Slovenia Business Week no. 31, August 1, 2005
Table of Contents:
HEADLINES ............................................................................................................................. 3
Footwear Maker Alpina Opens New Company in Ukraine ................................................... 3
NLB to Become the Biggest Montenegrin Financial Institution ............................................ 3
Government Adopts Programme to Encourage FDI .............................................................. 3
INTERNATIONAL COOPERATION ...................................................................................... 5
Czech Ambassador Pays Farewell Visit to FM Rupel ........................................................... 5
Serbia-Montenegro President Decorates Ambassador Suklje ................................................ 5
Rupel and Ribachuk Discuss Bilateral Relations ................................................................... 5
Ambassador Benedejcic Presents Credentials to Belarus President ...................................... 6
Rupel Says Relations with Russia are Extremely Good......................................................... 6
EUROPEAN UNION ................................................................................................................. 8
Sencar Taking Over as Slovenia's Ambassador to EU ........................................................... 8
EU Resumes Farm Subsidy Payments to Slovenia ................................................................ 8
Koprol Presenting Positions for EU Budget Talks in London ............................................... 9
PM Says EU Presidency to Cost EUR 60M; Balkans Among Priorities ............................... 9
Fouere Expects Slovenia to Face Serious Challenges as EU Member ................................ 10
LEGISLATION ........................................................................................................................ 12
Parliament Reconfirms Act on Drivers' Working Time ....................................................... 12
Tobacco Advertising to be Additionally Restricted ............................................................. 12
Government Amends Act on Natural Disaster Relief for Farmers ...................................... 12
Parliament Unanimous in Endorsing Health Insurance Reform .......................................... 13
STATISTICS/FORECASTS .................................................................................................... 14
Business Sentiment Down in July ........................................................................................ 14
Inflation Accelerates to 2.3% in July ................................................................................... 14
Tourist Numbers Up Slightly in First Half of 2005 ............................................................. 14
FINANCE................................................................................................................................. 16
Social Agreement to Boost Competitiveness ....................................................................... 16
Employers Confident Social Agreement Can Be Finalised This Year ................................ 16
Italian Bank Interested in Acquiring Slovenian Stock Brokerage ....................................... 17
Lawmakers Approve Loans for Motorway Construction .................................................... 17
Ales Zajdela New Chief Executive of Abanka .................................................................... 17
NLB Group Posts Half-Year Profit of EUR 45.4M ............................................................. 18
Banka Koper Sees Profit Windfall from Investment ........................................................... 18
Cabinet Adopts Budget Framework for 2006 and 2007 ...................................................... 18
Slovenian Insurers Post 2004 Net Profit of EUR 13.3M ..................................................... 19
Ljubljana Stock Exchange .................................................................................................... 19
Foreign Exchange ................................................................................................................. 20
REGIONAL INFORMATION ................................................................................................ 21
Government Grants State Aid to Municipalities Hit by Hailstorms .................................... 21
BRANCH INFORMATION .................................................................................................... 22
Ministry Selects 11 Cross-Border Environment Projects .................................................... 22
COMPANIES ........................................................................................................................... 23
State to Sell One Quarter of National Telecom This Year ................................................... 23
Power Company HSE Gets New Supervisory Board........................................................... 23
Marjan Babic Named Provisional Director General of Luka Koper .................................... 23
Vizjak HSE Supervisor Due to Key Power Projects, Ministry Says ................................... 24
Contracts Signed for First Pumped-Storage Hydro Plant .................................................... 24
Trbovlje Cement Plant to Install Desulphurisation Plant ..................................................... 24
Government Looking for Strategic Partner for Telecom, Official Says .............................. 25
We're Serious about Telekom Privatisation, Minister Vizjak Says ..................................... 25
HSE Director Says State Should Keep Majority Stake ........................................................ 26
Luka Koper Shareholders Confirm Expansion of Management Board ............................... 26
Gorenje Reports 15% Rise in Revenues .............................................................................. 26
Telekom Privatisation Remains on the Agenda ................................................................... 27
SLOVENIA IN BRIEF ............................................................................................................ 28
Jansa Says Border Arbitration Not on the Agenda for Now ................................................ 28
Tomos to Lay Off 94 Workers ............................................................................................. 28
Unions Reserved about Social Dialogue Guidelines............................................................ 28
STA Editor to Head European Commission Representation ............................................... 28
Biometric Features to Become Mandatory in Passports ...................................................... 28
Salzburg Group Calls for Closer Cooperation ..................................................................... 28
2
HEADLINES
Footwear Maker Alpina Opens New Company in Ukraine
The new company, named Alpina UA, is based in Kiev, and will initially focus on wholesale of
sports and fashion footwear, and later open its own stores in the country
Alpina has set up a subsidiary in Ukraine, aimed at increasing its exports in this country, the
Ziri-based footwear manufacturer said in a press release on Thursday, 28 July.
The manufacturer said it opted for Ukraine given the low supply of the market by western
manufacturers on the one hand and the rising standard of living in this 48 million market on
the other.
The new company, named Alpina UA, is based in Kiev, and will initially focus on wholesale
of sports and fashion footwear, and later open its own stores in the country, according to the
press release.
Alpina UA is the ninth company of the Slovenian manufacturer to be established abroad. The
producer boasts a total of 114 stores in Slovenia, Croatia, Serbia-Montenegro, BosniaHerzegovina, Hungary and Bulgaria, and plans to open its first store in Romania in
September.
Alpina generated revenues of SIT 4.7bn (EUR 19.6m) in the first half of the year, a decrease
of 1.5% over the same period last year. Sales on foreign markets dropped by 4% year-on-year,
while domestic sales rose by 2%.
NLB to Become the Biggest Montenegrin Financial Institution
Nova Ljubljanska banka (NLB), the owner of Montenegrin Montenegrobanka and Euromarket
banka, is planning to merge both banks at the end of 2005 to become the biggest financial
institution in the country
Nova Ljubljanska banka (NLB), the owner of Montenegrin Montenegrobanka and
Euromarket banka, is planning to merge both banks at the end of 2005 to become the biggest
financial institution in the country, the NLB said in a press release on Thursday, 28 July.
In the run-up to the merger, a new Montenegrobanka office building was inaugurated in
Podgorica, with the attendance of business partners, major clients as well as Montenegrin PM
Milo Djukanovic and Deputy PM Branimir Gvozdenovic.
According to Ranko Nikolic, director of Montenegrobanka, the bank's membership in the
NLB group is a great competitive advantage. "Montenegrobanka is active in financing the
development of Montenegrin companies. After the merger with the Euromarket banka, it will
be even more successful," Nikolic was quoted by the NLB as saying.
Government Adopts Programme to Encourage FDI
The annual inflow of greenfield investments is expected to increase by an average of 1 to
1.5% of GDP and provide between 1,000 and 1,500 new jobs
The government has adopted a 2005-2009 programme to encourage foreign direct investment
(FDI). The annual inflow of greenfield investments is expected to increase by an average of 1
to 1.5% of GDP and provide between 1,000 and 1,500 new jobs.
The government also debated a programme encouraging internationalisation of companies,
but suspended the debate. It is expected to adopt the programme by 20 August, Economics
Minister Andrej Vizjak told the press after the session on Thursday, 28 July.
The FDI promotion programme is to ensure at least one high-tech greenfield investment and
at least three greenfield investments in the service sector.
3
The guidelines set therein are according to the government an important signal to potential
foreign investors that Slovenia is keen on FDI and is prepared to create an attractive business
environment for them.
The average annual FDI inflow in the transition period was only 2% of the GDP. Slovenia
lags behind other comparable European countries also in terms of other FDI indicators, the
government says.
Although the country has recorded an increase in foreign investors' interest in the period
ahead and after EU accession, it has still not made a breakthrough when it comes to the
impact of foreign investments on economic growth.
4
INTERNATIONAL COOPERATION
Czech Ambassador Pays Farewell Visit to FM Rupel
He thanked the minister for excellent cooperation and expressed satisfaction over having
served here in a historic time when both countries joined the EU
Czech Ambassador Tomas Szunyog paid a farewell visit to FM Dimitrij Rupel on Tuesday,
26 July. He thanked the minister for excellent cooperation and expressed satisfaction over
having served here in a historic time when both countries joined the EU, the Foreign Ministry
said.
Ambassador Szunyog underlined the importance of Slovenian investments in the Czech
Republic, and the launch of studies of Czech at the Faculty of Arts, which he said would
crucially improve the knowledge of Czech culture, heritage and the Czech language.
Minister Rupel meanwhile stressed that bilateral relations are excellent, and have become
even better during Ambassador Szunyog's term in office in Slovenia.
Serbia-Montenegro President Decorates Ambassador Suklje
The two countries maintain high-level cooperation in politics, economy and culture ever since
they established diplomatic relations in December 2000, followed by the opening of embassies
in Belgrade and Ljubljana in 2001
Serbia-Montenegro President Svetozar Marovic has conferred a top state decoration on
Slovenia's Ambassador Borut Suklje for his personal contribution to the development of
bilateral relations between this country and Slovenia.
Suklje, Slovenia's first ambassador to Serbia-Montenegro, received the medal from the hands
of Ambassador Ranko Milovic on the premises of the Serbia-Montenegro Embassy in
Ljubljana on Wednesday, 27 July, the embassy said in a press release.
The two countries maintain high-level cooperation in politics, economy and culture ever since
they established diplomatic relations in December 2000, followed by the opening of
embassies in Belgrade and Ljubljana in 2001, according to the press release.
The embassy estimates that Slovenians are the most numerous visitors to Serbia-Montenegro.
Moreover, bilateral trade is expected to increase from EUR 560m posted last year to EUR
700m this year.
Slovenia is also a leading investor in this Balkan country. By the end of the year its
investments are expected to top EUR 500m. There are some 300 offices of Slovenian
companies operating in Serbia-Montenegro.
Apart from being a leading business partner, Slovenia is also one of the most important
partners in Serbia-Montenegro's bid to join the EU and NATO, the embassy said in the press
release.
Rupel and Ribachuk Discuss Bilateral Relations
Slovenian Foreign Minister Dimitrij Rupel and Ukrainian Deputy Prime Minister Oleg
Ribachuk discussed ways to strengthen bilateral cooperation
Foreign Minister Dimitrij Rupel and Ukrainian Deputy Prime Minister Oleg Ribachuk held a
working meeting on Thursday, 28 July, discussing ways to strengthen bilateral cooperation.
Rupel welcomed Ukraine's efforts to join Euro-Atlantic institutions, as well as the stability
and peaceful development of the region, the ministry said in a press release.
Rupel deemed bilateral cooperation between the countries as good, and welcomed the
democratic changes in Ukraine, which were also promoted by the OSCE, the organisation he
currently chairs.
5
Furthermore, the minister said he expected further productive and honest political dialogue
among the two countries on all levels, which got a new dimension with Slovenia's EU entry.
Rupel underscored Slovenia was prepared to help Ukraine with its experience with EU
accession, in particular in the political dialogue between the EU and the Ukraine.
Ambassador Benedejcic Presents Credentials to Belarus President
He said that President Lukashenko voiced an interest in consolidating bilateral relations in
the spirit demonstrating the fact that Slovenia and Belarus are both Slavic nations
Slovenia's Ambassador to Russia Andrej Benedejcic handed his credentials to Belarus
President Aleksandr Lukashenko at a ceremony in Minsk on Friday, 29 July, noting that the
two nations shared a common historical experience, in particular during World War II, when
both peoples suffered great hardship.
Benedejcic told STA that this historical experience led to Slovenia's commitment to the world
order established after WWII. According to him, Slovenia has often demonstrated this
commitment, currently also as the country chairing the OSCE.
Slovenia's stint comes at a very hard time, which is why the country is counting on Belarus's
help in the effort to ensure the security organisation would continue to operate successfully,
the ambassador said.
He said that President Lukashenko voiced an interest in consolidating bilateral relations in the
spirit demonstrating the fact that Slovenia and Belarus are both Slavic nations.
The ceremony was also attended by Foreign Minister Sergei Martynov, whom the incoming
Slovenian ambassador met on 28 July to present him with a copy of his credentials.
Benedejcic is also scheduled to meet Belarus Minister of Trade Aleksandr Ivanko and several
representatives of companies that do business with Slovenia. He will be accompanied by the
representative of the Ljubljana-based prefabricated houses manufacturer Riko in Minsk and
the company's general manager Janez Skrabec.
The ambassador, who met the outgoing head of the OSCE office in Minsk, Ambassador
Eberhard Heyken, told STA that Foreign Minister Dimitrij Rupel was scheduled to visit
Belarus in the second half of the year in his capacity as OSCE chairman.
Benedejcic presented his credentials to Speaker of Turkmenistan's Parliament Ovezgeldy
Ataev in late June. Turkmenistan is one of the five Central Asian countries that the Moscowbased ambassador will be responsible for.
Rupel Says Relations with Russia are Extremely Good
He said that the bilateral trade is nearing the common target of one billion US dollars,
"which opens way for new, even more ambitious goals"
Foreign Minister Dimitrij Rupel and Deputy President of the upper house of the Russian
parliament Dmitry Mezentsev assessed bilateral relations to be very good as they met on the
sidelines of the WWI commemoration at the Russian Chapel near Kranjska gora on Sunday,
31 July.
According to a press release by the Foreign Ministry, Rupel described relations between
Russia and Slovenia as "extremely good". He said that the bilateral trade is nearing the
common target of one billion US dollars, "which opens way for new, even more ambitious
goals".
According to Rupel, Slovenia is also striving for further cooperation in culture, including
cooperation within the Forum of Slavic Cultures, which aims at boosting cultural links
between Slavic speaking countries.
The two officials also touched on Slovenia's activities as the presiding country over the
Organisation for Security and Cooperation in Europe (OSCE).
6
OSCE Chairman Rupel briefed the Duma official about proposals for the organisation's
reform. He estimated that the talks he had recently held on the issue with Russian Foreign
Minister Sergey Lavrov were positive.
After the meeting, the two officials attended the traditional commemoration at the Russian
Chapel below the Vrsic mountain pass, held in memory of the Russian soldiers, prisoners of
war during WWI, who were killed in a snow slide in 1916 while building a road.
Mezentsev announced that the chapel will be renovated on the occasion of the 90th
anniversary of the tragic event next year. The renovation project will be funded by both
countries.
7
EUROPEAN UNION
Sencar Taking Over as Slovenia's Ambassador to EU
Sencar will officially assume all duties after President Drnovsek signs the decree and
Slovenia notifies the secretary general of the EU Council of the appointment
Igor Sencar assumed the post of Slovenia's ambassador to the European Union in Brussels on
Tuesday, 26 July. Sencar is taking over from Ciril Stokelj, who was recalled from his post.
Sencar will officially assume all duties after President Drnovsek signs the decree and Slovenia
notifies the secretary general of the EU Council of the appointment. This is expected to be
carried out by 1 August.
The 40-year-old Sencar has served as Slovenia's representative in the political and security
committee of the EU. He had previously worked as an adviser to the European affairs
committee in the Slovenian parliament.
He will become Slovenia's fourth ambassador to the EU, following Stokelj, Marko Kranjec
and Boris Cizelj.
In a statement for the STA, Stokelj said that Slovenia experienced a very important period in
relations with the EU during his term in office.
According to Stokelj, Slovenia has established itself as a successful new member of the EU
that represents sober standpoints.
"I'm handing over the office in good shape and I have no doubts that my successor will
continue the good work. Slovenia is faced by a demanding period during which it has to get
ready for the EU presidency (in 2008)," Stokelj told STA.
EU Resumes Farm Subsidy Payments to Slovenia
The European Commission has lifted a temporary blockade of farm subsidies to Slovenia
The European Commission has lifted a temporary blockade of farm subsidies to Slovenia, an
EU spokesperson told the press in Brussels on Tuesday, 26 July.
According to Michael Mann, the spokesperson for the European rural development
commissioner, the European Commission has decided to lift the blockade of farm subsidies
although it has not yet cleared Slovenia's income tax legislation as compatible with EU farm
subsidy rules.
The EU halted farm subsidy payments to Slovenia in mid-June, citing concerns over
withholding tax that is levied on farm subsidies in Slovenia.
Mann said that the Commission has not yet concluded whether Slovenia's income tax law
indeed violates EU subsidy rules, which demand that the farmer be paid the full worth of the
subsidy. However, he added the Commission did not want to hold back subsidies any longer
in the interest of farmers.
According to him, three subsidies worth around EUR 60m that have been halted will now be
paid out.
Mann added that Slovenia has been notified of the decision to lift the blockade. Meanwhile,
the Commission is to continue examining Slovenia's income tax law.
Legal doubts remain and the Commission's legal service will continue to study the matter,
Mann said, adding that the Commission could demand that wrongly used subsidies could be
returned if the law were to be found in violation of EU subsidy rules.
The issue was first raised by the European Commission as early as May, when Slovenia had
to answer whether the withholding tax was in line with EU regulations.
The Commission is primarily examining whether the Slovenian law affects the
implementation of the Common Agriculture Policy - the tax aspect is in Slovenia's domain.
8
The Slovenian Finance Ministry has argued that the Slovenian income tax system is fulling in
line with EU rules and added that tax regulations are in the domain of member states.
Koprol Presenting Positions for EU Budget Talks in London
Slovenia has urged the British EU presidency to put forward its proposal for the EU budget
talks for the 2007-2013 period as soon as possible
Slovenia has urged the British EU presidency to put forward its proposal for the EU budget
talks for the 2007-2013 period as soon as possible. The time dimension is very important for
the country, State Secretary for European Affairs Marcel Koprol said after talks in London on
Wednesday, 27 July.
Koprol was in London for consultations with a representative of the British presidency.
Following the talks, he told STA that Slovenia expected the negotiating position to be the
latest compromise proposal by the Luxembourg presidency.
As this failed to get support at the June summit, the British presidency took over the work,
deciding to hold bilateral consultations with delegations of all member states.
Assuming the rotating EU presidency on 1 July, London said negotiations would continue on
the basis of the work done so far.
Slovenia was the sixth country to hold consultations in London. These will continue until 20
September, whereupon London is to notify the committee of permanent representatives in
Brussels of the conclusions.
A new round of consultations is expected to begin in October, with the British presidency
expected to put forward a new proposal for talks in November, Koprol explained.
Since an agreement on the 2007-2013 financial arrangements was not reached in June,
Slovenia as a single statistical region will soon no longer be eligible for the largest chunk of
EU regional funds.
The country's GDP per capita for the 2001-2003 period has already exceeded the threshold of
75% of the EU's average. Slovenia has therefore decided to seek division into statistical
regions.
PM Says EU Presidency to Cost EUR 60M; Balkans Among Priorities
Presenting the programme of preparations for the presidency, Jansa said that 300 additional
staff will have to be hired
Prime Minister Janez Jansa has said the EU presidency in the first half of 2008 will cost
Slovenia up to 60 million euros. Presenting Slovenia's preparations for the presidency to the
press on Friday, 29 July in Ljubljana, Jansa said efforts to integrate the Western Balkans into
the EU will likely be one of the main priorities of the country's stint as EU president.
Presenting the programme of preparations for the presidency, Jansa said that 300 additional
staff will have to be hired, at a cost of around SIT 4bn (EUR 17m), and that additional
conference facilities will have to be built, costing more than SIT 1bn (EUR 4.2m).
These two items will make up for the bulk of the costs along with additional space for the
Slovenian representation office in Brussels, which will cost around SIT 2bn (EUR 8m).
"We're somewhere at the bottom in terms of the money used by member states for the
presidency," Jansa said.
Although the agenda for the presidency has not been finalised yet, one of the strategic issues
will surely be the integration of the Western Balkans into the EU, Jansa said.
Moreover, the prime minister said other matters on the agenda would likely include an interim
report on the implementation of the Lisbon Strategy and key meetings between the EU and
global players, such as the US, Russia and China.
Jansa told the press today that in the run-up to the presidency, Slovenia would get advice form
Luxembourg, a country that is smaller than Slovenia and had recently held the presidency.
9
Moreover, Slovenia will hold talks with countries of the presiding troika that it would have
made together with Germany and Portugal for 18 months starting as of 2007 if the EU
constitution were to enter into force before then.
According to Jansa, the six-month stint at the helm of the EU is both a great challenge and an
unparalleled chance to promote Slovenia internationally.
Slovenia, he said, is preparing a plan to use the presidency to promote itself abroad. The
country hopes to improve its international standing and promote its economy during the stint,
Jansa added.
Fouere Expects Slovenia to Face Serious Challenges as EU Member
Fouere, speaking in an interview with STA, was referring to Slovenia's stint at the helm of the
EU in 2008
Erwan Fouere, the head of the European Commission Representation to Slovenia whose term
in office ends on Monday, 1 August after more than three years of service, believes that
Slovenia will face tough challenges as an EU member in the future.
Fouere, speaking in an interview with STA, was referring to Slovenia's stint at the helm of the
EU in 2008. Despite the magnitude of the challenge, Fouere is confident the country will
demonstrate its skill in holding the presidency.
Asked how Slovenia had changed during his stint here, Fouere said the biggest change was
definitely the fact that it had joined the EU, something that opened up new opportunities.
Changes that are not always visible to the unaided eye have occurred in many different areas,
the outgoing EU ambassador said.
According to him, EU entry boosted Slovenia's exports and contributed to lower inflation.
Moreover, another positive effect of the accession is an increase in visitor numbers,
something that Fouere believes will strengthen Slovenia's image abroad.
An important change is the increasing confidence with which Slovenia is affirming itself on
the international scene, Fouere said, pointing to the country's current chairmanship of the
Organisation for Security and Cooperation in Europe (OSCE) and preparations for Slovenia's
presidency of the EU in 2008.
Slovenia is facing a number of serious challenges. While preparing for EU membership, the
country did not have the chance to participate in the shaping of EU policies, but it only
adapted to regulations.
Now that Slovenia is an EU member, the country is sits at the same table with all other
members and it is expected to contribute its share to the framing of EU policies, Fouere
explained.
He believes that the country can make its biggest contribution to the debate on EU
enlargement. It can function as a bridge between South-Eastern Europe and the EU and try to
ensure the EU keeps its door open to the countries in the region.
It is clear that only the prospect of joining the EU can ensure that reforms will continue in the
Balkans and that the security and economic stability of the region will consolidate, Fouere
said.
Responding to concerns that Slovenia as a small EU member would not have much influence,
Fouere said that it was not the size, but the quality of the country's contribution that mattered
in the EU.
The EU official explained that small countries had often strongly affected the fate of the EU
in the past. He quoted the example of the founding members Belgium, the Netherlands and
Luxembourg, all of which are small countries.
Slovenia has an opportunity to use its potential, as well as a chance to bring the EU closer to
citizens. If it succeeds, it can make a good example to other EU members, Fouere believes.
10
Fouere, who officially assumed office in Slovenia in March 2002, had made it one of his
priorities to inform the public about the EU. More than three years later the official says that a
person can never do enough to keep the public informed.
The European Commission's delegation under his leadership was trying to establish contacts
with the local population across Slovenia. By visiting remote regions, we tried to emphasise
the human dimension of the EU, Fouere explained.
Nevertheless, Fouere believes that all member states still need to do much to establish a closer
connection between the EU and its citizens, something that has also been demonstrated by the
recent double "no" vote on the EU constitution in France and the Netherlands.
Fouere said he would be missing Slovenia for its friendly people, excellent wines and good
food. His suitcases upon departure will also contain books by Slovenian authors, said Fouere,
who is intent on returning to Slovenia. If not earlier, for the Ljubljana marathon in October,
the Irish, who is a keen marathon runner, said.
A career diplomat, Fouere has headed the European Commission delegations to the South
African Republic, Mexico and Cuba. Prior to assuming the office here, he headed the
department for relations with the OSCE and the Council of Europe in the European
Commission External Relations Directorate General. He is returning to Brussels to the
Commission's department for the Balkans.
Fouere did not hide his wish to return to the region in the interview, though. He hopes that
after a few months in Brussels he will get a chance to return to the Balkan region. Fouere will
be succeeded as the head of the European Commission Representation to Slovenia by Mihela
Zupancic, the acting editor-in-chief of STA.
11
LEGISLATION
Parliament Reconfirms Act on Drivers' Working Time
The bill transposes the relevant European directives and introduces digital tachographs
The bill on working time of lorry drivers and digital tachographs was reconfirmed in
parliament on Thursday, 28 July after it was vetoed by the upper chamber. The bill transposes
the relevant European directives and introduces digital tachographs.
The bill, which was confirmed in parliament on 15 July, was vetoed at the proposal of the
interest group of employers in the National Council, with the argument that it ran contrary to
the minimal standards of the directive, setting stricter conditions than those set out by the
document.
Furthermore, the National Council said the opinions of haulier associations and the
parliamentary legal service were not considered in the bill, which allowed different
interpretations due to a lack of clarity.
The upper chamber therefore proposed to the parliament not to pass the bill, but summarise
the minimal standards of the relevant directive in a new bill, stating without ambiguity that
the bill in question was a special act on mobile workers.
The National Council suggested an alternative, namely to exclude from the bill the provisions
regarding driving time and immediately begin the harmonising procedure among the social
partners to amend the employment relationship act so it would allow exemptions for hauliers.
The Transport Ministry has explained that the new bill was a "lex specialis" for the drivers,
but cannot affect the general legislation such as the employment act. Transport Minister Janez
Bozic added maximum consensus was reached regarding drivers' weekly working time.
The EU directive allows up to 48 hours a week (or 60 hours, if the four-month average does
not exceed 48 hours a week), while the employment act stipulates 40-hour working week or
up to 56 hours in case of irregular hours, yet only up to six months.
The deadline for introducing digital tachographs in EU member states is 1 January 2006. The
main objective is to increase safety in road transport and ensure competitiveness. While the
bill was first confirmed unanimously, four MPs from the Social Democrats (SD) opposed it
this time.
Tobacco Advertising to be Additionally Restricted
The government adopted amendments to the act restricting the use of tobacco products,
tightening the rules on tobacco advertising in line with EU regulations
The government on Thursday, 28 July adopted amendments to the act restricting the use of
tobacco products, tightening the rules on tobacco advertising in line with EU regulations.
Pending endorsement in parliament, the amendments will bring the act fully in line with the
directive on the approximation of the laws, regulations and administrative provisions of the
member states relating to the advertising and sponsorship of tobacco products.
The ban on advertising will be expanded with additional definitions for what constitutes
tobacco advertising. Moreover, the current possibility of advertising new products has been
eliminated, as it allowed ads in print media which the directive explicitly prohibits.
The only advertising that will still be allowed is logos on smoking accessories, on commercial
premises and at tobacco stores.
Government Amends Act on Natural Disaster Relief for Farmers
The government explained in a press release that it wants to introduce advance payments
given the fact that farmers in need of help cannot wait for final calculations of the damage
12
The government adopted on Thursday, 28 July amendments to the act on natural disaster
relief for farmers. It has promised that the changes will allow for faster assistance to farmers
hit by natural disasters, as they introduce advance payments.
The government explained in a press release that it wants to introduce advance payments
given the fact that farmers in need of help cannot wait for final calculations of the damage.
If the final calculations show that a farmer has received excessive subsidies, he or she will be
obliged to return the money within three years.
The proposed amendments also promise to do away with the current confusion about which
other payments to take into consideration when calculating subsidies.
Contrary to the existing legislation, the amendments state explicitly that the calculations
should take into account other direct payments received by a farmer for disaster relief, but not
farm subsidies.
Parliament Unanimous in Endorsing Health Insurance Reform
The amendments, passed in a 56-to-0 vote, are due to come into effect in March next year
Parliament has endorsed amendments to the health insurance act, introducing mandatory risk
equalisation schemes for insurance companies offering supplementary health insurance
coverage.
The risk equalisation system will institute equal health insurance premiums for all the clients
of an insurance company regardless of gender or age.
The changes also do away with old age reservations, obliging the insurance companies to pay
out or transfer reservations that have been saved so far.
The amendments, passed in a 56-to-0 vote, are due to come into effect in March next year.
Without the amendments, insurance companies with older clients, in particular the largest
mutual insurer Vzajemna, would have to introduce much higher premiums to cover the larger
payouts to hospitals.
Equal premiums for all customers was highlighted by Health Minister Andrej Brucan as the
main benefit of the amendments. However, insurance companies will be allowed to grant
discounts of up to 3% for group insurances.
According to him, the customers will also be free to terminate their insurance policy contract,
which has been very difficult so far.
13
STATISTICS/FORECASTS
Business Sentiment Down in July
Compared to July 2004 and last year's average, it fell by 2 percentage points
Business sentiment worsened in July, as the seasonally adjusted sentiment indicator went
down 1 percentage point compared to the previous month. Compared to July 2004 and last
year's average, it fell by 2 percentage points, according to the Statistical Office.
The confidence indicator in manufacturing was down 1 percentage point compared to June.
Year-on-year, it shed 6 percentage points.
The retail sector is more upbeat, as the confidence indicator went up 3 percentage points on
June and 7 percentage points compared to last year.
The consumer confidence indicator remained level; it is now on the same level as last year's
average and the long-term average.
Inflation Accelerates to 2.3% in July
The figure is 0.4 percentage points higher than in Jun
Inflation accelerated to an annual rate of 2.3% in July, fuelled by petrol and package holiday
prices and increases in excise duty for tobacco, the Statistics Office said on Friday, 29 July.
The figure is 0.4 percentage points higher than in June.
The inflation rate for July amounted to 0.7%, with the cumulative inflation for the first seven
months of the year at 2.2%.
The steepest price increases were recorded in the groups alcoholic beverages and tobacco
(3.5%), recreation and culture (2.7%), housing, water, electricity and gas (1.7%) and transport
(1%).
The 3.5% price increase in the group alcoholic beverages and tobacco was mostly the result of
the second increase this year of excise duties on cigarettes, which raised tobacco prices by
6.7%.
Higher prices of petrol had a strong impact on prices of housing, water, electricity, gas and
transport. Liquid fuels were 7.3% more expensive, while engine fuel prices were up 3.7%.
Higher prices of fuels contributed 0.4 percentage points, package holidays 0.3 percentage
points, tobacco 0.2 percentage points and other 0.1 percentage point to the total price rise.
On the positive side, dropping prices were registered in the groups health (1.6%) clothing and
footwear (1%), and food and non-alcoholic beverages (0.6%).
Even though the main effect of the summer sales will not be visible before the next month,
July prices in the group clothing and footwear were down by 1%. Prices of footwear fell by
2.9%, clothing materials by 1.7% and clothing by 0.5%.
Lower prices of food, clothing and footwear, and hospital services reduced the inflation rate
by 0.3 percentage points.
Measured with the harmonised index of consumer prices, which is used for EU-wide
comparisons, the price growth was 0.7%. The 12-month average price growth measured with
the EMU convergence price index decreased to 2.9% from 3% in June.
In June the EMU convergence criterion for inflation was 2.3%, which means that last month
Slovenia's inflation was still 0.7 percentage point higher.
Tourist Numbers Up Slightly in First Half of 2005
The number of tourists visiting Slovenia stood at just over 1 million in the first half of 2005, a
rise of 3% on last year
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The number of tourists visiting Slovenia stood at just over 1 million in the first half of 2005, a
rise of 3% on last year. The head of the Slovenian Tourist Board (STO) is not happy with the
modest growth.
According to STO statistics, 636,324 foreign and 383,932 domestic tourists stayed in Slovenia
this year.
The number of domestic overnight stays fell 2% to 1.38m, while the number of foreign
overnight stays remained flat at 1.77m, the data shows.
According to Barbara Guncar, the managing director of the STO, the numbers fall short of
expectations.
The STO is not the only one to blame for the weak growth in tourism, she said, adding that
more needs to be done by the Economics Ministry to promote Slovenia as a tourist
destination.
Among the main foreign tourists, the number of Italians rose by 11% to 144,846 and the
number of Britons visiting Slovenia grew 31% to 35,094.
However, the number of German and Austrian tourists, the more traditional visitors here, fell
6% and 3% to 89,236 and 92,139 respectively.
The worst month was June, when 149,904 tourists visited Slovenia, a fall of 18% compared to
June of 2004.
15
FINANCE
Social Agreement to Boost Competitiveness
According to Labour Minister Janez Drobnic, the social agreement has to result in stable
economic conditions based on price stability, balanced incomes and sustainable public
finances
The Labour Ministry has unveiled guidelines for the 2006-2009 social agreement, whose main
objectives are to improve competitiveness, accommodate the changeover to the euro, as well
as respond to demographic trends and other challenges facing the ever more open Slovenian
economy. These are the tasks and objectives on which the social partners must reach
consensus, Labour Minister Janez Drobnic said as he presented the guidelines for the
document on Wednesday, 27 July.
According to Drobnic, the social agreement has to result in stable economic conditions based
on price stability, balanced incomes and sustainable public finances.
The social partners must moreover strive to ensure balanced social development and social
security, which will be based on solidarity and greater cooperation between public and private
funding, he said.
Slovenia must become a modern society where access to education, safe and healthy working
conditions and personal development, which also guarantees security in old age, must be
granted to all capable people, read the guidelines, which the government adopted last week.
The ministry said it was aware of the different priorities that the workers, employers and the
state advocate. However, it feels that curbing inflation, creating sustainable public finances
and enacting a motivating tax policy should be goals common to all.
The government has already submitted the guidelines to the social partners, inviting them to
respond with remarks and amendments. Based on their feedback, the ministry will draw up a
draft for negotiations that are set to start in September.
Negotiations on the previous social agreement (for the 2003-2005 period), lasted over a year.
Employers Confident Social Agreement Can Be Finalised This Year
According to the Association's president Samo Hribar Milic, the most crucial parts of the
social agreement will be topics that are also featured in the EU's overhauled Lisbon Strategy,
in particular jobs and economic growth
The guidelines for the 2006-2009 social agreement are well designed, but this does not mean
we support them in advance, the Employers' Association said in response to the guidelines
that were unveiled on Wednesday, 27 July.
The association's president Samo Hribar Milic told STA that "a consensus which would
satisfy all sides could be reached by the end of this year," but he does not believe consensus
will be possible on all issues.
According to him, the most crucial parts of the social agreement will be topics that are also
featured in the EU's overhauled Lisbon Strategy, in particular jobs and economic growth.
"All the measures that we propose and take in Slovenia will be evaluated from the vantage
point of whether they contribute to economic growth and new jobs," Hribar Milic pointed out.
For him, economic growth is associated with education, labour market flexibility,
deregulation and tax changes.
"This is all inter-connected, so I think the social agreement is a good framework for finding
common ground based on which we will then support crucial development changes," he said.
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Italian Bank Interested in Acquiring Slovenian Stock Brokerage
Italian bank Banca Popolare FriulAdria, a subsidiary of Milan-based group Banca Intesa,
has asked to be granted clearance to acquire a majority stake in Slovenian stock brokerage
Medvsek Pusnik
Italian bank Banca Popolare FriulAdria, a subsidiary of Milan-based group Banca Intesa, has
asked to be granted clearance to acquire a majority stake in Slovenian stock brokerage
Medvsek Pusnik.
Banca Popolare FriulAdria filed the request with the Securities Market Agency. Jure Klepec
of Medvesek Pusnik has told STA that this is a friendly takeover, agreed in negotiations
between the sides.
The Italian bank has owned nearly 10% of Medvesek Pusnik since the autumn of 2004. The
bank intends to offer around SIT 18,000 (EUR 75.4) per Medvesek Pusnik share, which is
about three times the company's book value, but 25% short of the current market price of SIT
22,500 (EUR 93.9).
According to Klepec, the bank intends to develop the brokerage. "They would surely not have
offered as much if they intended to close the company," he said.
The Securities Market Agency now has two months to respond to the request for the clearance
of the takeover. "We are counting on a positive response," Klepec said.
Medvesek Pusnik expects that the takeover would facilitate its development. According to
Klepec, the company wants to be the market leader in offering new products.
Lawmakers Approve Loans for Motorway Construction
Lawmakers have approved a plan to allow the Slovenian Motorway Company, DARS, to get
up to 360 million euros in state-guaranteed loans for the construction of motorways
Lawmakers have approved a plan to allow the Slovenian Motorway Company, DARS, to get
up to 360 million euros in state-guaranteed loans for the construction of motorways.
The acts on the approval of loans for motorway construction and state guarantees for these
loans were passed in a 58-to-0 vote on Thursday, 28 July.
The loans are to make up for a cut in state funds for motorway construction made in the
supplementary budget.
In line with the supplementary budget, DARS is set to get as much as SIT 8.5bn (EUR 35.5m)
less from the government than planned in the original budget.
With the approval of the two pieces of legislation, DARS will be able to take out bank loans
or issue bonds worth up to 360 million euros.
Transport Minister Janez Bozic told lawmakers that the legislation is part of efforts to step up
the pace of the construction of motorways in the country.
DARS will take out loans or issue bonds in order to finance the construction of seven
motorway section projects.
Ales Zajdela New Chief Executive of Abanka
Abanka is privately owned, but its biggest shareholder, with 22.9%, is the state-owned
insurance company Zavarovalnica Triglav, while its investment arm Triglav Steber 1 holds
another 7.3%
Ales Zajdela, the former chairman of Reiffeisen Krekova banka, has been named chairman of
Abanka Vipa, Slovenia's third largest bank. Zajdela was appointed at a marathon supervisory
board session on Thursday, 28 July.
Abanka said in a press release that Zajdela was the best candidate for the post. Before he can
formally take office, he needs to get the green light from the central bank.
The new Abanka chairman left his previous post due to disagreement with the Austrian
owners of the small Maribor-based bank.
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His predecessor at Abanka, Aljosa Tomaz, meanwhile resigned in early July after the bank
sold its 44.4% stake in financial firm NFD without consulting the then newly appointed
supervisory board.
The supervisory board also reviewed the bank's performance for the first six months of the
year, establishing that net profit was up 67.2% to 3.35bn (EUR 14m).
Total assets were up 10.5% year-on-year to SIT 546.28bn (EUR 2.28bn). By assets, the bank
thus controls 8.8% of the Slovenian market, which makes it the third largest bank in the
country.
Abanka is privately owned, but its biggest shareholder, with 22.9%, is the state-owned
insurance company Zavarovalnica Triglav, while its investment arm Triglav Steber 1 holds
another 7.3%.
NLB Group Posts Half-Year Profit of EUR 45.4M
The group's net profit in the first six months amounted to SIT 5.6bn (EUR 23.3m)
The group Nova Ljubljanska banka (NLB) generated pre-tax profit of SIT 10.9bn (EUR
45.4m) in the first half of the year, which is an increase of 23% over the same period last year.
The group's total assets rose by 17% to SIT 2,610bn (EUR 10.89bn).
The NLB, the country's number one bank, posted half-year pre-tax profit of SIT 8.4bn (EUR
35m), a rise of 26% year-on-year. Its total assets amounted to SIT 2,040.5bn (EUR 8.51bn),
the bank said in a press release published on Friday, 29 July.
The group's net profit in the first six months amounted to SIT 5.6bn (EUR 23.3m), while the
NLB reported net profit of SIT 5.5bn (EUR 22.9m).
The bank generated net interest revenues of SIT 19.5bn (EUR 81.3m) and net non-interest
revenues of SIT 17.7bn (EUR 73.8m), according to the press release.
Banka Koper Sees Profit Windfall from Investment
Banka Koper has reported a 26% rise in half-yearly profit, which stood at SIT 4.26bn (EUR
17.8m)
Banka Koper has reported a 26% rise in half-yearly profit, which stood at SIT 4.26bn (EUR
17.8m). The windfall profit is a rise of an early recall of treasury bonds by the Finance
Ministry and the sale of a stake in insurer Adriatic.
In a press release on Friday, 29 July, Slovenia's sixth-largest bank says that its total assets
stood at SIT 358.5bn (EUR 1.5bn) at the end of June, an 8% rise since the beginning of the
year.
The half-yearly profit amounted to 70% of the planned profit for the whole of this year, the
bank, which is owned by Italian bank San Paolo IMI, added.
Cabinet Adopts Budget Framework for 2006 and 2007
The budget deficit is forecast at 1.3% and 1.2% of GDP for 2006 and 2007 respectively
The cabinet has adopted the budget framework for the next two years, envisaging a spending
cut as a result of a fall in tax revenues. The budget deficit is forecast at 1.3% and 1.2% of
GDP for 2006 and 2007 respectively, Finance Minister Andrej Bajuk said.
The plan that was confirmed by the cabinet at the session on Friday, 29 July will see budget
expenditure stand at 26.3% of GDP in 2006 and 25.9% of GDP in 2007, a drop on earlier
estimates.
The document adopted today will act as the groundwork for the budgets for 2006 and 2007
that the government will draw up after it returns from the summer break.
According to Bajuk, the cut in expenditure is a result of the gradual phasing out of payroll tax.
The tax will be cut by 20% in 2006, 20% in 2007 and 30% in 2008, before being fully phased
out in 2009.
18
The cut in tax revenue has forced the government to cut spending compared to earlier plans.
Expenditures for 2006 are planned at SIT 1,819bn (EUR 7.59bn).
Bajuk pointed out that there was still a lot of uncertainty regarding the 2007 budget because
the EU has not yet adopted its spending plan, meaning Slovenia does not know how much
money it can expect to get.
The finance minister is confident that the budget framework for the next two years will allow
Slovenia to fulfil its macro-economic goals, including the adoption of the euro.
Moreover, the move to phase out payroll tax should help Slovenia be more competitive.
This will be coupled with the downsizing of the public administration, with at least 1% of the
jobs expected to be cut.
According to Bajuk, the government plans to make the biggest spending increases in areas
crucial for development, including technology, science and competitiveness.
Moreover, more money is to be set aside in the coming years for reducing the developmental
gap between the regions, improvement of the transport infrastructure and health.
On the other hand, funds are to be cut for justice, the national Motorway Company and the
Ministry of Labour, Family and Social Affairs, Bajuk said.
Slovenian Insurers Post 2004 Net Profit of EUR 13.3M
Slovenia's insurance companies reported successful performance in 2004
Slovenia's insurance companies reported successful performance in 2004, although producing
lower results than the previous year. Their total net profit amounted to SIT 3.2bn (EUR
13.3m), a drop over a SIT 5.2bn (EUR 21.7m) profit generated in 2003.
According to a report published by the Insurance Supervision Agency, poorer results were
prompted by an unfavourable ratio between revenues from insurance premiums on the one
side and outgoings for damages on the other.
Year-on-year, a slightly worse performance was reported in the business of life insurance,
while better results were generated in property insurance.
Gross premiums amounted to a total of SIT 318bn (EUR 1,32bn), of which property insurance
accounted for 55%, voluntary health insurance for 21.7% and life insurance for 23.3%.
The volume of operations, expressed in insurance premium figures, increased by 7.6% in real
terms in 2004 compared to 2003. The biggest increase of 19.7% was reported in life insurance
premiums.
No major changes were seen in market shares last year: Zavarovalnica Triglav remained the
country's top insurer with a market share of 43.1%, followed by Vzajemna (17.6%) and
Zavarovalnica Maribor (13.2%).
Ljubljana Stock Exchange
The SBI 20 benchmark index gained 41 points (0.9%) to finish the week at 4,548.44 points
Slovenian blue chips found upward momentum last week despite a lack of action because of
the holiday lull. The SBI 20 benchmark index gained 41 points (0.9%) to finish the week at
4,548.44 points.
Volumes were relatively thin owing to the summer holidays. Investors generated SIT 2.1bn
(EUR 8.76m) in regular turnover, while a further SIT 3.2bn (EUR 13.36m) in shares changed
hands in block deals.
On the official market, shares of drug maker Krka and fuel retailer Petrol led the charge,
picking up 1.74% and 2.1% respectively to close the week at SIT 80,361 (EUR 335.40) and
64,293 (EUR 268.33).
The action on the free market was slow bar Friday's SIT 326m (EUR 1.36m) deal involving
shares of printing works Gorenjski tisk. The share finished the week 25% higher at 3,500
(EUR 14.61) owing to that deal.
19
The PIX investment fund index gained 15 points (0.36%) to 4,230.39 on account of
heightened buying pressure late in the week.
Meanwhile, the BIO bond index edged 0.09 points (0.07%) higher to 121.67.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.58 (+0.01)
U.S. dollar (USD) - SIT 198.15 (+0.92)
Swiss franc (CHF) - SIT 153.58 (+0.34)
British pound (GBP) - SIT 347.87 (+3.17)
20
REGIONAL INFORMATION
Government Grants State Aid to Municipalities Hit by Hailstorms
The government decided to grant SIT 84.5m (EUR 352,715) worth of state aid from budget
reserves to the municipalities worst hit in the June and July hailstorms
The government on Thursday, 28 July decided to grant SIT 84.5m (EUR 352,715) worth of
state aid from budget reserves to the municipalities worst hit in the June and July hailstorms.
The municipalities are to receive the money at the beginning of the week, Environment
Minister Janez Podobnik told the press.
The Kozje municipality in the southeast was hit the worst and is set to receive SIT 25m (EUR
104,300), while nearby Podcetrtek is to get SIT 15m (EUR 62,600). Slovenska Bistrica in the
northeast will get SIT 9m (EUR 37,600) and Crnomelj in the southeast SIT 8m (EUR 33,400).
Sentjernej in the southern Dolenjsko region and Trzic in the northern Gorenjsko are to receive
SIT 5m (EUR 20,900) each. Meanwhile, the eastern municipalities Fram-Race, Krsko and
Sevnica are getting SIT 3m (EUR 12,500) each, Brezice SIT 2.5m (EUR 10,400) and the
northeastern communities of Selnica ob Dravi, Sentjur and Velika Polana SIT 2m (EUR
8,300) each.
The damage in agriculture and property was ascertained by municipal bodies, while the
money was divided in accordance with their provisional assessments, taking into account the
damage on infrastructure and the economic conditions in each municipality, Podobnik
explained.
21
BRANCH INFORMATION
Ministry Selects 11 Cross-Border Environment Projects
The total value of the projects is EUR 2.49m
Eleven environmental projects have been selected for funding under the Phare programme of
cross-border cooperation with Austria. "The projects will improve environmental protection
and management, and the sustainable use of natural resources," Environment Minister Janez
Podobnik said on Tuesday, 26 July.
The total value of the projects is EUR 2.49m. While the project managers must collect 10% of
the project value themselves, 75% of the rest will be contributed by the European
Commission and 25% by the Ministry of the Environment and Spatial Planning.
According to Podobnik, the projects will "offer support for sensitive areas with significant
ecological value in endangered ecosystems in the Alps and along the Mura and Drava rivers."
Mladen Breginc, the state secretary at the Environment Ministry, said this will give Slovenian
groups access to invaluable experience in the management of protected areas that the
Austrians possess.
The projects, valued at between 66,000 and 400,000 euros, involve the recording of habitats,
registries of species, concepts of the preservation of biodiversity, cross-border spatial
planning and ways of reducing the effects of transport.
22
COMPANIES
State to Sell One Quarter of National Telecom This Year
According to current estimates, Telekom Slovenije is worth about EUR 264bn (EUR 1.1bn)
The sale of 25% of Telekom Slovenije, the fixed-line telco, is scheduled for this year, the
Economics Ministry has written in a report on the state's financial investments that is awaiting
government approval. Most of the anticipated proceeds of SIT 66bn (EUR 275.5m) would be
used for debt repayment.
According to current estimates, Telekom Slovenije is worth about EUR 264bn (EUR 1.1bn).
Part of the proceeds from the sale of the stake, about SIT 10bn (EUR 41.4m), would go to
investors in the telecommunications network, while the remaining SIT 56bn (EUR 233.7m)
would be used to reduce the public debt.
The ministry says in the report, which is published online, that there are several ways of
privatising the telco, the best option being a combination of a strategic partner plus financial
and domestic investors.
In this way the financial investor would make sure the company's value is not diluted, while
Slovenian investors would become part-owners of a strategically important company,
according to the ministry.
Due to the complexity of the privatisation, the ministry proposes the formation of a working
group to determine the type of ownership that the ministry deems the most appropriate for the
state, and set goals the company has to meet before the sale.
The state directly owns 62.5% of Telekom and a further 11.6% through the state-run
Restitution Fund (SOD) and Pension Management Fund (KAD). Telekom is also the sole
owner of the country's largest mobile operator Mobitel and the largest ISP Siol.
Power Company HSE Gets New Supervisory Board
The new supervisors, appointed for a four-year term, are Economics Minister Andrej Vizjak,
Krsko Mayor Franc Bogovic, economist France Krizanic, Andrej Aplenc, Franc Ervin
Janezic and Janez Pozar
The government named six new supervisory board members at Holding slovenske elektrarne
(HSE), the biggest electricity producer in the country on Monday, 25 July.
The new supervisors, appointed for a four-year term, are Economics Minister Andrej Vizjak,
Krsko Mayor Franc Bogovic, economist France Krizanic, Andrej Aplenc, Franc Ervin Janezic
and Janez Pozar.
The HSE was established in September 2001 with the merger of the hydro chains Dravske
elektrarne, Savske elektrarne and Soske elektrarne, the Brestanica steam power plant and the
Velenje coal mine.
Marjan Babic Named Provisional Director General of Luka Koper
The new supervisory board of port operator Luka Koper named Marjan Babic, the erstwhile
deputy director general for finance, as the provisional director general
The new supervisory board of port operator Luka Koper on Monday, 25 July, named Marjan
Babic, the erstwhile deputy director general for finance, as the provisional director general.
The supervisors accepted the resignation of director general Bruno Korelic, effective as of 25
July, the company said in a press release.
Moreover, Marko Starman, the state secretary at the Environment Ministry, was appointed the
new chair of the supervisory board.
The new supervisory board was elected at the company's general meeting on 7 July.
23
Korelic resigned four days afterwards, saying he wishes to give the new supervisory board the
opportunity to appoint new management.
Vizjak HSE Supervisor Due to Key Power Projects, Ministry Says
The appointment of the minister to the supervisory board of Holding Slovenske elektrarne
(HSE) has created "a link between the ministry and the energy sector", the ministry said in a
press release
Economics Minister Andrej Vizjak has been appointed a member of the supervisory board of
the largest Slovenian power producer because of "important projects in the energy sector", the
Economics Ministry explained the reason for his appointment to STA.
The appointment of the minister to the supervisory board of Holding Slovenske elektrarne
(HSE) has created "a link between the ministry and the energy sector", the ministry said in a
press release on Tuesday, 26 July, adding Vizjak is not a member of any other supervisory
board.
The ministry's explanation comes a day after the government appointed six new supervisory
board members at the HSE for a four-year term, among them Minister Vizjak.. Moreover, the
government apparently intends to replace its representatives on the supervisory boards of
several other power distributors before their term expires.
On Friday, 22 July it published a request in the Official Gazette for the agendas of AGMs of
four electricity distributors to be expanded with the dismissal of its supervisors.
The HSE was established in September 2001 with the merger of the hydro chains Dravske
elektrarne, Savske elektrarne and Soske elektrarne, the Brestanica steam power plant and the
Velenje coal mine.
Contracts Signed for First Pumped-Storage Hydro Plant
The construction of the first pumped-storage hydro plant in Slovenia, the Avce plant, has
entered the second phase, as equipment and building contracts worth EUR 86.6m were signed
on 25 July, representing about 70% of the total investment
The construction of the first pumped-storage hydro plant in Slovenia, the Avce plant, has
entered the second phase, as equipment and building contracts worth EUR 86.6m were signed
on Monday, 25 July, representing about 70% of the total investment.
The main construction works will be carried out by Slovenian construction companies
Primorje and SCT, while power-generation equipment will be supplied by a consortium of the
companies Melco, Rudis and Sumitomo.
Contracts for the remaining equipment are to be finalised this year, Soske elektrarne, the
company operating hydro plants on the Soca river, said in a press release.
The plant, one of Slovenia's biggest energy projects currently under construction, is scheduled
to be brought online in 2008, generating 426 GWh of electricity a year. The power thus
generated will only be used in peak demand.
At times of low demand, excess power capacity is used to pump water into a higher reservoir.
When there is higher demand, water is released back into the lower reservoir through a
turbine, generating electricity. Reversible turbine/generator assemblies act as pump and
turbine.
Soske elektrarne is a part of the Holding slovenske elektrarne (HSE), the biggest power utility
in the country.
Trbovlje Cement Plant to Install Desulphurisation Plant
Cement producer Cementarna Trbovlje is set to start construction on a desulphurisation plant
early next year, to meet European environment standards coming into force after 2007
24
Cement producer Cementarna Trbovlje is set to start construction on a desulphurisation plant
early next year, to meet European environment standards coming into force after 2007.
The plant, due to be launched in March 2007, is projected to cost between 8 and 9 million
euros, director Franci Blaznek told STA on Tuesday, 26 July. It will be funded by the
company's majority owner, Lafarge.
According to Blaznek, the company has had a slow year after record sales in 2004. Revenues
are 10% short of projections, which Blaznek attributes to the long summer and heavy rains
that postponed construction works.
"The second trouble we are facing is exports to Croatia: we hardly export any more because
of problems with payments," he said, adding that Croatia had accounted for about 10% of
sales in the previous years.
Cementarna Trbovlje is owned by the French cement conglomerate Lafarge Paris, which
became the sole owner in 2002. The French sold a 25% stake to the European Bank for
Reconstruction and Development (EBRD) the same year.
Government Looking for Strategic Partner for Telecom, Official Says
According to Matjaz Jansa, the head of the General Directorate for Electronic
Communications, informal talks have already been held with interested companies
The government is looking to find a strategic partner for the purchase of a stake in the
national telecom, Telekom Slovenija, an Economics Ministry official told the press in
Ljubljana on Tuesday, 26 July.
According to Matjaz Jansa, the head of the General Directorate for Electronic
Communications, informal talks have already been held with interested companies.
Jansa added that the strategic partner would most likely be one of the European
telecommunications companies.
"Finding a strategic partner is the preferred option as it is unlikely that a financial investor
would pay as much," Jansa said.
"Apart from achieving a maximum price, we can ask for certain commitments from a strategic
partner," he added.
Moreover, he also stressed that the coalition agreement does not contain a commitment to sell
a quarter of the telco this year.
It is unrealistic to expect that this could be carried out this year, he said, adding that the
privatisation process is only in the initial stages.
The government plans to privatise Telekom in 2006, with the payment due in 2007, he said.
His comments come a day after the Economics Ministry indicated that the sale of a 25% stake
in the telecom is scheduled for this year in a report on the state's financial investments.
We're Serious about Telekom Privatisation, Minister Vizjak Says
Vizjak, who believes now is the right time to begin the privatisation process, said the
government knows exactly what it would like to achieve with the sell-off of Telekom
The government is serious about the privatisation of the national telecom Telekom Slovenije,
and would like to carry it out as soon as possible, Economics Minister Andrej Vizjak told a
business daily on Wednesday, 27 July.
Vizjak, who believes now is the right time to begin the privatisation process, said the
government knows exactly what it would like to achieve with the sell-off of Telekom.
According to him, it would make sense to find Telekom a strategic partner to secure its
development at home and abroad, which would also benefit its clients.
Moreover, the state would like to withdraw as owner of individual companies, Vizjak told
Finance.
25
A decision on Telekom's listing on the stock market will be made when guidelines for a
Telekom privatisation strategy have been drawn up, said Vizjak.
The minister added that Telekom will not necessarily be floated only after talks with potential
strategic partners have ended.
He expects the privatisation strategy, which should be "ready by the end of this year, or more
realistically within a year", would give a clear answer to the question of Telekom stock
market flotation.
HSE Director Says State Should Keep Majority Stake
Giving an interview for the weekly Demokracija, Zagozen said the state should keep more
than a 50% stake in the company, while other owners should have small stakes so that they
could not buy out the company at some point
Joze Zagozen, the new general manager of Holding slovenske elektrarne (HSE), has estimated
in a newspaper interview that Slovenia's largest power producer should remain in majority
state ownership even after privatisation.
Giving an interview for the weekly Demokracija, Zagozen said the state should keep more
than a 50% stake in the company, while other owners should have small stakes so that they
could not buy out the company at some point.
The state should also keep majority stakes in HSE subsidiaries, according to Zagozen. He is
convinced that it would not make sense to privatise the subsidiaries before 2007, when they
are due to face competition and produce energy at the prices set forth by the Leipzig stock
exchange.
Once privatisation is launched, the government should carry it in a way to prevent foreigners
to buy only the most profitable companies while the troubled producers would stay in state
ownership, Zagozen cautioned.
He also said that Slovenia should build more production facilities as it is currently producing
80% of the needed energy while it has to import the rest. "The question poses though whether
foreign investors should be invited to take part," Zagozen said.
The holding generated profit of over SIT 7bn (EUR 29.2m) in the first six months of the year.
Luka Koper Shareholders Confirm Expansion of Management Board
The shareholders of port operator Luka Koper have confirmed the expansion of the
management board from one to four members at the proposal of the majority owner, the state
The shareholders of port operator Luka Koper have confirmed the expansion of the
management board from one to four members at the proposal of the majority owner, the state.
The amendments to the articles of association, which were confirmed on Thursday, 28 July,
also stipulate that the supervisory board may determine specific assignments that individual
board members will be in charge of.
The four-member board will have a chairman, vice-chairman, a board member and a
representative of the workers council. The board members will be appointed for five-year
terms in office.
The new board is to be inaugurated in September.
After the recent resignation of long-time general manager Bruno Korelic, Marjan Babic, the
erstwhile deputy director general for finance, was named acting director general.
Gorenje Reports 15% Rise in Revenues
Home appliance group Gorenje generated SIT 113.9bn (EUR 475m) in sales revenues in the
first half of 2005
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Home appliance group Gorenje generated SIT 113.9bn (EUR 475m) in sales revenues in the
first half of 2005, a rise of 15% on last year. However, the group's net profits were flat on last
year at SIT 1.8bn (EUR 7.51m).
Although the half-yearly profit accounted for only 40% of this year's planned earnings, the
company said it was happy with the results given the operating conditions on its main
markets.
According to a press release from Gorenje, the group continues to face the same hurdles as
last year, including sluggish economic growth in most of its main markets, low consumer
confidence, a weak dollar and dear raw materials.
Moreover, the group's profit has also been eaten away by higher taxes in Slovenia. Although
the net profit grew only marginally, pre-tax profits at the parent company were up 2.4%.
Telekom Privatisation Remains on the Agenda
The state directly owns 62.5% of Telekom and a further 11.6% through the state-run
Restitution Fund (SOD) and Pension Management Fund (KAD)
The government has examined the documentation on the privatisation of fixed-line telco
Telekom Slovenije, but took no decision on the matter, Economics Minister Andrej Vizjak
said on Thursday, 28 July.
The ministry will draft a privatisation strategy by the end of 2005, while the sale will also be
scrutinised by the reform committee's subcommittee for privatisation by then, he explained.
According to plans, the actual sale of the state's stake will be carried out in 2006, while people
who invested in the telecoms network will be compensated in 2007.
The strategy will also determine the desired type of privatisation: the government is in favour
of a strategic partner and the ministry has already held talks with several potential partners.
According to the ministry, the most likely partner is one of Europe's fixed-line telcos as the
government would like a partner who is willing to offer the best price and ensure the
development of the telecommunications network.
The state directly owns 62.5% of Telekom and a further 11.6% through the state-run
Restitution Fund (SOD) and Pension Management Fund (KAD). According to current
estimates, Telekom Slovenije is worth about EUR 264bn (EUR 1.1bn).
Telekom is the monopoly fixed-line operator and the sole owner of the country's largest
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SLOVENIA IN BRIEF
Jansa Says Border Arbitration Not on the Agenda for Now
Arbitration as a way of resolving relations with Croatia is not on the agenda at the moment,
although we have not foregone this option, Prime Minister Janez Jansa told the press on
Wednesday, 27 July. There are other avenues that we should explore first, he stressed.
Tomos to Lay Off 94 Workers
Tomos will cut 94 jobs after furniture giant Ikea cancelled a deal on the supply of steel
furniture parts. Ikea accounted for 35% of the revenues, so we have to take measures to
improve competitiveness and cut costs, Tomos general manager Stane Ursic said on Monday,
25 July. The Koper-based company began supplying Ikea with furniture parts in 1992, when it
first launched production of such components. Tomos, a company in the Hidria industrial
group, is best known as a maker of motorcycles and motorcycle parts.
Unions Reserved about Social Dialogue Guidelines
The biggest trade union confederations are reserved about the guidelines for the 2006-2009
social agreement that the government presented on Wednesday, 27 July. Negotiations need to
be approached realistically, Dusan Semolic emphasised. According to Semolic, the head of
the Association of Free Trade Unions (ZSSS), the union wants the document to include many
measures protecting the social rights of workers, job security and economic development.
STA Editor to Head European Commission Representation
The European Commission has launched the procedure to appoint Mihela Zupancic, the
acting editor-in-chief of the Slovenian Press Agency (STA), the head of the European
Commission representation in Slovenia, the Commission said on Thursday, 28 July. The
Commission also appointed new heads of its representation in six other new EU member
states, i.e. Cyprus, Estonia, Hungary, Malta, Poland and Slovakia.
Biometric Features to Become Mandatory in Passports
The government on Thursday, 28 July adopted amendments to the act on passports, making it
mandatory for passports to contain biometric features. Biometric face recognition will be
mandatory as of 28 August 2006, while finger print identification is to be introduced 36
months after the confirmation of the relevant technical specifications.
Salzburg Group Calls for Closer Cooperation
Interior ministers of the Salzburg group of Central and Eastern European countries called for
closer cooperation in fighting terrorism, border protection and illegal migration as they came
out of a meeting on Friday, 29 July. Interior Ministry State Secretary Vinko Gorenak, who
represented Slovenia on behalf of Minister Dragutin Mate, said the countries (Austria, Czech
Republic, Hungary, Poland, Slovakia and Slovenia) agreed mutual cooperation and assistance
is crucial for the group's success in the EU.
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