Slovenia Business Week no. 17, April 24th, 2006

Slovenia Business Week no. 17, April 24th, 2006 Table of Contents: HEADLINES ............................................................................................................................. 3 IMF Anticipates 4% Economic Growth in Slovenia .............................................................. 3 Internautica Boat Fair to Showcase Super Yacths ................................................................. 3 Slovenia Meeting Eurozone Inflation Criterion ..................................................................... 3 INTERNATIONAL COOPERATION ...................................................................................... 5 Drnovsek Promoting Bilateral Cooperation with Hong Kong ............................................... 5 President Drnovsek Meets Chinese Vice President ............................................................... 5 Ambassador to Turkey Appointed also to Azerbaijan ........................................................... 5 Drnovsek Calls for Sustainable Economic Model ................................................................. 6 EUROPEAN UNION ................................................................................................................. 7 EU Repeats Warning to Slovenia Over Occupational Pension Insurance ............................. 7 Minister Says EU Directive to Be Transposed in Two Months ............................................. 7 Social Partners Divided Over Labour Flow Reciprocity ....................................................... 7 LEGISLATION .......................................................................................................................... 9 Government Adopts New Mergers and Acquisitions Bill ..................................................... 9 Parliament Passes Act on Registration of Property .............................................................. 10 STATISTICS/FORECASTS .................................................................................................... 11 Wages Drop in February over January ................................................................................. 11 Unemployment Rate Edges Lower in February ................................................................... 11 FINANCE................................................................................................................................. 12 Central Bank: Euro Changeover to Cost Slovenia EUR 4.2m ............................................. 12 NLB Takes Out EUR 700m Syndicated Loan ..................................................................... 12 Ljubljana Stock Exchange .................................................................................................... 12 IMFC: IMF Should Upgrade Control of World Economy ................................................... 13 Foreign Exchange ................................................................................................................. 13 REGIONAL INFORMATION ................................................................................................ 15 Prime Minister and Economics Minister Visit Idrija ........................................................... 15 Official Results Confirm Creation of Five New Municipalities .......................................... 15 Gorisko Needs Roads and Tourism, Government Says ....................................................... 16 BRANCH INFORMATION .................................................................................................... 17 Record Season at Slovenian Ski Centres.............................................................................. 17 Slovenia's Sustainable Energy Programme to Get SIT 1.5bn .............................................. 17 Spas Post Profit of EUR 12.5m for 2005 ............................................................................. 17 Petition against VAT on Books Launched ........................................................................... 18 COMPANIES ........................................................................................................................... 19 Apparel Manufacturer CEO Believes in Success ................................................................. 19 Mozina, Vasle Get Green Light from RTVS Programming Council ................................... 19 DARS Signs Contracts for Motorway Sections ................................................................... 20 Luka Koper Plans Investments to the Tune of EUR 450m .................................................. 21 WWI Sells Vega to Mobitel and Simobil, Bids Farewell to Slovenia ................................. 21 Government Visits Hit, Discusses Mega Gaming Project ................................................... 22 Government to Transform Lipica Stud Farm ....................................................................... 23 Sava Supervisors Propose Higher Dividends ....................................................................... 23 Ministry and Airport Rushing to Catch Ryanair Flights ...................................................... 24 Chief Arbiter Appointed for N-plant Arbitration ................................................................. 24 Petrol Keeps Focus on SE Europe ........................................................................................ 25 Exotic Orchids Grown in Slovenia's Prekmurje ................................................................... 25 Altima Cancels Mercator Bid ............................................................................................... 26 SLOVENIA IN BRIEF ............................................................................................................ 27 Development Partnership Signed ......................................................................................... 27 National Geographic Successfully Launched in Slovenia ................................................... 27 Adria Shareholders Vote for Audit ...................................................................................... 27 Krajc Appointed Head of Government PR Office ............................................................... 27 Polytechnic of Nova Gorica Officially University ............................................................... 27 CO2-Busting Programme Launched in Slovenia ................................................................. 27 Drnovsek Meets Sri Lankan PM for Talks on Peace Process .............................................. 27 2 HEADLINES IMF Anticipates 4% Economic Growth in Slovenia IMF believes Slovenian inflation will stand at 2.5% this year and 2.4% in 2007 Slovenia's economy will expand by 4% annually in 2006 and 2007, according to the World Economic Outlook, a report released on Wednesday, 19 April by the International Monetary Fund (IMF). IMF believes Slovenian inflation will stand at 2.5% this year and 2.4% in 2007. According to the report, Slovenia is on track to continue meeting Maastricht criteria for eurozone entry through its planned adoption of the euro in the beginning of 2007. The growth forecast for Slovenia is under the 5.9% growth the IMF anticipates will be registered around the world this year. According to the report, global economic growth continues to beat all expectations despite the high prices of crude oil. Meanwhile, the IMF forecasts global growth to drop somewhat to 4.7% in 2007. Internautica Boat Fair to Showcase Super Yacths The event, to take place at the Portoroz marina between 9 and 14 May, will display some 150 boats and feature around 1,000 companies dealing with nautical equipment This year's Internautica 2006 boat fair wants to attract visitors primarily by showcasing large boats, also known as super-yachts, the organisers said at a press conference in Portoroz on Thursday, 20 April. The event, to take place at the Portoroz marina between 9 and 14 May, will display some 150 boats and feature around 1,000 companies dealing with nautical equipment. According to Jurij Korenc of the Studio 37 firm that is organising the event, the fair has to stress its competitive advantages. Besides being the last major fair before the launch of the season, and offering last-minute registration, the fair must become a unique event, so the number of moorings for 15-to-35 metre yachts will be substantially increased, Korenc said. Marina Portoroz chairman Enes Loj meanwhile said that the marine will also increase the number of moorings for large yachts as part of its strategy. This year's event, to open on Europe Day, will also host a meeting of old boats, Oldtimer 2006, while the Nokia Cup sailing regatta will take place on 12 and 13 May. At the end of Internautica, the visitors and the jury will also select the "Best Boat of the Year" and the "Slovenian Boat of the Year". Slovenia Meeting Eurozone Inflation Criterion Slovenia is meeting the inflation criterion for eurozone entry, according to the latest figures of Eurostat, the EU's statistical office Slovenia is meeting the inflation criterion for eurozone entry, according to the latest figures of Eurostat, the EU's statistical office. Slovenia's harmonised index of consumer prices was at an annual rate of 2.4%, which is well below the reference rate of 2.6% for March. The data, published on Thursday, 20 April, is crucial as it is the last set of figures that the European Commission and the European Central Bank (ECB) will take into account when they draw up in mid-May the convergence report on Slovenia's readiness to adopt the euro in 2007. The data is not favourable for Lithuania, which also wants to enter the eurozone next year: its inflation level is at 2.7%, just above the ceiling. 