Economy Briefs - the Real Estate Market in Bulgaria
Financial Inspection
Parliament adopted on first reading a State Financial Inspection Bill on March 2. The new legislation establishes a State Financial Inspection Agency, whose team will exercise subsequent control over the implementation of budgetary discipline. The new structure will succeed the Agency for State Internal Financial Control. The new agency’s powers involve establishment of administrative violations and indicators of fraud; detection of damage incurred on organisations’ assets; and holding of culprits of administrative offences legally liable.
The state financial inspection will be exercised on the basis of reports.
Sofia Budget
The Sofia City Council on March 2 adopted a new budget of 501 million leva for 2006. The financial framework is 56 million leva more than envisaged in the initial version of the budget. The target figure for privatisation proceeds has been increased by 25 million leva and the one for proceeds from advertising by 10 million leva. The municipality will take a loan of 20 million leva. About 16 million leva of this will be disbursed on rehabilitation of roads and public transport infrastructure. The new budget version envisages 13 million leva for municipally-owned health establishments.
Quality Pricing
The Cabinet has postponed the adoption of new rules for the pricing and standard quality of water supply services. Water specialists said on March 2 that the delay was caused by disagreements between Regional Development and Public Works Minister Assen Gagauzov and the State Commission for Energy and Water Regulation (SCEWR). Under the new rules, SEWRC will review water supply tariffs to make sure they are cost-based. The tariffs can be adjusted for movements in inflation, electricity prices and the cost of spare parts. Until the new ordinances are adopted, the tariff hikes proposed by the 30 municipality-owned water supply companies will be approved by the respective local governments and those tabled by the 29 state co-owned utilities will be reviewed by the Regional Development and Public Works Ministry.
Demographic Development
Labour and Social Policy Minister Emilia Maslarova presented on March 6 Bulgaria’s demographic development strategy for the period until 2020. The key objectives are a high level of educated persons among the youngest age groups, a decrease in the child mortality rate, and an increase in life expectancy. A package of measures including relieved crediting for young couples and students - as well as solutions to their accommodation problems, extension of maternity leave periods and augmenting social assistance for mothers on maternity leave - would become effective as of 2007, Maslarova said.
Participation Wanted
Italian power company Enel is interested in investing in the construction of Bulgaria’s second nuclear plant at Belene, on the Danube, regardless of whether the Cabinet will want a minority or majority stake partner. This was announced on March 1 by Enel’s representative for the Balkans, Enrico Viale. He was meeting Bulgarian reporters at Enel headquarters in the Rome. Enel, Italy’s largest power company and Europe’s second-largest listed utility, intends to invest about 15 billion euro in the energy sector in South East Europe over the coming years and is not concerned about the amount of the funds necessary for the construction of Belene. According to Viale, between two and 2.5 million euro are needed for the construction of Bulgaria’s second nuclear plant.
Air Profit
National flag carrier Bulgaria Air said on March 1 that its 2005 pre-tax profit dropped to 500 000 leva from 1.7 million leva in 2004. The drop was due to the restructuring of the company, higher fuel prices and the entry of low-cost airlines, Bulgaria Air Executive Director Zlatin Surustov told reporters. Bulgaria Air has adopted a number of measures aimed at stabilising and expanding its market share and answering those market developments, he said. The strategy for the privatisation of Bulgaria Air was expected to enter Parliament for approval any moment now, said Transport Minister Petar Mutafchiev. The flag carrier currently accounts for 30 per cent of air fares sold in Bulgaria and about 25 per cent of the revenues from fares.
Mutual Funds
The net assets of Bulgaria’s mutual funds grew by a million leva month-on-month in February to 94.8 million, the Financial Supervision Commission said on March 2. A total of eight open-end investment funds and 12 contractual funds are licensed to operate in Bulgaria. TBI Eurobond leads the market in terms of assets with 20.75 million leva, just ahead of Advance Invest with 20.66 million leva. Elana Eurofund ranked third in late February with assets totalling 10.3 million leva, up from 10.16 million leva a month earlier. The top five funds collectively manage 67.68 million leva, or 71 per cent of the sector’s total assets.
Property Expansion
Bluehouse Accession Property planned to raise 100 million UK pounds for investment in real estate projects in Bulgaria and Romania, the news agency SEE News reported on March 2. The company has applied to trade on UK’s alternative investment market. Bluehouse Accession’s portfolio in Bulgaria and Romania is valued at 55 million euro.
Parliament adopted on first reading a State Financial Inspection Bill on March 2. The new legislation establishes a State Financial Inspection Agency, whose team will exercise subsequent control over the implementation of budgetary discipline. The new structure will succeed the Agency for State Internal Financial Control. The new agency’s powers involve establishment of administrative violations and indicators of fraud; detection of damage incurred on organisations’ assets; and holding of culprits of administrative offences legally liable.
The state financial inspection will be exercised on the basis of reports.
Sofia Budget
The Sofia City Council on March 2 adopted a new budget of 501 million leva for 2006. The financial framework is 56 million leva more than envisaged in the initial version of the budget. The target figure for privatisation proceeds has been increased by 25 million leva and the one for proceeds from advertising by 10 million leva. The municipality will take a loan of 20 million leva. About 16 million leva of this will be disbursed on rehabilitation of roads and public transport infrastructure. The new budget version envisages 13 million leva for municipally-owned health establishments.
Quality Pricing
The Cabinet has postponed the adoption of new rules for the pricing and standard quality of water supply services. Water specialists said on March 2 that the delay was caused by disagreements between Regional Development and Public Works Minister Assen Gagauzov and the State Commission for Energy and Water Regulation (SCEWR). Under the new rules, SEWRC will review water supply tariffs to make sure they are cost-based. The tariffs can be adjusted for movements in inflation, electricity prices and the cost of spare parts. Until the new ordinances are adopted, the tariff hikes proposed by the 30 municipality-owned water supply companies will be approved by the respective local governments and those tabled by the 29 state co-owned utilities will be reviewed by the Regional Development and Public Works Ministry.
Demographic Development
Labour and Social Policy Minister Emilia Maslarova presented on March 6 Bulgaria’s demographic development strategy for the period until 2020. The key objectives are a high level of educated persons among the youngest age groups, a decrease in the child mortality rate, and an increase in life expectancy. A package of measures including relieved crediting for young couples and students - as well as solutions to their accommodation problems, extension of maternity leave periods and augmenting social assistance for mothers on maternity leave - would become effective as of 2007, Maslarova said.
Participation Wanted
Italian power company Enel is interested in investing in the construction of Bulgaria’s second nuclear plant at Belene, on the Danube, regardless of whether the Cabinet will want a minority or majority stake partner. This was announced on March 1 by Enel’s representative for the Balkans, Enrico Viale. He was meeting Bulgarian reporters at Enel headquarters in the Rome. Enel, Italy’s largest power company and Europe’s second-largest listed utility, intends to invest about 15 billion euro in the energy sector in South East Europe over the coming years and is not concerned about the amount of the funds necessary for the construction of Belene. According to Viale, between two and 2.5 million euro are needed for the construction of Bulgaria’s second nuclear plant.
Air Profit
National flag carrier Bulgaria Air said on March 1 that its 2005 pre-tax profit dropped to 500 000 leva from 1.7 million leva in 2004. The drop was due to the restructuring of the company, higher fuel prices and the entry of low-cost airlines, Bulgaria Air Executive Director Zlatin Surustov told reporters. Bulgaria Air has adopted a number of measures aimed at stabilising and expanding its market share and answering those market developments, he said. The strategy for the privatisation of Bulgaria Air was expected to enter Parliament for approval any moment now, said Transport Minister Petar Mutafchiev. The flag carrier currently accounts for 30 per cent of air fares sold in Bulgaria and about 25 per cent of the revenues from fares.
Mutual Funds
The net assets of Bulgaria’s mutual funds grew by a million leva month-on-month in February to 94.8 million, the Financial Supervision Commission said on March 2. A total of eight open-end investment funds and 12 contractual funds are licensed to operate in Bulgaria. TBI Eurobond leads the market in terms of assets with 20.75 million leva, just ahead of Advance Invest with 20.66 million leva. Elana Eurofund ranked third in late February with assets totalling 10.3 million leva, up from 10.16 million leva a month earlier. The top five funds collectively manage 67.68 million leva, or 71 per cent of the sector’s total assets.
Property Expansion
Bluehouse Accession Property planned to raise 100 million UK pounds for investment in real estate projects in Bulgaria and Romania, the news agency SEE News reported on March 2. The company has applied to trade on UK’s alternative investment market. Bluehouse Accession’s portfolio in Bulgaria and Romania is valued at 55 million euro.
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