불가리아 주요 경제뉴스 (11 - 18 DECEMBER 2009 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT ( 11 - 18 DECEMBER 2009 )

 

 

Sections/headline briefs:

 

 

MACROECONOMY:

 

·        Japan gives EUR 20 M for business projects

·        New industrial zone to be developed in Stara Zagora

·        Finance Minister: Bulgaria ends year with top EU fiscal results

·        Greek business in Bulgaria cool as Athens wobbles

·        Bulgaria may lose EUR 1 B from renewable energy moratorium

·        Consumer prices in Bulgaria go up by 33% for 5 Years

·        Municipalities need BGN 3.5 М for sewerage systems

·        Economists: Bulgaria risks scoring own goal with early Euro adoption

·        Sofia attempts to ease traffic jams with Dutch help

·        Businesses abandon more than 100 EU-funded projects

·        EU Funds Bulgaria with EUR 10.7 M under Phare Program

·        Bulgaria receives extra 36.83 M Euro for rural development

·        Bulgaria to spend EUR 660 000 on Expo 2010 in Shanghai

·        Bulgarian business calls for quality mark

·        Minister: Regional development ministry is 'No. 1' in Bulgaria

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENTS:

 

·        Lukoil to invest USD 1 billion in local refinery

·        Poland's GTC to invest EUR 300 M in four malls in Bulgaria

·        Sparkassen Immobilien to construct EUR 12 М office building in Sofia

·        Two investors mull solar energy parks of above 240 MW near Karnobat

·        Net FDI inflows fall 58.6% y/y in Jan-Oct

·        25 projects worth EUR 19 M approved under second call for proposals in Romania-Bulgaria cross-border cooperation programme

·        FIDE President: We plan to build a big chess complex in Sofia

·        Heating utilities forced to invest

·        Coalmine Maritsa East to invest EUR 49 M next year

 

 

COMPANIES:

 

·        Melrose production to surge on new Bulgarian fields

·        New Bulgaria yacht association aims to attract wealthy tourists

·        Bulgaria’s builders shift from housing to road projects

·        New owner vows to switch on idled Chimco in 2010

 

 

THE CRISIS:

 

·        Bulgarian industry warns of chain bankruptcies

·        Exports contraction narrows significantly in October

·        Bulgaria's export with record growth since start of crisis

·        Bulgaria cement producers announce partial plant shutdown

·        Bulgaria construction sector hardest hit in EU by Crisis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Articles:

 

 

MACROECONOMY:

 

 

Japan gives EUR 20 M for business projects

The Bulgarian Bank for Development (BBD) has received a loan from Japan Bank for International Cooperation (JBIC) for a second time, Sahso Chakalski, executive director and deputy chairman of BBD managing board, said. The first one, amounting to EUR 10 million, was provided in 2006. The agreement this year is twice bigger, for EUR 20 million.

Absorption
The first credit line was given solely to Bulyard Shipbuilding Industry in Varna, which has a joint project with Japan. The funds were used for the purchase of high-tech equipment, Japanese spare parts and licences for ship construction. The company is in close cooperation with Mitsubishi.

Admission
Bulyard will again apply for financing but this time other companies will be admitted on condition they have renewable energy projects. The credit line is open to all who want to make use of Japanese technologies, Chakalski pointed out. Projects for solar energy production will be in the focus. BBD will offer loans with a 10-year term and individual grace period. So far BBD has received credit lines from the Chinese Bank for Development and the Council of Europe Development Bank. By the end of the year, a credit line amounting to EUR 25 million from the European Investment Bank will be signed. All the loans are given by our partners under preferential terms due to the excellent performance and capitalisation of BBD, Chakalski commented.

New industrial zone to be developed in Stara Zagora

Businesses from the whole country can buy space in Stara Zagora's new industrial zone. Its construction was made possible by a municipal project approved under the PHARE programme worth BGN 1.653 million. The first sod was turned in June. Contractor for the construction works is Primastroy and consultant is Industrial Infrastructure consortium. After the implementation of the project we will develop industrial production, especially environmentally friendly one, mayor of Stara Zagora Svetlin Tanchev said. Construction rights are offered at a minimal fee for businesses. The municipality expects new jobs to be created in the future.

