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BULGARIA


  
  

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 19,859 15,608 13,600 69
         
GNI per capita
 US $ 2,130 1,790 1,650 106
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 118 - (29/03/07)

Bulgaria became a member of the EU as of January. This means it is now operating in a tripolar world, with Russia and the FSU as a whole on the one hand and the US on the other as the two other poles.

Turkey and the Middle East are also important, but not as much as the three giants in question.

Efficient use of EU funds 
It has already established procedures and mechanisms for the efficient utilisation of EU funds, Prime Minister Sergei Stanishev has told members of Parliament.

In 2006 Bulgaria accepted a law for financial management and control of the public sector and a law for internal audit, Stanishev said. These regulations also aided the distribution of EU funds.

Another positive step was the setting up of controlling institutions in various offices, responsible for EU fund utilisation, Stanishev said as quoted by the Bulgarian National Radio.

Bulgarian National Audit Office will also exercise control. 

Stanishev listed some of the measures to be used for controlled fund distribution. Institutions will be given the chance to report any violations or suspicions of fund misuse. Additional practices will be introduced to increase transparency and efficiency.

All institutions and measures were created following EU recommendations, Stanishev said.

Three Nations Finalize Oil Pipeline Deal
Meanwhile the business of government goes on. Bulgaria is keen to maintain close ties with Russia and Central Asia, not least for their energy supplies. Bulgaria, Greece and Russia have signed an agreement finalizing the details for the construction of a long-awaited oil pipeline that will funnel Russian oil directly to southeastern Europe - bypassing Turkey's busy Bosphorus Straits.

No immediate details were announced about the cost of the privately funded project, in which a 175-mile pipeline will be built, but experts had estimated it at between US$1 billion and US$1.3 billion.

The pipeline will bring Russian oil from Bulgaria's Black Sea port of Burgas to Alexandroupolis in northeastern Greece, bypassing the environmentally vulnerable Bosphorus Straits. Russia is expected to have a 51 per cent share in the deal, with Bulgaria and Greece splitting the remaining 49 per cent.
In discussion since the early 1990s, the venture received new interest because of high oil prices.

Andrei Dementiev, Russian Deputy Minister of Industry and Energy, said the signing was an important step to compensate for time that has been wasted so far.

The agreement must be approved by the three governments, said Bulgarian Deputy Minister of Regional Development Kalin Rogachev, who signed the agreement on Wednesday. "The project puts Bulgaria on the world energy map," he said.

The Burgas-Alexandroupolis pipeline, tentatively scheduled for completion by 2010, would initially carry 700,000 barrels of oil a day port through a 36-inch pipeline, with capacity set to eventually rise to more than 1 million barrels a day.

Russia's Gazprom-Neft and Rosneft are to participate in the venture, along with Russian-British venture TNK-BP, Bulgargaz and Terminal Universal Burgas from Bulgaria, and Greek companies Hellenic Petroleum and Thraki.

Last September, Russian President Vladimir Putin, Greek Prime Minister Costas Karamanlis and Bulgarian President, Georgi Parvanov, met in Athens to pledge political support for the project. Putin last week again urged faster progress.

In Athens, Greek Development Minister, Dimitris Sioufas, stressed the pipeline's "important and positive economic impact on the wider region."

"The project enhances the geostrategic position of Greece and Bulgaria and gives them an important role in serving the Mediterranean and European markets," Sioufas said.

It remained unclear whether the agreement would resolve a dispute between Sofia and Moscow over ownership of the Burgas oil terminal. Opposition lawmakers in Bulgaria argue the deal should be scrapped if Russian companies are granted control.

Burgas-Alexandroupolis could compete with another planned pipeline venture.

Macedonia, Albania and Bulgaria have agreed to build an east-west pipeline from Burgas to the Albanian port of Vlore. The 556-mile pipeline is also due to be completed in 2010, costing an estimated US$1.2 billion. 

Bulgaria is becoming a hub of the EU energy system:- 

New energy horizons for Europe
The European Commission welcomed an intergovernmental agreement to construct a Trans-Balkan pipeline that will be built on EU territory, bypassing the crowded Bosporus Straits. "It is going to alleviate the pressure on a very environmentally-sensitive area and it is going to increase the security of supply by providing an alternative route for the transit of oil. So, however you look at it, it's positive," Ferran Tarradellas Espuny, spokesman for Energy Commissioner Andris Piebalgs, told New Europe from Brussels on March 16th.

A day earlier, at the Presidential Mansion in Athens, Russia, Greece, and Bulgaria in excellent ambience signed an agreement on the construction and operation of the Bourgas-Alexandroupolis pipeline. Russian President Vladimir Putin, Greek Prime Minister Costas Karamanlis, and Bulgarian Prime Minister Sergei Stanishev attended the signing ceremony, marking a new era for the transport of Russian and Caspian crude to Europe.

Signing the agreement on behalf of the three countries were Greek Development Minister Dimitris Sioufas, Russia's Industry and Energy Minister Viktor Khristenko and Bulgarian Regional Development Minister Asen Gagaouzov.

The Greek premier, in full command of the signing ceremonies, told a well-attended press conference this "historic day" is the result of intensive preparation leading to the implementation of this strategic project. "This has been a pending issue for 14 years and it is now being managed in the best possible way for the benefit of all," said Karamanlis, who helped overcome last minute obstacles in negotiations.

He pledged that Greece will continue to work on the pipeline at the same intense pace in order to make up for lost ground and complete the work as quickly as possible.

Karamanlis said this project will place Greece and Bulgaria on the energy map. "Apart from individual benefits for individual countries this is a wider issue and a wider project that will be beneficial for the global energy market since it facilitates access to oil and products that are important products.

"Putin defined the project's significance for energy security, noting that the Trans-Balkan pipeline will provide an opportunity to think about expanding supplies from the Caspian region through Russian territory.

"We are all equally interested in making this project happen. Bulgaria, Greece and Russia are equally interested in the construction of this pipeline, but, of course, as my colleague - the prime minister of Greece - said this is a project that is interesting for all the energy markets globally because the implementation of this project also provides a scope for further considerations on how oil will be brought further from the Caspian Sea," Putin said in response to questions. "It will be very interesting for US companies, Azeri companies or Kazak companies. This will also increase energy supplies for the global market.

"In turn, Stanishev said the pipeline is of geo-strategic significance and will play an important role in strengthening energy security. "This is a new beginning of an era to come which should lead to great infrastructure works and projects which should play a very important role not only in Greece but rather in Europe.

"It's notable that the Russian president stressed that the pipeline will be filled with new volumes of oil, which will be transported through Russia among others.

Assessing the Russian president's statements, the EU energy spokesman welcomed the possibility of using Kazakh and Azeri oil for the pipeline. "That's perfect. That's reasonable because from a commercial point of view the more people you have using the pipeline, the more money you are going to get. So it will be risky to say they cannot use Kazak or Azeri oil, if they don't have enough oil to fill it," Tarradellas Espuny told New Europe.

The agreement to build the Bourgas-Alexandroupolis pipeline could also have a positive effect for another project, the Chevron-led Caspian Pipeline Consortium (CPC) -- operating the pipeline running from the Chevron-led Tengiz field in Kazakhstan to the Black Sea.
The CPC partners - Kazakhstan and Chevron - have been asking for Russia's permission to double the size of CPC capacity. "Russia has blocked that pipeline's capacity expansion until the Bosphorus pipeline is agreed because otherwise that oil from the Caspian would be competing with Russian oil trying to get out of the Bosporus," Chris Weafer, chief strategist at Moscow's Alfa Bank told New Europe. Speaking telephonically from Washington DC, he said, "Russia has been telling Chevron: 'If you want permission for the doubling of the pipeline you have to lean on the US State Department to put pressure on Greece and Bulgaria to agree on the pipeline.'

"Washington, which backed a competing Trans-Balkan pipeline -- the Burgas-Vlore oil pipeline project - has eased its reservations about Bourgas-Alexandroupolis, realising that a bypass of the crowded Bosphorus Straits, where tankers sometimes have to wait inline for 10 days, was long overdue.

Just a few days before Russia, Greece and Bulgaria signed the agreement for the construction of the Bourgas-Alexandroupolis pipeline, US Deputy Secretary of State Matt Bryza, who visited Turkey and Greece, said Greece and Bulgaria are US' allies in NATO and American companies are interested in the pipeline, so Washington does not oppose the pipeline.

Asked if American companies would participate in constructing the Bulgarian portion of the pipeline, the Bulgarian development minister told journalists in Athens it would be decided by the time construction is set to begin. He noted, however, that transit fees would be collected by Bulgaria.

Meanwhile, Bryza has urged diversity and multiple means of transport of hydrocarbons. The US opposes Russia's proposal to participate in the Turkish-Greek-Italian pipeline deal, which will transport natural gas from the Caspian region and the Middle East to Europe. Putin's visit to Greece followed his trip to Italy where Russian gas giant Gazprom and Italy's ENI finalised the details of a major gas deal.

Politicians, company executives and analysts alike believe the Bourgas-Alexandroupolis pipeline is ready to move forward. Transneft CEO Semyon Vainshtok told journalists in Athens that Russia, Greece and Bulgaria will form an international company and register its head office. According to the intergovernmental agreement, the international company will be registered in a European Union member state. A tender will then be held to conduct a survey and a feasibility study, and construction will start after it has been completed. This will all be done "within a very short time, in less than a year or two," Vainshtok said. Asked if everything will go well, Vainshtok said he is certain since Russian oil will be flowing through the pipeline.

Commenting on the agreement, Alfa Bank's Weafer said: "Everybody believes it's a done deal. In terms of the political decision to do it, I don't see any further obstacles. It looks like all parties have finally agreed ... Even the US now wants it done."

U.S., Bulgaria in joint aviation training
If Sofia is looking eastwards for energy, it is looking westwards for its military ally. From March 19 to 30 Bezmer aviation base hosted joint training of Bulgarian and U.S. air forces, the latest result of its year-long alliance with Washington. 

The aviation training took place under the name Thracian Spring 07. U.S. medical personnel, the 37th Airlift Squadron and members of the Bulgarian Air Force took part in the humanitarian relief training. 

Participants in Thracian Spring 07 were to be trained according to NATO transport aviation procedures. The training was to make use of simulations and participants to be instructed how to act in conditions of serious incidents and natural disasters. 

Bulgaria's Foreign Minister Ivaylo Kalfin and Secretary of State Condoleezza Rice signed in April last year the agreement for the location of U.S. military bases on the territory of the Black Sea country. 

Under the agreement the U.S. will be able to use three Bulgarian military bases - the Novo Selo range and the Bezmer both near Bulgaria's border with Turkey, and the Graf Ignatievo airfield in central Bulgaria. US forces will also use a storage facility near Bulgaria's port of Burgas. 

The agreement, which will be valid for 10 years, provides mechanisms for bilateral consultations over the actions of the US forces in Bulgaria.

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AVIATION

Fraport to invest 10m in airports in Varna, Bourgas


In 2007, Fraport Twin Star Airport Management AD will invest 10 million Euro each in the two airports in the Black Sea cities of Varna and Bourgas, Andreas Helfer, executive director of the company who won the concessions on the two facilities, said a meeting, Sofia News Agency reported. 
Work is going on for the completion of Terminal 5 of the Varna Airport.

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CREDIT RATINGS

Moody's raises bond rating outlook from stable to positive 

Moody's Investors Service said it has raised the outlook on the Government of Bulgaria's Baa3 long-term foreign and local currency bond ratings to positive from stable, a press release from the agency reported. 
The alterations in outlook was due to the government's strong fiscal position, robust economic growth and expected Euro zone membership. Economic growth has been robust and macroeconomic volatility has declined. The outlooks on Bulgaria's A1 foreign currency bond ceiling, Baa3 foreign currency deposit ceiling and Baa1 local currency deposit ceiling were also changed to positive from stable. The change did not affect Bulgaria's local currency bond ceiling, which is Aa3. 
Citing Bulgarian government's budget surplus of 3.7 per cent of GDP in 2006, Kenneth Orchard, Moody's lead analyst for Bulgaria said that this is the largest surplus of any European Union member country and indicates that the government strongly follows a prudent fiscal policy. 
The ratio of government debt to GDP has declined dramatically from 66 per cent in 2001 to about 24 per cent today. "Risk is further diminished by the improved currency and maturity structure of the government's debt, combined with a substantial fiscal reserve account that could be tapped in a period of stress," Orchard added. In Moody''s view, high rates of investment should allow the economy to continue to grow at the current trend over the medium term.
Bulgaria is expected to join the Euro zone eventually. "Bulgaria currently meets the deficit, debt and interest rate Maastricht criteria for Euro adoption but does not meet the inflation criterion," said Orchard.

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ENERGY

Russia, Greece, Bulgaria endorse pipeline agreement

Russia, Greece and Bulgaria endorsed the Bourgas-Alexandroupolis oil pipeline agreement in the Bulgarian coastal city of Bourgas. Russian Deputy Industry and Economy Minister Andrey Dementiev, Greek Secretary General of the Development Ministry Nikos Stefanou and Bulgarian Deputy Regional Development Minister Kalin Rogachev signed the document, Focus news agency reported. 
The pipeline project would strengthen Bulgaria's positions on the European energy market, Rogachev said. 
Stefanou said the project is an alternative way of the Bosporus Straight for transportation of oil from Russia and the Black Sea to EU countries. The route is safe and offers opportunities for high economic effectiveness. 
The agreement between the three governments will be signed in Athens after which an international project company will have to be set up. 
Construction works will start in the beginning of 2008 and have to finish within shortest terms, Stefanou said. 
One of the participants in the project - Russian oil company Rosneft - said the agreement might be signed in February, but a source in a related Russian department said he doubted that this would be possible, Interfax reported.
The 285-kilometre-long pipeline could initially carry 35 million tonnes of oil annually, but its handling capacity could be later increased to 50 million tonnes. The project is valued at some US$900 million.
Russian President Vladimir Putin said at a press conference two weeks ago the Russian side has made the necessary proposals for the project, all that remains is for them to be agreed by Greece and Bulgaria. 

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FOREIGN COOPERATION

Greece to expand cooperation with Bulgaria

Greek Parliament Speaker, Anna Benaki-Psarouda, recently said that Greece will boost its comprehensive cooperation with Bulgaria, after meeting with her Bulgarian counterpart, Georgi Pirinski, in Bulgaria, Sofia News Agency reported. 
She added that cooperation would focus on safeguarding regional peace and stability, boosting trade and promoting personnel exchanges. She hoped that Greece, Bulgaria and Romania would form a regional axis to implement the policy of the EU and spread their experience to their neighbouring countries.

Bilateral cooperation discussed with Slovakia

Bulgaria`s Interior Minister, Roumen Petkov, and his visiting Slovak counterpart, Robert Kalina, recently discussed the signing of a new cooperation agreement and ways to step up cooperation, Sofia News Agency reported. 
After the meeting, Petkov said that the two countries have similar problems in home affairs. The two discussed the fulfilment of the Schengen Criteria and the possible introduction of new identity documents - passports and driving licences - with biometric data. Kalinak said cooperation with Bulgaria is very important for this country. 

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FOREIGN ECONOMIC RELATIONS

India, Bulgaria to expand economic relations

Vice-President of the Bulgarian Chamber of Commerce and Industry (BCCI), Tsvetan Simeonov, recently participated in a presentation of Indian economy and opportunities for trade and economic cooperation between Bulgaria and India. At the meeting, Simeonov said that Bulgaria and India could expand their economic cooperation through exchange of technologies, know-how and establishment of joint companies, Sofia News Agency said. 
In turn, Indian Ambassador to Bulgaria, Lal Miller Dingliana, said that Indian firms are interested in cooperation with Bulgarian alcohol producers and particularly wine producers. India's middle class, one of the main wine consumers, totalled 300 million people, Dingliana said. The exchange of goods between the two countries in 2006 amounted to 75 million Euro, it was reported. 

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FOREIGN INVESTMENT

5,500m Euro to be invested in infrastructure 

According to a national strategy for integrated development of infrastructure in 2006-2015, a total of 5,500 million Euro will be invested in infrastructure projects by the end of the government's term in 2009, Bulgarian Regional Development and Public Works Minister Asen Gagaouzov announced during the conference, "Infrastructure Projects, Bulgaria 2007: State and Prospects," Sofia News Agency reported. 
Addressing the participants at the conference, Gagaouzov said that the construction sector generated over six percent of Bulgaria's GDP in 2006, according to preliminary figures. A total of 1,626 kilometres of roads, worth over 450 million Euro, were built or rehabilitated last year. The Trakia and Maritsa motorways will be completed by 2009, while the Lyulin motorway will be completed within three years. Concession-awarding procedures will be launched for the Hemus and Black Sea motorways. 
In 2007-2010, 153 kilometres of roads will be rehabilitated or newly built with a loan from the European Investment Bank under the Transit Roads 5 Project. Over 600 million levs has been allocated for second and third-class roads under the Regional Development Operational Programme. As to the Transport Operational Programme, over 2,000 million Euro has been allocated for infrastructure, Gagaouzov recalled. The construction industry has yet to attain the standards for environmental protection and for the quality and safety of the construction products.

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MINERALS & METALS

Bulgarian unit of Cumerio hikes production

Belgian copper producer Cumerio recently reported that its production of cathodes at Cumerio Med, the Pirdop, Bulgaria-based smelter, reached 65,000 tonnes in 2006, an eight per cent improvement on the previous year. The company's annual financial report revealed, however, anodes production was slightly below last year's level, at 238,500 tonnes. Cumerio said the maintenance performed at the smelter during the first half of 2006 did not significantly affect the production of anodes for the year, New Europe reported.
Sales of anodes and cathodes in the Black Sea region increased to 137,000 tonnes. Cumerio said group recurring EBIT topped 93.8 million Euro in 2006 and is seen at 70-75 million Euro this year. In February 2006, Cumerio announced a major investment program for Bulgaria. In view of the current shortfall in refining capacity, the company said it had decided to build a state-of-the-art copper refinery with an annual production capacity of 180,000 tons of cathodes. Cumerio also said it would de-bottleneck the smelter, which would increase its annual capacity to 275,000 tonnes of copper anodes.

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TOURISM

Tourist boom in Eastern Europe expected 

Bulgaria and Romania's accession to the European Union is expected to generate a boom in tourism around Eastern Europe, especially on the Balkans, reports leading online holiday company directline-holidays.co.uk. 
After the two countries joined the Union, experts envisage that Bulgaria is bracing itself for a 10 per cent rise in foreign tourists during 2007 as a total of 5.6 million are expected to visit, Sofia News Agency reported. 
Joining the EU increases the visibility of a country as a tourist destination. Bulgaria's EU membership has made it more popular as a travel destination. In fact, Bulgaria boosted tourism in 2006, earning the record breaking amount of nearly one billion Euro. This has even prompted directline-holidays.co.uk to hire travel consultants with unique knowledge of Eastern Europe in order to deal with specific Balkans holiday enquiries. The increase, according to directline-holidays Sales Manager, Alex Pilkington, points to a bright future for tourism in the Balkans. 
Tourists are realising Balkans holidays offer the best of both worlds: from sunny beaches to world class ski resorts. They are also among the countries offering the lowest prices for package tours. With an increasing number of Britons choosing activity holidays and most of them turning to the mountain slopes, a boom in Bulgaria skiing holidays has followed, with direct-line skiing. 
Budget airlines have also attracted tourism to Eastern Europe with no-frills air carriers increasing the number of flights they offer, whilst competition is expected to bring prices down further. One of the reasons for more flight options is that after EU entry, aviation companies no longer need government permission to secure landing rights.

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