Slovenia Business Week no. 08, February 19, 2007
Table of Contents:
HEADLINES ............................................................................................................................. 2
Aerodrom, Akrapovic and Litostroj E.I. Best Rated Firms in 2006 ...................................... 2
Taste Slovenia at New Tourist Rep Office in Brussels .......................................................... 2
CCIS to Boost Competitiveness with Cooperation, Not Adversity ....................................... 2
INTERNATIONAL COOPERATION ...................................................................................... 4
Cyprus, Slovenia Share Stance on Turkey's EU Bid .............................................................. 4
EUROPEAN UNION ................................................................................................................. 5
Vizjak: EU's Ambitious Energy Objectives Watered Down .................................................. 5
Mate: End to Labour Barriers Must Precede Migrant Worker System .................................. 5
STATISTICS/FORECASTS ...................................................................................................... 7
Over 85% of Slovenians Support Euro Adoption, Survey Shows ......................................... 7
Average Earnings Up 2.2% in 2006 ....................................................................................... 7
Pensions Up by 3.2-3.8% ....................................................................................................... 8
Registered Unemployment at 8.6% in December .................................................................. 8
FINANCE................................................................................................................................... 9
Petrol Prices Up ...................................................................................................................... 9
Pension Purse Records Ends 2006 with Balanced Budget ..................................................... 9
Warsaw Bourse Enters LJSE Acquisition Talks .................................................................... 9
Government Confirms Key Documents for Drawing EU Funds in 2007-2013 ................... 10
Ljubljana Stock Exchange .................................................................................................... 10
BRANCH INFORMATION .................................................................................................... 12
Committee Unanimously Endorses Agriculture Minister Nominee .................................... 12
Minister: Slovenia Met Its Kyoto Targets, Looking Beyond Them .................................... 12
COMPANIES ........................................................................................................................... 14
Minister Announces Extended One-Stop-Shop System....................................................... 14
Paloma Plans to Turn a Profit in 2007 ................................................................................. 14
Styria Planning a New Daily in Slovenia ............................................................................. 15
Foundry, Construction Company Unveil Strategic Cooperation Plans ................................ 15
Slovenian Sugar Plant to Get EU Restructuring Aid ........................................................... 16
Drava River Power Company Posted EUR 19.55M in 2006 Profit ..................................... 16
Government Limits Participation of Civil Servants in Company Boards ............................ 17
Istrabenz Moves to Acquire All of Droga Kolinska............................................................. 17
State-Run Funds Continue to Divest, Selling Stakes in 10 Firms ........................................ 18
Comet's Performance Exceeds Expectations........................................................................ 18
SLOVENIA IN BRIEF ............................................................................................................ 19
Austria and Slovenia Ministers Debate Schengen Enlargement .......................................... 19
Slovenian Gallery in Brussels to Present Mix of Arts, Technology .................................... 19
Minister Mate Upbeat about Pace of Schengen Preparations .............................................. 19
Slovenia in Favour of Stronger EU-Wide Police Cooperation ............................................ 19
Slovenia and Portugal for Boosting EU's Strategic Partnerships ......................................... 19
Parliamentary Committee Endorses Development Minister Nominee ................................ 19
HEADLINES
Aerodrom, Akrapovic and Litostroj E.I. Best Rated Firms in 2006
Airport operator Aerodrom Ljubljana, exhaust system maker Akrapovic and Litostroj E.I., a
maker of water turbines, won the Rating of the Year award by the rating agency Dun &
Bradstreet and its Slovenian partner I
Airport operator Aerodrom Ljubljana, exhaust system maker Akrapovic and Litostroj E.I., a
maker of water turbines, won on Tuesday, 13 February the Rating of the Year award by the
rating agency Dun & Bradstreet and its Slovenian partner I.
According to I, the awarded companies have the lowest risk factor, operate successfully and
do not make hazardous business and capital transactions.
Those qualities make them reliable partners to suppliers, banks and insurance companies.
Moreover, the rating improves their purchasing power and ensures longer payment deadlines.
Aerodrom Ljubljana chairman Vinko Moze said at the ceremony that the award was not only
a prestige, but it also obliged the awarded to justify the rating in the future.
The awarded companies were selected among 384 Slovenian companies which had an A1
rating in 2006.
Taste Slovenia at New Tourist Rep Office in Brussels
Slovenia intends to offer sustainable tourism instead of mass tourism
"Taste Slovenia" was the slogan used by Slovenian tourist officials as they officially opened a
new tourist office in Brussels on Tuesday, 13 February.
Slovenia intends to offer sustainable tourism instead of mass tourism, the representatives
added, while Marjan Hribar of the Economy Ministry said that their vision was to conquer the
entire Europe.
The office will "greatly contribute to Slovenia's visibility...and facilitate cooperation between
Slovenia and various EU institutions," said Dimitrij Piciga, director of the Slovenian Tourist
Board (STO).
Rok Klancnik, the director of the office, meanwhile said that the Benelux countries have
recorded a continuous rise in interest for Slovenia.
The new office wants to bring some 100,000 inhabitants of Belgium, the Netherlands and
Luxembourg to Slovenia in 2007, some 15,000 more than last year, Klancnik told reporters.
The office, which has been operating since 1 January, is located near the European
Parliament, the European Council and the European Commission.
CCIS to Boost Competitiveness with Cooperation, Not Adversity
The Chamber of Commerce and Industry of Slovenia (CCIS) unveiled a white paper on
competitiveness, which calls for greater value added, a more flexible labour market, better
phasing of EU funds and more dispersed exports as ways of boosting the country's
competitive ability
The Chamber of Commerce and Industry of Slovenia (CCIS) on Wednesday, 14 February
unveiled a white paper on competitiveness, which calls for greater value added, a more
flexible labour market, better phasing of EU funds and more dispersed exports as ways of
boosting the country's competitive ability.
The government, trade unions and companies are not adversaries, we are partners on the same
ship which will "set the course, safely yet with appropriate speed," CCIS president Samo
Hribar Milic told a conference accompanying the launch of the strategy paper.
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The white paper includes 62 measures that are divided into eight groups: business on foreign
markets, technological development, education, cutting red tape, labour market flexibility,
environment protection, promotion of entrepreneurship and regional development.
The CCIS, which drafted the document as a guideline for the government as it adopts
economic policy measures, is convinced that competitiveness cannot be achieved through
wage policy alone. Instead, what it takes is an appropriate macroeconomic environment, clear
ownership and protection of competition.
Economist Marko Jaklic of the Ljubljana Faculty of Economics agrees. Instead of taking
short-term measures which "demoralise employees", businesses should think about improving
productivity and value added, he told the conference.
Jaklic also said the white paper does not say enough about the activities managers themselves
need to undertake in order to boost competitiveness. Economist France Krizanic added that
the document did not include venture capital initiatives.
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INTERNATIONAL COOPERATION
Cyprus, Slovenia Share Stance on Turkey's EU Bid
Foreign Minister Dimitrij Rupel and his Cypriot counterpart Yiorgos Lillikas agreed that the
two countries had similar views on international issues, including Turkey's accession to the
EU
Foreign Minister Dimitrij Rupel and his Cypriot counterpart Yiorgos Lillikas agreed on
Friday, 16 February that the two countries had similar views on international issues, including
Turkey's accession to the EU.
"Turkey should become an EU member because this is in the interest of the Turkish people
and us," Lillikas said. However, there are no shortcuts to membership and Turkey has to fulfil
all the conditions just like the other countries did, he added.
According to Lillikas, the observance of the EU body of laws cannot be subordinated to other
issues, so Turkey cannot set the elimination of the embargo over the Turkish part of the Island
as a condition for the expansion of its customs union with the EU onto Cyprus.
Minister Rupel endorsed the position. "We in the EU want Turkey to implement the
additional protocol [which obliges Turkey to open its ports to Cyprus] so that Cyprus may
enjoy the same possibilities as the other member states."
The ministers also said the two countries saw eye to eye on issues such as the EU's
institutional development, neighbourhood policy and enlargement.
"Being small countries, Slovenia and Cyprus realise that their future is directly connected to
the future of the EU," Minister Rupel said. He believes smaller member states act in a "more
European way", as this is the only way for them to prosper in the bloc.
The talks opened good prospects for strengthening the cooperation between the countries,
especially in transport and tourism, Rupel said.
The opening of the Cypriot embassy in Ljubljana, which is scheduled for the summer
according to Lillikas, should contribute to the strengthening of bilateral relations.
Lillikas also congratulated Slovenia on its successful changeover to the euro, saying it was a
role model for Cyprus, which wishes to adopt the euro in 2008.
In a meeting with President Janez Drnovsek earlier in the day, Lillikas is reported as having
thanked Slovenia for its support in the international treatment of the divided island.
Drnovsek pledged ongoing support in the matter, voicing the hope that the dialogue between
the two ethnic communities on the island would result in a constructive solution, a press
release from his office says.
The Cypriot minister also quizzed Drnovsek about Slovenia's stance on the Kosovo issue,
saying the status talks could have broader international implications.
Drnovsek reportedly said that the situation in Kosovo was specific, so it did not make sense to
draw parallels between the different issues, the press release reads.
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EUROPEAN UNION
Vizjak: EU's Ambitious Energy Objectives Watered Down
Economy Minister Andrej Vizjak came out of EU Council for Transport, Telecommunications
and Energy session saying EU members managed to agree only on non-binding objectives
concerning the use of renewable energy sources
Economy Minister Andrej Vizjak came out of EU Council for Transport,
Telecommunications and Energy session on Thursday, 15 February, saying EU members
managed to agree only on non-binding objectives concerning the use of renewable energy
sources. "The initially ambitious objectives of the European Commission have been watered
down," he said.
The debate on separating energy production and distribution activities yielded no agreements,
Vizjak explained. While Slovenia has no problem accepting the separation of these activities,
other countries "are divided and have very different positions".
Slovenia also backed the European Commissions' objectives concerning the use of renewable
energy sources, however most countries backed the general non-binding objectives of
increasing renewable energy sources to 20% of the EU's power consumption by 2020, and a
binding objective to increase the use of biofuels to 10%.
Vizjak said the objectives were ambitious. In Slovenia, the share of renewable energy is
currently at around 14.6%, "yet there is still way to go until 2020," he said, adding that the
goals can be reached using nuclear power, which provides a realistic long-term solution.
The commitments made at the meeting could lead to a quick solution on the issue, but the
member states must first agree on a number of details, he said. In his view, the European
Commission needs to show "support and understanding" in the matter.
The ministers also agreed on cross-border cooperation in order to avoid black-outs similar to
that which affected most of Western Europe in early November. The ministers accepted the
Commission's recommendations to upgrade energy grid capacities enabling a country to
import 10% of its power production capacities in case of an extraordinary need.
Mate: End to Labour Barriers Must Precede Migrant Worker System
Interior Minister Dragutin Mate told a meeting of EU interior ministers in Brussels that the
EU cannot implement a system of circular migration for foreign workers before all the
internal labour restrictions in the bloc are lifted
Interior Minister Dragutin Mate told a meeting of EU interior ministers in Brussels on
Thursday, 15 February that the EU cannot implement a system of circular migration for
foreign workers before all the internal labour restrictions in the bloc are lifted.
Mate was one of the ministers who questioned the sense of circular migration system
proposed by the European Commission in a bid to promote legal migration of workers in
occupations where the EU has a shortage, before internal restrictions are lifted.
Many countries that joined the EU in the most recent rounds of enlargement, including
Slovenia, believe that internal labour restrictions need to be abolished before such a migrant
worker system can be put into practice.
"Circular migrations are a possibility, but a solution must first be found to providing free
movement of labour between the old and new members," Mate explained Slovenia's stance.
The European Commission believes these are two separate issues. The goal of its proposal is
to allow seasonal workers to be imported from outside the EU to fill gaps in certain sectors,
particularly agriculture and construction.
The Commission believes that such a system would also stem the flow of illegal immigrants,
mostly from Africa, who are looking for a better life in the EU.
5
European Commissioner for Justice, Freedom and Security Franco Frattini stressed that the
gradual abolishment of internal restriction remained a priority for the Commission.
He added that the system of circular migration concerns a completely different issue, since it
involves seasonal workers, who would be allowed to stay in the EU for only up to six months.
Frattini added that quotas on the number of migrants who would be allowed in under the
system would be set by individual member states and that there would be no EU-wide quota.
He said that in return the Commission expected from African countries serious efforts to reign
in illegal migration and a commitment to receive workers following the end of their term in a
seasonal job.
Meanwhile, the EU is also tackling illegal migration by increasing awareness in African
countries about job possibilities in the bloc. The EU has already set up an information office
in Mali that dispenses information about possibilities for legal migration.
6
STATISTICS/FORECASTS
Over 85% of Slovenians Support Euro Adoption, Survey Shows
The majority of the respondents (70.4%) labelled the 1 January euro switch as an important
or very important event, while 5.5% described it insignificant or very insignificant
Over 85% of Slovenians had no troubles in bidding farewell to the tolar, their currency for
over 15 years, according to the results of a survey published by the Ninamedia polling agency
on Wednesday, 14 February.
The majority of the respondents (70.4%) labelled the 1 January euro switch as an important or
very important event, while 5.5% described it insignificant or very insignificant.
The survey, carried out a month after the euro was adopted, also shows that 48.6% of those
polled trust the euro more than they did the tolar, while 21.4% believe that the tolar was a
more trustworthy currency.
Asked about who should get the credit for the euro switch, 21.1% of the 1,000 respondents
chose outgoing central bank governor Mitja Gaspari, who recently failed to convince the
majority of MPs to confirm him for a second term at the helm of Banka Slovenije.
The previous government meanwhile got the credit from 18.8% of those questioned and the
incumbent one from 15.5%, while 29% of those polled could not say who should get the
credit.
The survey also showed that 88.6% of the respondents had no troubles in adjusting to the
euro. The majority of those who had, encountered problems in calculating the exchange rate.
The only real concern for those polled were potential price hikes (42.5%), with 83.4% of the
respondents saying they experienced a price increase following the euro switch.
They mainly blamed retailers (56.7%), while 22.3% put the blame on the government.
Over half of those polled believe their purchasing power will remain the same with the new
currency, while 36.7% fear it will drop.
The majority of the respondents also said Slovenia would continue to use the euro in 2020
(68%), while 7.9% said it would not.
Average Earnings Up 2.2% in 2006
The average gross earnings in Slovenia last year stood at EUR 1,212.8
The average gross earnings in Slovenia last year stood at EUR 1,212.8, which is 2.2% more
than a year once adjusted to inflation.
Slovenian workers netted an average EUR 773.42 per month last year, a yearly increase of
2.5% in real terms, data from the Statistics Office shows.
An average Slovenian employee earned EUR 1,261.09 gross in December 2006, which is
9.9% less than a month earlier.
The net wage for December averaged EUR 818.94, a drop of 5.7% compared to November.
The smaller monthly drop in net earnings compared to gross earnings in December is a result
of a lower tax burden on labour stemming from the new income tax legislation.
The data also shows that the only Slovenian region where pay was higher than the Slovenian
average was the central Osrednjeslovensko region, which includes Ljubljana, where
employees earned 12.9% more than the Slovenian average.
The lowest wages were registered in the NE Pomurje region, where earnings trailed behind
the Slovenian average by 16.8% last year.
7
Pensions Up by 3.2-3.8%
The rise is the result of an adjustment to increases in salaries, which is made twice a year
Most Slovenian pensioners will benefit from a 3.2% rise in pensions this month. This is
according to a decision taken on Friday, 16 February by the Pension and Disability Insurance
Institute (ZPIZ).
The rise is the result of an adjustment to increases in salaries, which is made twice a year.
While most pensions will go up by 3.2%, some will increase by 3.8%, including those paid
out to people who retired after 1 January 2006.
As the rise is effective as of January, pensioners will also get the difference for January with
their February pensions, according to ZPIZ deputy director Joze Kuhelj.
Kuhelj said the difference in pension rises was necessary in order to put people who have
retired in various periods in an equal position. This was also envisaged by law.
In line with the decision of the ZPIZ board the lowest bracket base pension as of 1 January is
EUR 467, while the highest base pension is EUR 1,868. The war veterans' pension amounts to
EUR 397, while the old age pension under the law on the pension insurance of farmers totals
EUR 198 and state pension EUR 155.
According to ZPIZ, Slovenia had 531,075 pensioners at the end of 2005, while a total of
846,890 people paid insurance to the pension purse.
Registered Unemployment at 8.6% in December
The average unemployment rate for last year stood at 9.4%
Slovenia's registered unemployment rate was 8.6% in December 2006 and was level with that
recorded the month before, the national Statistics Office said on Friday, 16 February. The
average unemployment rate for last year stood at 9.4%.
In December 78,303 people were registered as unemployed. This is down 0.7% on November
and down 15.4% year-on-year. While the unemployment rate among men was 7.1%, it
reached 10.5% among women.
Slovenia's labour force numbered 911,319 in December 2006, out of whom 833,016 were
employed. The number of these dropped by 0.4% compared to November, but increased over
December 2005.
The ILO-compatible unemployment rate reached 5.6% in the third quarter of 2006, which is
the latest available data.
While data on registered unemployment are released monthly, the data based on labour force
survey, which is the methodology applied by the International Labour Organisation (ILO), are
released quarterly.
8
FINANCE
Petrol Prices Up
Petrol prices are adjusted every two weeks to oil prices and the exchange rate of the US
dollar under a government pricing model
Petrol prices went up on Tuesday, 13 February. Regular unleaded costs EUR 0.954, which is
2.9 cents more, while premium is being sold at EUR 0.965, 3.1 cents more than before.
Diesel costs EUR 0.909, which is 2.2 cents more, whereas heating oil went up by 2.6 cents to
EUR 0.550.
Petrol prices are adjusted every two weeks to oil prices and the exchange rate of the US dollar
under a government pricing model.
Pension Purse Records Ends 2006 with Balanced Budget
The Pension and Disability Insurance Institute (ZPIZ) ended 2006 with even revenues and
expenses of EUR 3.85bn each
The Pension and Disability Insurance Institute (ZPIZ) ended 2006 with even revenues and
expenses of EUR 3.85bn each. The ZPIZ did not have to take out any loans to finance its
operations, general manager Marijan Papez told the press on Tuesday, 13 February.
According to Papez, the institute performed well in 2006 and does not plan to take out any
loans in 2007.
Quizzed about European Commission warnings on the need to tweak the pension system,
Papez said that the Commission said nothing the institute did not already know.
However, the pension reform is bearing fruit and there is need for drastic changes at the
moment, he added.
The Commission had warned Slovenia that it needed to reform its pension system to ensure its
sustainability.
Papez also said that they would respond in time to the qualified opinion by the Court of
Audits, which said that the Institute overcharged the state by EUR 2.3m in 2004.
Warsaw Bourse Enters LJSE Acquisition Talks
The Warsaw Stock Exchange (WSE) confirmed its interest in acquiring a 70% stake in
Ljubljanska borza
The Warsaw Stock Exchange (WSE) confirmed its interest in acquiring a 70% stake in
Ljubljanska borza, the manager of the Ljubljana Stock Exchange (LJSE), on Friday, 16
February saying its offer would top the one made by Sweden's OMX group.
"We are willing to enter serious talks on the price...we are not buying only a stake, but future
market potential. We want the offer to be satisfactory for both sides," Ludwik Sobolewski, the
executive director of WSE, told the press on Friday, 16 February.
OMX bid just over EUR 125 per share of Ljubljanska borza in December, an offer that the
owners turned down as inadequate. The price values Ljubljanska borza at EUR 4.2m.
Addressing reporters prior to talks with the owners of Ljubljanska borza, Sobolewski said the
Warsaw bourse would make a better offer.
Sobolewski said WSE did not want to be a financial investor, but would like to establish an
alliance between the two stock exchanges and connect both markets. He believes that the
Warsaw Stock Exchange is too small to pose a threat to the Slovenian market.
However, more will be known at the beginning of March, he said.
9
With 285 companies listed, the Warsaw Stock Exchange is one of the biggest stock exchanges
in Eastern Europe. WSE market capitalisation amounted to EUR 120bn at the end of 2006.
The average daily turnover in Warsaw stood at EUR 749m in the same year.
The LJSE meanwhile has 201 companies quoted and has a market capitalisation of EUR
19bn. Last year's turnover was EUR 996.48m, an increase of 72% over the year before,
according to the LJSE's annual statistical report.
Government Confirms Key Documents for Drawing EU Funds in 2007-2013
The cabinet endorsed key documents that allow Slovenia to draw EUR 4.2bn from EU
cohesion funds in the 2007-2013 period
The cabinet endorsed on Friday, 16 February key documents that allow Slovenia to draw EUR
4.2bn from EU cohesion funds in the 2007-2013 period. It also authorised the Government
Office for Local Government and Regional Policy to finalise talks with the European
Commission on the issue, government PR and Media Office said.
The government, meeting at a correspondence session, also adopted a framework that defines
the strategy and three operational programmes that define the phasing of cohesion funds in
more detail.
The operational programme for obtaining money from the European Regional Development
Fund envisages EUR 1.7bn of EU money and EUR 300m of Slovenian funds. The money will
be used to improve competitiveness, research, business infrastructure and regional
development.
The human resources operational programme will get EUR 756m from the European Social
Fund and EUR 133m from the national budget. The money will be used for promoting
entrepreneurship, life-long learning, equal opportunities and social inclusion.
Investments into environment and transport will meanwhile be financed by the Cohesion
Fund and the Regional Fund. The EUR 1.6bn of EU funds and EUR 289m of national funds
will also be used for sustainable energy use.
Apart from the documents, the cabinet also agreed to draft operational programmes for crossborder, interregional and transnational cooperation. These programmes will be confirmed by
the cabinet and then to Brussels in the following months.
Local Government and Regional Policy Ivan Zagar said in Brussels on Wednesday, 14
February that he expected Slovenia to send the documents to the European Commission on
Thursday, 15 February. However, the cabinet did not confirm them at its regular session as
they had to undergo minor corrections.
Ljubljana Stock Exchange
The main market SBI 20 shed 26.67 points to 7,280.11
The rapid price growth that marked the better part of January on the Ljubljana Stock
Exchange has come to a near halt, with the main indices hitting a plateau and remaining
virtually level for the second week in a row. Last week the main market SBI 20 shed 26.67
points to 7,280.11 and the SBI TOP index of the six biggest issues shed 13.43 points to
1,679.29.
The two busiest items were among the losers last week: drug maker Krka shed 1.29% to EUR
901.55 on deals worth EUR 5.63 and household appliance maker Gorenje, which clocked up
volumes of EUR 1.95m, was down 0.70% to EUR 30.31.
Iskra Avtoelektrika, a maker of electronic components for the car industry, topped the list of
winners last week with a gain of 9.22% to EUR 60.79. The share gained more than 2% on
Friday, 16 February after two state-run-funds, KAD and SOD, announced they would be
selling a stake of 26.94% to the best bidder in an auction.
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Istrabenz meanwhile gained 2.13% on the weekly comparison to EUR 49.01. However,
investors were cool about the offer the company made on Friday, 16 February for 40% of
food company Droga Kolinska that it does not own already, awarding Istrabenz with a 0.43%
loss.
The free market was more bullish last week. Chemical company Helios, still riding the wave
of rumours about consolidation in the chemical industry, added 1.19% to EUR 1,255.00 and
furniture trader Lesnina was up 1.68% to EUR 1,830.21.
Big investment funds posted solid gains, foremost among them Krona Senior, which was up
+2.93% to EUR 9.47. The PIX investment fund index gained 61.56 points to 5,776.39.
The bond BIO index remained almost level last week at 118.40.
Brokers wrapped up deals worth EUR 26m, with an additional EUR 91.4m done in block
trade.
11
BRANCH INFORMATION
Committee Unanimously Endorses Agriculture Minister Nominee
The parliamentary Agriculture, Forestry and Food Committee unanimous support for Iztok
Jarc, nominated by PM Janez Jansa as the new agriculture, food and forestry minister
The parliamentary Agriculture, Forestry and Food Committee expressed on Wednesday, 14
February unanimous support for Iztok Jarc, nominated by PM Janez Jansa as the new
agriculture, food and forestry minister.
In presenting his views and policies at the committee hearing, Jarc labelled a successful
Slovenian presidency of the EU as one of the ministry's key tasks.
The seasoned diplomat plans to strengthen the competitiveness of agriculture and promote
collaboration between the sector and policies on environment protection and climate change.
Jarc also convinced the committee members by stressing that he would consult nongovernmental and governmental organisations and consider their proposals whenever possible
in the decision-making process.
Other key tasks would involve efficient implementation of the direct payments reform and the
programme of countryside development for the 2007-2013 period.
Jarc, born in 1963, graduated in international relations and began his career at the
international relations committee of the Socialist Republic of Slovenia.
He became state secretary at the Agriculture Ministry in 2001 and was named ambassador to
Israel in 2004, holding the post until 7 February, when he was relieved of his duties because
of the nomination.
The vote in parliament looks like a walk-through as statements of support have already come
from the coalition parties as well as the opposition National Party (SNS).
Jarc will replace Marija Lukacic, who stepped down on 10 January citing health reasons.
Minister: Slovenia Met Its Kyoto Targets, Looking Beyond Them
Two years to the day since the Kyoto Protocol came into effect, Environment Minister Janez
Podobnik is confident that Slovenia has met all its commitments under the treaty
Two years to the day since the Kyoto Protocol came into effect, Environment Minister Janez
Podobnik is confident that Slovenia has met all its commitments under the treaty. What is
more, Slovenia, along with other EU members, is looking beyond 2012, when the current
protocol runs out, Podobnik said Friday, 16 February.
The Kyoto Protocol, which aims to curb air pollution through the reduction of greenhouse gas
emissions, has so far been ratified by 169 countries, including Slovenia. The treaty pledges to
cut these emissions by 5.2% by 2012.
Slovenia's Kyoto target is to bring down the emissions by 8% to below the level of 1986. This
means that it should cut its emissions by 18.6 million tonnes of carbon dioxide equivalent by
2012, which the country is on track to achieve. The government adopted an operative gas
emission reduction plan in December 2006.
"We are pleased the Slovenian CO2 emission allocation plan is the first after Britain's to be
endorsed [by the EU]. This is an acknowledgment to Slovenia that it has submitted a fair plan
to the European Commission," Podobnik said on the sidelines of a meeting with the mayors of
the border regions of Obsotelje and Kozjansko (NE).
"We have not fiddled anything, but have made realistic assessments of the situation in the
energy sector, transport, utilities and agriculture," Podobnik added as he addressed reporters
in the town of Smarje pri Jelsah.
12
According to him, Slovenia, Great Britain and possibly Spain are about to sign a joint
declaration on the Kyoto Protocol anniversary, which would be addressed to the European
public. The minister added that Kyoto mechanisms would be one of Slovenia's priorities for
when it holds the EU presidency in 2008.
The operative plan for the implementation of Kyoto targets lists seven measures, including a
technological overhaul of Slovenian thermal power plants, reduction of energy consumption
in industry, increase in renewable energy sources and replacement of fossil fuels with
biological ones.
The plan also envisages trading in emission allowances and an improvement of the energy
efficiency of buildings. In transport, Slovenia plans to promote public transport and shifting
transit from roads to railways.
According to Andrej Kranjc of the Ministry of the Environment and Spatial Planning, the
energy sector, which accounts for the bulk of greenhouse gas emissions, is well-covered with
emission coupon trading, while it also needs restructuring.
"The most problematic is the transport sector where emissions keep increasing," Kranjc said.
He pledged the committee in charge would step up its efforts to tackle the issue.
The costs of the implementation of the measures are estimated at EUR 48.5m a year, except
for measures in transport where an additional EUR 79m a year will be needed for the
introduction of bio fuels and promotion of public transport. The cost of activities regarding
carbon sequestration are estimated at EUR 1.3m a year, according to Podobnik.
13
COMPANIES
Minister Announces Extended One-Stop-Shop System
Following the success of the first one-stop-shop system, aimed at simplifying registration
tasks for entrepreneurs, the system will see a EUR 1m upgrade to match the needs of
companies as well
Following the success of the first one-stop-shop system, aimed at simplifying registration
tasks for entrepreneurs, the system will see a EUR 1m upgrade to match the needs of
companies as well, Public Administration Minister Gregor Virant announced on Monday, 12
February.
Virant said the main purpose of the one-stop-shop project launched in the mid-2005 was to
enable entrepreneurs to set up their businesses on-line, free of charge and as quickly as
possible.
However, 90% of the requests to establish a company are incomplete, according to the
Supreme Court. "A system that generates 90% incomplete requests is a rotten, bad system,"
Virant said.
Thus, in order to speed up the process, the current one-stop-shop system will be upgraded to
enable all the incorporation procedures for companies to be carried out on-line, much like for
entrepreneurs, Virant said.
The upgraded system, which is scheduled to kick off in November 2007, will offer everything
needed for starting a company, while also enabling existing companies to do all their business
with the public administration over the internet, he explained.
Paloma Plans to Turn a Profit in 2007
Paper company Paloma generated EUR 86m of net sales revenues in 2006
Paper company Paloma generated EUR 86m of net sales revenues in 2006, but it expects to
post a loss due to increased prices of energy and raw materials. The company is planning to
turn a profit in 2007, Paloma chairwoman Mateja Perger told the press on Tuesday, 13
February.
According to Perger, last year's loss was not as big as it had been presented by certain media,
which estimated it at EUR 2.5m. "The results show that the loss is considerably lower," she
said.
Energy and raw material costs amounted to 45% of all material costs, said Perger, adding that
that the price of natural gas increased by 25% while electricity went up by 10%.
On the other hand, the company, which invested EUR 8.3m in 2006, managed to cut the costs
of logistics.
In 2007 the company expects to raise sales by 10% to EUR 92m. Net profit would amount to
one percent of the net sales, said Perger.
Paloma will cut the workforce by 150 this year, said Perger, so that it will have 920
employees by the end of 2007. The company is planning to invest EUR 23m in the upgrade of
production capacities this year.
Pergar also presented the conclusions of annual general meeting on Monday, 12 February,
which confirmed the incorporation of the subsidiary Paloma Horgen.
The subsidiary was founded by Paloma and Swiss partner Papierfabrik Horgen, which
withdrew from the joint venture last year.
The company's shareholders also appointed Igor Hustic a new member of the supervisory
board, replacing Andrej Kokalj, who resigned in January.
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Paloma is on the list of state-owned companies which are due to be sold in the next 30
months. Perger said she hoped the owners would "carefully choose strategic partners who are
aware of the company's importance."
Styria Planning a New Daily in Slovenia
Austrian media company Styria Media International AG said it had signed up Goran
Novkovic, deputy editor-in-chief of the business daily Finance, who will be put in charge of a
new tabloid daily in Slovenia
Austrian media company Styria Media International AG said on Tuesday, 13 February it had
signed up Goran Novkovic, deputy editor-in-chief of the business daily Finance, who will be
put in charge of a new tabloid daily in Slovenia.
"It is a great privilege for us to sign up an experienced and respected person like Goran
Novkovic," Styria chairman Klaus Schweighofer was quoted as saying in a press release.
Finance wrote two weeks ago that the Graz-based company was planning to release a new
paper next year. It will reportedly be modelled on the successful Croatian tabloid 24-sata.
In Slovenia Styria owns the free weekly Zurnal and is the co-owner (25.7%) of publisher
Dnevnik, which publishes the daily Dnevnik and the tabloids Nedeljski Dnevnik, Hopla and
Direkt.
Moreover, Styria owns 40% of the internet company Megaklik, which operates Slovenia's
most popular auction site, www.bolha.com, and the event guide www.napovednik.com.
Finance also reported in early February that the company was interested in acquiring internet
firm Noviforum, which runs localised search engines in Slovenia, Croatia, Serbia, BosniaHerzegovina and Macedonia.
Foundry, Construction Company Unveil Strategic Cooperation Plans
Mariborska livarna Maribor (MLM) foundry and the civil engineering company Riko unveiled
a long-term strategic partnership under which Riko will acquire a 10% stake in the foundry
Mariborska livarna Maribor (MLM) foundry and the civil engineering company Riko
unveiled on Wednesday, 14 February a long-term strategic partnership under which Riko will
acquire a 10% stake in the foundry.
Riko will acquire the stake from one of the company's existing shareholders, MLM chief
executive Branko Zerdoner told the press in Ljubljana. Riko general manager Janez Skrabec
would not disclose the price.
The foundry is planning to increase revenues to over EUR 100m this year and gain a foothold
on the Russian market through Riko's aid.
In 2006 the company, which employs 1,100 workers and exports 75% of output to foreign
markets, posted revenues of EUR 92m.
The two companies have been cooperating before, with an MLM plant, constructed by Riko's
SAS subsidiary from Croatia, already producing a part for the diesel engine of the Golf Mark
V.
Apart from the production of cast metal products, the two companies will also cooperate in
the marketing of the foundry's line of Armal water taps and Aklimat aluminium radiators.
MLM and Riko are planning to construct a factory for the production of radiators in Russia,
while the foundry also hopes to increase the sales of its water taps in the world's largest
country.
Riko already has a foothold in Russia. It is currently constructing a EUR 130m commercial
and hotel complex within the Luzhniki Olympic Complex in Moscow and the Peter I Hotel in
Moscow.
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Slovenian Sugar Plant to Get EU Restructuring Aid
The lone Slovenian sugar plant is entitled to funds from the EU restructuring fund when it
stops producing sugar under the 2005 EU sugar reform
The lone Slovenian sugar plant is entitled to funds from the EU restructuring fund when it
stops producing sugar under the 2005 EU sugar reform, the Agriculture Ministry told STA on
Wednesday, 14 February.
The Slovenian government is expected to send the restructuring plan for Tovarna sladkorja
Ormoz to the European Commission at the end of this month, the ministry said.
According to the ministry, Slovenia expects to get EUR 38.9m from the restructuring fund
that was established in line with the EU sugar reform adopted in November 2005. The
European Commission is to set the final figure after it gets the restructuring plan from
Slovenia.
The for Tovarna sladkorja Ormoz are to be divided among farmers, who are to get EUR 3.9m,
and employees, who will get EUR 8.255m in severance pay. The remainder of the money is to
be used for closing the plant in the northeastern Slovenian town of Ormoz.
Meanwhile, the ministry said the aid from the EU is subject to a bond of 120% of the value of
the aid that can be cashed in case of abuse of the aid.
Slovenia's sole sugar factory will stop producing sugar from sugar beet in 2007, after the EUwide sugar reform made sugar production in Slovenia unprofitable.
Efforts are underway to have the plant converted to biofuel production. Jurij Dogsa, the
chairman of sugar factory Tovarna sladkorja Ormoz, said recently that the plant would have to
undergo a EUR 35m overhaul in order for it to be able to produce 50,000 cubic metres of
bioethanol a year.
Drava River Power Company Posted EUR 19.55M in 2006 Profit
The Drava river power producer expected similar results for 2007
Power producer Dravske elektrarne posted EUR 19.55m in operating profit in 2006, slightly
down on EUR 20.9m in 2005, according to unconsolidated data presented to the press on
Thursday, 15 February by director Damijan Koletnik.
A slight drop in the profits was the product of less favourable hydrological conditions, said
Koletnik. He said the Drava river power producer expected similar results for 2007.
According to Koletnik, the company is also bracing for the liberalisation of the EU electricity
market and will have to restructure, continue the already launched projects and search for new
development opportunities.
One of the company's major investments is the EUR 63m renovation of Slovenia's largest
hydroelectric power plant in Zlatolicje (NE). The project, slated to be completed in 2009, will
enable the company to increase its output by 5%.
Another new project is a pumping hydro plant in Kozjak, a hilly region in NE Slovenia. The
investment is estimated at EUR 200m, and is also part of the government resolution on
development projects in Slovenia between 2007 and 2023.
Regarding the construction of a chain of power plants on the Mura River, Koletnik said that
the company would carry out studies to determine their environmental impact.
He added that the construction would go ahead only if the project gets the support of the local
population and the required clearances.
Koletnik is meanwhile not keen on a possible merger of Dravske elektrarne with its 100%
owner power producer HSE. "Dravske elektrarne has to remain an independent legal entity, as
the company belongs to the region, the Drava river and the population alongside it," he said.
Dravske elektrarne operates a chain of ten power plants on the Drava and Mura rivers with a
total capacity of 577 MW. The power producer commands a 25.5% share of Slovenian
electricity production with output totalling around 2,5 billion kWh per year.
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Government Limits Participation of Civil Servants in Company Boards
The cabinet adopted on a decree that prohibits ministers and state secretaries from serving in
management and supervisory boards of companies or institutions in direct or indirect
majority state ownership
The cabinet adopted on Thursday, 15 February a decree that prohibits ministers and state
secretaries from serving in management and supervisory boards of companies or institutions
in direct or indirect majority state ownership, Public Administration Minister Gregor Virant
told the press.
The limitations are slightly less restrictive for other civil servants, as they allow them to sit in
a maximum of two supervisory boards or councils of public institutions, Virant added after
the cabinet session.
The cabinet also reduced the session fees, awards and costs compensations for executive and
non-executive board members, added Andrej Sircelj, state secretary for taxes at the prime
minister's office.
Membership in supervisory boards of companies, with the exception of regulatory agencies,
will net civil servants between EUR 115 and EUR 215 per session, depending on the size of
the company, Sircelj said.
Meanwhile, the supervisory board chairman will get 30% more, he added.
According to Sircelj, members of management boards will get between EUR 150 and EUR
500 per session, with the yearly awards capped at 3% of the paid dividends or EUR 15,000 at
the most.
The companies must transpose the decrees at the next general assembly or by 31 August at the
latest, said Virant.
Istrabenz Moves to Acquire All of Droga Kolinska
Conglomerate Istrabenz announced a bid to acquire the 40% of food company Droga
Kolinska that it does not own already
Conglomerate Istrabenz on Friday, 16 February announced a bid to acquire the 40% of food
company Droga Kolinska that it does not own already. The offer stands at EUR 16 per share well below the EUR 17.53 that Droga Kolinska fetched on the Ljubljana Stock Exchange
yesterday - and values the outstanding share at EUR 91m.
Istrabenz said it has already signed a pre-contract with two undisclosed shareholders for the
purchase of their combined 14.85% stake in Droga Kolinska, which increases its shareholding
to over 75%.
The tourism, energy and food conglomerate says the takeover bid is a way of taking
responsibility for and control over restructuring at Droga Kolinska.
"The group faces a tough period of risky restructuring of the portfolio of programmes and
brands. This is crucial if we are to secure the long-term success of Droga Kolinska as it
competes with global corporations," Istrabenz CEO Igor Bavcar wrote in a press release.
"The fulfilment of the objectives demands a series of decisions and risky business moves
which cannot be carried out unless Istrabenz takes responsibility for their realisation."
Istrabenz said the offer reflected the underlying value of the company, whereas the current
market price was a result of poor liquidity on the stock market.
Istrabenz currently owns just over 60% of Droga Kolinska. Other major shareholders include
financial firms Maksima Holding (12.76%) and Poteza Nalozbe (9.99%) and Bank Austria
Creditanstalt (3.36%).
Droga Kolinska was created with the merger of two food companies (Droga and Kolinska) in
January 2005 which was masterminded by Istrabenz. The merged company was taken public
to great fanfare in October 2005, but it has been struggling to fulfil the expectations of
investors.
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State-Run Funds Continue to Divest, Selling Stakes in 10 Firms
The state-run funds KAD and SOD published an invitation for bids for their shares in ten
companies, among them Iskra Avtoelektrika, a maker of electronic components for the car
industry, Domel, a maker of electromotors and household appliances, and shipping company
Splosna Plovba
The state-run funds KAD and SOD on Friday, 16 February published an invitation for bids for
their shares in ten companies, among them Iskra Avtoelektrika, a maker of electronic
components for the car industry, Domel, a maker of electromotors and household appliances,
and shipping company Splosna Plovba.
KAD and SOD were joined in the sale of their stake in Iskra Avtoelektrika by insurance
company Zavarovalnica Triglav and its investment arm Triglav DZU. The combined stake
offered for sale is 26.94%.
The stake in Domel, offered by KAD, SOD, investment company Poteza Nalozbe and IMP
Promont, is 47.83%.
A combined 24.71% stake in Salus, a wholesaler of drugs and medical instruments, is being
sold by KAD, SOD, Poteza Nalozbe and mutual funds KD Galileo, KD ID, Skala, Infond
Delniski, Moja nalozba, Zvon ena ID and KD Rastko.
KAD and SOD are also selling a 29.65% shareholding in Splosna plovba.
Only bids for the entire stakes will be accepted. Bidding is open to Slovenian and foreign
persons and companies and closes on 3 April.
Comet's Performance Exceeds Expectations
Comet, a grinding wheel manufacturer, posted net revenues of EUR 40.7m in 2006, a 6.9%
increase over 2005 and 1.4% above plans
Comet, a grinding wheel manufacturer, posted net revenues of EUR 40.7m in 2006, a 6.9%
increase over 2005 and 1.4% above plans. Its net profit in 2006 amounted to EUR 1.3m, 4.4%
above plans, the company said on Friday, 16 February.
The company's management attributed the upbeat results to favourable market conditions,
while also pointed to the negative impact of rising energy costs and costs of strategic
materials.
The company currently employs 645 workers and is based in Zrece, a town in northeast
Slovenia.
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SLOVENIA IN BRIEF
Austria and Slovenia Ministers Debate Schengen Enlargement
Interior Minister Dragutin Mate and his Austrian counterpart Guenther Platter stressed the
importance of implementing Schengen standards in Western Balkan countries following talks
with in Brdo pri Kranju on Monday, 12 February.
Slovenian Gallery in Brussels to Present Mix of Arts, Technology
The LJUCosinusBRX art gallery opened its doors in Brussels on Wednesday, 14 February.
Located in front of the office of European Science and Research Commissioner Janez
Potocnik, the gallery will showcase Slovenian projects that encompass art and science, Jurij
Krpan of the Galerija Kapelica gallery told the press in Ljubljana.
Minister Mate Upbeat about Pace of Schengen Preparations
Interior Minister Dragutin Mate is optimistic about preparations for the elimination of border
that Slovenia shares with EU member states. The preparations for the establishment of the
"SIS I for All" is proceeding as planned and the results are "very encouraging," Mate said on
Thursday, 15 February.
Slovenia in Favour of Stronger EU-Wide Police Cooperation
EU interior ministers on Thursday, 15 February agreed landmark plans to give member states
access to each other's police databases in a bid to combat terrorism, cross-border crime and
illegal immigration. Slovenia fully supports the solution, Interior Minister Dragutin Mate said
after the session.
Slovenia and Portugal for Boosting EU's Strategic Partnerships
The Slovenian and Portuguese defence ministers called for an enhancement of ties between
the EU and NATO on Friday, 16 February as they identified the defence priorities of theirs
countries' successive presidencies over the Union.
Parliamentary Committee Endorses Development Minister Nominee
The parliamentary Economy Committee endorsed on Friday, 16 February Ziga Turk,
nominated by Prime Minister Janez Jansa for the development minister without portfolio.
Turk's bid was supported by nine and opposed by two members of the committee.
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