 

 

 

Finance Minister: Bulgaria ends year with top EU fiscal results

Bulgaria will end the year with the best fiscal result in the European Union, Bulgaria’s Finance Minister, Simeon Djankov, said.Djankov voiced his confidence in a Sunday interview for the Bulgarian National Radio (BNR), aiding that in 2010 Bulgaria would also be the only country to fulfill the Maastricht criteria.The Minister pointed out that the country has reached the bottom of the crisis, but the anti-crisis measures of the new cabinet are yielding positive results such as the passing of the 2010 budget and the upgraded rating by Standard & Poors.Djankov believes that thanks to the stable fiscal policies and the fight against illegal business practices, the Bulgarian economy would be BGN 1 B stronger than the forecasts.“My main goal and the goal of the cabinet is to reach a positive 2010 balance, something we already see signs it might happen,” the Minister said, adding that an additional BNG 400 M would enter the 2010 budget just from the fiscal binding of the National Revenue Agency and the Customs Agency.

Greek business in Bulgaria cool as Athens wobbles

The public finance turmoil in Greece will exert no impact on Greek companies and business in Bulgaria, Greek business representatives told a business breakfast hosted by the Hellenic Business Council in Bulgaria (HBCB). Last week global agency Fitch downgraded the state and a string of banks to reflect high debt levels and a nagging deficit, setting off a wave of sell-off of shares and government bonds. Representatives of Green companies brushed off possibilities that companies, banks in particular, will stumble upon funding difficulties following the cut in the state rating. Foreign analysts said that banks could theoretically speaking find it hard to secure funding from the European Central Bank (ECB) in 2011, when the institution is expected to raise the bottom rating requirement for collateral securing financing. Unless the agency revises its rating on Greece by that time, banks might have trouble tapping funding by the ECB’s standard operations. Some Bulgarian experts warned that if that scenario should unfold, Greek banks might start pulling back investments from their Bulgarian units. Greek prime minister George Papandreou is expected late Monday to unveil a new package of measures to prop up.

Bulgaria may lose EUR 1 B from renewable energy moratorium

The intention of the Bulgarian government to impose a temporary moratorium on the new renewable energy projects might lose Bulgaria EUR 1 B of foreign investments over the next 5 years.This was stated Wednesday at a news conference by Nikola Gazdov, Chair of the Bulgarian Photovoltaic Association.Gazdov’s statement is in response to an announced last week by Bulgaria’s Environment Minister Nona Karadzhova that the government was going to freeze the construction of renewable energy projects which were at an early stage until an all-out plan for the sector was developed.The Environment Ministry has also made it clear that in this way Bulgaria would avoid the infringement procedure initiated by the European Commission because of the started construction of wind power parks in territories included in the European protected areas network NATURA 2000. The government’s plan for renewable energy and the respective environmental assessment are expected to be approved by the EC by the middle of 2010.“If a moratorium is imposed, the foreign investors will not come back for years after it has expired. Bulgaria is going to lose huge investments and several thousand jobs,” Gazdov predicted.In his words, the lack of a clear legal framework for investments in renewable energy is repulsing potential investors in the sector.He admitted that there were many “fake” projects in the renewable energy sphere but made it clear that the failure to realize the real ones would mean staggering loses for the Bulgarian economy.“The announcement about the introduction of the moratorium caused panic and chaos among banks and investors,” he declared adding that the likely ban would affect practically all renewable energy projects in the country because only a small portion of the planned photovoltaic parks with a total capacity of 3 MW had been completed already.According to the members of the Bulgarian Photovoltaic Association, banks think that the investment environment is unstable and risky and have started to refuse funding for RES projects in Bulgaria. The Deputy Chair of the Association, Ilko Yotsev, said that his application for funding of a solar park was rejected from Raiffeisenbank after the announcement of the Environment Ministry regarding the potential moratorium.The Association has also warned that the future ban might affect the prospects of Bulgaria to achieve its goal as part of a commitment to the EU to have 16% of its energy come from renewable energy sources by 2020.

Consumer prices in Bulgaria go up by 33% for 5 Years

According to information from the National Statistical Institute (NSI), consumer prices in Bulgaria increased by 33% over the past five years. However, last year the consumer prices decreased a little. The NSI announced an inflation of 0.1% for November. The inflation over the past 12 months is negative minus 0.1%. While inflation has been going down, interests on bank deposits have been constantly increasing, up to 8.3% for deposits in BGN in November. This makes 2009 a perfect year for saving. The negative inflation is largely due to a decrease in the prices of foods, which fell by more than 4.7% over the past twelve months. The prices of the services telecommunications, clothing items, footwear and accommodation have also decreased a little.

