a response to the rightist-UDF leader Martin Dimitrov who called for a 2012-budget-law update to incorporate the expanding budget deficit this year. Dimitrov said that a BGN 814mn shortfall in tax revenues is expected, which is to bring up the budget deficit figure from BGN 1.1bn to BGN 1.9bn or 2.4% of GDP. This means that the country’s budget gap will exceed the 2%-of-GDP ceiling, envisaged in this year’s budget law. 

 

 

 

INVESTMENTS:

China Set to Invest in Bulgaria's Infrastructure, Renewable Energy

Renewable energy and infrastructure are two of the key sectors where Bulgaria is about to see Chinese investments, according to the participants in a high-profile business forum The Bulgarian-Chinese forum was co-organized by the Bulgarian Chamber of Commerce and Industry (BCCI) and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. It featured China's Vice Trade Minister Jiang Yaoping and Bulgaria's Deputy Economy Minister Ivo Marinov as keynote speakers on Monday. Jiang Yaoping is on a three-day state visit to Bulgaria leading a Chinese business delegation. He suggested that Chinese companies should expand their role in Bulgaria in the field of infrastructure construction – all the way from highways to power plants. According to Marinov, Chinese companies are expected to start producing solar panels and wind power generators in Bulgaria. Bulgaria's investment advantages that he presented before the Chinese businesspeople included macroeconomic stability, EU membership, the lowest taxes in the EU, incentives for industrial zones and hi-tech parks, and reduction of the administrative burden. He pointed out the record trade between Bulgaria and the PRC in 2011 – USD 1.346 B, according to data of the National Statistical Institute. Bulgaria's export to China grew by 61% year-on-year, reaching USD 403 M; compared with 2001, it is forty times greater. China's export to Bulgaria was worth USD 943 M in 2011. Marinov reminded that Bulgaria enjoys the status of approved tourist destination according to a memorandum between the EU and China's national tourism administration. By the end of 2011, Chinese investments in Bulgaria have reached a total of USD 70 M, China's Vice Trade Minister said. Chinese Ambassador to Bulgaria Guo Yezhou told the forum that in 2011 the Chinese investments in the country grew by 320% year-on-year, with new investments in telecommunications, car manufacturing, energy, agriculture. More that 200 businesspeople took part in the Bulgarian-Chinese business forum in Sofia on Monday. According to the BCCI Chair Tsvetan Simeonov, the event has helped boost China's business interest in Bulgaria.

 

 

 

COMPANIES AND INDUSTRIES:

Only 9% of enterprises in Bulgaria use renewable energy – survey

Only nine per cent of non-financial enterprises in Bulgaria using renewable energy sources, in a limited way in the forms of solar, biomass or biofuels, a survey has found. It is mostly companies in trade and services that are using renewable energy, according to a survey by the Institute for Economic Research at the Bulgarian Academy of Sciences, the results of which were released on March 23 2012. Households said that they would seek alternative sources of energy in two cases, if the price of electricity was increased and if their monthly income was reduced. The most commonly used forms of renewable energy in Bulgaria were biomass heating, at 58.3 per cent, followed by solar heating of water, 12.5 per cent, and waste from agriculture and forestry, 4.6 per cent. About a 10th of households surveyed said that they would be willing to pay more for electricity produced by renewable sources. A separate 75 per cent said that they would be prepared to pay up to 10 per cent of their monthly electricity bill for renewable energy. Analysis of the results of the survey found that despite the financial crisis and inter-company debt, but with incentives and national policies, business in Bulgaria would invest an average of 1.68 per cent of annual turnover in renewable energy over the next five years. This means, according to the institute, that the use of funds for investment in the sector would be up to 680 million leva. The study's authors believe that it is possible that firms would allocated larger shares of their annual turnovers, because the production of renewable energy saves spending by end-users on building power networks and losses of energy in transmission.

 

Bulgaria’s Elatsite Med to bid for Romania’s largest copper mine - report

Bulgaria's third largest copper and gold mine Elatsite Med will participate in the privatisation tender for Romania's largest copper mine Cupru Min, located in the northwest town of Abrud, state-run news agency BTA quotes information from Romanian media. Three other companies from Australia, the Netherlands and Canada have, have also filed bids. The initial tender price is set at EUR 60mn. The IMF has urged Romania to divest Cupru Min. Romania tried to privatise the mine twice in 2008 but both attempts proved unsuccessful. Cupru Min posted EUR 4.3mn profit in 2010 following a loss in the amount of EUR 4.1mn in 2009. Its debt is estimated at EUR 16.2mn. Elatsite Med operates a copper and gold extraction and enrichment complex near the village of Mirkovo in the central parts of Bulgaria. The company extracts around 12mn tonnes of copper concentrate with estimated yield of 40,000 tonnes of copper and 1.5 tonnes of gold. 