3 Slovenia has been meeting the eurozone inflation criterion since November, when the figures were on par. In January Slovenia's inflation slipped below the ceiling for the first time. Inflation is not the only criterion that aspiring euro entrants have to meet to adopt the euro: the budget deficit must be below 3% of GDP and public debt below 60% of GDP. The candidate must also have spent at least two years in the euro waiting room, the ERM II mechanism, which Slovenia will achieve at the end of June this year. It is expected that the final decision on the expansion of the eurozone will be made at the EU summit on 15 June. This will by no means be the only expansion of the eurozone, as the ten newcomers that joined the EU in 2004 cannot opt out of the euro. 4 INTERNATIONAL COOPERATION Drnovsek Promoting Bilateral Cooperation with Hong Kong Slovenian President Janez Drnovsek met Hong Kong's Chief Executive Donald Tsang for talks that focused on ways of improving business cooperation between Slovenia and Hong Kong Slovenian President Janez Drnovsek met Hong Kong's Chief Executive Donald Tsang on Friday, 21 April for talks that focused on ways of improving business cooperation between Slovenia and Hong Kong. According to the president's office, Tsang expressed interest in investments in Slovenia and cooperation with Slovenian companies. Drnovsek was quoted as saying that it was important Hong Kong has offered opportunities for small and mid-sized enterprises from Slovenia. He also underlined the potential of the port of Koper as an entry point for goods destined to Central Europe. Tsang moreover invited Slovenian businessmen and government representatives to visit Hong Kong, to be followed by a return visit of Hong Kong businessmen. President Drnovsek Meets Chinese Vice President Drnovsek and Zeng agreed that there are plenty of opportunities for cooperation in trade, politics, culture and science, according to a press release from the president's office President Janez Drnovsek held talks with China's Vice President Zeng Qinghong on Friday, 21 April, with opportunities for bilateral cooperation topping the agenda. Drnovsek and Zeng agreed that there are plenty of opportunities for cooperation in trade, politics, culture and science, according to a press release from the president's office. Talks also touched on the situation in Tibet and the implementation of the principle of two systems in one country that China has successfully enacted when it got back Hong Kong. They are reported as having agreed that this principle has been successful, benefiting Hong Kong as well as China. Drnovsek also asked Zeng to extend an invitation to Chinese President Hu Jintao to visit Slovenia when he embarks on a tour of Europe. Earlier in the day Drnovsek met Hong Kong Chief Executive Donald Tsang, for talks that centred around ways of boosting economic cooperation. Ambassador to Turkey Appointed also to Azerbaijan President Janez Drnovsek has appointed Slovenia's Ambassador to Turkey Mitja Strukelj to become Slovenia's new ambassador extraordinary and plenipotentiary to Azerbaijan President Janez Drnovsek has appointed Slovenia's Ambassador to Turkey Mitja Strukelj to become Slovenia's new ambassador extraordinary and plenipotentiary to Azerbaijan. Strukelj will continue to be based in Ankara. The appointment was published in the Official Gazette on Friday, 21 April, along with Drnovsek's recall of Magdalena Tovornik, Slovenia's ambassador extraordinary and plenipotentiary to France. 5 Drnovsek Calls for Sustainable Economic Model President Janez Drnovsek called for a sustainable global economic model as he addressed the 5th Forum for Asia in Boao, China President Janez Drnovsek called for a sustainable global economic model as he addressed the 5th Forum for Asia in Boao, China on Saturday, 22 April. He also emphasised the importance of Asia, saying that "if Asia wins, we all win." "Our systems - economic, political and security—are all interconnected. Globalisation is here and I do not see how economic development in Europe, for example, can continue progressing without progress in Asia," Drnovsek said. However, he also stressed that as we search for new opportunities and as our development moves to new levels, our strategy must necessarily be linked to sustainable development. "Continuous economic growth and development are impossible without investing into building a sustainable economic model," he explained. "Sustainable development, or let's call it business with a human face, is not a utopian dream. It is not just our moral obligation, but also a pressing need," he said. Whereas the world is preoccupied now with energy security, Drnovsek sees access to drinking water as the next major crisis and a source of conflict. "We use water lavishly today; tomorrow we will fight wars over access to it." Drnovsek concluded by urging the participants to think of global development and the next stage of global progress in terms of a "balancing act between human rights, social stability, economic vibrancy and strategic security. This is Asia's win-win formula." The president was addressing a panel dubbed "New Opportunities for Asia: Driving Growth to the Next Level". 6 EUROPEAN UNION EU Repeats Warning to Slovenia Over Occupational Pension Insurance The European Commission has issued a second requested to Slovenia to complete its implementation of a directive on activities and supervision of institutions for occupational pension insurance The European Commission has issued a second requested to Slovenia to complete its implementation of a directive on activities and supervision of institutions for occupational pension insurance. The deadline for the implementation of the directive ran out on 23 September, while Slovenia and ten other EU members received the first request already in December, the Commission said on Wednesday, 19 April. If Slovenia once again does not act, the Commission will refer the case to the Court of Justice of the European Communities in Luxembourg. As the Commission explained, the directive is an important element in upgrading the EU's internal market with respect to supplementary pension insurance. Although the systems for such occupational insurance differ in EU countries, the directive brings harmonised regulations for the supervision of institution which handle pension insurance, and sets down rules for cross-border assurance of occupational pensions. According to the Commission, this latter issue is one of the matters Slovenia should transpose to its legislation. Slovenians should be able to have access to pension insurance in other EU members as well. In Slovenia, supplementary pension funds are managed by mutual pension funds, companies and insurers, the biggest of which is the state-run Pension Fund Management (KAD). Minister Says EU Directive to Be Transposed in Two Months Labour Minister Janez Drobnic has said that Slovenia will transpose the EU directive on activities and supervision of institutions for occupational pension insurance into the national legislation within two months Labour Minister Janez Drobnic has said that Slovenia will transpose the EU directive on activities and supervision of institutions for occupational pension insurance into the national legislation within two months. Responding on Wednesday, 19 April to the second request of the European Commission to Slovenia to complete the implementation, Drobnic told STA that the delay was caused by the long inter-departmental harmonisation. "The legislation is ready, we have harmonised it with NGOs, the social partners and the Government Development Office. It is currently being discussed with the Government Legislative Office," Drobnic revealed, adding that the draft would be submitted to the government next week. In comparison with other European states, the transposal of EU legislation in Slovenia is "completely adequate, while warnings are welcome," Drobnic added. Social Partners Divided Over Labour Flow Reciprocity Slovenia's social partners are divided over whether the country should respond to the decision of a number of old EU members to keep labour restrictions on eight EU newcomers, among them Slovenia, in kind 7 Slovenia's social partners are divided over whether the country should respond to the decision of a number of old EU members to keep labour restrictions on eight EU newcomers, among them Slovenia, in kind. While the majority of the employers believe Slovenia should not ban labour from the countries involved, the majority of the unions back reciprocal measures. Labour Minister Janez Drobnic told the industrial relations forum on Friday, 21 April in Ljubljana that the government has not yet decided on how to respond to those EU member states that will decide to keep restrictions on Slovenian labour for at least two more years. Slovenia opposes transitional periods by the old EU members because the free flow of labour is a fundamental freedom of the EU internal market, Drobnic said. According to Drobnic, data shows that Slovenian workers do not pose a threat to labour markets in other EU countries, while workers from those countries are not a threat to the Slovenian labour market. Dusan Rebolj of the Pergam union told the forum that Slovenia must stick with reciprocity in order to protect its market from "social dumping". He added that the EU would not be able to be fully effective without the total implementation of all the principles of the internal market, including the free flow of labour. Meanwhile, the representatives of the Employers' Association Samo Hribar Milic said Slovenia should abolish all restrictions on its labour market in order to become more competitive. Hribar Milic believes that an "infusion" of new ideas and people from other environments can make Slovenia better. This view was echoed by Joze Smole of the Chamber of Commerce and Industry, who believes Slovenia could fill jobs for which there is a lack of domestic labour with foreign workers. However, the representative of the Chamber of Craft Industries disagreed with this view. Dusan Krajnik believes Slovenia needs to respond to restrictions imposed by old EU members in kind. The unions, too, were not completely united in their support for reciprocity, with Boris Mazalin of the Konfederacija 90 union saying that restrictions have a negative impact on workers from border regions. Slovenia responded to the restrictions imposed by 12 old EU members in 2004 in kind. With the first review of restrictions taking place this year, some of the old members have announced they would not extend the measures. Others, including Austria, Germany and Italy, have said that they would not lift them. Slovenia now needs to take a renewed stance on whether it will answer those members that choose to keep restrictions with restrictions of its own. 8 LEGISLATION Government Adopts New Mergers and Acquisitions Bill The government has adopted a new mergers and acquisitions bill, which will completely overhaul and upgrade the existing legislation in this field, and fully transpose the EU directive on takeover bids The government has adopted a new mergers and acquisitions bill, which will completely overhaul and upgrade the existing legislation in this field, and fully transpose the EU directive on takeover bids. The bill removes the peculiarities related to transition that the 1997 act includes; it clearly defines the roles of all stakeholders, including the state, and improves the protection of small shareholders, Economics Minister Andrej Vizjak told the press on Thursday, 20 April. Vizjak said the most important aspect of the new law would be the expansion of takeover provisions from listed companies to non-public companies with at least 250 shareholders and a share capital of at least SIT 1bn (EUR 4.2m). Moreover, the bill redefines the calculation of the voting rights of individual entities in the target companies, whereby the authorities are able to determine whether a shareholder already exceeds the takeover threshold. The takeover threshold remains at 25% of the voting rights, but Vizjak said the government initially thought about raising the figure to one third of the voting rights. This option will be examined after the law is passed, he said. The relevant EU directive leaves it up to the individual member states to determine the threshold. Slovenia has one of the lowest thresholds, and Vizjak voiced the hope that it will soon be brought on par with the EU average. The bill moreover defines a "fair price", which is considered as the price that the acquirer is offering, whereby it is not lower that the highest price that the acquirer or associated companies that act in sync with it have paid for the relevant securities 12 months prior to making their bid. If one year after the publication of the takeover offer the acquirer purchases securities of the target company at a higher price that that of the takeover offer, it has to pay the sellers the difference in the purchase price. According to Vizjak, the bill also includes a new definition of "entities that act together", which should make it easier for the securities market watchdog to prove violations. As far as defence mechanisms are concerned, the bill says that management board of the target company must be neutral, however, it can keep defence mechanisms that had been in place before. The bill places special emphasis on small shareholders, although according to Dusan Psenicnik, who heads the working group for corporate law at the Economics Ministry, the existence of the obligation to make a takeover offer gives them the right to sell their shares at a premium. Additionally, the entity that should have made the takeover offer but has failed to do so can be prevented from voting at the AGM, whereupon the voting rights of the remaining (small) shareholders are appropriately raised. 9 Parliament Passes Act on Registration of Property The centrepiece of the act is the introduction of a real estate registry Parliament passed on Friday, 21 April the act on the registration of property, a key piece in the mosaic of the government's efforts to introduce property tax. The centrepiece of the act, which was passed in a 61:6 vote, is the introduction of a real estate registry. Property tax, which will replace the municipal "compensation for the use of building land", which is unique to Slovenia, will be set on the basis of the market value of property. The market value will be determined with the help of a second piece of legislation, a bill on the mass valuation of property, which was passed in second reading today. The bill is to be passed in third reading later at this session, which ends on 3 May. This requires that all properties be valued according to the same standards, so a property registry is required for a fair appraisal in accordance with the bill on mass valuation. Once the act on the registration of property enters into force, it is expected to simplify the entry of properties in real estate records and ensure that the data is complete. 10 STATISTICS/FORECASTS Wages Drop in February over January The average net wage in Slovenia was SIT 177,856 (EUR 742.34) in February The average net wage in Slovenia was SIT 177,856 (EUR 742.34) in February, 1.3% less than in January but up 5.5% over the same month last year, according to the National Statistical Office. The average gross earnings stood at SIT 277,403 (EUR 1.158), down 1.5% over the month before and up 5.5% year-on-year, the office said on Tuesday, 18 April. In real terms, February gross wages dropped by 1.9% over January and increased by 3.2% compared to February 2005. Unemployment Rate Edges Lower in February The registered unemployment rate in Slovenia stood at 10.4% in February The registered unemployment rate in Slovenia stood at 10.4% in February, down 0.1 percentage points over January, according to the latest data by the Statistical Office. A total of 94,132 people were registered as unemployed, 1.1% less than the previous month and 1.1% more than in February 2005. The data also shows that the unemployment rate among women was 12.4%, while it stood at 8.7% among men. Slovenia's labour force numbered 908,251 in February, with 814,119 among these registered as employed, which is an increase of 0.8% over January and up 0.8% year-on-year. Out of 812,486 people employed, 82,988 persons were self-employed. The number of farmers increased 2.8% year-on-year to 32,210. 11 FINANCE Central Bank: Euro Changeover to Cost Slovenia EUR 4.2m Bank of Slovenia Vice Governor Andrej Rant told the meeting of the Zlatorog business club in Celje that the costs would be related predominantly to the circulation of euro notes and coins A central bank official has told a meeting of business officials that the costs to the state of the anticipated changeover to the euro will stand at around SIT 1bn (EUR 4.2m). Bank of Slovenia Vice Governor Andrej Rant told the meeting of the Zlatorog business club in Celje on Wednesday, 19 April that the costs would be related predominantly to the circulation of euro notes and coins. According to Rant, 750 tonnes of euro coins and 73 tonnes of euro notes would start being delivered to Slovenian banks as of 1 December. Teller machines would begin to be loaded with euro notes three hours before New Year's Day, with 60% to 70% of all cash points in the country filled with euros by the start of the year. Rant reiterated that Slovenia was well on track to adopting the euro as it continued to fulfill all the set criteria for eurozone membership. NLB Takes Out EUR 700m Syndicated Loan This is the biggest international loan for any Slovenian bank ever, and one of the biggest in Central and Eastern Europe, the NLB said in a press release Nova Ljubljanska banka (NLB), Slovenia's largest bank, has signed a contract on an EUR 700m syndicated loan, to be provided by a consortium of 35 international banks. This is the biggest international loan for any Slovenian bank ever, and one of the biggest in Central and Eastern Europe, the NLB said in a press release on Friday, 21 April. The bank is convinced that the size of the loan is proof of the trust that international financial institutions place in NLB, as the final figure has far exceeded the initial demand. The money will be used mainly to finance Slovenian companies. Ljubljana Stock Exchange Action slower after Altima withdrawal Mercator was the headline maker on the Ljubljana Stock Exchange last week after UK hedge fund Altima withdrew its bid to buy a quarter of the retailer, which sent the shares into freefall. Yet Mercator failed to pull down other blue chips, so the main indices closed only moderately higher. The SBI 20 index was down 17 points on the week to 4,740.40, with the blue chip SBI TOP down 0.54 points to 1,078.95. After soaring on news of the Altima bid at a price of SIT 41,000 (EUR 171.12) per share, Mercator plunged over 5% on Tuesday, 18 April when Altima withdrew its bid, but recovered somewhat by the end of the week to close at SIT 38,824 (EUR 162.03) for a cumulative weekly loss of 5.5%. Altima, which now owns just over 2% of Mercator, said one of the reasons it was pulling out because of the announced capital increase of up to 50% of the share capital with excluded preemptive right of existing shareholders. Mercator may have been making headlines, but it was pharma company Krka which was making the gains. On deals worth SIT 1.1bn (EUR 4.6m), Krka added 2.3% to SIT 141,929 (EUR 592.39). 12 According to Karel Lipnik of the brokerage Ilirika, Krka was also benefiting from the announcement of Icelandic pharma company Actavis that it would seek to acquire Croatian drug maker Pliva; this has created takeover buzz in the sector. Intereuropa, the logistics group, was also interesting, gaining 0.6% to SIT 5,164 (EUR 21.55) on expectations that it would pay higher dividends. Trading in other blue chips was much more moderate, as the buzz created by the Altima offer has subsided. Deals wrapped up last week totalled SIT 3.4bn (EUR 13.7m), with an additional SIT 1.4bn (EUR 5.8m) made in block deals. IMFC: IMF Should Upgrade Control of World Economy The International Monetary and Finance Committee (IMFC) has decided that the IMF should start to monitor the ways in which certain economic policies of one country affect other countries The International Monetary and Finance Committee (IMFC) has decided that the IMF should start to monitor the ways in which certain economic policies of one country affect other countries. At its session in Washington on Saturday, 22 April, the IMFC also decided that emerging economies such as China should get more say in IMF's decision making. Nevertheless, Slovenia would like to see relatively small IMF member states retaining their prominent role in the organisation. Finance Minister Andrej Bajuk believes that small countries should continue to have timely access to information. Bajuk, who heads the Slovenian delegation at the IMF's spring meeting, told Slovenian reporters that "it would be bad for today's globalized world if only interests of certain big countries were listened to". The IMFC also pointed to global imbalances, most notably the high US spending and a low level of saving coupled with a large deficit on one hand, and strong Asian economies on the other hand. Bajuk admitted that Slovenia has little say in these matters, all it can do is to adjust to the situation. "Slovenia has to get ready for high oil prices so as to avoid what has happened to the Americans, who in real terms pay half of what we in Slovenia pay for petrol, but nevertheless complain about expensive fuel," he said. The finance minister considers the US deficit worrying, and believes the US should do something about its fiscal discipline. Bajuk also said that the euro should not hastily try to take over the dollar's primacy. Asked about Slovenia's economic growth, Bajuk said that while the growth could have been better, "many countries in Europe would be happy to boast Slovenia's growth". The IMF has projected a 4% growth for 2006, but Bajuk thinks it could reach even 4.2%, which IMF experts consider reachable. The question is, according to Bajuk, whether such growth is sustainable in the long-run. He believes that small business is the sector which should be strengthened in this respect. His delegation consists of two Bank of Slovenia representatives, Bozo Jasovic and Bostjan Jazbec, Finance Ministry State Undersecretary Andrej Kavcic and the director of the Centre for the Development of Finances Mira Dobovisek. Foreign Exchange Mean exchange rate of the Bank of Slovenia Euro (EUR) - SIT 239.59 (+0.00) U.S. dollar (USD) - SIT 194.55( -3.47) Swiss franc (CHF) - SIT 152.06 (-0.49) 13 British pound (GBP) - SIT 346.27 (-0.70) 14 REGIONAL INFORMATION Prime Minister and Economics Minister Visit Idrija Jansa and Vizjak made a stopover at Kolektor Group, one of the world's largest makers of commutators Prime Minister Janez Jansa and Minister for the Economy Andrej Vizjak visited on Tuesday, 18 April the town of Idrija ahead of the government tour of Severno Primorsko, the northern part of the western region of Primorsko. As Jansa and Vizjak made a stopover at Kolektor Group, one of the world's largest makers of commutators, the prime minister said it he was pleased to visit a successful company, which has proved that a firm can be competitive with a good development strategy and management. He moreover stressed that the Idrija-based company, which employs 2,000 people and which generated revenues of SIT 42bn (EUR 175.3m) in 2005, contributes to the development of the town, which would otherwise be even more demographically endangered. Meanwhile, Vizjak said that the government must consider the viewpoints of Kolektor Group and similar successful companies if it wants to enhance the competitiveness of Slovenian economy. Kolektor's management presented Jansa and Vizjak with its proposals on introducing more flexible working hours, and less taxes for Slovenian labour force working abroad. The president of Kolektor Group Stojan Petric pointed to the importance of cooperation between science and industry. He also said the company would like the road connection between Idrija and the interior of Slovenia to be improved as soon as possible. Jansa promised that the state intends to earmark more money for maintenance and modernisation of the country's road network than in previous years. He added that the EU spending plan ensures around EUR 700m for infrastructure, which Slovenia will also use. Official Results Confirm Creation of Five New Municipalities The National Assembly will thus have the final say on the establishment of the municipalities of Recica ob Savinji, Sentrupert, Gorje, Log-Dragomer and Sveti Jurij v Slovenskih goricah, which had been endorsed by the voters The National Electoral Commission (RVK) has confirmed the official results of the 9 April local referenda on the establishment of new municipalities, at which voters opted for five new municipalities out of the proposed nine. The National Assembly will thus have the final say on the establishment of the municipalities of Recica ob Savinji, Sentrupert, Gorje, Log-Dragomer and Sveti Jurij v Slovenskih goricah, which had been endorsed by the voters. To allow voters in the likely new municipalities to elect mayors and local councillors at the autumn local elections, the parliament must endorse the new self-governing entities by the end of June at the latest, RVK secretary general Marko Golobic told STA on Wednesday, 19 April. Most of the five prospective new municipalities received comfortable majority support, most notably Sentrupert (82.7%), Log Dragomer (84.6%) and Sveti Jurij v Slovenskih goricah (79%). The majorities in Recica ob Savinji (65.3%) and Gorje (53.1%) were slimmer. 