 

Municipalities need BGN 3.5 М for sewerage systems

 

Some BGN 3.5 billion is needed for the sewerage system and water treatment facilities in Bulgaria, Nayden Zelenogorski, chairman of the association of Bulgarian towns and regions and mayor of Pleven, said at a roundtable discussion on municipal infrastructure problems. According to him, municipalities cannot provide the funds themselves, they have to come from European programmes and the state budget. The country lags behind in the construction of new water treatment facilities in towns over 10,000 residents which have to be ready at the end of 2010. Part of the facilities will be finished after the deadline. EU funds that have not been absorbed will have to be paid back. A total of 380 villages with less than 10,000 inhabitants have no water treatment equipment.

 

 

 

 

 

 

 

 

 

Economists: Bulgaria risks scoring own goal with early Euro adoption

Economists from the Bulgarian Academy of Sciences have warned that introducing the Euro in 2013 would mean for Bulgaria the scoring an 'own goal'.If Bulgaria were to adopt the Euro at that time, the country would undergo a serious shock of steep price rises, especially in the services sector, warned Professor Chavdar Nikolov of BAS.Over recent weeks, there has been renewed speculation as to when Bulgaria would seek to join the Eurozone, with the year 2013 figuring in several statements, most noticeably by Bulgarian PM Borisov, addressing the EPP Congress in Berlin. Professor Nikolov maintained that, at present, prices remain too low and would still be so in 2013. According to him, the best time for Bulgaria to adopt the Euro is 2016.

Sofia attempts to ease traffic jams with Dutch help

The newly elected Mayor of Sofia, Iordanka Fandakova, will apply for EU financing for a traffic management system aimed at easing the city's nightmare jams. The Dutch Ambassador to Sofia, Karel van Kesteren, officially handed to the Mayor of Sofia study focused on ways to ease the city's traffic congestions. The study is financed by the Dutch Transportation Ministry and has been carried out by the Dutch "DHV" and "Vialis Traffic" and the Bulgarian "Setra". The project for introducing an "intelligent system for the capital's traffic management" was presented Tuesday. The estimated necessary funds are EUR 13,8 M while the time period for the project's realization is nearly four years. Fandakova says she will apply for EU financing. The system will require appropriate software, cameras and radars to account for the number of passing vehicles and to organize "green waves", deemed crucial for eliminating the congestion. In the long term, the system will save Sofia EUR 18,1 M a year from fuel, lost time, and reduced harmful emissions. Its 10-year maintenance will cost EUR 19 M. A pilot "intelligent traffic control" system is already in place on one of Sofia's major boulevards - "Todor Alexandrov" with four different green waves, according to the time of the day. The study shows that the pilot project has reduced travel times on the boulevard in half.

Businesses abandon more than 100 EU-funded projects

One in six companies with a contract under the competitiveness operational programme has cancelled its project. That emerged from data provided by the ministry of economy, energy and tourism two years after the start of the programme. A total of 738 business agreements have been signed so far but 124 of them will not be carried out. That will result in EUR 16.6 million savings. As much as EUR 3.1 million has been paid to businesses, i.e. 0.27% of the total programme amount. Another EUR 0.936 million has been used for technical aid.

Projects
The bulk of projects terminated by beneficiaries are connected with technological upgrade of small and medium enterprises: a total of 71. Another 45 of the abandoned projects are related to implementation of international standards. Three innovation projects will not be fulfilled either.

Reasons
The slow project appraisal and fund remittal discouraged beneficiaries. Assessment under the programme was very sluggish and when it was finally completed, the situation had changed drastically, the management board chairman of the Bulgarian Association of Micro Enterprises, Petar Stoyanov, told the Pari daily. Even innovative ideas had become stale. Meanwhile companies had changed their priorities.

Financing
A great amount of the financing will never be absorbed, because the crisis has depleted companies' resources and they cannot implement their projects, even though they will be refunded later on, Programme Consulting manager Valeri Karamanov pointed out. Currently most businesses cannot prove they have sufficient incomes to guarantee bank loans.

Changes
The complicated application procedures discouraged companies, Zhulieta Hubenova, EU programme consultant at the energy ministry, told the Pari daily. However, she promised that as early as in the beginning of 2010 the planned improvements will yield results. That is very important since new schemes for nearly EUR 0.5 billion will be opened next year. The tender procedures will be eased and more specific assessment criteria will be introduced.

EU Funds Bulgaria with EUR 10.7 M under Phare Program

The European commission has decided to unfreeze 10.7 million euro of Bulgaria`s funds under the Phare Program, said Silvia Injova, national coordinator of the accession funds. The money has been allotted following two requests for the implementation of several projects. By the end of the year we expect to receive another 23 million Euro in EU funds under Phare, Injova added. The deadline for the payment of funds under the ISPA program will be extended by one year, if there is an approval of such an extension, she went on. Twenty-eight projects under the SAPARD program will be financed with funds from the state budget next year, provided that no infringements have been committed.

Bulgaria receives extra 36.83 M Euro for rural development

The European Commission has agreed to allot an extra 36.83 million euro to Bulgaria under the program for development of rural areas 2007-2013, agriculture minister Miroslav Naydenov said. The money has been allocated under the EU plan for economic reconstruction of the Balkans. “The co-financing from the Bulgarian government is in the size of ten percent (over 3.8 million euro),” the minister added. Fifty-six percent of the funds will be used to finance projects for the construction of water treatment plants an sewerage infrastructure, while 35% will be allocated for projects involving biomass processing and renewable energy sources; finally, nine percent of the funds have been earmarked for restructuring of the milk processing sector. By 2013, Bulgaria could appropriate more than three billion euro under the program for development of the rural areas. The financial aid for coping with new challenges such as climate change, projects involving renewable energy sources, water management and biodiversity, innovations and restructuring of the milk processing sector, as well as the development of broad band internet in the rural areas, will increase by ten percent.

Bulgaria to spend EUR 660 000 on Expo 2010 in Shanghai

Bulgaria’s cabinet decided Wednesday to allocate BGN 1,320 M for the country’s participation in Expo 2010 entitled “Better City, Better Life” in Shanghai, China.The money will come from economization measures at the Ministry of Economy, Energy and Tourism.Bulgaria’s participation in the Shanghai 2010 Expo is seen by the government as part of a wider national strategy aimed at attracting foreign investment and improving the country image as well advertising it as a tourist destination.The “Better City, Better Life” Expo is taking place between May 1 and October 31, 2010.

Bulgarian business calls for quality mark

During talks with economy minister Traycho Traykov and agriculture minister Miroslav Naydenov that took place yesterday on the sidelines of the third edition of the national campaign "Safe Christmas", representatives of the Bulgarian business proposed that the government introduces a special sign for the high-quality goods and services on the market. The two ministers became patron of the campaign, organized by the Standart.
Deputy Interior Minister Pavlin Dimitrov and national ombudsman Ginyo Ganev also took part in the discussion. The fair merchants in Bulgaria should be put on a "white list", said Tsvetan Dimitrov, representative of Petrol JSC. He backed the idea of the Standart Editor-in-Chief, Mrs Slavka Bozukova that there should be a place in every shop or store where people cloud learn about their rights and file complaints if necessary. It is all very normal that the best goods should be marked - no matter it is a concrete product or a whole brand. The businessmen and the politicians shook hands and agreed that the campaign for safe products and services should happen not only at Christmas but all the year round. "Our aim is that the Bulgarian should buy not only safe but also quality food," said Miroslav Naidenov. He reminded that an agency on food control will be established with the Ministry of Agriculture. "I hope Safe Christmas campaign will serve as an example about how things should be  in general," said Bulgaria's Minister of Economy, Traycho Traykov.

Minister: Regional development ministry is 'No. 1' in Bulgaria

Rosen Plevneliev claimed that his was the first and most ambitious of all Bulgarian ministries, when opening a Sofia conference on "Progress on implementation of Operational Programs (OP) Regional Development". The Minister of Regional Development and Public Works based his claim on the fact that it had already sent its compliance assessment to the European Commission. Plevneliev said on Thursday that he hoped to receive a positive assessment from Brussels within six to eight weeks. According to him, the results of the projects included in the operational program are already available. "We already have European schools, European kindergartens, and European roads," he stated. Payments under contracts of OP "Regional Development" are worth EUR 60 M at present, said Liliana Pavlova, Deputy Minister of Regional Development and Public Works. She noted that, only a month ago, the payments were worth over EUR 30 M, and said it was necessary to continue accelerating the pace of settlement of the projects. The total cost of the program is EUR 1,6 B, Pavlova stated. She added that, once the Bulgarian government approves the concept for restructuring hospital care in the country, an open scheme for the operational program will begin, which will provide funding to state hospitals to a total of BGN 148 M, with BGN 100 M going to municipal hospitals.

 

 

 

 

INVESTMENTS:

 

 

Lukoil to invest USD 1 billion in local refinery

 

Russia’s oil major Lukoil is to invest USD 1 billion in a hydrocracking unit in its local refinery Lukoil Neftochim, located in the southern Black Sea city of Burgas, Lukoil’s first vice president Vladimir Nekrasov unveils. The project has already been drafted and the equipment has been ordered. Next year, Lukoil plans to invest USD 250mn in repair and upgrade of the petrochemical production at the refinery and USD 22mn in development of its network of filling stations across the country. In February, the refinery will shut down for 40 days to connect two new desulphurisation units worth USD 300mn, which will enable it to produce fuels under the Euro 5 standard. Lukoil Neftochim processed 7.12mn tons of crude oil last year, up from 7.06mn tons in 2007 and the planned 7.08mn tons for 2008. The refinery upped its sales by more than 23% to BGN 7.13bn (EUR 3.64bn) last year but posted pre-tax loss of BGN 479.6mn as compared to net profit of BGN 104mn in 2007 due to volatile world oil prices. Lukoil Neftochim is the largest refining and chemical processing plant on the Balkans. It employs 3,000 workers. Lukoil Neftochim exports half of its production to neighbouring Balkan countries and reportedly covers 80% of the motor fuels demand in the country.

 

Poland's GTC to invest EUR 300 M in four malls in Bulgaria

 

As much as EUR 300 million will be invested by Poland's GTC in four malls in Bulgaria. The shopping centres, named Galleria, are under construction in Stara Zagora, Varna and Burgas but the project in Ruse has been tabled for now. We have rent agreements for about 50% of the space in Galleria Stara Zagora, GTC's Ivana Bozicevic said. Prices range from 10 to 40 euro/sq. m but they will be raised when more than 70% of the space is occupied, she explained. The rents will also depend on shops' turnover. The mall in Stara Zagora will include a Mercator hypermarket, a DM drugstore, outlets of Zara, Bershka and Stradivarius, nine cinema halls and a covered parking lot. The project will have a total floorage of 26,000 sq. m and will open in August or September 2010.
Galleria in Varna will be finished in the spring of 2011. Its 38,000 sq. m total area will include 160 shops, 12 cinema halls, a Piccadilly hypermarket, restaurants and an entertainment area, as well as a 1,300-car parking lot. The mall in Burgas will be ready in the autumn of 2011. Its 130 shops, 10 cinema halls, Mercator hypermarket and entertainment facilities will be located on a total area of 37,000 sq. m. The centre will offer parking for 1,250 vehicles.

 

 

 

Sparkassen Immobilien to construct EUR 12 М office building in Sofia

 

Austria’s real estate company Sparkassen Immobilien plans to construct a EUR 12mn office building in the capital city of Sofia . The facility should be completed by 2013. The Austrians run a project for building a small office building of 5,000 sqm. Sparkassen Immobilien confirms that it will open the shopping centre Serdika Centre in the spring. The project, estimated at a total of EUR 210mn, is run in cooperation with German ECE Projektmanagement.

 

Two investors mull solar energy parks of above 240 MW near Karnobat

 

Two consortiums have declared interest in building solar energy parks in the south-eastern town of Karnobat , mayor Georgi Dimitrov informs. The facility will be located on 649 ha and will be run under concession. High Solar Energy, comprising five companies some of which from Ireland and Portugal , has offered to build photovoltaic instalment of total production capacity of 500 MW but needs larger plot of 1,124 ha. Initially, the capacity of the park will amount to 320 MW. Another consortium between Germany ’s Kuessel and the local Unlimited Energy has earmarked EUR 570mn for the construction of a 240 MW solar energy park on a land plot of 600 ha and is ready to launch construction works next year. Last year, the municipality of Karnobat allocated 570 ha of land to a 35-year concession project for building solar and wind-power generators. Germany ’s N-Vision unveiled plans to invest some EUR 125mn in the construction of a wind-energy park with total installed capacity of 100 MW near Karnobat. Karnobat wind farm may become operational by the end of next year. In September, a consortium between Greece ’s Alpha Grissin SA and Spain ’s Preneal Internacional signed 30-year concession agreement for 842.4 hectares land plot near Karnobat to build a wind-power park with production capacity of 111MW. The total investment in the facility is expected at EUR 155mn.

 

Net FDI inflows fall 58.6% y/y in Jan-Oct

 

Net FDI inflows declined by 58.6% y/y to EUR 2.24bn in Jan-Oct, according to preliminary data of the central bank. The contraction steepened from revised 51.7% y/y in Jan-Sep. In October alone, the net inflows collapsed by 99.2% y/y to only EUR 6mn in October. The net FDI covered the CA deficit at 90.8% in Jan-Oct as compared to 100.9% in Jan-Sep. In annualised terms, net FDI were 67.6% of the CA gap as of the end of October deteriorating from 70.6% a month earlier as additionally the CA balance turned negative again during the month.

 

25 projects worth EUR 19 M approved under second call for proposals in Romania-Bulgaria cross-border cooperation programme

 

Nineteen project proposals to an aggregate value of some 10 million euro, submitted to the Joint Technical Secretariat of the 242 million euro Romania-Bulgaria Cross-Border Cooperation Programme 2007-2013 until January 31, 2009, and another six project proposals for some 9 million euro, submitted until March 31, 2009, were approved for financing by the Programme's Joint Steering Committee at its Second Meeting, which took place in Silistra (Northeastern Bulgaria) on Tuesday, Bulgaria's Ministry of Regional Development and Public Works said in a press release. The second call for proposals was opened on October 1, 2008. More than 300 project proposals were submitted, requesting financing which exceeds the 101,464,403 euro allocated for this call by 279 per cent.

FIDE President: We plan to build a big chess complex in Sofia

It is not by chance that FIDE has decided to give the world chess championship match between Topalov and Anand to Bulgaria – in the past few years Bulgaria has established itself as a big chess nation,” FIDE President Kirsan Ilyumzhinov said.
“Although a small country, Bulgaria has world class chess players like GM Veselin Topalov and GM Antoaneta Stefanova,” he added. Mr. Ilymzhinov gave an exclusive interview for the Standart.

- Mr. Ilyumzhinov, what do you think of the Topalov v Anand match?
- They both are world famous chess players. Anand has a very strong theoretical grounding and so does Topalov. This is why I think we’ll see some theoretical innovations during the match. Both players are at the top of the FIDE standings and they both have won the world chess crown. The game could only benefit from a match between these two chess giants – the popularity of the game will grow and there will be a lot of benefits for Bulgaria, as well. The official website of the Kramnik v Topalov match in Elista was visited by millions of chess fans every day. I think that the interest in the world chess championship match in April-May 2010 will be equally high. on the whole, the even will strengthen Sofia’s positions as a chess capital, which will soon have a big chess complex.

 

Heating utilities forced to invest

Sofia's heating utility will have to invest about EUR 280 million in a modern 400-megawatt cogeneration facility to be able to sell electricity at preferential prices. The same holds true for all other heating utilities that have low-efficiency cogeneration facilities. From 2010 they will not receive preferential prices if their electricity/heat cogeneration installations are not efficient, the CEO of Toplofikatsia of Pleven, Valentin Terziyski, told the Pari daily.

Preferences
The revocation of preferential prices will considerably increase heating rates, Toplofikatsia of Sofia's CEO Petko Milevski pointed out. Many utilities may opt out of electricity production, because it will not longer be profitable. Currently most heating utilities rely on these revenues, Toplofikatsia of Burgas's CEO Valyo Duchev added.

Upgrade
The utilities in Pleven, Burgas, Varna, Vratsa and Veliko Tarnovo have already invested in high-tech installations, Terziyski said. EVN Bulgaria Toplofikatsia in Plovdiv has also upgraded its cogeneration, which will allow it to meet the high efficiency requirement. Next year EVN plans to launch the construction of the most modern such facility in Bulgaria. It will generate 45 mW of electricity and 50 mW of heating.

 

Coalmine Maritsa East to invest EUR 49 M next year

 

The state-owned coalmine Maritsa East, located in the southern part of the country, plans to invest BGN 96.4mn (EUR 49mn) next year. CEO Todor Todorov thinks the capital expenditures of the company may exceed BGN 100mn. The EBRD-administered fund for investments in energy projects as a compensation for the closure of four units of the nuclear plant in Kozloduy will grant EUR 15mn to improve the energy efficiency of the heavy mining equipment next year. Todor Todorov, who took the CEO position in July, expects Maritsa East Mines profit to exceed the target of BGN 1.2mn for this year as a result of the improved management and the reduced costs. The financial result of the coalmine, part of the Bulgarian Energy Holding, was negative at BGN 23mn in H1 and the previous management was projecting a loss of BGN 48mn for the full year. Maritsa East Mines provide inputs to three thermo-power groups in the region with total production capacity of about 2,500MW that will be raised to more than 3,000MW after the completion of ongoing modernisation and upgrade projects. Maritsa East raised its production by 3.3% to 24.7mn tons of coal last year, which is 7% above the corresponding target.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANIES:

 

Melrose production to surge on new Bulgarian fields

Edinburgh-based oil explorer Melrose Resources is on track to produce 40,000 barrels of oil a day next year as it brings two new Bulgarian gas projects on stream, the Scotsman reported.The FTSE 250 company was Bulgaria's largest producer of domestic gas for several years until 2008, when its Galata field in the Black Sea was exhausted. Most of the country's supplies come from Russian giant Gazprom.Next year, Melrose plans to spend USD 51 M bringing the Kavarna and Kaliakra fields into production in July and October. This move is expected to restore its Bulgarian production to 2007 levels.The group said yesterday that it was still hopeful of signing off a gas storage agreement with the national government, a potentially lucrative deal that would pump gas into the now disused Galata field during periods of low demand.New production from Bulgaria and increased production from Egypt means Melrose now expects to produce 40,000 barrels of oil equivalent a day in 2010 – 1,500 barrels a day more than its previous forecasts.The group, majority-owned by executive chairman Robert Adair, will get more than 80 per cent of its production from Egypt, which will also be the focus of its exploration campaign.Chief executive David Thomas said that Melrose "should start to reap the benefits" of its recent development programmes in 2010, with strong cash-flow funding its active exploration campaign.

New Bulgaria yacht association aims to attract wealthy tourists

16 of the largest companies engaged in production and marketing of yachts have founded an Association in Bulgaria.The Association of Producers and importers of yachts in Bulgaria is a non-profit organization and has set out to become the official professional organization which defends the interests of producers and importers of luxury marine vehicles in Bulgaria.Lachezar Bratoev was unanimously elected by open ballot as Chairman of the Association. He is also Chairman of the Association of yacht ports in the country. The headquarters of the new association is in Burgas."It is a good opportunity for our country to become a prestigious yacht destination and to attract wealthy tourists," Bratoev concluded.

Bulgaria’s builders shift from housing to road projects

Large-scale companies that flocked to build holiday and golf projects in Bulgaria are now gunning for the upcoming Trakiya motorway tender and are in talks to snap up road builders. A poll of Dnevnik to gauge interest for the tender showed that construction companies are ditching holiday, residential and golf complexes, shirting their focus to highways and roads. The change of focus is prompted by the reallocation of cash pots provided under the EU’s operational programmes. Thus, the EUR 1 billion lined up to develop Bulgaria’s threadbare road infrastructure seem a lucrative bite as housing construction and tourism are down in the dumps. We have been developing our road business for the past seven or eight months, Nikolay Galchev, owned of Galchev Engineering Group, told Dnevnik. The company built a name thanks to a spate of holiday properties it scattered on the Black Sea coast and the upscale mountain resort of Bansko. He added the company has vied in six tenders under the Transit Roads V programme for the repair of some 1.535 kilometres of road network. Galchev is holding negotiations to team up or acquire a number of road companies, he said, without elaborating. The firm has purchased papers for the Trakiya tender but has not yet made up its mind on whether it will submit an offer, nor has it chosen a partner. Balkanstroy, a local company that has developed a golf project in Razlog as well as a raft of housing and holiday properties nationwide, will bid in the tender, said manager Nikolay Kaloyanov, but did not name its partner. “Our colleagues from the high-construction sector are eyeing highway projects. While we respect their experience, we think that have no experience in road construction,” said Roumen Yovchev, chairman of the Roads industry chamber and executive director ofMoststroy, parting of Holding Roads. He announced he would propose more stringent criteria for companies eligible for first- and second-category building projects, which include infrastructure development. The Bulgarian companies that raced in last year’s suspended tenders for the highway will be back to the game. Holding Roads, Glavbolgarstroy, Avtomagistrali-Tcherno More and Trace Group will tie up with other local firms to fulfill the tough criteria. Some of the foreign companies that bid last year are also coming back. Some 60 companies have so far purchased documents to build the section linking Stara Zagora and Nova Zagora with a projected cost of EUR 96 million. Bids can be submitted by January 12.

New owner vows to switch on idled Chimco in 2010

Bulgaria’s troubled fertiliser maker Chimco will resume operations in October or November 2010, the plant’s new owner, construction entrepreneur Nikolay Galchev, told Dnevnik. The businessman said his holding company Galchev Engineering Group as acquired the plant, which has been dead for a few years, from Novo Chimco around five months ago. Quoting a commercial secret, Galchev was mum about the financial details of the recent transaction. He revealed an agreement has been reached with the government, including a reschedule of the plant’s debt, Galchev said. Payments are scheduled to begin in May 2010. In end-2007, Novo Chimco got hold of the facility after paying BGN 85.7 million, the amount t it owed to its creditors. The businessman said he is negotiating with seven or eight candidates, mostly foreign companies, seeking a strategic gas supply partnership. Separate talks are underway to secure markets for the plant’s core produce of carbamide and fertilisers. Galchev will stick to the rescue plan for the facility that has got the nod of the government. Asked about the possible scenarios if the plant failed to come back to life in October, Galchev he “don’t dare even think about it.”

 

 

 

 

 

 

 

 

 

 

THE CRISIS:

 

Bulgarian industry warns of chain bankruptcies

 

Bulgaria's Industrial Association (BIA) warned on Monday that mass bankruptcies of companies were now a serious threat because of rising debt levels."The danger of chain bankruptcies has become real due to the freezing of intercompany debt payments," the association, one of the biggest industrial groupings in Bulgaria, said in a report.Defaulted company debts in Bulgaria were expected to reach a total 210 billion leva (107 billion euros, 157 billion dollars) at the beginning of next year, compared to 190 billion leva at the beginning of 2009, BIA President Bozhidar Danev said.In comparison, intercompany debts at the end of 2008 stood at 90 billion leva, he added.According to the association, state authorities were partly responsible for the looming debt troubles of many companies because they were not paying them on time for their work on public tenders. The sectors worst affected were commerce, construction, real estate, electricity distribution and transport, the report noted.

 

Exports contraction narrows significantly in October

 

The exports decline narrowed to only 6.7% y/y to BGN 2.36bn (EUR 1.2bn) in October from 20.1% y/y in September, according to preliminary data of the statistical institute. The exports to non-EU countries were by 3.3% y/y lower, compared to more than 40% y/y in September, while exports to the EU contracted by 8.7% y/y in October and 2.5% y/y in September. In the ytd readings total exports fell by 26.6% y/y as compared to 28.8% y/y in Jan-Sep. At the same time, imports contracted by 34.9% y/y in October and 35.4% y/y in Jan-Oct. As a result the foreign trade deficit continued improving at a fast rate of 73.1% to BGN 500.7mn in October and by 51.5% y/y to BGN 6.8bn in Jan-Oct. It reached 10.7% of the full-year GDP forecast in Jan-Oct improving from 21.1% of GDP a year earlier. The improvement in the foreign trade gap is the main reason for the CA deficit contraction, which the government expects to reach some 11% of the GDP forecast for this year down from 25.3% of GDP last year. The central bank will provide detailed balance of payments data today.

Bulgaria's export with record growth since start of crisis

In October 2009, Bulgaria’s export registered a record monthly growth for the last year.According to data of the Bulgarian National Bank, Bulgaria’s export grew by 15% in October compared to September 2009, reaching EUR 1,21 B.Its decline compared to October 2008 was only 5,5%, compared to a year-on-year decline of 20% in September 2009.In January-October 2009, Bulgaria has a negative foreign trade balance of EUR -3,5 B, which is twice smaller compared to the first ten months of 2008.Bulgaria’s foreign direct investments in January-October 2009 amounted to EUR 2,33 B – which is also twice smaller than the EUR 5,87 B attracted in the first ten months of 2008.At the end of October 2009, the foreign direct investments cover 95% of Bulgaria’s current account deficit.

Bulgaria cement producers announce partial plant shutdown

Devnya Cement and Vulkan Cement have announced that they have temporarily shut down all the furnaces in two of their production plants.These actions are a result of the long-term and serious impact of the economic crisis on the Bulgarian construction industry, the group has announced on Wednesday.They have reported a decline in production demand of more than 40% in 2009 compared to the previous year.The planned suspension is expected to last for the two months of December 2009 and January 2010. These actions are intended to optimize costs and material stocks during the winter season.During this period, most employees will be on leave or in another working position. Devnya and Vulcan will continue operations and grinding of cement supply in order to meet the needs of their customers.This is the third time this year when the company has been forced to take such action. The furnaces in two plants were shut down in March and August.These reactions, reflecting the seriousness of the current economic situation, are unprecedented in the history of the group in Bulgaria over the past 10 years.Devnya Cement and Vulkan Cement are part of the Italcimenti Group. They have operated in Bulgaria since privatization in 1998, where the group is the market leader in cement manufacturing.Italcimenti is the fifth largest cement producer in the world, with annual output of 70 M tons in 22 countries, and the largest supplier in the Mediterranean basin.

Bulgaria construction sector hardest hit in EU by Crisis

A statistical analysis of the European construction sector released on Thursday shows that the greatest drop in output was registered in Bulgaria.In October, Bulgarian construction output fell by 4,4%, according to initial estimates. The year-on-year decrease for Bulgaria was 25.1%.The EU 27 states showed an overall drop in output for October of 0,7%, and an annual fall of 9,9%.On an annual basis, Poland, the Czech Republic and Germany showed an increase in production output, varying between 0,2% and 3,3%.These first estimates were provided by Eurostat, the statistical office of the European Communities.