 

 

LUKERG Renew Gets Clearance To Buy Three Wind Park Operators in Bulgaria

Bulgarias competition watchdog said on Monday it gave the green light to LUKERG Renew, a joint venture between Italy's ERG Renew and Russia's LUKOIL-Ecoenergo, to acquire three companies that operate wind parks in the Southeast European country. Austria-based LUKERG Renew got clearance to take full control of Wind Park Kavarna West, Wind Park Kavarna East and K&S Energy, the Commission for the Protection of Competition said in a statement. The acquisition will not hinder competition on the Bulgarian market where the combined share of the parties to the deal, calculated on the basis of their installed capacity and the volume of electricity generated in the country in 2010, is significantly less than 5%, the commission added. According to data from Bulgaria's commercial register, all three companies are wholly-owned by Austria's Raiffeisen Energy & Environment Holding Bulg GmbH. Sofia-based newspaper Capital Daily reported earlier this month, quoting unnamed sources, that the price of the deal may reach up to 21 million euro ($27.9 million). ERG Renew is one of the leading Italian wind power generation companies. It set up its 50/50 renewable energy joint venture with LUKOIL-Ecoenergo in May 2011.

 

Commercial vehicle sales in Bulgaria up 26.3% y/y in Feb 2012

Total sales of new commercial vehicles, which include vans, trucks, buses and coaches, in Bulgaria rose by 26.3% y/y to 250 units in February 2012, data by the European Automobile Manufacturers’ Association shows. The growth slightly decelerated from 26.9% y/y in Jan and the ytd readings show a 25.4% y/y expansion. Sales in all EU countries declined by 11.3% in a year to totally 126,010 units in February and by 7.9% y/y to 267,111 in Jan-Feb. In 2011, sales of new commercial vehicles in Bulgaria fell by 6.6% to 2,927 units while the EU 27 market expanded by 9.9% to 1.94mn units, respectively. 

 

Schneider Electric to install 39 MW of PV plants in Bulgaria

French electrical equipment provider Schneider Electric yesterday said it had won an engineering, procurement and construction (EPC) deal for two photovoltaic (PV) power plants with total capacity of 39 MW in Bulgaria. The company will carry out the engineering, project management, equipment supply, installation and commissioning of the projects. It will also connect to the grid and operate the ground-mounted Letnitsa and Vratsa PV plants. The PV systems will include total of 160,000 solar panels at six sites and will generate 47 GWh of electricity a year, enough to meet the consumption of 16,000 residents and to offset 17,000 tonnes of greenhouse gas emissions a year, according to Schneider Electric estimates. The plants are expected to become operational towards the end of June 2012.

 

Rubin, Glass Industry buy 63.6% of Serbian Srpska Fabrika Stakla for EUR 35mn

Consortium of Bulgarian companies Rubin and Glass Industry, majority owned by Bulgaria's seventh largest lender in terms of assets, Corporate Commercial Bank, signed a contract for the purchase of a 63.6% stake in Serbia's Srpska Fabrika Stakla, Capital Daily reported. The seller of the stake is state-owned natural gas provider in Serbia, Srbijagas. Prior to the deal, Rubin controlled 34.49% of the Serbian glass maker. The value of the deal is EUR 35mn and the buyer vows to invest EUR 22mn additionally to expand glass production. The buyer plans to triple the production in a year to 120,000 tons of glass annually. Rubin will take over also the debt of the Serbian factory to Agrobanka and the Serbian arm of Hungary's OTP, totalling over EUR 10mn. The new owner plans to reduce the number of employees from 1,700 at present. This is estimated to cost EUR 4.5mn in terms of compensations, however, half of the amount will be covered by the Serbian government. 

 

Bulgaria's Devnya Cement Launches 160 Mln Euro Production Upgrade

Bulgarian cement producer Devnya Cement said on Thursday it has officially launched the construction phase of a 160 million euro ($213.4 million) project for the upgrade of its production facilities. The company has signed up Chinese turn-key cement plant builder CBMI, a subsidiary of Sinoma International Engineering, as a general subcontractor for a new clinker and cement production line set to begin operation in early 2015, Devnya Cement said in a statement. The annual capacity of the new production line will be nearly 1.5 million tonnes of cement. Devnya Cement (www.devnyacement.bg), a subsidiary of Italy's Italcementi, is based near the Black Sea port city of Varna and has an annual capacity of some 2.0 million tonnes of cement. In Bulgaria, Italcementi operates also the Vulcan cement plant. Italcementi Group (www.italcementigroup.com), the world's fifth largest cement producer, operates in 22 countries.

 

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea