Slovenia Business Week no. 20, May 22nd, 2006
Table of Contents:
HEADLINES ............................................................................................................................. 3
Commission Gives Thumbs Up to Slovenia's Euro Bid ........................................................ 3
Slovenian Companies' Total Net Profit Exceeds Loss in 2005 .............................................. 3
CCIS Survey: Slovenian Companies Ready for Euro ............................................................ 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Rupel Calls for Interim Solution for EU Constitution ........................................................... 5
New Japanese Ambassador Presents Credentials ................................................................... 5
New Ambassadors to France, Argentina and Canada ............................................................ 5
Slovenia, Bosnia-Herzegovina Sign Deal to Avoid Double Taxation ................................... 6
Drnovsek Believes Central Europe's Future is Europe's Future ............................................. 6
Drnovsek Promises Macedonia Help in EU Efforts............................................................... 7
EU Integration Tops Drnovsek-Yushchenko Talks ............................................................... 7
EUROPEAN UNION ................................................................................................................. 8
Commissioner Potocnik: Historic Day for Slovenia and Europe ........................................... 8
PM: Euro Nod Good News for Slovenia ................................................................................ 8
Gaspari: Slovenia Among Most Developed European Countries .......................................... 9
Official: Choosing Tasks Key Factor for Slovenia's EU Presidency ..................................... 9
Slovenian, Dutch FMs for Extending Period to Rethink EU Future .................................... 10
Irish Speaker Believes Small Country Can Be Successful EU Chair .................................. 10
Slovenia, France Agree to Cooperate on EU Presidency Plans ........................................... 11
STATISTICS/FORECASTS .................................................................................................... 12
Wages Up in March .............................................................................................................. 12
Unemployment Slightly Down in March ............................................................................. 12
Slovenians Satisfied with Job Security but Frustrated with Wages ..................................... 12
Government Confirms IMAD Spring Report ....................................................................... 13
Slovenia's GDP per Capita at 76% of EU Average in 2003................................................. 13
FINANCE................................................................................................................................. 15
Talks Between Finance Ministry and KBC on NLB Continue ............................................ 15
CCIS Cautions State to Curb Public Expenditure ................................................................ 15
Economist Stresses Importance of Public Finance Policy ................................................... 15
EBRD Selling Stake in NLB ................................................................................................ 16
EBRD Expects Local Investors to Bid for Stake in NLB .................................................... 16
Bajuk Says NLB to Remain in Slovenian Ownership.......................................................... 17
Ljubljana Stock Exchange .................................................................................................... 18
Foreign Exchange ................................................................................................................. 18
BRANCH INFORMATION .................................................................................................... 19
Slovenia's Carbon Dioxide Emissions Below Limit ............................................................ 19
Austria, Slovenia have Great Biomass and Solar Energy Potential ..................................... 19
Austrian, Slovenian Agriculture Ministers Examine Topical Issues ................................... 20
COMPANIES ........................................................................................................................... 21
NEK Generating Electricity Again ...................................................................................... 21
Petrol Would Like to Takeover Serbia's NIS Jugopetrol, CEO Says................................... 21
Signing of a Deal Between WAZ and DZS Postponed ........................................................ 22
Istrabenz Increases Stake in Droga Kolinska to Only 60.24% ............................................ 22
Adria Airways Launches Ljubljana - Rome Route .............................................................. 22
Delo Reports Drop in Q1 Profit ........................................................................................... 22
Gorenje Selling Top-of-the-Line Fridges at Harrods ........................................................... 23
Mercator AGM Fails to Approve Capital Injection ............................................................. 23
Russian Lukoil Interested in Nafta Lendava Company ....................................................... 24
Lukoil Interested in Slovenian Companies, Alekperov Tells PM ........................................ 24
Paper Mill Vipap Concludes Modernisation ........................................................................ 25
Pivovarna Lasko Doubles Loss in Q1 .................................................................................. 25
SLOVENIA IN BRIEF ............................................................................................................ 26
Nobel Laureate Erwin Neher Visits Maribor Faculty of Medicine ...................................... 26
Social Partners Fail to Reach Agreement on Labour Market ............................................... 26
Drnovsek Receives Visiting Bosnian Minister .................................................................... 26
Drnovsek Receives Ahtisaari ............................................................................................... 26
Speaker Cukjati Receives Algerian Ambassador ................................................................. 26
Jansa and Ahtisaari Discuss Kosovo and Western Balkans ................................................. 26
Minister Confident Slovenia Didn't Violate EU State Aid Rules ........................................ 26
Government Replacing Ambassador to Holy See ................................................................ 26
Government Appoints Chief Market Inspector .................................................................... 27
Defence Minister Stresses Improvements in Bosnia-Herzegovina ...................................... 27
Archaeologists Discover Bronze Age Sword in Lake Bled ................................................. 27
CCIS, Students, Employers Sign Higher Education Partnership ......................................... 27
Celje New Slovenian Diocese .............................................................................................. 27
2
HEADLINES
Commission Gives Thumbs Up to Slovenia's Euro Bid
The European Commission has said in its report that Slovenia is ready to adopt the euro on 1
January 2007
The European Commission has said in its report that Slovenia is ready to adopt the euro on 1
January 2007. The thumbs up paves the way for Slovenia to become the first among the
countries that joined the EU in May 2004 to adopt the euro.
According to the Commission's convergence report for Slovenia, released in Strasbourg on
Tuesday, 16 May, the country is in compliance with all the membership criteria, which is why
it should be allowed to join the eurozone on 1 January 2007.
The positive assessment was upheld by the European Central Bank in a separate report on
Slovenia's readiness for eurozone membership that it released in Frankfurt on Tuesday, 16
May.
The reports are the first in a series of steps leading to the confirmation of Slovenia's bid to
join the eurozone.
EU leaders are now expected to vote on admitting Slovenia to the eurozone at their summit on
15 and 16 June. Moreover, EU finance ministers are expected to take a final vote on the legal
basis for Slovenia's membership on 11 July.
"Slovenia meets all the convergence criteria - a result of stable policies and reforms,"
European Commissioner for Economic and Monetary Affairs Joaquin Almunia said.
"However, it is important to stress that Slovenia will not have completed all the work by
introducing the euro. The euro has its benefits and responsibilities, foremost to retain stability
of public finance," Almunia added.
Moreover, the commissioner stressed that Slovenia must now speed up "practical preparations
to make the switch to the new currency smooth." In his opinion, this includes measures to
prevent unwarranted price hikes.
In its report, the Commission concludes that Slovenia meets all Maastricht criteria for
eurozone membership: its inflation is 2.3% (0.3 pp below requirements), while the general
and total government deficits are well below what is prescribed.
Despite the overall positive assessment, Slovenia has been urged by the Commission to keep
working on public finance sustainability - the pension system is seen as the biggest problem in
this respect.
The Commission also concluded that Slovenia has not faced any great instability with
currency, the tolar, which has fluctuated only slightly around the parity rate of SIT 239.64 for
one euro. since Slovenia entered the ERM II mechanism in June 2004.
Moreover, it says that long-term interests rates, which stood at 3.8% in March, are well below
the reference value of 5.9%, while it also finds that Slovenia has adopted all relevant
legislation for the euro.
Meanwhile, the Commission included a number of recommendations in the report. Among
others, it says that Slovenia should take steps to privatise its financial sector and calls on
Slovenia to keep implementing regulations of the common market.
Slovenian Companies' Total Net Profit Exceeds Loss in 2005
Slovenian companies concluded 2005 in the black for the fourth year in row, with the total net
profit reaching SIT 433.1bn (EUR 1.8bn), a 9% rise over 2004
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Slovenian companies concluded 2005 in the black for the fourth year in row, with the total net
profit reaching SIT 433.1bn (EUR 1.8bn), a 9% rise over 2004, according to the Agency for
Public Legal Records and Related Services (AJPES).
The AJPES report, presented on Wednesday, 17 May, includes data for 43,711 enterprises,
excluding banks, insurance companies, the state-run Pension Fund Management (KAD) and
Restitution Fund (SOD), and companies in liquidation or bankruptcy.
The companies included in the report employed a total of 474,601 workers, or 3% more than
in 2004, while their revenues increased by 9% year-on-year to SIT 14,424.7bn (EUR 60.2bn),
Marina Masle of AJPES told the press.
As many as 28,226 or 64.6% of the companies ended the year with a profit, reaching SIT
615.5bn/EUR 2.57bn, while 12,890 or 29.5% of them posted a combined loss of SIT 182.3bn
(EUR 760.83m).
AJPES moreover notes that 96.4% of the companies qualify as small enterprises, with midsized and large enterprises, which employ half of all workers, accounting for only 1.8% each.
The most important sector in terms of net revenues and the number of employees was
manufacturing, followed by trade, repair of motor vehicles and consumer goods, real estate
business, lease and business services.