15 Gorisko Needs Roads and Tourism, Government Says Roads as the main problem and tourism as the biggest opportunity for the Gorisko were highlighted as the government visited the western region Roads as the main problem and tourism as the biggest opportunity for the Gorisko were highlighted as the government visited the western region on Wednesday, 19 April. Poor road infrastructure is the main development impediment of the region, Prime Minister Janez Jansa told the press at the end of the government's visit. He stressed that plans are in the making to link up the three main valleys in the mountainous region, including with tunnels. Money is not a problem, but the absence of appropriate projects in the region is, the prime minister said. Finance Minister Andrej Bajuk meanwhile stressed that modernising road infrastructure was one of Slovenia's key strategic projects. Roads were also the main item on the agenda of Transport Minister Janez Bozic's visit to the region on Tuesday, 18 April. Bozic said in Idrija that the ministry had a vision of a "fourth development axis" for the region. According to him, the ministry would soon "formalise" the vision to facilitate the launch of the necessary procedures. The appropriate zoning laws could be in place in five years. Meanwhile, tourism has been highlighted as a major potential, with Economics Minister Andrej Vizjak saying the state was willing to help the region as it embarks on a major investment cycle in tourism. Vizjak also touched on the government's support for a gaming centre near Nova Gorica; US gaming giant Harrah's Entertainment plans to build a casino there with Slovenian partner Hit, but it wants the government to lower the gaming tax. Vizjak did not mention any decision on lower taxes, but he said that the ministry perceives the project as an "exceptional opportunity", as it would facilitate the development of small and mid-sized businesses in the region. The prime minister concluded by lauding the regional authorities for successful phasing of EU funds. He also voiced the hope that the Nova Gorica Polytechnic, which will soon get the status of university, would successfully cooperate with companies in the region. 16 BRANCH INFORMATION Record Season at Slovenian Ski Centres Slovenian ski resorts were visited by 1.835 million skiers by the beginning of April, making a 9% higher profit compared with last year Slovenian ski resorts were visited by 1.835 million skiers by the beginning of April, making a 9% higher profit compared with last year, which makes this season one of the most profitable ones, according to preliminary data of the Slovenian Association of Ski Lift Operators. "Given good weather conditions, skiing will continue through Labour Day holidays, therefore, we expect even better results," the association's secretary Dusan Bozicnik told STA. The 2005/2006 skiing season is certainly one of the best ever. The association has analysed 44 ski resorts, including ten small ones for the first time, but the season would have been a record one even without them. There was a total of 2,737 skiing days at all Slovenian resorts, with Pohorje in the northeast as the most successful one with 130 days. "We have a lot to be happy about, however, it could have been even better, if we had had the same luck with snow as we did with weather, especially during New Year's holidays and school break," Bozicnik also said. "Our system can take around two million visitors a year, and with a bit of luck we could have even come closer to this figure," he added. There are currently six ski centres open in Slovenia and will stay open until Labour Day holidays, including Areh, Kope, and Rogla in the northeast, and Krvavec, Vogel and Kanin in the northwest. Asked about the safety at Slovenian ski resorts, Bozicnik said that there have been less accidents than last year and no extreme incidents. Slovenia's Sustainable Energy Programme to Get SIT 1.5bn The National Council held a debate on renewable energy resources The National Council held a debate on renewable energy resources on Tuesday, 18 April. Marko Starman, State Secretary at the Environment Ministry, pointed out that in the 20072013 fiscal plan, SIT 1.5bn (EUR 6.26m) have been allocated by the state and investors for the Sustainable Energy Programme. The programme aims at increasing the share of supply with renewable energy sources - at 10.8% in 2003 - as well as well at expanding the use of alternative energy sources in generating electricity - at 23.3% in 2003. Starman explained that the programme will launch a new investment cycle worth around EUR 220m annually, which will indirectly contribute to improved economic competitiveness, the creation of new jobs and regional development. While Peter Novak of the Faculty of Mechanical Engineering stated that renewable energy was Slovenia's only alternative to building a second nuclear plant, Borut Zakotnik, also a mechanical engineer, pointed to the potential of wind energy. Other participants of the debate highlighted the potential role of small hydroelectric power plants and other renewable sources such as wood biomass and the reuse of thermal water. Spas Post Profit of EUR 12.5m for 2005 Slovenian natural health resorts posted sales revenues of SIT 34.6bn (EUR 144.4m) for 2005 17 Slovenian natural health resorts posted sales revenues of SIT 34.6bn (EUR 144.4m) for 2005, with profit at SIT 3bn (EUR 12.5m). The number of overnight stays topped 2.5 million, the association of natural health resorts told the press on Thursday, 20 April. The spa hotels hosted over 556,000 guests, of which 55.3% were from abroad. The average occupancy rate at hotels was 62.6%. The spas last year strengthened their position on the market, as they accounted for a third of all overnight stays in Slovenia, according to Rudi Rumbak, the secretary of the association. The association represents 15 natural health resorts. Petition against VAT on Books Launched Several Slovenian publishing houses, writers and poets have launched a petition in which they call on the government and the parliament to withdraw its plans to raise VAT on books Several Slovenian publishing houses, writers and poets have launched a petition in which they call on the government and the parliament to withdraw its plans to raise VAT on books. The group believes books should be exempt of VAT. According to the petition, the signatories firmly believe that their demand represents the smallest common denominator of the Slovenian culture and civilisation. This is also confirmed by the fact that among the signatories and initiators of the petition are also numerous distinguished Slovenians, of all ages and political or religious beliefs, the document also says. They moreover feel that VAT levied on books, given their importance for the Slovenian identity, is a humiliating fact, while the tax exemption is the least the state owes to its ancestors, as well as to the present and future generations. The director of the publisher Sanje, Rok Zavrtanik, told STA on Thursday, 20 April that the online petition has already been signed by 730 people. In his words, it is difficult to say how the authorities would react to the demand. "It is now most important that the people realise what effects higher VAT on books would have." "It is not easy to understand our efforts, as the risks of VAT are not understood even by representatives of some public institutions, not to mention politicians," Zavrtanik added. 18 COMPANIES Apparel Manufacturer CEO Believes in Success The CEO of apparel manufacturer Mura, Borut Meh, told the daily Delo that his company has largely managed to carry out the necessary changes and has a good chance of becoming a successful company by 2015 The CEO of apparel manufacturer Mura, Borut Meh, told the daily Delo that his company has largely managed to carry out the necessary changes and has a good chance of becoming a successful company by 2015. The Murska Sobota-based Mura is already implementing its development plan, adopted in 2005, which sees Mura transforming from a clothes manufacturer into a fashion company with a maximum of 1,800 employees by 2015, Meh revealed. He added that the state helped Mura in times of its biggest need, as without state aid in 2002 and 2003 the company would not have survived. He furthermore expects the government to reduce the tax wedge for textile and apparel producers. The company has used half of EUR 10m of state aid for covering the loses generated by its German subsidy Westmur and the other half to pay social contributions to the state. However, "Mura is not yet out of the red, but we are on track to achieve that goal," Meh said in an interview the Slovenia's leading daily published on Tuesday, 18 April. According to unaudited results, Mura ended 2005 with a loss of SIT 300m (EUR 1.25m), SIT 100m (EUR 417,400) less than in 2004. The company additionally generated a loss of SIT 400m (EUR 1.67m) in Serbia-Montenegro. Since Mura is the largest employer in the impoverished region of Prekmurje (NE), the management has opted for gradual layoffs, Meh pointed out. Since 2002 the company has reduced the number of its employees from 5,600 to less than 4,400, doing so by transfers, early retirements and training programmes for other jobs, he told the Ljubljana-based daily. Besides layoffs, Mura's future success is also based on its plan to become a fashion company, developing and marketing its own trademarks. Indeed, its 2005-established subsidiary Mura the European House of Fashion managed to end last year without a loss, despite start-up costs. Meh also admitted that Mura's workers are not among the best paid, but the real tragedy lies in the fact that even their low salaries are high compared to textile workers in Romania, Bulgaria, Hungary, Turkey and other places. "Mura's average gross salary is SIT 150,000 (EUR 626). But adding the costs of commuting, food and holiday allowances, the cost per worker rises to over SIT 200,000 (EUR 834.77), Meh said, adding that they will try to reach a social agreement with the trade unions for this year. Mozina, Vasle Get Green Light from RTVS Programming Council The Programming Council of the public broadcaster RTV Slovenija endorsed the nominees for the director of TV Slovenija, Joze Mozina, and for Radio Slovenija, Vinko Vasle The Programming Council of the public broadcaster RTV Slovenija endorsed on Tuesday, 18 April the nominees for the director of TV Slovenija, Joze Mozina, and for Radio Slovenija, Vinko Vasle. The pair was put forward by RTV Slovenija director general Anton Guzej. 19 The councillors were almost unanimous with 19 votes in favour of Mozina, one against and two abstentions. Vasle meanwhile got the support of 17 councillors, one "no" vote, while four council members abstained. In his vision of TV Slovenija's news programmes, Mozina, who works for TV Slovenija as a journalist, stressed that the journalists' incisiveness should be both strengthened and rewarded. He finds it worrying that the main evening news show, TV Dnevnik, is losing its ratings, which he also attributes to the one-hour format of the show. This trend could be reversed by improving the work and increasing the number of staff and by better programme management, he believes. Mozina moreover stressed the need for historical impartiality in educational programmes and pointed out that some religious shows should be broadcast "at a better time". Mozina is a two-time recipient of the Josip Jurcic Award, conferred by the namesake fund on journalists who pursue truth, for his documentaries on mass executions by Slovenian resistance during and after WWII. Vasle, a former journalist of the daily Delo and the weekly Mag, is currently assistant editorin-chief of the women's magazine Jana. In presenting his vision of the radio broadcaster, Vasle said that radio is still the fastest medium, therefore, it should be organised so that it "would broadcast the information now". In his view, Radio Slovenija's "Val 202" station should be able to make its own original news programme. Currently all three stations of Radio Slovenija broadcast uniform main news programmes. He believes that short news should be broadcast every half an hour rather than every hour, while a ten minute news show on the events of the day should be introduced in the morning, and another, a 15-minute one, in the afternoon. He also believes that Radio Slovenija should set up an archive that it would offer to other radio stations at a suitable price. Both directors will be appointed for a four-year term by the general director, who however is not obliged to take into account the Council's opinion. The RTV Slovenija Programming council consists of 29 members, out of which 21 are appointed by the parliament. DARS Signs Contracts for Motorway Sections The Slovenian Motorway Company (DARS) has signed four contracts worth SIT 31.8bn (EUR 132.7m) with construction companies working on the Prekmurje (NE) and Gorenjsko (N) motorway stretches The Slovenian Motorway Company (DARS) has signed four contracts worth SIT 31.8bn (EUR 132.7m) with construction companies working on the Prekmurje (NE) and Gorenjsko (N) motorway stretches. DARS signed a SIT 7.6bn (EUR 31.7m) contract with a consortium of five Slovenian construction companies on the construction of the 4.5 km Lendava - Pince motorway section in NE Slovenia. A contract for a 3 km stretch of motorway between Cogetinci and Vucja vas (also in northeastern Slovenia), worth SIT 6bn (EUR 25m), was signed by DARS with a consortium of six Slovenian construction companies. The two sections are to be completed within two years. Meanwhile, DARS also signed a SIT 14.4bn (EUR 60.1m) contract with a consortium made up of Slovenian construction companies SCT, Primorje and CPL, as well as Austria's Strabag on a 9.8km stretch in the northern Gorenjsko region. 20 The project on the Gorenjsko motorway linking Ljubljana to the Karavanke tunnel with Austria is to be completed in 32 months and will be co-funded by the EU to the tune of EUR 13m. Meanwhile, SCT and Primorje also signed contracts worth SIT 3.6bn (EUR 15m) with DARS for the construction of two road bridges on the Gorenjsko motorway. Luka Koper Plans Investments to the Tune of EUR 450m Luka Koper, the operator of Slovenia's sole seaport of Koper, plans long-term investments in the amount of EUR 450m for the extension of two piers and the construction of a third pier, chief executive Robert Casar told the daily Finance Luka Koper, the operator of Slovenia's sole seaport of Koper, plans long-term investments in the amount of EUR 450m for the extension of two piers and the construction of a third pier, chief executive Robert Casar told the daily Finance on Wednesday, 19 April. The extension of the container pier by 350 metres, estimated at EUR 110m, would effectively double transhipment capacity, while the expansion of the second pier would provide additional space for about 60,000 vehicles a year as well as liquid cargo. After the first pier is extended the company plans to start building the third pier, which has a price tag of EUR 180m. It would span 41 hectares and have the capacity for 600,000 container units a year, Casar told the business daily. The third pier, once finished, would be a dedicated container pier, while the first pier would be used for cars and general cargo. Casar said that additional capacities are also planned in the hinterland, to make room for the handling of about 450,000 containers a year and a distribution centre. The long-term objective is the transhipment of one million container units a year, Casar explained. The investments would be funded with long-term loans and European funding. However, Casar was quick to point out that these projects would be in vain if the second rail track between Koper and the mainland hub of Divaca is not built by 2015 as planned. WWI Sells Vega to Mobitel and Simobil, Bids Farewell to Slovenia US mobile operator Western Wireless International (WWI) has decided to sell the network of its Slovenian subsidiary, Vega, to the two leading mobile operators in the country, Mobitel and Simobil for EUR 5m US mobile operator Western Wireless International (WWI) has decided to sell the network of its Slovenian subsidiary, Vega, to the two leading mobile operators in the country, Mobitel and Simobil for EUR 5m. The move marks the end of WWI's rocky five-year adventure in Slovenia. According to Telekom Slovenije, its mobile arm Mobitel, which is the leading operator in the country, is to purchase 191 base station locations with all the accompanying equipment for EUR 2.5m. Meanwhile, Slovenia's second-largest mobile operator, Simobil, will buy 135 Vega base stations, also for EUR 2.5m. In a press release on Wednesday, 19 April, Simobil said the acquisition would improve the quality and coverage of its network. Moreover, it said it would offer favourable terms for Vega subscribers to switch to Simobil's network. Vega commented on its decision on Wednesday, 19 April by saying that it regretted having to pull out of Slovenia. "The company now saw prospects in terms of changes on the Slovenian electronic communications market that would justify additional investment," Vega said. 21 According to Vega, its subscribers will be able to continue using the Vega network until the end of May whereupon they would have to switch operators while keeping their number. Telekom Slovenije also announced on Wednesday, 19 April that it signed with Vega a deal on the mutual withdrawal of lawsuits. Vega and WWI will therefore withdraw the SIT 48.8bn (EUR 203.7m) damages suit against the state and Mobitel that it filed last year for obstruction of competition. Telekom Slovenija, meanwhile, is to stop legal action against WWI for unpaid bills, Telekom added in the press release. In response, Economics Minister Andrej Vizjak said the decision for Vega to withdraw the lawsuit against the state was logical as "Vega's claim was completely unfounded". "We will now avoid unnecessary court courts," added Vizjak, who believes WWI's decision to leave Slovenia will not have a negative impact on foreign direct investment in Slovenia. "Every foreign investment is a business project that must be feasible and for which the government cannot be held accountable...those making business decisions must assume responsibility for mistakes," he added. Vega entered the Slovenian market in 2001 and immediately launched an aggressive advertising campaign that was successful at first. But after the initial boom, the company saw the number of its subscribers stagnate at 30,000, which is only 2% of the Slovenian market, well below initial plans of 20%. Vega often complained of not being given a fair chance because of a lack of competition on the market. Government officials claimed that Vega's poor standing in Slovenia was a result of poor decisions on Vega's part. Government Visits Hit, Discusses Mega Gaming Project The government delegation, headed by PM Janez Jansa, discussed current operations at Hit as well as a possible mega gaming project between the largest Slovenian gaming company and US gaming giant Harrah's Entertainment, as it visited the Nova Gorica-based company The government delegation, headed by PM Janez Jansa, discussed current operations at Hit as well as a possible mega gaming project between the largest Slovenian gaming company and US gaming giant Harrah's Entertainment, as it visited the Nova Gorica-based company on Wednesday, 19 April. "We have listened to the opinions and positions of Hit's management and are ready to continue to discuss, analyze and find a suitable solution" on the deal, Finance Minister Andrej Bajuk said after the meeting. "If Hit and Harrah's Entertainment reach a deal, we are ready to take part in the discussion and examine Slovenia's tax legislation," Bajuk added. In July last year, Harrah's outlined to the Slovenian government its plans for an EUR 800m mega gaming and tourism centre in the western town of Nova Gorica. The company wanted to know whether the government would be willing to relax tax legislation and lift restrictions on gaming licenses. Hit representatives meanwhile said that Jansa expressed the cabinet's support for the company's development plans and is aware of the importance of investment in tourism. Such investment is, according to Jansa, one of the key elements for Slovenia's development as it contributes to economic growth and creates high-quality jobs. The recently-appointed Hit CEO Niko Trost added that the management is currently in talks with Harrah's management on a meeting between the two. 22 Bajuk labelled the deal a huge investment that would "mean a new type of tourist service which could be a boost for the entire Slovenian economy." This project is not just about gaming, it is "a different concept, such as is predominant in Northern America. There they see it as a leisure industry." He stressed, however, that "not only should the social acceptability of such activities for the society be examined, but also the negative effects caused by such activities." Government to Transform Lipica Stud Farm The government discussed the restructuring possibilities for the Lipica Stud Farm and tasked the Culture Ministry with managing the transformation of Lipica's status as a public institution The government discussed the restructuring possibilities for the Lipica Stud Farm on its session on Thursday, 20 April, and tasked the Culture Ministry with managing the transformation of Lipica's status as a public institution. The ministry said in press release that the first phase of the restructuring procedure will include the establishing of a body governed by public law comprised of two organisational units. While the first unit, the stud farm, will be performing the public function, the second unit, hotels and catering, will be subjected to corporate law. After the economic side is consolidated, the government will reexamine the possibility of transforming one of Slovenia's most prominent tourist attractions into a company. The discussed restructuring analysis was drafted by a working group appointed by the government last September. The Culture Ministry announced it would consider the analysis when drafting the proposal for an amendment to the Lipica Stud Farm act, which is expected to be adopted later in the year. Sava Supervisors Propose Higher Dividends The supervisory and management boards of the chemical and tourism company Sava have proposed the shareholders to up the dividend to SIT 640 (EUR 2.67) per share The supervisory and management boards of the chemical and tourism company Sava have proposed the shareholders to up the dividend to SIT 640 (EUR 2.67) per share, SIT 20 (EUR 0.08) more than last year, Sava's press release reads on Friday, 21 April. In line with the proposal, the accumulated profit of 1999 would be used to pay dividends worth a total of SIT 1.3bn (EUR 5.42m). All those who are registered as Sava shareholders at the Central Securities Clearing Corporation (KDD) by 2 June 2006 will be entitled to the dividends. The two boards will moreover propose the shareholders, which are to discuss the proposals at an AGM on 31 May, the way of using the accumulated profit from 2005, and to confirm the discharge for the management and the supervisory boards. The supervisors furthermore confirmed at its session on Thursday, 20 April, the 2005 business report, which was for the first time drafted in line with the international accounting standards. As a consequence, the results and assets of the Sava group are more realistic, Sava also said. The new standards also influenced the return on capital of the Sava group, which in 2005 already exceeded the 10% planned for 2007. The supervisory board labelled the work of Sava management as successful, as all of the main goals have been realised, in the core company as well as the group. The Sava group generated SIT 58.5bn (EUR 244.17m) of sales revenues in 2005, a 4% rise year-on-year, and 3% below plans. 23 Gross profit of the group totalled SIT 10.5bn (EUR 43.82m) last year, 14.5% more than panned, while net profit of SIT 9.2bn (EUR 38.4m) exceeded the plans by 4.3%. Ministry and Airport Rushing to Catch Ryanair Flights The Transport Ministry and the owner of the international airport in Slovenia's secondlargest city, Maribor, are rushing to sign a deal on airport infrastructure that would subsequently allow the arrival of Irish budget airline Ryanair to Maribor Airport The Transport Ministry and the owner of the international airport in Slovenia's second-largest city, Maribor, are rushing to sign a deal on airport infrastructure that would subsequently allow the arrival of Irish budget airline Ryanair to Maribor Airport. The ministry had drafted a contract on infrastructure management at the airport last month, but Prevent, the company which owns the operator of the airport, Aerodrom Maribor, requested a number of revisions. Most of the wording has now been harmonised, while it is now up to Prevent to decide whether to sign it, the ministry told STA on Friday, 21 April. The main sticking point of the wording of the contract, which determines a licence fee for infrastructure use, was its two-year validity period. The ministry explained that Aerodrom Maribor wants the contract to last for five years, as Ryanair would like to enter into a five-year deal with the airport. This was confirmed by Aerodrom Maribor general manager Silvo Ambroz, who did not wish to comment other claims by the ministry but added that the time was running out for the deal with Ryanair. Meanwhile, the Transport Ministry reiterated its support for the launch of Ryanair flights at Maribor Airport, explaining that it stands ready to issue all necessary permits. Meanwhile, Prevent chairman Joze Kozmus said that talks between the airport operator and the ministry were in their final phase. According to him, Prevent wants Aerodrom Maribor to enter into a long-term agreement with the state so as to allow it to meet its commercial commitments to the carriers that would use the airport. Kozmus added that Ryanair was expected to take a decision on new routes in the beginning of May. "Our company believes that we will reach a deal with the ministry in time," he explained. In early March the Transport Ministry announced it would be willing to break a several-year deadlock with the airport operator on infrastructure management. Chief Arbiter Appointed for N-plant Arbitration The International Centre for Settlement of Investment Disputes (ICSID) has named David Williams of New Zealand the head of the panel of arbiters in the dispute between Slovenia and the Croatian power company, HEP, over undelivered electricity from the Krsko Nuclear Power Plant (NEK) The International Centre for Settlement of Investment Disputes (ICSID) has named David Williams of New Zealand the head of the panel of arbiters in the dispute between Slovenia and the Croatian power company, HEP, over undelivered electricity from the Krsko Nuclear Power Plant (NEK). The ICSID made the appointment on Thursday, 20 April, thereby completing the threemember panel that is to decide on HEP's EUR 31.7m compensation claim for power that Slovenia is supposed to have failed to deliver from NEK, HEP said in a statement on its website. The other two members of the panel are Charles Brower, named at the behest of HEP, and Jan Paulsson, who was named by the Slovenian government. 24 The panel is expected to meet representatives of HEP and Slovenia within two to three months, HEP added in its statement. HEP launched the arbitration procedure at the ICSID late last year. It claims Slovenia failed to deliver NEK-produced power from 1 July 2002, when Croatia ratified a bilateral agreement settling disagreements about NEK, to 18 April 2003. Slovenia believes that the damage claim is excessive and that Croatia has also included a period during which it asked for a deference in the start of supply. Petrol Keeps Focus on SE Europe The strategic focus of oil company Petrol will be Southeast Europe, where there are the biggest opportunities for growth through acquisitions, chairman Marko Kryzanowski writes in the latest issue of the company's magazine The strategic focus of oil company Petrol will be Southeast Europe, where there are the biggest opportunities for growth through acquisitions, chairman Marko Kryzanowski writes in the latest issue of the company's magazine. Kryzanowski also announced the launch of retail activities in Kosovo, which he says is the strategically most important market in the region. Growth prospects there are buoyed by the construction of a US military base for SE Europe and the resulting demand for aircraft fuel. Additionally, Petrol will seek vertical integration with either acquisitions or a strategic partner. Kryzanowski says that Petrol has been thinking about buying a refinery: those in SE Europe are inappropriate whereas there are three in Italy that are worth vying for. Meanwhile on the home market, Kryzanowski said Petrol would find it hard to retain the large market share, so talks are underway with retailer Mercator to build filling stations next to its shopping centres. Petrol also wants to upgrade cooperation with Mercator in merchandise and revive a contract that had been signed in 2004. "The present condition is impossible. We have to carry out the deal or we will go our separate ways," he said. Exotic Orchids Grown in Slovenia's Prekmurje An enterprising Slovenian company has undertaken orchid growing in the northeasternmost region of Prekmurje, expecting to send its first 200,000 plants to shops by the end of this year An enterprising Slovenian company has undertaken orchid growing in the northeasternmost region of Prekmurje, expecting to send its first 200,000 plants to shops by the end of this year. The company Ocean Orchids, which was established three years ago, completed its EUR 4.7m investment into a 14,000 sq. metre greenhouse last December. It was set up by Roman Ferencak and Tomaz Jevsnik of the town of Dobrovnik together with partners from Netherlands, where the two passionate horticulturists went to perfect their knowledge about orchid growing. In what they claim is the first and only commercial production of orchids in Central and SE Europe, the company plans to grow as many as half a million phaelenopsis orchids in the next few years. The investment is expected to break even in seven to ten years, director general Ferencak told STA. He expects sales revenues to reach around EUR 2.2m a year, which however would not come only from orchids but also other tropical plants. Ocean Orchids, which currently employs eleven people, plans to sell at least 10 to 15% of its production on the domestic market, and the rest in Slovenia's neighbours. This small company also boasts an award for a positive impact on the community it received from the business daily Finance in the 2004/05 season. 25 Orchids enjoy high temperatures, so the temperature in the greenhouse needs to be around 27 degrees Celsius. Not exactly energy friendly, the building is heated with thermal water and also with natural gas. Altima Cancels Mercator Bid The London-based Altima Global Special Situations Master Fund (Altima) cancelled its invitation to shareholders to sell up to 24.99% in Slovenia's largest retailer Mercator at SIT 41,000 (EUR 171.12) per share On Tuesday, 18 April, the London-based Altima Global Special Situations Master Fund (Altima) cancelled its invitation to shareholders to sell up to 24.99% in Slovenia's largest retailer Mercator at SIT 41,000 (EUR 171.12) per share. Altima, which had acquired 2.1% of Mercator shares, stated a call by Mercator's supervisory board for a capital injection of up to 50% of the company's share capital without giving preemptive rights in acquiring new shares to existing shareholders as the main reason for its move. On Thursday, 20 April, representatives of Altima and of the Slovenian Association of Small Shareholders agreed to step forward against the planned capital injection at the upcoming AGM. 26 SLOVENIA IN BRIEF Development Partnership Signed The presidents of six parliamentary parties and both MPs of the Italian and Hungarian minorities signed on Tuesday, 18 April a Development Partnership pact put forward by PM Janez Jansa to secure a broad political consensus on structural reforms. "The Development Partnership is a continuation of a positive tradition of broad political consensus ahead of important decisions, and is an important development document on the political level, first ever in Slovenia," Jansa said after signing the document. National Geographic Successfully Launched in Slovenia Slovenian readers are showing a lot of interest in the Slovenian version of National Geographic, the first issue of which was published on 14 April, Uros Leban of National Geographic Slovenija told STA. The Slovenian edition is the 29th version of the magazine in a non-English language. The monthly, with a circulation of 8.5 million, has set standards in reporting, photography and mapping. Adria Shareholders Vote for Audit Shareholders of flag carrier Adria Airways have voted to launch an audit of the last five years of operations at the cash-strapped company. Meeting on Tuesday, 18 April in Ljubljana, the shareholders of the majority state-owned company decided that auditing firm KPMG would scrutinise the last five years of operations. Krajc Appointed Head of Government PR Office The government has appointed Gregor Krajc the director of the Government PR and Media Office, where he has been the acting director since 1 January. Krajc had already been the head of the office between January and July 2003, whereupon he was named the government spokesperson, a post he held until December 2004. Before he became involved in PR, Krajc was the Brussels correspondent of the public broadcaster RTV Slovenija Polytechnic of Nova Gorica Officially University The Polytechnic of Nova Gorica has officially upgraded its status to university, the director of the institution Danilo Zavrtanik told STA on Friday, 21 April. The new "University of Nova Gorica" is the first in the country not to be established by the state. The Polytechnic filed its request to become the fourth Slovenian university a year ago. CO2-Busting Programme Launched in Slovenia The Environment Ministry launched the "Slovenia Lowers CO2" project on Friday, 21 April as part of celebrations of World Earth Day. The project hopes to reduce CO2 emissions form cargo transport and promote energy efficiency, said Environment Minister Janez Podobnik. Drnovsek Meets Sri Lankan PM for Talks on Peace Process President Janez Drnovsek met Sri Lankan Prime Minister Ratnasiri Wickremanayake on Friday, 21 April. The pair's talks focused on Srilanka's stalled peace process. 27

Slovenia Business Week no. 17, April 24th, 2006

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