불가리아 주요 경제뉴스 ( 14 - 21 September 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST WEEKLY REPORT( 14 - 21 September 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

Bulgarian State Budget to Project 1.8% Economic Growth in 2013

IMF mission to stay in Bulgaria till October 2

Bulgarian govt to raise pensions not earlier than in April 2013

 

INVESTMENTS:

Net FDI in Bulgaria doubles to EUR 742.9mn in Jan-Jul

Bulgarian energy regulator raises grid access prices for renewables

China's Hareon Solar Technology unit launches 25 MW PV plant in Bulgaria

The Netherlands is largest investor in Bulgaria for past 2 years

 

 

COMPANIES AND INDUSTRIES:

Bulgarian cigarettes maker Bulgartabac projects 35% exports growth in 2013

New passenger car registrations in Bulgaria up 2.1% y/y in Jan-Aug

Rosatom denies Westinghouse access to Bulgaria's reactor development papers

Bulgaria's H1 wine exports rise 16.1% y/y

Green energy firms to take Bulgaria to court over new fees

Bulgaria 2nd in EU by Annual Growth in Construction Production

Moesia Oil and Gas wins oil and gas exploration licences in Bulgaria

 

 

 

 

 

 

 

 

 

Articles:

MACROECONOMY

Bulgarian State Budget to Project 1.8% Economic Growth in 2013

Bulgaria's 2013 State Budget Act will most likely project a 1.8% GDP growth for next year, announced Menda Stoyanova, a MP from the ruling center-right party GERB and chairperson of the Parliamentary Committee on Budget. However, Stoyanova was unable to confirm that the 1.8% economic growthforecast of the Bulgarian government for 2013 will be final, adding that the Borisov Cabinet and the GERB MPs will still have to check out the government's economic analysis in the fall. In her words, in 2013, Bulgaria's state budget deficit will be about the same as in 2012 – or about 1.3%. She also said the state budget law for next year will provide for slightly higher state spending but will also seek to increase tax revenues to compensate for the increase in expenditures. Stoyanova said the Bulgarian government will likely provide more funding for education, social policy, health care, and innovations but refused to provide specific figures. She pointed out that the Cabinet does not plan any changes in taxes, and that it intends to raise the minimum monthly salary from BGN 290 to BGN 310 as of January 1, 2013. In 2013, which will be a year for parliamentary elections in Bulgaria with the Borisov Cabinet's term expiring in the summer, the government also plans to increase all retirement pensions by 10%.

 

IMF mission to stay in Bulgaria till October 2

A mission from the International Monetary Fund (IMF) arrived in Bulgaria on September 20 to discuss the recent economic developments and prospects with the Bulgarian authorities, the finance ministry informed. The mission, part of IMF's regular staff visit, will be headed by Catriona Purfield and will stay in the country by October 2. The IMF representatives will review the government's key short- and medium-term macroeconomic forecasts and assumptions, policies ensuring economic growth, the drivers of economic recovery as well as the results of the ongoing structural reforms. At its last mission in Bulgaria on May 2-9, the IMF recommended increasing the fiscal reserves in order to guarantee financial and macroeconomic stability. The IMF also warned that although the prudent and decisive policies ensured Bulgaria's resilience through the global crisis, growth continues to slow and will depend on euro area growth recovery and stronger EU funds absorption by the country. The banking sector is capitalised, liquid, profitable and well supervised, the IMF said. 

 

Bulgarian govt to raise pensions not earlier than in April 2013

Pensions in Bulgaria may be raised not earlier than in April 2013, Menda Stoyanova, head of the budget commission, said in an interview for BNR. According to earlier reports, pensions would grow by over 7.3% as of January 1, 2013. In order to accomplish the increase in pensions, the government will have to set aside some BGN 800mn that will cover the accumulated inflation for the past three years, according to estimates of the budget commission. We remind that the decision to raise pensions was taken first in February but the rate was back then unknown as the government said that it would depend on the budget execution. The minimum pension in the country was raised to BGN 145 (EUR 74.1) as of June 1 from BGN 136.08 previously. Taxes and excise duties in Bulgaria will stay unchanged, Dyankov added. 

 

INVESTMENTS:

Net FDI in Bulgaria doubles to EUR 742.9mn in Jan-Jul

Net FDI in Bulgaria posted a EUR 742.9mn surplus in Jan-Jul, up more than two times from Jan-Jul 2011, according to preliminary data of the central bank. In July alone, net flows to the country were EUR 28.8mn against EUR 77.4mn a year earlier. Total FDI invested in the country marked a significant improvement in Jan-Jul of the current year, rising to EUR 846.2mn, on the back of strong increase in equity capital flows. Equity capital invested in real estate properties continued to grow - it rose by 15.6% y/y to EUR 141mn in Jan-Jul 2012 and constituted 28% of the total equity capital invested in the country. Reinvested earnings dropped by 24% y/y to EUR 360.3mn in Jan-Jul. The other capital account, which shows net change in intra-company loans, showed inflows of EUR 290.2mn in H1. 

 

Bulgarian energy regulator raises grid access prices for renewables

State Energy and Water Regulatory Commission has determined temporary prices for electricity distributors to charge producers of renewable energy for gaining access to the electrical distribution grid. The new prices come into force as of September 18, 2012 and should be paid monthly until the final prices are set at a later date. The commission’s decision follows a request made by distribution companies last week in view of the increased number of new renewable energy producers applying to join the electrical grid and the resulting increased administrative costs for grid operators. 
The temporary prices differ according to the type of renewable source used and the generation capacity of the plant with biomass sources having to pay the lowest and photovoltaic generators – the highest prices. The national Association of Producers of Ecological Energy has strongly criticized the decision claiming it is another heavy burden imposed on renewable energy producers after the guaranteed purchase price decrease announced in July 2012. The chairman of the Bulgarian Photovoltaic Association, Nikola Gazdov, considers the new fees a retroactive measure for subsidising the grid operators, as quoted by investor.bg. Further, Mr. Gazdov said there is no reason for the regulator to charge different prices for different types of energy and puts the renewable sources at a disadvantage.

 

China's Hareon Solar Technology unit launches 25 MW PV plant in Bulgaria

Bulgarias BCI Cherganovo, fully-owned by a subsidiary of Chinas Hareon Solar Technology, put into operation a 25 megawatt (MW) photovoltaic (PV) power plant in Bulgarias village of Cherganovo, the local authorities said. Investment in the plant, which was launched on Monday, totals 61.3 million euro ($80.1 million), the Kazanlak municipality said in a statement published on its website. The project was backed by the China National Development Bank. The plant covers an area of 60 hectares. Hareon Solar Technology is currently working on four PV projects in Bulgaria with a total capacity of 90 MW, the statement quoted Hareon Solar Technology vice president Lewis Liu as saying. The village of Cherganovo is located in central Bulgaria.

 

The Netherlands is largest investor in Bulgaria for past 2 years

The Invest Bulgaria Agency would be implementing an ambitious EU-funded program for attracting investors over the next few months. Over the past two years, the Netherlands was the top investor in Bulgaria, followed by Austria according to Invest Bulgaria Agency Executive Director Borislav Stefanov, cited by Sofia News Agency. Speaking Thursday in Varna, he explained that real estate investments had fallen two or three times during the said period, plummeting from a rate of EUR 300 – 400 M per year to around EUR 100 – 150 M. Stefanov emphasized that the sectors of finance and trade has seen much more pronounced declines. He cited the processing industry and telecommunications as sectors registering increases. Stefanov announced that the Invest Bulgaria Agency would be implementing an ambitious EU-funded program for attracting investors over the next few months. He specified that the program included a number of events and campaigns abroad in cooperation with major international media outlets. The Invest Bulgaria Agency head informed that the value of the entire project was BGN 15 M and it included around 30 different activities. He said that the initiative would include conferences in China, Korea and Japan. Stefanov explained that Bulgaria would be advertized as an investment destination in eight sectors mainly related to the processing industry, machine building, electronics, electrical engineering, and IT. He added that Bulgaria would also try to popularize medical tourism. The InvestBulgaria Agency head reminded that the project had been launched in 2010 but the activities it included had not used up a lot of financial resources. Stefanov went on to say that the crisis had changed the structure of investments in Bulgaria substantially. He noted that in the years up to 2009, some 60-90% of the investments had been concentrated in three big sectors - finance, property, and trade, while investments in production, telecommunications and energy had been considered less significant.

 

 

 

COMPANIES AND INDUSTRIES:

Bulgarian cigarettes maker Bulgartabac projects 35% exports growth in 2013

Bulgarian tobacco holding Bulgartabac (57B) sees a 35% increase in exports in 2013, CEOs Ventsislav Cholakov and Angel Dimitrov said, as quoted by investor.bg. Exports volumes to Central Europe and the Balkans are to grow by 31% next year. In the last nine months, Bulgartabac posted a 10% y/y increase in sales volumes and a 30% y/y rise in revenues, the CEOs added. In Oct 2011, VTB bought 79.83% of Bulgartabac from the state through its Austria's subsidiary BT Invest GmbH for EUR 100.1mn. The remaining shares of the holding are floated on the local bourse. 

 

New passenger car registrations in Bulgaria up 2.1% y/y in Jan-Aug

New passenger car registrations in Bulgaria increased by 2.1% y/y to 12,905 units in Jan-Aug, the European Automobile Manufacturers’ Association said. At the same time, the number of the newly registered vehicles in all the EU 27 countries declined by 7.1% y/y to 8,268,642 units. In August alone, new passenger car registrations in Bulgaria however dropped by 7.6% y/y to 1,519, still below the 8.9% annual decrease in EU-27. In 2011, the number of sold vehicles fell by 22.3% to 19,136. 

 

Rosatom denies Westinghouse access to Bulgaria's reactor development papers

Westinghouse Electric Company, which was hired by Bulgarian government to run the feasibility study on the construction of a potential seventh reactor at Bulgaria's nuclear power plant Kozloduy, will not be granted access to Rosatom's records regarding the development of the unit, BNT reported, citing Russian media. In August, Westinghouse, a group company of Toshiba Corporation, was appointed to research whether the 1,000 MW nuclear reactor initially planned for the already abandoned Belene project could be installed at Kozloduy NPP site. The government will pay EUR 999,500 to Westinghouse for a feasibility study that was expected to be ready by March 2012. The ban on access to information related to the construction of the reactor follows AtomStroyExport's decision to raise the value of the claim against the National Electricity Company (NEK) regarding delayed payments for completed activities under the Belene project to EUR 1bn, up from EUR 58mn previously. Bulgaria's response to the move was that it would look to declare the contracts for the construction of Belene nuclear plant void and threatened to file legal suit against AtomStroyExport. 

 

Bulgaria's H1 wine exports rise 16.1% y/y

Bulgarian wine exports rose by an annual 16.1% to 25.14 million litres in the first half of 2012, the country's agriculture ministry said on Tuesday. Sales of Bulgarian wine on the domestic market amounted to 46.96 million litres in the January-June period, up by an annual 13.1%, the ministry said in a statement. In the first six months of the year Russia, Romania, Poland and the Czech Republic were the country's main foreign markets for wine. The 2012 grape harvest is expected to be 30% lower than a year earlier, due to low winter temperatures and prolonged drought during the summer months. The quality of the grapes, however, is good, the statement added. Bulgaria produced a total of 105 million litres of wine last year. The country exported some 65.6 million litres of wine in 2011, with Russia being the biggest foreign market.

 