Last year's average gross wage in Slovenian enterprises was SIT 254,391 (EUR 1,061.70).
AJPES moreover received annual reports from 57,766 sole proprietors who employed a total
of 59,164 workers, and generated a total of SIT 1,084.2bn (EUR 4.52bn) in net sales
revenues.
Among sole proprietors, 99.97% of them qualify as small, with last year's gross average wage
of SIT 150,968 (EUR 630.07). As much as 14.8% of them ended 2005 in the red.
CCIS Survey: Slovenian Companies Ready for Euro
Slovenian companies are very well prepared for the euro switch
Slovenian companies are very well prepared for the euro switch, set to happen in January
2007, Nina Presern of the Chamber of Commerce and Industry of Slovenia (CCIS) told the
press in Ljubljana on Thursday, 18 May.
Presern, the head of the euro changeover preparations task force at the CCIS, added that the
Chamber surveyed the companies' readiness in April and May, examining all of the business
operations that touch on the euro.
The survey, which analysed a representative sample of companies in various regions, has
shown that the biggest problems appear in the IT sector, especially in small companies.
"The changeover to the euro will be more difficult than the switch to the tolar [October 1991],
especially because information technology has not existed then to such a great extent," added
CCIS vice-president Cveto Stantic.
The CCIS also stressed that the costs of the switch per individual company could range
between EUR 10,000 and EUR 1m or more, Presern warned, pointing to new equipment and
costs of training.
Mirjana Dimc Perko, a member of the management board at the household appliance maker
Gorenje, said that their IT system, especially in bookkeeping and accounting, will have to
undergo the largest changes.
Ljubomir Osovnikar, management board member of steel maker Acroni, said that the euro
would greatly facilitate the company's business operations, adding that "the euro will
represent another difference between Slovenia and Slovakia".
4
INTERNATIONAL COOPERATION
Rupel Calls for Interim Solution for EU Constitution
Rupel moreover believes that it would be sensible to come to interim solutions based on the
constitution, "perhaps a temporary agreement", which would nevertheless increase the bloc's
efficiency
Foreign Minister Dimitrij Rupel called at the session of the EU Council for General Affairs
and External Relations in Brussels on Monday, 15 May for a one-year extension of the period
of reflection on the EU constitution.
Rupel moreover believes that it would be sensible to come to interim solutions based on the
constitution, "perhaps a temporary agreement", which would nevertheless increase the bloc's
efficiency.
As he explained, these "interim solutions" would concern first of all the system of decisionmaking in the EU Council, its structure as well as the make-up and activities of the European
Commission.
"These things need to be solved, whether the constitution is valid or not," the minister is
convinced. He stressed that Slovenia would like the constitution to be implemented, and has
already ratified it.
New Japanese Ambassador Presents Credentials
Tsuneshige Iiyama, the first residential Japanese Ambassador to Slovenia, presented in
Ljubljana copies of his credentials to State Secretary at the Foreign Ministry Bozo Cerar
Tsuneshige Iiyama, the first residential Japanese Ambassador to Slovenia, presented on
Monday, 15 May in Ljubljana copies of his credentials to State Secretary at the Foreign
Ministry Bozo Cerar, the Foreign Ministry said.
Iiyama and Cerar used the opportunity to discuss bilateral relation between the two countries,
with Cerar expressing Slovenia's interest in more direct investments from Japan.
The pair shared a view that political relations between the two states were very good,
however, they called for a stronger economic cooperation, the press release also said.
Cerar briefed the ambassador on priority foreign policy tasks of the Slovenian government,
focusing on preparations on Slovenia's EU presidency in the first half of 2008.
He moreover acquainted his guest with the Centre for European Future, which is to be opened
soon in Ljubljana in what is seen as Slovenia's contribution to ensuring Euro-Atlantic future
to EU candidate countries.
Cerar and Iiyama also talked about the international conference on the Caspian Sea region,
which is to be held at the lakeside resort of Bled in August.
Both countries expect bilateral relations to improve as a result of January's opening of the
Japanese embassy in Slovenia.
Iiyama's predecessor was Itaru Umezu, who was based in Vienna. Slovenia's embassy in
Tokyo was opened in 1993, and is currently headed by Ambassador Robert Basej.
New Ambassadors to France, Argentina and Canada
The last edition of the Official Gazette has published a list of orders by President Janez
Drnovsek naming three new ambassadors
The last edition of the Official Gazette has published a list of orders by President Janez
Drnovsek naming three new ambassadors. Janez Sumrada has become ambassador
extraordinaire and plenipotentiary to France, Avgustin Vivod to Argentina and Tomaz
Kunstelj to Canada.
5
Sumrada will take over from Magdalena Tovornik at the Embassy in Paris. Her mandate ran
out on 18 April and on Monday, 15 May President Drnovsek appointed her senior adviser for
political affairs in his cabinet.
The Embassy in Argentina, which is also competent for Brazil, Chile and Uruguay, was led
by chargé d'affaires Jana Strgar after Ambassador Bojan Grbovsek was recalled last July.
The Slovenian Embassy in Ottawa, Canada was led by acting chargé d'affaires Barbara Susnik
following the recall of Ambassador Veronika Stabej in November last year. Stabej is currently
the head of the Foreign Ministry's PR office.
Slovenia, Bosnia-Herzegovina Sign Deal to Avoid Double Taxation
Slovenian Finance Minister Andrej Bajuk and Bosnian Human Rights and Refugees Minister
Mirsad Kebo signed a convention on the avoidance of double taxation
Slovenian Finance Minister Andrej Bajuk and Bosnian Human Rights and Refugees Minister
Mirsad Kebo signed in Ljubljana on Tuesday, 16 May a convention on the avoidance of
double taxation.
The agreement, which is to enter into force on 1 January 2007, will abolish double taxation of
income and assets, and strengthen economic cooperation between the two countries, the
ministers told the press.
The deal moreover facilitates free capital and labour movement, and includes a principle of
non-discrimination which applies to all taxes.
"We are convinced that the deal will strengthen the already good economic links between the
countries," Bajuk stressed. Meanwhile, Kebo revealed that Slovenia is Bosnia-Herzegovina's
fourth largest trading partner, and its largest foreign investor in 2005.
In line with the agreement, a company's profits would only be taxed in the country where this
company is headquartered, except in cases when the company from one country does business
in the other country through affiliate offices, Bajuk explained.
Interests can be taxed in the country of the recipient's residence, while the country where
interests were accrued can tax them at a 7% rate. Licence fees can be taxed in the country of
origin at a 5% rate.
Pensions from past employment can be taxed only in the country of the recipient's residence.
Kebo added that pensioners alone would have to pay EUR 1m less in taxes per month after
the deal enters into force.
Drnovsek Believes Central Europe's Future is Europe's Future
President Janez Drnovsek said that the future of Central Europe is the future of Europe as the
whole, as he addressed the 13th summit of presidents of Central European states in Bulgaria's
seaside resort of Varna
President Janez Drnovsek said that the future of Central Europe is the future of Europe as the
whole, as he addressed the 13th summit of presidents of Central European states in Bulgaria's
seaside resort of Varna on Friday, 19 May.
According to the president's office, Drnovsek stressed that a united and strong Europe is in
common interest of all Central European states.
He also called for a fresh impetus for the EU constitution, as the bloc needs a strong formal
framework.
The president moreover pointed out that Central Europe will remain a geographical concept,
but will not become a political one. "The EU will be here, therefore, there will be no need for
Central Europeans to form a special political entity," he added.
Drnovsek feels that the EU's expansion to Southeastern and Eastern Europe is of great
importance, as these regions are a constituent part of European civilisation. "There is no need
for borders to separate Europe," the president said.
6
He furthermore pointed to the need for a balanced and sustainable development as well as
environmental protection, as profit cannot be the only criterion for development.
Drnovsek and his Bulgarian counterpart Georgi Parvan shared a view that bilateral relations
between Slovenia and Bulgaria are very good, as they met after the summit, the president's
office also said.
They moreover agreed that there is a great potential for further development of economic and
cultural cooperation. Meanwhile, Parvanov thanked Drnovsek for Slovenia's support in
Bulgaria's EU accession.
Drnovsek already met his Croatian counterpart Stipe Mesic in Varna, with whom he agreed
that they share a constructive dialogue.
The pair moreover talked about the upcoming referendum on Montenegro's independence and
the talks on the future status of Kosovo, according to Drnovsek's office.
Drnovsek Promises Macedonia Help in EU Efforts
President Janez Drnovsek has promised Slovenia's unyielding support for Macedonia's efforts
to join the EU as he held talks with his Macedonian counterpart Branko Crvenkovski in the
Bulgarian resort town of Varna
President Janez Drnovsek has promised Slovenia's unyielding support for Macedonia's efforts
to join the EU as he held talks with his Macedonian counterpart Branko Crvenkovski in the
Bulgarian resort town of Varna on Friday, 19 May.
Crvenkovski in turn thanked Slovenian institutions as well as citizens for the assistance,
according to a press release by the president's office.
Talks also touched on the political and economic situation in Macedonia, with Drnovsek
voicing the expectation that cooperation in commerce would continue to prosper.
Drnovsek and Crvenkovski held talks on the margins of the meeting of presidents from
Central Europe.
The Slovenian president held talks with his Croatian counterpart Stipe Mesic and Bulgaria's
Georgi Parvanov earlier in the day.
EU Integration Tops Drnovsek-Yushchenko Talks
Ukraine's activities associated with Euro-Atlantic organisations topped the agenda as
President Janez Drnovsek and his Ukrainian counterpart Viktor Yushchenko met in the
Bulgarian resort of Varna
Ukraine's activities associated with Euro-Atlantic organisations topped the agenda as
President Janez Drnovsek and his Ukrainian counterpart Viktor Yushchenko met in the
Bulgarian resort of Varna on Friday, 19 May.
The EU must continue to expand, whereby it is impossible to imagine a united Europe
without Ukraine, Drnovsek said according to a press release from his office.
Yushchenko meanwhile thanked Slovenia for its continuing support of Ukraine's "European
efforts," the press release reads.
Talks on the margins of the meeting of Central European presidents also touched on bilateral
cooperation, with Drnovsek stressing that there is still room for improvement.
On the margins of the annual meeting, Drnovsek also held talks with Macedonian president
Branko Crvenkovski, Croatia's Stipe Mesic and Bulgaria's Georgi Parvanov.
7
EUROPEAN UNION
Commissioner Potocnik: Historic Day for Slovenia and Europe
Slovenia's member of the European Commission has said that 16 May is "a historic day for
Europe and Slovenia" as he commented on the European Commission's decision to
recommend that Slovenia be admitted to the eurozone on 1 January 2007
Slovenia's member of the European Commission has said that 16 May is "a historic day for
Europe and Slovenia" as he commented on the European Commission's decision to
recommend that Slovenia be admitted to the eurozone on 1 January 2007.
According to Janez Potocnik, who serves as the European Commissioner for Research and
Development, Tuesday, 16 May's thumbs up for Slovenia's bid to adopt the euro is
recognition for "a job well done to those who steered monetary policy in the country".
He added that it was also a sign that the EU's enlargement on to ten new members in 2004
was a success.
Potocnik explained that the Commission took its decision on Slovenia's euro-readiness
"unanimously and without debate".
Slovenia's path to introducing the euro now has very few hurdles, he said, but pointed out that
Slovenia must not let down its guard in ensuring sustainability of its public finances in the
future.
PM: Euro Nod Good News for Slovenia
In Jansa's opinion, the European Commission's report on Slovenia's readiness for the euro
reflects the actual situation in Slovenia, which has healthy public finance and a strong
economy
Slovenian Prime Minister Janez Jansa has said that "Slovenia has received good news" as he
responded to the European Commission's decision to recommend that Slovenia be admitted to
the eurozone on 1 January 2007.
In Jansa's opinion, the European Commission's report on Slovenia's readiness for the euro
reflects the actual situation in Slovenia, which has healthy public finance and a strong
economy.
"The introduction of the euro is one of the most important projects in Slovenia," Jansa
reiterated, stressing that it "would contribute to improving Slovenia's global image".
According to Jansa, the switch to the euro in Slovenia will be a historic moment that will
bring immense positive effects for the country.
The euro will increase macroeconomic stability, simplify the way Slovenian companies do
business and make life easier for its citizens, Jansa said at Tuesday, 16 May's press conference
in Ljubljana.
Moreover, in Jansa's opinion, Slovenia is a positive example for the expanded EU given that it
will be the only newcomer to introduce the euro in 2007.
Jansa stressed that Slovenia was aware that membership of the eurozone has its
responsibilities, foremost as regards retaining the stability of public finances.
Slovenia does not want to follow the example of some eurozone members that are violating
the Stability and Growth Pact, the PM said. For this reason, Slovenia intends to hurry up with
reform efforts, he added.
Meanwhile, Finance Minister Andrej Bajuk stressed that Slovenia would tackle pension
system sustainability head on. "We will have to carry out certain structural reforms," he told
the press on Tuesday, 16 May.
"We need to take concrete steps, which the government is already working on," he said,
adding that he would like to see consensus reached among all the concerned players in
Slovenia on these measures.
8
Moreover, Bajuk said that the final euro-tolar rate is likely to be very similar to the current
parity rate of SIT 239.64 for one euro.
Bajuk also praised former finance minister Dusan Mramor: in his opinion, Mramor deserves a
lot of the credit for taking a brave decision to put Slovenia on course for rapid euro adoption.
well as plans to finance local governments and infrastructure construction.
Gaspari: Slovenia Among Most Developed European Countries
"Slovenia is entering the club of the most developed states in Europe," Bank of Slovenia
Governor Mitja Gaspari said in his response to the decisions of the European Commission
and European Central Bank to recommend that Slovenia be admitted to the eurozone on 1
January 2007
"Slovenia is entering the club of the most developed states in Europe," Bank of Slovenia
Governor Mitja Gaspari said in his response to the decisions of the European Commission and
European Central Bank to recommend that Slovenia be admitted to the eurozone on 1 January
2007.
"This is a result of good cooperation in the past," Gaspari moreover said, expressing hope that
cooperation between the government, Bank of Slovenia and the social partners would persist.
According to him, several challenges await Slovenia and its economy, which the government,
the central bank and the social partners will have to face. However, their present cooperation
is a good basis for future progress on this path.
Gaspari moreover noted that the European partners have always welcomed the broad
consensus which Slovenia has managed to reach on its way to the eurozone. In his view, this
was one of Slovenia's main advantages over other candidates.
"I hope that the rest of the process of euro adoption will go well and that we will all have a
chance in January to get used to new circumstances, a life with the euro," Gaspari added.
He moreover pointed out that the Bank of Slovenia would make an effort for this process to
be conducted in such a way that the Slovenians will not see the euro changeover as a burden
but as a responsibility.
Official: Choosing Tasks Key Factor for Slovenia's EU Presidency
A correct and realistic choice of the priority tasks and good cooperation between the
parliament and the government will be of key importance for the success of Slovenia's stint as
EU president
A correct and realistic choice of the priority tasks and good cooperation between the
parliament and the government will be of key importance for the success of Slovenia's stint as
EU president, the head of the Government Office for European Affairs (SVEZ) Janez
Lenarcic said on Wednesday, 17 May.
Lenarcic presented a report on Slovenia's preparations for the countries EU chairmanship in
the first half of 2008 to members of the parliamentary foreign policy and EU affairs
committees.
He highlighted the European constitutional treaty and the EU's future, the Western Balkans,
the European Neighbourhood Policy, energy and cultural dialogue as the most likely priorities
of Slovenia's presidency.
Other possible priorities include the Lisbon Strategy, an interim survey of the Cohesion and
Common Agricultural policies and the role of the EU as a global player, Lenarcic explained,
adding that the finalisation of priorities should be concluded by mid-2007.
Some of the opposition MPs voiced concern over some of the possible priorities, calling for
the parliament to be included in the decision-making process.
9
Lenarcic assured that the government welcomes the contribution of the parliament but pointed
out that individual countries were far from "independent" when choosing the priorities, as
more than 90% of the agenda for presiding countries are "inherited" from earlier presidencies.
Turning to the organisational aspect of the chairmanship, Lenarcic said the tasks involved
include the chairing of more than 4,000 meetings, 30 official ministerial meetings in Brussels
and Luxembourg and up to 15 informal meetings in Slovenia.
Government estimates have put the sum needed for the entire project at SIT 13.7bn (EUR
57.2m). The staff has already been chosen and includes 1,100 people, according to Lenarcic.
Slovenian, Dutch FMs for Extending Period to Rethink EU Future
Slovenian FM Dimitrij Rupel and his Dutch counterpart Bernard met in The Hague
Slovenian FM Dimitrij Rupel and his Dutch counterpart Bernard Bot have agreed that the
period to rethink the future of the EU needs to be extended, as they met in The Hague on
Wednesday, 17 May.
Both ministers believe that the bloc is currently going through a difficult period, caused by
last year's rejection of the EU constitutional treaty by voters in France and Netherlands.
The Slovenian minister also presented Slovenia's priorities during the country's stint as EU
chair in the first half of 2008, while Bot offered help to Slovenia in its preparations.
Rupel said Slovenia's priorities include the discussion on the EU's future, intercultural
dialogue, diversification of the bloc's energy sources and the bloc's expansion to the Western
Balkans.
He also outlined his vision of an interim solution to the crisis. He believes the constitution
should be put on hold and a new transitional document drafted to address the bloc's urgent
needs.
Such a document should in no way be in opposition to the constitution, but would be less
high-profile.
Since it would not constitute a constitution, it could be simply "ratified by parliament" rather
than requiring a referendum nod, Rupel believes.
In the mean time, the EU could wait for a more favourable moment for the constitution, which
he believes is necessary to expand the EU to over 27 members.
Bot congratulated Rupel on Slovenia receiving a positive assessment of its readiness to enter
the eurozone, as well as stressed the good relations between the two states and expressed his
hope on strengthening economic ties.
Irish Speaker Believes Small Country Can Be Successful EU Chair
Being small is no reason why Slovenia should not be as successful in presiding over the EU as
any of the bigger member states, or could even be more successful, Irish Parliament Speaker
Rory O'Hanlon said in Ljubljana
Being small is no reason why Slovenia should not be as successful in presiding over the EU as
any of the bigger member states, or could even be more successful, Irish Parliament Speaker
Rory O'Hanlon said in Ljubljana on Thursday, 18 May.
O'Hanlon, who visited Slovenia with his delegation, added that good preparations for
presiding over the bloc are of key importance, as he and his Slovenian counterpart France
Cukjati held a joint press conference.
Ireland has already presided over the EU several times and was very successful each time, he
added.
Cukjati meanwhile said that Slovenia and Ireland were cooperating well and also agree on the
majority of key European issues.
10
Besides Slovenia's preparations for the stint, the pair also discussed future EU enlargement
and the European Constitution. The countries agree that the document presents a solid
foundation for continuing talks, Cukjati added.
Late in the day O'Hanlon also met PM Janez Jansa with the pair agreeing that relations
between Ireland and Slovenia were good and without open issue.
They highlighted economic cooperation as area with the biggest potential for future
collaboration, the PM' office said in a press release.
Jansa also acquainted O'Hanlon with the economic and social reforms planed in Slovenia,
stressing that Ireland presented a good example to Slovenia as it is one of the countries that
managed to get the most out of their EU membership.
Slovenia, France Agree to Cooperate on EU Presidency Plans
Slovenian Foreign Minister Dimitrij Rupel and his French counterpart Philippe Douste-Blazy
have agreed that their countries would cooperate in preparing for their respective stints as
EU presidents in 2008
Slovenian Foreign Minister Dimitrij Rupel and his French counterpart Philippe Douste-Blazy
have agreed that their countries would cooperate in preparing for their respective stints as EU
presidents in 2008.
In line with the agreement, the two countries are to establish expert teams that would draft
ways to break the deadlock over the EU constitution.
The agreement was reached as part of Rupel's visit to Paris on Thursday, 18 May.
Slovenia is to preside over the EU in the first half of 2008, followed by France in the second
half of the year.
In the meeting, Douste-Blazy reiterated that France was committed to the EU although it had
not gotten over the shock caused by the rejection of the constitution by its citizens in last
year's referendum, Rupel said.
Rupel believes that there is no way French citizens would back the constitution in its current
form if given another chance to vote on it.
For this reason I have proposed to my French colleague that the constitution is put to the side
somewhat and that priority be given to issues of day-to-day EU operations, he added.
The pair also touched on the programme of relocation of Slovenian bears to the French
Pyrenees, which is going ahead despite opposition from local farmers.
Douste-Blazy is said to have stressed that the relocation programme is an example of the good
relations between the countries.
Unlike Netherlands, where Rupel paid a visit on Wednesday, 17 May, France is less clear on
what it must do as regards the constitution.
We have therefore agreed to compile a joint list of possibilities, Rupel said, adding that
Slovenia would therefore not only be cooperating with the countries that will chair the bloc
before it, in 2007, Germany and Portugal, but also France.
"It is impossible to achieve anything significant without France. Slovenia and Portugal will
act as some kind of a bridge between Germany and France, the two most important members
of the EU," he added.
Moreover, the pair also agreed that future EU enlargement onto the Western Balkans was
needed, but only after the countries meet the conditions for membership.
The pair also touched on developments in the Middle East, agreeing that the EU should
continue to help the Palestinians by bypassing the government led by Hamas.
Rupel also had lunch with former French PM Eduard Balladur, met former French FM Huber
Vedrine, and appeared as a guest on a radio talk show together with former French Minister
for European Affairs, Noel Lenoire.
11
STATISTICS/FORECASTS
Wages Up in March
The average net wage in Slovenia was SIT 181,982 (EUR 759.40) in March
The average net wage in Slovenia was SIT 181,982 (EUR 759.40) in March, 2.3% more than
in February and up 5.3% over the same month last year, according to the National Statistical
Office.
The average gross earnings stood at SIT 285,690 (EUR 1,192), up 3% over the month before
and 5.1% year-on-year, the office said on Tuesday, 16 May.
In real terms, March gross wages increased by 2.2% over February and by 3.1% compared
with March 2005.
Unemployment Slightly Down in March
The registered unemployment rate in Slovenia stood at 10.1% in March, down 0.3% points
over February
The registered unemployment rate in Slovenia stood at 10.1% in March, down 0.3% points
over February, according to the latest data by the Statistics Office.
A total of 91,363 people were registered as unemployed, 2.9% less than the previous month
and 1.1% less than in March 2005.
The unemployment rate among women was 12.2%, while it stood at 8.3% among men.
Slovenia's labour force numbered 908,695 in March, with 817.332 among these registered as
employed, which is an increase of 0.4% over February and 1.0% up year-on-year.
Out of the 734,189 people employed - an increase of 0.4% over February - 83,143 persons
were self-employed. The number of farmers increased 2.8% year-on-year to 32,210.
Based on ILO and Eurostat standards the unemployment rate in Slovenia in 2005 averaged
6.5%.
Slovenians Satisfied with Job Security but Frustrated with Wages
When reflecting on their employment features, workers in Slovenia find the most satisfaction
in the level of job security, in their co-workers and the work itself, but are less enthusiastic
about their working hours and wages, according to a survey conducted as part of the SiOK
project
When reflecting on their employment features, workers in Slovenia find the most satisfaction
in the level of job security, in their co-workers and the work itself, but are less enthusiastic
about their working hours and wages, according to a survey conducted as part of the SiOK
project.
The survey conducted between 2001 and 2005, whose results were presented on Thursday, 18
May in Ljubljana, included 175 Slovenian companies which were subjected to 323 different
studies involving 56,044 questionnaires.
While the survey revealed that workers in Slovenia are mostly frustrated by their working
hours and wages, it also showed that they value the quality, originality, motivation and vigour
present at their work place.
While other organisational climate features, such as internal communication, the internal flow
of information and upgrading, received somewhat poorer grades, the characteristic "career
possibilities" is ranked at the very bottom.
According to Mitja Cimerman of AT Adria, one of the consultancies involved in the project,
the data gathered offers managers unprecedented insight into the climate in their companies
and offers them valuable guidelines for improvement.
12
The SiOK project was set up in 2000 in cooperation of the Slovenian Chamber of Commerce
and is being developed by several specialised consultancies who are conducting comparative
research of organisational climate in Slovenian and Croatian companies.
Government Confirms IMAD Spring Report
According to the report confirmed by the government, economic growth is to stand at 4.2%
for this year, 0.2 percentage points higher than initially predicted
The cabinet has confirmed the spring report of the Institute for Macroeconomic Analysis and
Development (IMAD) in which the institute upgrades economic growth and inflation
forecasts for Slovenia.
According to the report confirmed by the government at its session on Thursday, 18 May,
economic growth is to stand at 4.2% for this year, 0.2 percentage points higher than initially
predicted.
IMAD director Janez Sustersic told the press that Slovenia is facing a period of favourable
economic trends - exports grew rapidly in the first quarter of the year and industrial output
was on the rise, while the number of unemployed was dropping.
Sustersic added that the report also concludes what the European Commission confirmed on
Tuesday, 16 May: that Slovenia is in compliance with criteria for eurozone membership.
IMAD has made its spring projections on the basis of existing economic policies and budgets
for 2006 and 2007; the effects of the planned reform measures have not been considered.
It is furthermore based on solid growth projections for Slovenia's main trade partners, which
is expected to increase export growth to 8.2% this year, more than IMAD projected in the
autumn report. On the other hand, private consumption is expected to grow only moderately.
The revised growth projection is mainly a result of upgraded growth in investment spending.
Most notably, the volume of investments in motorway construction is 30% higher than last
year, housing investment is soaring and investments in the corporate sector are upbeat.
The report is also optimistic about the outlook for employment. Survey employment is to
remain below 6.5% and the registered unemployment rate edge to below 9.5%. At the same
time, Sustersic said, wage growth is projected to lag behind productivity gains by a similar
margin than last year (0.9 percentage points).
IMAD also slightly upgraded its inflation projections, with consumer price growth anticipated
to stand at 2% this year. For the subsequent years, inflation is to hover at just above 2%, said
Sustersic, who pointed out that competition is preventing GDP growth from having too big an
impact on inflation.
Whereas the inflation outlook for this year is stable, the forecast for 2007 does carry some
risks. If prices are rounded up when the euro is adopted on 1 January 2007, and household
electricity prices soar due to energy market liberalisation, inflation could be 0.5 percentage
points higher than projected.
Slovenia's GDP per Capita at 76% of EU Average in 2003
Slovenia's GDP per capita stood at 76% of the EU average in 2003, putting the country above
the 75% threshold for receiving EU funds under Objective 1
Slovenia's GDP per capita stood at 76% of the EU average in 2003, putting the country above
the 75% threshold for receiving EU funds under Objective 1, according to Eurostat data
published on Thursday, 18 May.
The data is based on Slovenia's status as one cohesion region, which is why Slovenia made a
request late last year to be divided into two regions in order to remain entitled to Objective 1
funding in the 2007-2013 EU budget period.
13
The EU's preliminary assessment of the request was favourable, with European Regional
Policy Commissioner Danuta Huebner saying in late March that Eurostat gave a positive
preliminary opinion, saying that the request is in line with regulations".
Huebner moreover told STA that Slovenia's request has been checked and is good, adding that
the proposal could officially enter into force in 2008.
Eurostat data also shows that in 2003 GDP per capita expressed in terms of purchasing power
parity in the 254 NUTS 2 regions across the EU ranged from 33 percent of the EU 25 average
in the region of Lubelskie, in Poland, to 278 percent of the average in Inner London.
According to Eurostat data for 2003, 37 regions exceeded 125% of the bloc's average
development level, with Prague being the only region located in one of the new member
states.
Meanwhile, of the 60 regions that fall below the 75% threshold, 16 can be found in Poland,
seven in the Czech Republic and six in Hungary.
Slovenia first surpassed the 75% threshold in 2002, when the country's GDP per capita stood
at 75.3% of the EU average.
14
FINANCE
Talks Between Finance Ministry and KBC on NLB Continue
"The ministry would like to stress that there is no ultimatum from the KBC," the ministry
explained
Talks between Belgian financial group KBC and the government regarding the future of KBC
in Slovenia's largest bank, NLB, are continuing and have never stopped, the ministry said on
Monday, 15 May.
The statement comes in response to the unofficial information published in the daily Delo that
KBC has demanded that the government tell it whether it would allow it to increase its current
34% stake in NLB to 49%.
"The ministry would like to stress that there is no ultimatum from the KBC," the ministry
explained.
"We have never given any ultimatum - we do not do business in such a way," KBC
spokesperson Viviane Huybrecht told STA.
The talks between the government and KBC on the increase of the share the Belgian company
holds in Nova Ljubljanska banka (NLB) began after the period in which KBC bound itself not
to increase its 2002-acquired 34% stake ran out in 2005.
KBC announced last week that it would "reassess its investment" in NLB. Unhappy with its
inability to raise its stake, the KBC said it would "limit its responsibility...to that of a pure
financial investor".
CCIS Cautions State to Curb Public Expenditure
In a press release the CCIS expressed its concerns regarding the long-term sustainability of
the country's pension purse, growth of public expenditure and the necessary changes to the
tax system
The Chamber of Commerce and Industry of Slovenia (CCIS) said that it expected a positive
assessment of Slovenia's readiness to enter the eurozone in 2007. In response to the
assessment, it cautioned that the country should take to heart the recommendations in the
European Commission's report regarding the sustainability of public finances.
In a press release on Tuesday, 16 May, the CCIS expressed its concerns regarding the longterm sustainability of the country's pension purse, growth of public expenditure and the
necessary changes to the tax system.
The leverage of economic policy will be greatly reduced in Slovenia after the euro switch,
while wage policy will gain even more importance, it said.
The European Commission has said in its report, published on Tuesday, 16 May, that
Slovenia is ready to adopt the euro on 1 January 2007.
Economist Stresses Importance of Public Finance Policy
A positive convergence report on Slovenia's readiness to adopt the euro means that the
country's macroeconomic indicators are favourable, while the key challenge now lies in
leading a prudent public finance policy, economist Mojmir Mrak told STA
A positive convergence report on Slovenia's readiness to adopt the euro means that the
country's macroeconomic indicators are favourable, while the key challenge now lies in
leading a prudent public finance policy, economist Mojmir Mrak told STA on Tuesday, 16
May.
15
Mrak, commenting on the positive reports by the European Commission and the European
Central Bank on Slovenia's readiness to join the eurozone in 2007, added that after the
changeover, Slovenia would no longer have control of monetary policy.
"The fiscal and public finance policies as well as various parts of structural policies will now
gain more importance. The situation will be more transparent, monetary policy will not be at
hand to ease any shocks," Mrak added.
While he believes that certain price hikes will surely appear with the changeover, Mrak
assessed that these would appear in a relatively limited number of products which do not
feature prominently in the basket of goods.
EBRD Selling Stake in NLB
The European Bank for Reconstruction and Development (EBRD) has published an invitation
for expressions of interest in its 5% stake in Slovenia's largest bank, NLB
The European Bank for Reconstruction and Development (EBRD) has published an invitation
for expressions of interest in its 5% stake in Slovenia's largest bank, NLB. In line with the
terms of the invitation, the EBRD intends to sell its stake in separate allotments of no more
than 0.25% and no less than 0.1% of the share issue.
The EBRD issued the invitation in Wednesday, 17 May's edition of the daily Delo. It set 2
June as the deadline for receiving the expressions of interests and said that it retained the right
to reject all bids.
In a statement issued through its website, EBRD said the bank was selling its 384,101 shares
in NLB because of conditions in the shareholders agreement.
This was also confirmed by the Slovenian Finance Ministry in its statement. "The
EBRD...became an owner of NLB as an interim partner, undertaking the obligation to
withdraw transparently following the expiration of the shareholder contract," said the
ministry.
Meanwhile, the EBRD denied that the sale had anything to do with the recent negotiations
between the two largest NLB shareholders, the state and Belgian financial group KBC.
"The EBRD's announcement is a result of the Bank's contractual obligations under the
existing shareholder agreements, which pre-date KBC's recent announcement to reassess its
investment in NLB."
EBRD bought the stake in NLB in the autumn of 2002 for EUR 64m as part of the first phase
of privatisation of Slovenia's largest bank, which also saw KBC acquire its 34% stake.
At the time, it was agreed that the EBRD would not sell its shares before 2006, while KBC
would not be allowed to increase its stake before 2006.
Unhappy with its inability to convince the Slovenian government to allow it to raise its stake,
KBC recently announced it would reduce its role in the NLB to that of a financial investor.
Meanwhile, KBC spokeswoman Viviane Huybrecht told STA that the Belgian group will not
be buying the EBRD's stake. She added that the KBC does not have a pre-emptive right to the
purchase.
Moreover, Huybrecht added that the KBC has not changed its mind about reducing its role in
the NLB to that of a financial investor.
EBRD Expects Local Investors to Bid for Stake in NLB
The European Bank for Reconstruction and Development (EBRD) expects local investors to
express their interest in acquiring its 5% stake in Slovenia's largest bank, NLB
The European Bank for Reconstruction and Development (EBRD) expects local investors to
express their interest in acquiring its 5% stake in Slovenia's largest bank, NLB, the head of the
EBRD office in Slovenia, Francois Lecavalier, told STA on Wednesday, 17 May.
16
The announced sale is in no way related to the recent decision by the Belgian banking group
KBC (which has decided to reduce its role in NLB), but the result of EBRD's obligations
under the 2002 shareholders agreement, Lecavalier added.
However, the agreement does not bind EBRD to sell its stake, so the bank will decide on what
step to take after it gets potential offers, he revealed. The market will show how much EBRD
could get for its stake in NLB, he added.
EBRD intends to sell its stake in separate allotments of no more than 0.25% and no less than
0.1% of the share issue, as written in the agreement signed between EBRD and the Slovenian
government, he explained.
By acquiring a stake in the Nova Ljubljanska banka (NLB), EBRD wanted to improve NLB's
performance and assist the government in reducing its stake to a minority participation, he
added.
According to Lecavalier, EBRD is "satisfied with the first, but obviously the second has not
been reached".
EBRD is selling its 384,101 shares in NLB and set 2 June as the deadline for receiving the
expressions of interests. It bought the stake in NLB in the autumn of 2002 for EUR 64m as
part of the first phase of privatisation of Slovenia's largest bank, which also saw KBC acquire
its 34% stake.
Bajuk Says NLB to Remain in Slovenian Ownership
Finance Minister Andrej Bajuk has rebuffed allegations that the country was losing
credibility because of the government's privatisation plan for the financial sector, in
particular NLB, the largest bank
Finance Minister Andrej Bajuk has rebuffed allegations that the country was losing credibility
because of the government's privatisation plan for the financial sector, in particular NLB, the
largest bank. NLB is a crucial financial institution so the government wants to keep it in
Slovenian hands, but not necessarily in state ownership, Bajuk said.
"In the EU it is still the relevant country that takes the responsibility for the stability of the
financial system...but it has limited decision-making power in institutions in majority foreign
ownership. As long as there is this gap, we cannot take a different position," Bajuk said on
Friday, 19 May.
Bajuk said the current system in which the state takes responsibility but does not have
ultimate control was "nonsense". "We will strive to make changes in the EU, but until there is
such a gap between responsibility and jurisdiction, the situation will remain as it is."
Bajuk was responding to criticism from Liberal Democracy (LDS) leader Jelko Kacin, who
claimed that favouring Slovenian companies as the future owners of NLB is exhausting and
inhibiting the country's economy. He said that foreign investment would boost the economy.
The debate about the state's role in NLB was reignited by KBC, the Belgian owner of one
third of the bank, which has recently said it would become merely a financial investor in view
of its failure to get the government to allow it to raise its stake to above 50%.
The opposition seized upon the development as proof that the government was failing to
honour its election promise of offloading the state's stakes in major companies as a means of
renouncing the oft-criticised meddling of the government in corporate decision-making.
Kacin thus said that the government was saying no to foreign capital, which Bajuk disagrees
with. "Time will tell whether the current developments in our relations with our partners in
NLB are a disagreement of a final divergence of views that it incompatible with the
relationship which we have had so far," Bajuk said.
17
Ljubljana Stock Exchange
The Ljubljana Stock Exchange (LJSE) followed the downward trend of the global stock
markets this week with the main market SBI 20 index shedding 2.19% and finishing the week
at 5,006.46 points
The Ljubljana Stock Exchange (LJSE) followed the downward trend of the global stock
markets this week with the main market SBI 20 index shedding 2.19% and finishing the week
at 5,006.46 points.
According to analysts, the drop can be interpreted as a delayed reaction to the decision by the
US Federal Reserve to raise the key interest rate.
In a week of relatively modest volumes pharma company Krka and energy company Petrol
yet again dominated trading, with Krka accounting for SIT 2.5bn (EUR 10.43m) and Petrol
for SIT 695m (EUR 2.9m) of the SIT 6.8bn (EUR 28.38m) worth of shares traded totally.
Both, however, slipped significantly, with Krka loosing 4.5% to SIT 149,490 (EUR 623.81)
and Petrol down 4.2% to SIT 81,911 (EUR 341.81).
The third strongest stock in terms of trading, that of home appliance maker Gorenje, followed
suit, shedding just over 4% to SIT 5,616 (EUR 23.44).
The blue-chip heavy SBI TOP index lost 38.29 points to end the week on 1,144,83.
On the winning side, chemical and tourism group Sava held the lead, recording a 2.79%
increase to SIT 45,117 (EUR 188.27) on volumes of SIT 58.3m (EUR 243,282).
Popular investment funds followed the slumping blue chips, pulling the PIX investment fund
index 75.02 points down to 4,023.84.
The bond BIO index edged 0.08 points lower to 119.08.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.60 (-0.02)
U.S. dollar (USD) - SIT 187.73 (+2.27)
Swiss franc (CHF) - SIT 153.97 (-0.59)
British pound (GBP) - SIT 352.10 (+0.39)
18
BRANCH INFORMATION
Slovenia's Carbon Dioxide Emissions Below Limit
While the quota for the 98 Slovenian heavy industry companies was 9.138m tons of carbon
dioxide, pollution permits were issued for 8.76m tonnes with no irregularities identified at any
of the companies
The European Commission has made no objections to the data on Slovenian greenhouse gas
emissions for 2005. While the quota for the 98 Slovenian heavy industry companies was
9.138m tons of carbon dioxide, pollution permits were issued for 8.76m tonnes with no
irregularities identified at any of the companies.
In its report published on Monday, 15 May, the Commission wrote that out of the 21 EU
member states participating in the 2005-launched EU emissions trading scheme, Italy made
the worst impression with 207 companies missing the deadline for sending relevant data and
with 647 tainted by irregularities.
A total of 9,400 plants were inspected as part of the scheme with most of the companies
receiving a positive mark.
However, as figures showed that EU states had given industrial plants more carbon dioxide
pollution permits (1.829bn tonnes) than they needed (1.785bn tonnes), environmental
organisations said that there were too many credits available to industry and that the scheme
which aims at curbing the emissions is obviously not working.
Meanwhile, Slovenian Environment and Spatial Planning Minister Janez Podobnik reiterated
in Ljubljana that Slovenia had committed itself to curb its greenhouse emissions by 8% until
2012 compared to 1986.
According to Podobnik, one of the measures to contribute to this initiative is the replacement
of fossil fuels with biofuels. Such a step has clear environmental objectives but is also in line
with economic-social programmes such as rural development, Podobnik added.
He also said that the biofuels market secures the farmers a reliable but most of all a long-term
and stable source of income. It also decreases Slovenia's dependence on imported natural
resources and creates new jobs.
The introduction of biofuels is also supported by the EU, which has adopted several measures
to this aim, among them the directive on fostering the introduction of biofuels for motorised
vehicles. Slovenia is expected to start selling biofuels for this purpose in 2007.
Austria, Slovenia have Great Biomass and Solar Energy Potential
Austria and Slovenia have extensive potential in producing biomass and using solar energy
Austria and Slovenia have extensive potential in producing biomass and using solar energy,
the head of the international department at the Austrian Energy Agency Alois Geisslhofer said
in Celje on Wednesday, 17 May.
Geisslhofer, speaking at the Austrian Energy Days held at the Celje fair, added that the
countries already cooperate in numerous cross-border programmes, yet a new momentum is
needed.
In the morning part of the event, attended by 45 Austrian and 135 Slovenian companies, Jani
Turk of the Environment and Spatial Planning Ministry outlined the goals of the Slovenian
energy policy and the ministry's activities.
He pointed out that Slovenia was taking part in the Intelligent Energy Europe programme
aimed at promoting sustainable development in energy-related areas and at fulfilling the EU's
strategic goals on reliability and competitiveness of energy supply and environmental
protection.
19
The afternoon part of the meeting, scheduled to wrap up on Thursday, 18 May, the
participants will discuss the purchase price of electricity generated by using renewable
sources, and get acquainted with an Austrian example of efficient use of renewable energy.
Austrian, Slovenian Agriculture Ministers Examine Topical Issues
WTO negotiations and topical matters regarding fisheries, genetically-modified organisms,
countryside development and wine reforms topped talks in a meeting between Austrian
Agriculture Minister Josef Proell and his Slovenian counterpart Marija Lukacic
WTO negotiations and topical matters regarding fisheries, genetically-modified organisms,
countryside development and wine reforms topped talks in a meeting between Austrian
Agriculture Minister Josef Proell and his Slovenian counterpart Marija Lukacic on Tuesday,
16 May, as Proell wrapped up his visit to Slovenia.
According to the Agriculture Ministry, Proell and Lukacic concluded that the current WTO
talks were being viewed overly from an agricultural point of view instead of a view that
equally deals with all economic fields.
The pair stressed that Green Box Measures, including rural development aid and subsidies,
should remain unchanged. They also said that sensitive products, including meat and dairy
products, need to be treated separately from other agricultural goods in market liberalisation
efforts.
Meanwhile, the talks also touched on genetically-modified organisms. In drafting legislation
in the field, Slovenia intends to uphold the view that consumers should have the right to buy
produce that has not been genetically altered, Lukacic told Proell.
20
COMPANIES
NEK Generating Electricity Again
The overhaul lasted four days longer than initially planned due to an increased number of
repairs necessary during the restart, which were all on the non-nuclear part of the power
plant
The Krsko Nuclear Power Plant (NEK) was again connected to the national grid on Sunday,
14 May at 9:40 PM following a regular overhaul which began on 8 April.
The overhaul lasted four days longer than initially planned due to an increased number of
repairs necessary during the restart, which were all on the non-nuclear part of the power plant,
NEK said on Monday, 15 May.
The purpose of this year's overhaul was to change the nuclear fuel, carry out preventative
checks and replace certain parts. 56 new fuel elements were placed inside the reactor.
All 30 of the planned modifications, aimed above all at simplifying the use of safety
equipment and the plant in general, were carried out according to plan.
Important replacements include both low-pressure turbines, which means that the power of
the plant is now greater by 20 MW, the equivalent of a small hydroelectric power station.
The four steam generator feedwater preheaters were also replaced, the IT system was
expanded and upgraded and the next step in the replacement of the analog radiation
monitoring system was also carried out.
Alongside the repairs and replacements the entire maintenance plan was implemented.
Around 700 Slovenian and foreign specialists participated in the overhaul, organised by NEK.
The NEK also said that the power station is now functioning at 29% full capacity and is
supplying 90 MW to the grid. The company added that the maintenance and repairs should
ensure the stable operation of the power plant during its 22nd fuel cyclus which is expected to
last until October 2007.
Petrol Would Like to Takeover Serbia's NIS Jugopetrol, CEO Says
Marko Kryzanowski, CEO of Slovenia's largest fuel trader Petrol, said that Petrol will
definitely try to take part in the privatisation of Serbia's state-owned NIS Jugopetrol
Marko Kryzanowski, CEO of Slovenia's largest fuel trader Petrol, said that Petrol will
definitely try to take part in the privatisation of Serbia's state-owned NIS Jugopetrol.
In an interview published by the daily Dnevnik on Monday, 15 May, Kryzanowski added that
Petrol does not yet know how the privatisation of NIS Jugopetrol would be carried out as the
plan to sell the state's stake is still being drafted.
It is also possible that Petrol would launch its bid in collaboration with a partner, most likely
with an oil giant, Kryzanowski revealed, naming Hungary's MOL or Russia's Lukoil as
Petrol's most likely partners.
He also told the daily that Petrol and NIS are complementing each other, with NIS having a
well-developed network of fuel stations as well as two refineries, something that Petrol lacks.
Without a refinery of its own, Kryzanowsky revealed, Petrol is highly dependent on its petrol
derivatives suppliers. "We are lacking either a refinery or a strategic partner with a strong
position as derivatives buyer."
The acquisition of NIS would require a capital injection into Petrol, with the move to increase
the company's capital by 50% scheduled to be carried out in the summer, after the company
drafts its five-year strategic plan.
Kryzanowski, who took over late last year, wants 25% plus one share of Petrol to remain in
state ownership, with the rest distributed between two or three other large owners.
21
Signing of a Deal Between WAZ and DZS Postponed
The signing of a contract between German media conglomerate WAZ and Slovenian
publishing house DZS on establishing a joint venture, scheduled for 16 May, has been
postponed
The signing of a contract between German media conglomerate WAZ and Slovenian
publishing house DZS on establishing a joint venture, scheduled for Tuesday, 16 May, has
been postponed.
After WAZ told STA the previous week that they expect to sign a contract with DZS on
establishing a 50:50 joint venture, which will take charge of DZS's 51.05% stake in the daily
Dnevnik, the German company said that the signing was deferred for a week.
"The lawyers have not yet finalised the deal, therefore, we will sign the contract next week,
presumably next Tuesday," WAZ spokesperson Peter Klossek told STA.
Meanwhile, DZS does not expect to sign the agreement so soon. "A letter of intention has
been signed, negotiations are underway, and we expect to sign the deal in a month or a month
and a half," DZS added.
Istrabenz Increases Stake in Droga Kolinska to Only 60.24%
Istrabenz published a takeover bid on 14 April offering SIT 2,450 (EUR 10.23) per share for
the remaining shares
Istrabenz holding has acquired an additional 4.61% in Droga Kolinska to increase its stake in
the food company to 60.24%, Istrabenz said on Tuesday, 16 May.
Istrabenz published a takeover bid on 14 April offering SIT 2,450 (EUR 10.23) per share for
the remaining shares, it did not however set down the smallest number of shares which would
have to be purchased for the bid to be successful.
According Istrabenz's CEO Igor Bavcar the "successful bid" confirms that the shareholders
believe Droga Kolinska will be able to handle the risks connected to its business strategy.
Droga Kolinska's CEO Robert Ferko agreed, adding that the result of the bid keeps Droga
Kolinska on track to becoming the leading food company in the region by 2010.
Istrabenz announced its takeover plans in mid March, with the company's CEO Bavcar
explaining that a takeover was a logical step after the successful purchase of Kolinska and its
merger with Droga last year.
Adria Airways Launches Ljubljana - Rome Route
With the help of Italian partner, carrier Air One, the route is to be serviced four times a week
Slovenian flag carrier Adria Airways launched a regular route between Ljubljana and Rome
on Wednesday, 17 May. With the help of Italian partner, carrier Air One, the route is to be
serviced four times a week.
Adria expects the new route to bring in around 9,000 passengers by the end of this year,
mostly tourist but also businessmen.
Adria's CEO Tadej Tufek told the press in Rome on Wednesday, 17 May that the Italian
capital was also chosen due to its connections to other Italian and European destinations.
Compared to the same period last year, Adria Airways has increased the number of flights on
its regular routes by 10%, while the number of passengers in the first four month of 2006 rose
by 15%.
Delo Reports Drop in Q1 Profit
Slovenia's leading newspaper publisher Delo has reported just under SIT 78m (EUR 325,488)
in net profits for the first quarter of 2006
Slovenia's leading newspaper publisher Delo has reported just under SIT 78m (EUR 325,488)
in net profits for the first quarter of 2006, a 31% drop over the same period last year.
22
According to Delo, the fall is to be attributed to the negative effects of newly launched
projects and exceptional developments in the company.
Compared to the same period in 2005, revenues increased by nearly 5% to SIT 3.35bn (EUR
14m). Advertising revenues went up by 9% and revenues from newspaper sales by 6%, the
daily also says in Wednesday, 17 May's edition.
Gorenje Selling Top-of-the-Line Fridges at Harrods
Slovenian household appliance maker Gorenje is selling two versions of its top-of-the-line
Premium Touch refrigerators at London's prestigious department store Harrods, the business
daily Finance wrote
Slovenian household appliance maker Gorenje is selling two versions of its top-of-the-line
Premium Touch refrigerators at London's prestigious department store Harrods, the business
daily Finance wrote on Wednesday, 17 May.
The most expensive of the Premium Touch refrigerators is sprinkled with 7,000 Swarovski
crystals and priced at just under GBP 9,999 (EUR 14,605). Gorenje has so far manufactured
less than ten of these.
Additionally, two cheaper models are also available. Covered with 3,500 Swarovski crystals,
they are selling for around GBP 775 (EUR 1,139).
While other Gorenje household appliances are also on sale at Harrods, the Premium Touch
line will only be available for purchase in May and June, according to Finance.
Mercator AGM Fails to Approve Capital Injection
Mercator CEO Ziga Debeljak said the decision will in no way endanger Mercator's 2006
investment projects, including its planned strategic partnership with the Serbian TUP Rodic
M&B company
Shareholders of Slovenia's largest retailer Mercator rejected the management and supervisory
boards' proposal to authorise the two bodies to decide whether the company would get a 50%
capital injection, as they met in Ljubljana on Wednesday, 17 May.
Mercator CEO Ziga Debeljak said the decision will in no way endanger Mercator's 2006
investment projects, including its planned strategic partnership with the Serbian TUP Rodic
M&B company.
According to Debeljak, 10% of Mercator's shares currently available to the management will
suffice for this year's partnership plans, Debeljak told the press after the AGM.
He revealed that the external experts are currently carrying out a legal and financial audit of
TUP Rodic M&B for Mercator, while Mercator experts are scrutinising the business
operations of the Serbian company.
Small shareholders and beverage group Pivovarna Lasko voted against the proposal, with
Lasko presenting its own capital injection plan, which, however, was also voted down.
The AGM, attended by 79% of Mercator's issued share capital, also rejected the discharge for
Mercator's previous management board, yet confirmed it for the supervisory board.
They also turned down the management and supervisory boards' proposal to appoint Srecko
Kenda to the supervisory board and voted against a counter-proposal to appoint Marjan
Somrak, a representative of the small shareholders, to the post.
The AGM, however, voted in favour of a proposal to authorise the retailer's management to
acquire the company's shares, a proposal to appoint an auditing company, and to look into
some of the company's business operations.
Meanwhile, Ljubljana city councillors passed a spatial plan to allow Mercator to expand its
supermarket in Siska, a north-western borough of Ljubljana. The SIT 5.3bn (EUR 22.11m)
investment should be finished by spring 2007, Mercator told STA.
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Ljubljana councillors in February 2005 turned down a bid by a Mercator rival, Spar, to build
its own shopping centre close to Mercator's existing one. STA was unable to get Spar's
comment, due to the absence of the company's CEO Igor Mervic.
Russian Lukoil Interested in Nafta Lendava Company
Oil company Lukoil expressed considerable interest in investing in the Nafta Lendava oil
company, Minister of the Economy Andrej Vizjak said after meeting Lukoil's CEO Vagit
Alekperov in Ljubljana
Oil company Lukoil expressed considerable interest in investing in the Nafta Lendava oil
company, Minister of the Economy Andrej Vizjak said after meeting Lukoil's CEO Vagit
Alekperov in Ljubljana on Thursday, 18 May.
According to Vizjak, the sale of the entire Nafta group would allow the continued
development of the company, as well as the creation of new jobs and promising development
programmes.
The government wants to sell Nafta Lendava and sees Lukoil's initiative as one of the possible
ways to privatise it, Vizjak added.
The government will try to meet Lukoil representatives in the shortest time possible and
continue with discussions on concrete deals regarding Nafta Lendava, he revealed.
"The powerful Russian company could solve some of the Slovenian economy's key problems,
especially regarding a long-term reliable supply of oil derivatives," he explained.
Lukoil also expressed interest in the infrastructure on the Slovenian coast, where they would
be interested in setting up their own logistics centre for this part of Europe, the minister
added.
Alekperov also had a meeting with PM Janez Jansa.
Lukoil Interested in Slovenian Companies, Alekperov Tells PM
President of Russian oil giant Lukoil Vagit Alekperov has expressed his company's interest in
partnership with Slovenian companies as he met Slovenian Prime Minister Janez Jansa
President of Russian oil giant Lukoil Vagit Alekperov has expressed his company's interest in
partnership with Slovenian companies as he met Slovenian Prime Minister Janez Jansa in
Ljubljana on Thursday, 18 May.
According to a press release from the PM's office, Alekperov said Lukoil was interested in
strategic cooperation with Slovenia, especially with refinery Nafta Lendava, port operator
Luka Koper and petrol retailer Petrol.
Jansa is said to have said that he backs cooperation, but added that the decisions are in the
hands of the corporations concerned, the press release added.
Alekperov had met Economics Minister Andrej Vizjak earlier in the day for talks on the same
topic.
At that meeting Lukoil expressed considerable interest in investing in the Nafta Lendava oil
company, according to Vizjak.
Vizjak added that the sale of the entire Nafta group would allow the continued development
of the company, as well as the creation of new jobs and promising development programmes.
The government wants to sell Nafta Lendava and sees Lukoil's initiative as one of the possible
ways to privatise it, Vizjak explained.
Jansa and Alekperov also discussed challenges facing Europe and the world in the energy
sector.
The prime minister's office said that energy will likely be one of the priorities of Slovenia's
stint as EU president in the first half of 2008.
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Paper Mill Vipap Concludes Modernisation
Slovenian paper mill Vipap Videm Krsko concluded the EUR 4m second phase of upgrading
its production line, bringing to a close its 1998 plan to modernise its production
Slovenian paper mill Vipap Videm Krsko concluded the EUR 4m second phase of upgrading
its production line, bringing to a close its 1998 plan to modernise its production, Vipap CEO
Oldrich Kettner said in Krsko on Friday, 19 May.
The symbolic start of the upgraded line was also attended by Minister of Economy Andrej
Vizjak and Czech Deputy Minister for Industry and Trade Martin Tlapa.
Kettner said in a press release that this year's planned phasing out of pulp production is a
consequence of unsuccessful talks between Slovenia and the EU.
The phasing out will leave the company with 350 excess workers, Kettner revealed, while
Vizjak said that the state is ready to help the workers in finding new employment. "The
ministry has the means and the programme," he added.
Kettner said that the Czech bank Ceskoslovenska ophodni banka (CSOB), controlled by the
Czech Consolidation Agency, a part of the country's Finance Ministry, is still Vipap's formal
owner.
Vizjak pointed out that the government is ready to take part in securing successful future
business operations in cooperation with the company's active owner. The same intent was
expressed by the Czech side, which called for cooperation of both states.
Vizjak moreover expressed his belief that keeping 450 jobs at Vipap can only be achieved by
continuous modernisation and education of the workforce.
The company is also carrying out environmental protection plans and has so far invested EUR
107m into technological and environmental plans.
The modernisation presents the largest investment in 2006, Kettner said, explaining that the
upgrade is meant to ensure production of high-quality paper from recycled paper.
The company produced a record 180,000 tonnes of paper in 2005, he revealed, adding that a
new paper-making line will be set up by 2010.
Pivovarna Lasko Doubles Loss in Q1
The loss comes despite the increase in sales, which amounted to SIT 3.3bn (EUR 13.77m), SIT
200m (EUR 834,700,) more than in Q1 2005
Brewery Pivovarna Lasko generated a loss of SIT 225.3m (EUR 940.000) in the first quarter
of 2006, double that incurred in the same period last year, the company said on Friday, 19
May.
The loss comes despite the increase in sales, which amounted to SIT 3.3bn (EUR 13.77m),
SIT 200m (EUR 834,700,) more than in Q1 2005.
Lasko said that a net loss is typical for the beverage industry in the first quarter of the year.
Volume sales are also lower than during the rest of the year.
The brewery sold 198,705 hectolitres of beer and water in the first three months of 2006,
5.6% less than the year before. This is 16.8% of the total volume planned for the year.
The Pivovarna Lasko group, which includes brewery Pivovarna Union and soft-drinks
subsidiaries Fructal and Radenska, posted SIT 4.4bn (EUR 18.36m) in net profits in 2005,
367% more than in 2004.
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SLOVENIA IN BRIEF
Nobel Laureate Erwin Neher Visits Maribor Faculty of Medicine
The Faculty of Medicine in Maribor was visited Monday, 15 May by Nobel laureate Erwin
Neher, who handed his hosts a plaque in honour of cooperation between the Max-Planck
Institute for Biophysical Chemistry in Gernmany's Goettingen and the Institue for Physiology
at the Maribor Faculty. According to Maribor University Chancellor Ivan Rozman, the visit of
a Nobel prize winner is an important contribution to further development of the faculty and
the university.
Social Partners Fail to Reach Agreement on Labour Market
The social partners failed to close the chapter of employment and labour force at their talks
aimed at concluding a Social Agreement for the 2006-2009 period, and have indeed ended the
talks further apart than they were some weeks ago.
Drnovsek Receives Visiting Bosnian Minister
Slovenian President Janez Drnovsek has received the visiting Bosnia-Herzegovina Minister
for Human Rights and Refugees Mirsad Kebo. The pair spoke about economic cooperation
and the latest developments in Bosnia, the president's office said in Monday, 15 May's press
release.
Drnovsek Receives Ahtisaari
President Janez Drnovsek met the special UN envoy for Kosovo Martti Ahtisaari as the
diplomat arrived on a visit to Slovenia on Monday, 15 May. The pair discussed "international
topics, especially progress in Kosovo status talks", Drnovsek's office reported, but did not
specify whether Drnovsek's Kosovo plan has been touched on.
Speaker Cukjati Receives Algerian Ambassador
Parliamentary Speaker France Cukjati met the non-residential Algerian Ambassador to
Slovenia Salah Lebdioui in Ljubljana on Tuesday, 16 May.
Jansa and Ahtisaari Discuss Kosovo and Western Balkans
Prime Minister Janez Jansa received the special envoy for Kosovo Martti Ahtisaari on
Tuesday, 16 May, with whom he exchanged views on the situation in Western Balkans.
Minister Confident Slovenia Didn't Violate EU State Aid Rules
Minister of the Economy Andrej Vizjak is confident that Slovenia did not violate EU state aid
rules. Reacting to the announcement of the European Commission that it was launching two
investigations into aid given to Slovenian companies, Vizjak said he doubted the
Commissions would find any wrongdoing.
Government Replacing Ambassador to Holy See
The government on Thursday, 18 May relieved Slovenian Ambassador to the Holy See
Ludvik Toplak of his duties. According to a press release from the Government PR and Media
Office, Toplak, appointed to the post on 19 June 2002, was recalled because he had served out
his term. Toplak was also relived of his duties as Slovenia's ambassador extraordinary and
plenipotentiary to the Sovereign Maltese Order of Knights.
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Government Appoints Chief Market Inspector
The cabinet appointed on Thursday, 18 May Andrejka Grlic as Slovenia's new chief market
inspector. Grlic, appointed for a term of five years, had already been the acting chief inspector
since 19 January this year,
Defence Minister Stresses Improvements in Bosnia-Herzegovina
Slovenian Defence Minister Karl Erjavec said that the overall situation in BosniaHerzegovina has greatly improved in his speech at the 23rd International Workshop on Global
Security that took place in Berlin on Thursday, 18 May.
Archaeologists Discover Bronze Age Sword in Lake Bled
A team of archaeologists has found a Bronze Age sword, assessed to be over 3,000 years old,
in Lake Bled, one of Slovenia's premiere resorts. The completely preserved sword was
discovered earlier this week and dates back to 13th or 12th century BC.
CCIS, Students, Employers Sign Higher Education Partnership
The Student Organisation of Slovenia (SOS), the Chamber of Commerce (CCIS) and the
Employers' Association have signed a statement of partnership in higher education in which
they call for a public agency for higher education. The representatives of all three institutions
also called at a press conference on Friday, 19 May for the comparison of levels of the
previous and present education systems within the national qualification framework.
Celje New Slovenian Diocese
A special ceremony with a mass in the centre of Celje marked the inauguration of a new
diocese in this eastern city and the appointment of its new Bishop Anton Stres on Sunday, 21
May. The ceremony was led by the recently-elevated Archbishop of Maribor and
Metropolitan Franc Kramberger, who also conferred a bishop's crosier on Stres.
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