Green energy firms to take Bulgaria to court over new fees

Investors said the cuts breach legal requirements as the regulator did not hold a public discussion on them and did not inform the companies concerned. Renewable energy developers will take Bulgaria's energy regulator to court and alert Brussels over what they called "illegal" new fees on wind and solar installations that will deal a heavy blow to the sector, they said on Wednesday, cited by Reuters. The Balkan country's energy regulator has effectively cut preferential feed-in tariffs for electricity generated by wind and solar power parks for already operational installations by imposing new grid access fees. The move will cut the preferential feed-in tariff for the photovoltaic projects completed by June 30 this year by 40 percent, and by 20 percent for projects completed before December 31, 2011. Wind power plants tariffs will be reduced by about 10 percent. Investors said the cuts breach legal requirements as the regulator did not hold a public discussion on them and did not inform the companies concerned. They also complained of a breach of competition rules by the regulatory authority, which they said was abusing its dominant position. "We will file a legal appeal to the Bulgarian court next week, and we are preparing a separate complaint to the European Commission too," Bulgarian Wind Energy Association's Executive Director Sebastian Noethlichs told a news conference. Dozens of Austrian, German, Japanese, Chinese, South Korean and U.S. companies have rushed to take advantage of sun and wind power potential in Bulgaria, which also offered lucrative incentives for green energy. But growth in installations has outpaced forecasts, putting pressure on the ageing power grid and electricity prices in the EU's poorest member state, which has been trying to cool down demand for green energy installations since last year. Investors, who have borrowed funds to build new solar and wind energy parks betting on high and guaranteed tariffs, say the regulator's move was a clumsy attempt to reverse past decisions and claw back subsidies at the expense of private capital. "The amount of loans from local banks only is 2 billion levs ($1.33 billion), without taking into account the international funding," added Noethlichs. The Czech Republic recently won court backing for a tax on solar projects, while Spain plans to raise an additional 6 billion euros ($7.8 billion) or so a year from new taxes on power generation. The total installed capacity of photovoltaic parks in Bulgaria soared to more than 700 MW by the end of August, a huge gain from the 134 MW in operation at the end of 2011, industry officials said. The surge of solar parks, however, has pushed consumer prices up 13 percent in 2012 as the government seeks to recoup the cost of the subsidies. ($1 = 1.4982 Bulgarian levs) ($1 = 0.7660 euros)

 

Bulgaria 2nd in EU by Annual Growth in Construction Production

Bulgaria is one of the three EU Member States to register an annual increase in production in the construction sector in July 2012, according to Eurostat data. In the construction sector, production in Bulgaria grew by 3.0% in July 2012 as compared to July 2011. Bulgaria is only preceded by Hungary, which scored a year on year increase of 7.7%, and is followed by Germany, where production in the construction sector went up by 2.2% on the year. According to data of the EU's statistical office, the largest annual declines in production in July 2012 were registered in Slovenia (-18.3%), Portugal (-18.2%), Spain (-16.1), and Italy (-14.2%). Compared to July 2011, production in July 2012 fell by 4.7% in the euro area and by 6.1% in the EU27. In July 2012, building construction dropped by 4.6% year on year in the euro area and by 5.4% in the EU27. Among the Member States for which data are available for July 2012, production inconstruction fell in ten and rose in five. The largest declines were recorded in Italy (-2.2%), Spain (-2.1%), and Switzerland (-1.1%), while the highest increases were registered in Hungary (+8.7%), Germany (+1.9%), Bulgaria (+1.6%) and the Czech Republic (+1.6%). In July 2012, production in the construction sector fell by 0.3% in the euro area and by 0.2% in the EU27 as compared to the previous month. In July 2012, building construction declined by 0.8% on the month both in the euro area and in the EU27.

 

Moesia Oil and Gas wins oil and gas exploration licences in Bulgaria

Irish petroleum exploration and production company Moesia Oil and Gas has won four exploration licences in Bulgaria, the government announced. The company will explore for oil in gas in the northern part of the country and the expected investment in this project will exceed EUR 9.3mn in the next five years. In August, the government signed another exploration contract with the consortium comprising French oil company Total, OMV and Repsol. The consortium will explore for natural gas in Bulgarian offshore territories. The contract brought EUR 40mn in one-off bonus to the state budget. Other recent gas exploration efforts include a EUR 7mn oil and gas exploration project in the southern part of the country, close to Greece and Turkey, where substantial deposits were recently found. Bulgaria hopes to diversify its natural gas resources that are currently entirely dependent on Russian gas imports. Local gas also costs 40% less than imported, so if drilling proves successful, this will have a significant effect on local economy and households' budgets. The state budget will also benefit and the effects are estimated to up to 30% of the revenues from the total quantity of oil and gas extracted.

 

 

 

Reported by:

GeorgiIliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea