REVIEW OF SECTOR TRANSPORT,
INFRASTRUCTURE AND
COMMUNICATIONS IN BULGARIA
MAIN REPORT
(D20010456\23021)
Submitted to:
Submitted by:
Senter Internationaal
NEA Transport research and training
Rijswijk, The Netherlands, May 2001
CONTENTS
page
1
EXECUTIVE SUMMARY ............................................................................ 5
1.1
1.2
1.3
Transport, infrastructure and communications ............................................ 6
Donors and financing .................................................................................. 7
Business opportunities for Dutch Enterprises.............................................. 8
2
GENERAL INTRODUCTION AND BACKGROUND ................................ 13
2.1
2.2
2.3
2.4
2.5
2.5.1
2.5.2
2.6
2.7
Objectives of the study ............................................................................. 14
Purposes of the study ............................................................................... 14
Results of the project ................................................................................ 14
Activities ................................................................................................... 15
Methodology and Approach ...................................................................... 16
Desk research .......................................................................................... 16
Field research ........................................................................................... 16
Organisation of a seminar ......................................................................... 17
Project Team ............................................................................................ 17
3
GENERAL DATA ON BULGARIA ........................................................... 19
3.1
3.2
3.3
General socio-economic situation ............................................................. 19
Privatisation process in Bulgaria ............................................................... 21
Business environment in Bulgaria ............................................................. 22
4
TRANSPORT, INFRASTRUCTURE AND COMMUNICATIONS .............. 27
4.1
4.2
Transport and infrastructure...................................................................... 27
Communications ....................................................................................... 38
5
PRIORITIES FOR INVESTMENT BY THE BULGARIAN AUTHORITIES 41
5.1
5.2
Priority investments in transport infrastructure .......................................... 41
Companies offered for privatisation in transport and communications ...... 44
6
EXISTING DONOR ACTIVITIES IN BULGARIA ...................................... 47
6.1
6.2
6.2.1
6.2.2
1.1.3
Bilateral donor activities ............................................................................ 47
Multilateral donor activities........................................................................ 47
European Union........................................................................................ 47
EBRD ....................................................................................................... 51
World Bank ............................................................................................... 59
7
MARKET OPPORTUNITIES PER SUB SECTOR .................................... 61
8
DUTCH BUSINESS OPPORTUNITIES IN BULGARIA ............................ 67
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9
CONCLUSIONS ....................................................................................... 87
9.1
9.2
9.3
Transport, infrastructure and communications .......................................... 87
Donors and financing ................................................................................ 89
Business opportunities for Dutch Enterprises............................................ 90
4
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1
EXECUTIVE SUMMARY
The Programme for Co-operation with Countries in Central and Eastern Europe (PSO)
aims at supporting the transition of Central and Eastern European countries to a
market-oriented and sustainable economy. Under this programme, the Netherlands
government funds projects, assigned to enterprises in The Netherlands, for the transfer
of knowledge and expertise, which should lead to sustainable investment and/or trade
relations on a business to business basis.
It was decided to carry out a Transport Sector study for Bulgaria, Romania and Ukraine
in order to develop a framework for the development of new transport projects in these
countries within the PSO framework.
The main findings for Bulgaria are:

From 1991 to 1996 progress in Bulgaria was slow and erratic. Its most recent
history is characterised by the remarkable turnaround that occurred after the
change of leadership in 1997. Since then Bulgaria has re-energised long pending
structural reforms. The IMF supported currency board had a positive impact on the
country’s financial discipline, privatisation has accelerated, and price control has
been liberalised.

Fiscal policy was tightened (consolidated budget deficit came in at only 1%),
important steps were taken in the area of privatisation, banking sector reforms,
agricultural liberalisation, energy pricing and legal reforms, required to improve the
prospects for sustainable economic growth and European Union accession.

The Government has prepared a programme for the year 2001 in which the
privatisation of SOE’s is defined as a key element of the structural enterprises (over
600) in the sectors of industry, construction, agriculture, tourism and trade. The
plan envisages preparatory stage of the privatisation of certain facilities in the
sectors of infrastructure and public services – energy, railway transport, water
supply and sewerage.
A report published by the Bulgarian International Business Association “BIBA White
Paper on Foreign Investment – Issue 2001” reads that substantial scope for
improvement remains, which could substantially ameliorate the “business climate”
and overall competitiveness of industry. It specifies issues such as: Public-Private
partnership / legislation drafting and implementation, quality/productivity culture in
industry, public administration performance and education, transport sector
technology and infrastructure, law implementation and enforcement, border
crossing initiatives.

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5
1.1
Transport, infrastructure and communications
 Government’s main priorities are: Harmonisation of national legislation and
transport regulations with those of the EU member states, Development of
transport infrastructure and Implementation of structural reform and privatisation in
the transport sector.
 Major progress has been made in the Harmonisation process for all transport
sectors. The report specifies the present status of the laws and regulations
envisaged for implementation.
 The social and economic difficulties suffered by Bulgaria, coupled with a lack of
finance for road infrastructure has brought about a deterioration of the roads in
general. Moreover road building in Bulgaria is difficult and costly as some 40% of
the country’s territory is mountainous.
 The programme ‘Transit Roads” rehabilitated 1400 km of the main road network up
to 1999. Financing came from the EIB, EBRD and the Phare programme. Currently
“Transit Roads III” is covering the rehabilitation of another 600km, to be completed
in 2002.
 According to the Inter-departmental programme on the development of transport
infrastructure 1,200 million Euro will be needed for rehabilitation and construction
of roads of national and international importance. The participation of Bulgaria in
the TINA project is a very important component of the development of transport
infrastructure.
 River transport is still not very significant, with total inland water transport
accounting for around 5% of Bulgarian vessel tonnage. There are plans for
significant modernisation of ports over the next few years.
 The two major sea ports of Bulgaria – Varna and Burgas handle more than 60% of
the national foreign trade freight turnover. The drop in traffic and the obsolete
equipment are major problems for the Varna Port development.
Burgas has benefited in recent years from the increased trade flows to Western
Europe and the transport related to the biggest Bulgarian petrol refinery. It is
proposed that the ports will be restructured and given under concession, either
totally or in part.
 A renewed Sofia airport was opened in September 2000. There is a plan to develop
and expand the airport with the capacity and modern facilities to deal with demand
expected early next century. The US$ 200 million project will be financed by the
EIB and the government.
 According to new laws and directives it is envisaged that only railway infrastructure
will remain under state ownership. The railway industry and other sections of the
National Company "Bulgarian State Railways", together with the commercial
activities of railway transport, are subject to privatisation.
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To date 8 out of 13 railway enterprises have been privatised (concerned with
rolling stock repairs and construction, etc).

Telecommunication: Bulgaria inherited relatively high line density from the pretransition period. Recent investments increased further the fixed line telephone
penetration. The quality of the network is less advanced. Although mobile
telephone penetration has grown fast there is considerable room for growth.

The adoption of the new Telecommunications Law in 1998 introduced a liberalised
regime for activities in the telecommunications sector. All services were liberalised
except voice telephony and leased lines, which will be opened to competition on 1
January 2003. This is well in advance of the WTO commitment of 1 January 2005.
1.2




Donors and financing
There are many bilateral projects in all sectors. Particularly, Germany and Italy are
very active in Bulgaria.
The EU is an important donor to Bulgaria. The major objectives of the support are
the opening of the Bulgarian transport system for EU member states, Restructuring
the transport sector in accordance with European standards and market economy
principles, Development of infrastructure, technological modernisation and new
investments.
For the Cross Border Co-operation programme Euro 86 million has been allocated.
Bulgaria expects to receive Euro 420 million for the period 2000-2006 for the
development of transport infrastructure through the EU ISPA programme. Priority
projects have been identified.
EBRD is a major financing institution for Bulgaria. The EBRD will continue to
promote privatisation, post-privatisation restructuring and sound corporate
governance of selected companies in the enterprise sector, through both debt and
equity investments. In the case of large enterprises, the EBRD will continue to work
alongside foreign strategic partners as well as with domestic investors. The EBRD
will proactively support the rapidly growing interest by private investors in the
infrastructure sector, particularly in power generation, in telecommunications and in
certain municipal services. The future water concession and the district heating
projects with the Sofia Municipality should constitute landmark transactions.
Besides, the EBRD will also continue to provide selective sovereign-based support
for crucial sectors such as district heating, energy transmission and transport.
Lastly, the EBRD will continue to provide guidance on the restructuring of the
energy sector.
Since Bulgaria joined the World Bank in 1990, Bank assistance to the country has
been aimed at fostering sustainable development and economic growth by
investing in physical and social sector infrastructure, and by accelerating structural
reforms and rapid development of the private sector.
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The World Bank is presently not involved in many projects in the fields of transport,
infrastructure and communications. The World Bank is implementing transport and
trade facilitation projects in Bulgaria and projects focussed on improving border
crossings and customs facilitation.
1.3
Business opportunities for Dutch Enterprises.
Privatisation progress in Bulgaria offers a wide range of business opportunities for
Dutch enterprises. Local financing is one of the main problem areas, due to the high
interest rates charged. Cross border financing is increasing.
Investment climate is continuously improving largely due to a consistent economic and
financial policy. However, there is uncertainty with regard to the outcome of the next
elections. The still widespread poverty and lack of social facilities in Bulgaria may lead
to a change towards a less consistent economic policy.
There are and will be many business opportunities in Bulgaria. The project ideas
identified implicitly prove the relevance of the current PSO+ programme for Bulgaria.
Given the emphasis the authorities put on improving transport and infrastructure an
increase of the PSO budget for the theme “Transport” should be considered.
The following table shows an assessment of the business opportunities in the different
sub sectors for possible PSO+ projects. Sometimes the expression "no key area" has
been used to indicate that the relevant sub sectors do not really qualify for PSO+
projects. This does not necessarily mean that there are no sound business
opportunities in the mentioned sub sectors.
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Sector
Road transport
Goods / Freight
Reasonable opportunities in distribution
services, conditioned transport and
heavy transport
Passengers
Bus operations (city and
intercity): no key area.
Conditioned transport of perishable
products.
International bus lines; no
key area.
Towing services and service stations.
Reasonable opportunities in international
road transport, following economic
development.
Bonded warehousing, VAL services and
regional distribution.
Tank cleaning and chemical waste
management.
Leasing facilities for commercial vehicles.
E-commerce and business planning.
Supply industry
Design, manufacturing and marketing of
trailers, semi-trailers, tankers and special
vehicles.
Manufacturing of buses
(sub-urban and intercity).
Manufacturing of tanks for fuels, liquid
gas and chemicals for the automotive
sector
Manufacturing of cable beams for
automotive industry.
Production of on-board computers for
commercial vehicles.
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Transport by rail
Opportunities for forwarders;
no key area
Government controlled;
no key area
Supply Industry
Manufacturing of railway components.
Manufacturing railway
components
Automation railways and traffic systems.
Automation railways and
traffic systems.
Not relevant
Inland water
transport
Not applicable yet.
Supply industry
Navigation communication and safety
systems; no key area.
Sea transport and Based on present performance; no key
ports
area.
Supply industry
Air transport
Supply industry
Public works &
water
management
Maritime communication and safety
systems.
Opportunities in forwarding and storage
activities.
.
Airport maintenance.
Massive investments planned in road
construction and maintenance;
Opportunities in supply of modern road
building machinery and technology.
Water management and distribution in
Plovdiv. Design of water distribution
systems; no key area.
Telecommunicati
on and ICT
Postal services
10
Production of measuring devices (metres)
for water and gas.
Manufacturing and application of optical
fibre cable technology.
Development integrated postal services.
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Key areas for PSO projects
Provision of integrated logistics services (bonded warehousing; high-quality physical
distribution; tank cleaning. Manufacturing fuel tanks. Production and assembling
(semi-)trailers. Manufacturing of buses.
Road construction technologies (equipment and materials).
Conditioned transport of perishable products.
Development of integrated postal services.
Business opportunities / project ideas identified for Dutch enterprises
In spite of the fact that government influence and interference in the market economy is
still present in Bulgaria, the ongoing privatisation of the industrial sectors in
combination with the substantial market potential offers increasingly sound business
opportunities.
The PSO programme for Bulgaria is and will prove to be very effective in view of the
stage of economic and institutional development of the country. The sectors transport,
in particular road transport, road infrastructure as well as agricultural production and
distribution offer many opportunities to Dutch enterprises, which we have summarised
below more specifically.
It should be noted that project ideas as listed below do not necessarily qualify as PSO+
project.
Road transport (freight)

Reasonable opportunities in distribution services, conditioned transport and
heavy transport.

Conditioned transport of perishable products.

Towing services and service stations.


Bonded warehousing, VAL services and regional distribution.
Tank cleaning and chemical waste management.


Leasing facilities for commercial vehicles.
E-commerce and business planning.

Design, manufacturing and marketing of trailers, semi-trailers, tankers and special
vehicles.
Manufacturing of tanks for fuels, liquid gas and chemicals for the automotive sector.

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11

Manufacturing of cable beams for automotive industry.

Production of on-board computers for commercial vehicles.
Road transport (passengers)

Production of intercity buses and coaches in Omürtag

Production of sub urban buses for Sofia.
Ports and maritime transport

Maritime communication and safety systems.
Air transport

Airport maintenance services Sofia International Airport.
Public works and water management
 There are various opportunities for co-operation in the sector maintenance and
construction of roads, especially in the field of supply of road construction
machinery and technologies and transport equipment.

Water distribution systems in Plovdiv. Production of measuring devices for water
and gas distribution.
Telecommunication

Co-operation and investment in optical fibre connection.
Postal services

12
Development of integrated postal services.
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2
GENERAL INTRODUCTION AND BACKGROUND
The Programme for Co-operation with Countries in Central and Eastern Europe (PSO)
aims at supporting the transition of Central and Eastern European countries to a
market-oriented and sustainable economy. Under this programme, the Netherlands
government funds projects, assigned to enterprises in The Netherlands, for the transfer
of knowledge and expertise, which should lead to sustainable investment and/or trade
relations on a business to business basis.
Transport is one of the sectors within the PSO programme and covers a wide range of
activities and encompasses the following sub sectors:






Freight transport.
Public transport.
Transport by mode; air, water, road, and rail.
Public works and water management.
Telecommunication and postal services.
Information and communication technology.
It was decided to carry out a Transport Sector study for Bulgaria, Romania and Ukraine
in order to develop a framework for the development of new transport projects in these
countries within the PSO framework. Emphasis should be put on business to business
projects, however some institutional projects may be included to assist in the further
development of a particular sub sector.
This document reports the main findings of the assignment. The level of development
of the different sub sectors in the 3 countries varies, which is likely to have an impact
on the opportunities for Dutch enterprises in the particular sectors in the different
countries. Therefore, a country by country approach, rather than a (sub) sector
approach has been applied in this study.
Our approach has an entrepreneurial character. We have incorporated local expertise
into the project by making use of the services of experts and facilitators in the 3
countries. This should give a structural support dimension during and after the
execution of this study.
Expertise from private companies already established in the defined countries also
have been used to explore complementary or spin-off activities, whilst making use of
their assessment of their business environment.
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2.1
Objectives of the study
The 3 main objectives of this study, which should lead to an optimal allocation of the
funds for the transport sector within the 2001-2003 PSO programme are:
1. Increasing Dutch investments in CEE countries and in particular in Bulgaria,
Romania and Ukraine and develop sustainable bilateral trade relations.
2. Assist in restructuring of the transport sector in Bulgaria, Romania and Ukraine.
3. Increasing the business-to-business relations of enterprises from the Netherlands
active in the transport sector with enterprises in Bulgaria, Romania and Ukraine.
2.2
Purposes of the study
In order to achieve the objectives mentioned above the following purposes have been
listed:
1. Present a clear survey on the current situation in the transport sector in Bulgaria,
Romania and Ukraine.
2. Identify sub sectors with market opportunities, in particular considering Dutch
potential.
3. Indicate possible PSO project ideas in these sub sectors, preferably with an
indication of potential recipients.
4. Indicate possible web-sites where the studies can be published.
5. Organise a seminar in the Netherlands for presenting the results of the study.
2.3
Results of the project
The following products and services are being delivered in order to achieve the
purposes of the project:
1. A separate report per country, delivered in hard copy and electronically, covering
the transport sector in respectively Bulgaria, Romania and Ukraine.
2. A list of at least two concrete market opportunities in every promising sub sector,
per country.
3. A seminar organised for Dutch companies to present and distribute the final
reports.
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2.4
Activities
For realising the first result, the following activities have been carried out:
1. Collection and analysis of available information to make a survey of the transport
sector in Bulgaria, Romania and Ukraine, with emphasis on opportunities for
business-to-business relations.
2. Provision of a description of the activities of multilateral donors in the field of
transport in Bulgaria, Romania and Ukraine. Special attention will be paid to the
EU/ISPA programme, the World Bank (IBRD and IFC), the EBRD and the EIB. The
study must include an analysis of the possibilities to integrate PSO projects into
these multilateral activities. PSO projects should, however, always be stand-alone
projects with a separate budget.
For realising the second result, a list of at least 2 concrete market opportunities in
every promising sub sector per country has been elaborated carrying out the following
activities:
1. Provision of an inventory of international Dutch companies active in the transport
sector and companies in Bulgaria, Romania and Ukraine. The list also contains
companies in Bulgaria, Romania and Ukraine in the transport sector having ties
with Dutch enterprises. Also Dutch companies planning or considering activities in
the field of transport in (one of) these countries have been mentioned.
2. Survey and detailed description of the sub sectors with market opportunities for
Dutch companies.
3. Identification and description of concrete market opportunities in every promising
sub sector.
For realising the third result, organising a seminar, the following activities have been
carried out:
1) Identification of Dutch companies in the transport sector.
2) Organisation of the seminar and presenting the study on the Internet.
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2.5
Methodology and Approach
2.5.1
Desk research
The project team has identified and listed Dutch companies active in the transport
sectors per Country (Bulgaria, Romania and Ukraine). This information has been
obtained from, among others:
 The Associations for transport (in the Netherlands and the three countries) and
their publications.

The Chambers of Commerce in the Netherlands and the three countries.






The Departments of International Co-operation in the three countries, responsible
for the co-ordination of bilateral or multilateral co-operation or investment
programmes.
Ministry of Transport, Public Works and Water Management and Ministry of
Economic Affairs.
Senter.
The Dutch Embassies in the three countries.
The Embassies of Bulgaria, Romania and Ukraine in the Netherlands.
Individual companies, active in the transport sector.
The NCH (Nederlands Centrum voor Handelsbevordering).


The EVD.
The Association of Dutch Exporters: Fenedex.

Also, an inventory and analysis on the transport sector data available for the 3
countries have been carried out. Information has been drawn from studies performed
by NEA as well as from reports produced and published by the Ministries and
International Finance Institutions.
Local experts have assisted in obtaining the relevant market data and making it
accessible.
2.5.2
Field research
In each country a field research programme has been carried out, assisted by local
experts.
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
Interviews and discussions with key persons and staff of the Ministry of Transport,
identifying relevant transport policy lines and measures per sector, priorities,
constraints and opportunities have been carried out. In this context the presence
and effectiveness of the institutional framework relevant to the sub sectors has
been assessed.

The Dutch Embassy has been an important source of information for identification
of possible general opportunities in the transport market, for the assessment of the
local transport policies in relation to Dutch interests and the identification/contacting
of key persons in the different sub sectors.

Many private and publicly owned enterprises have been interviewed, which are
leading in or representative for the sub sector. Foreign owned or subsidiary
companies have deliberately been included. The output from these interviews has
been used to draw conclusions on segment attractiveness for investments.
Opportunities, spin-off and synergies have thus become visible.
2.6
Organisation of a seminar
A seminar has been organised in the Netherlands to present the results of the study to
a wider audience of interested Dutch companies active in the studied sub sectors.
2.7
Project Team
The project did consist of four experts:
René Meeuws
Hans Houtsma
Arthur Gleijm
Jan-Coen van Elburg
Team Leader
Extensive use has been made of local experts, facilitators and interpreters in Ukraine,
Romania and Bulgaria.
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17
3
GENERAL DATA ON BULGARIA
3.1
General socio-economic situation1
Bulgaria is situated in the heart of the Balkan Peninsula with a population of 8.2 million
people and a 1999 GNP per capita of US$1,380.
Its most recent history is characterised by the remarkable turnaround that occurred
after the change in leadership in 1997, following a decade-long delay in the transition to
a market economy.
Market reforms in the country began in 1991 in the face of difficult initial conditions,
including massive price distortions and almost complete state control over productive
resources.
Externally, heavy reliance on trade within the disintegrating former Soviet Union
caused a dramatic fall in trade flows and severe shortages of foreign exchange.
From 1991 to 1996 progress was slow and erratic, with periods of tight macroeconomic
policies followed by a loosening of those same policies. High inflation and large
exchange rate fluctuations undermined credibility of the country's economic
management. This, together with the effects of delayed reforms, led to a severe
banking and foreign exchange crisis that culminated in hyperinflation in January and
February 1997. The depth of this crisis was reflected in the economic outcome: GDP
fell by about 10 percent in 1996, and currency reserves shrank to US$446 million (one
month of imports). In February 1997, inflation reached a high of 243 percent per month.
The devastating effects of the economic crisis on the social conditions of the country
placed considerable strain on many vulnerable groups, and poverty became a serious
and widespread problem.
Since the 1996 crisis, Bulgaria has re-energised long-pending structural reforms. In
July 1997, a currency board supported by the International Monetary Fund (IMF) was
introduced and this, in turn, had a positive impact on the country's financial discipline.
Central Bank financing of the budget (except against purchases of special drawing
rights from the IMF) has been eliminated, the privatisation process has accelerated,
and many previously controlled prices have been liberalised.
1
This paragraph is based on information from the World Bank.
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19
Real GDP grew by 2.4 percent, and inflation reached 6.2 percent at end-1999.
Bulgaria's economy showed its increasing resilience to the adverse external
environment-the Kosovo conflict, continuing negative effects from the Russian crisis,
and shrinking demand in the Euro area--especially in the first half of 1999.
The stabilisation effects of the currency board and prudent fiscal policies cushioned the
negative external influence. In response to the growing current account balance, which
in 1999 reached 5.4 percent of GDP, fiscal policy was tightened and the consolidated
budget deficit came in at only 1.0 percent. Similarly, whilst the delay in completing
some policy commitments, important steps were taken in the areas of privatisation,
banking sector reforms, agricultural liberalisation, energy pricing, and legal reforms
required to improve the prospects for sustainable economic growth and pave the way
for European Union (EU) accession. On December 10, 1999, during the European
Council's Helsinki meetings, Bulgaria, together with Latvia, Lithuania, Romania, the
Slovak Republic and Malta, was invited to begin accession negotiations on EU
membership.
The most important and visible component of the structural reform program, the
privatisation of state-owned enterprises (SOEs), has accelerated significantly over the
last two-to-three years. Progress in the privatisation of SOEs can be inferred from the
share of state-owned long-term assets privatised, which reached about 80 percent of
enterprises in the competitive sector by end-1999 (compared to 42 percent at the end
of the previous year).
Effective restructuring of utilities started in 2000. The government also instituted a
program of isolation and liquidation of those SOEs that are not candidates for
privatisation because they are not viable. By mid-1999, the isolation program was
completed, which was largely successful in privatising or liquidating some 48 large
loss-makers.
Efforts to liberalise the agricultural sector have been consistent with the government's
program for structural reform. By end-1999 some 97 percent of agricultural land was
restituted to former owners, and the process is practically completed. Consolidation of
land is encouraged by the new Land Lease Act, removing all previously existing
restrictions, and facilitating the development of an active land market with an increase
of the profitability in the sector.
Privatisation in the sector is almost completed with 72 percent of state assets in
agriculture and 90 percent of the assets in the food industry in private hands. The trade
and pricing policies are fully liberalised, and all government control on prices of
agricultural and food-products has been eliminated.
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A system of licensed warehouse receipts has been introduced to provide options for
further development of the grain market.
The introduction of the currency board brought stability that strongly contributed to the
return of confidence in the financial sector. The banking sector is highly capitalised and
relatively sound as a result of the strengthening of regulations and improved
enforcement. By mid-2000, five of the eight public sector banks have been sold to
private strategic investors, and negotiations for the sale of two more are at an
advanced stage.
Separately, conforming to the requirements for EU accession, the government's
strategy in the energy sector has the dual objective of developing its marketcompetitiveness, while improving financial discipline. A comprehensive restructuring
program, under which the government intends to conduct the privatisation of most of
the generation and distribution assets of the National Electric Company, has been
developed and is under implementation. The broad framework for restructuring is
provided by the new Energy Efficiency Act, which was adopted by parliament in July
1999.
3.2
Privatisation process in Bulgaria
In 1992 the Privatisation Agency was established in Bulgaria as an independent state
institution, responsible for the sale of large and strategic state-owned companies. The
agency is subordinated to the Ministry of Economy.
The Government has prepared a programme for the year 2001 in which the
privatisation of the state-owned enterprises is defined as a key element of the structural
reform. The programme plans to finalise in 2001 the privatisation of all state-owned
enterprises (more than 600) in the sectors of industry, construction, agriculture, tourism
and trade. The plan further states to initiate the preparatory stage of the privatisation of
certain facilities within the sectors of infrastructure and public services - energy, railway
transport, water supply and sewerage. Examples of privatisation are Balkan Airlines
and the shipyards in Rousse and Bourgas.
Between 1993 and 2000 stakes and shares in 4,222 enterprises were sold off. The
total financial result of this massive privatisation process amounts US$ 6,820 million,
including US$ 2,484 million negotiated payments, US$ 1,008 million in outstanding
liabilities and US$ 3,328 million of pledged investments. A major portion of the financial
result was generated from deals with foreign investors. By June 30, 2000 the
Privatisation Agency has finalised a total of 85 deals with foreign participants with a
total amount involved of US$ 2,712 million.
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21
3.3
Business environment in Bulgaria
The information in this paragraph is from a report published by the Bulgarian
International Business Association "BIBA White Paper on Foreign Investment - Issue
2001". According to the 2000 White-Paper substantial improvements to the
environment within which Bulgarian industry evolves can be noticed. The full version of
this document can be found on the CD-ROM, which accompanies this report.
Nonetheless, substantial scope for improvement remains, which could substantially
ameliorate the “business climate” and overall competitiveness of industry. Specifically,
possible improvement areas are:


Public-Private partnership / legislation drafting & implementation;
Quality/Productivity culture in industry;




Public Administration performance and education;
Transport sector technology and infrastructure;
Hastening privatisation/deregulation of the natural monopolies (i.e. utilities and
energy sectors);
Law implementation and enforcement;
Promoting investment (including FDI) in SME’s, based on a “Strategic Cluster
Strategy”;
Border crossing initiatives;

Post-privatisation control and facilitation.


1.
Public-Private partnership
There remains the need to improve public-private partnership. A means through which
such effect could be achieved is through the promotion of government recognised
“Industry Chambers – Branchovi Organizatsi”. The latter’s primary objective would be
to develop, promote and communicate sector strategy and policy, to the relevant
ministries and governmental structures, for approval and harmonisation to EU practice.
This approach would imply participation of industry representative organisations in the
drafting of legislation, in co-operation with government. Public-Private partnerships
should also be extended to seek means by which to stem the “brain-drain”, whilst
encouraging the education sector and industry to engage in a dialogue such as to
better co-ordinate education and employment policy.
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2.
Fostering a “World-Class” level, Quality/Productivity culture
The importance of improving quality and productivity of Bulgarian industry could be
“championed” by the ministry of economy through its sponsoring of a “Baldrige -type”
Industrial Quality and Productivity award, to “promote” excellence and world-class
practice within different sectors of the Bulgarian Industry.
3.
Public Administration performance
The government could define a program allocating significant sums of foreign aid
received towards improving the quality and customer-orientation culture of the civil
service. Also public administration should adopt in general “business-open” instead of
“administration- open” approach, i. e. not only to work on a legislative and theoretical
level but to be more practical/ linked to the reality and to offer more services to the
business itself.
4.
Transport Sector Technology and infrastructure improvements
The government could seek additional sources of external financing to improve the
technological condition of rail and port infrastructure. At the same time, a dialogue
should be engaged between major industrial users of BDG and BDG, to identify ways
in which the current state of poor repair and performance of the Bulgarian railways
could be addressed. The issue requires immediate attention in order for it to not affect
adversely the performance of industry at large. Closely related to railway infrastructure,
another issue requiring urgent attention is the state of affairs at Bulgarian ports and
harbours. Service, productivity (i.e. Bulk-cargo discharge rates) and overall
performance of ports and harbours requires urgent attention and improvement. The
lack of transparency as pertains to the process and procedures for tendering/obtaining
quay concessions must be addressed promptly.
5.
Legislation / Regulation implementation, enforcement and EU
harmonisation
In addition to the public-private partnership issues, another point of focus should be the
improvement of implementation/control and enforcement measures of legislation
protecting consumers and industries from unfair, covert or possibly hazardous
practices. Concrete examples, to be addressed on a priority basis are:

EU-harmonised GM control/segregation of cereals and subsequent GM content
food/feed labelling.
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23



(i)
(ii)
Necessary amendments to the Law on Narcotic Substances and Precursors such
as to not disturb the production operations and supply chain of large industrial
consumers/exports of Hydrochloric Acid and Sulfuric acid whilst still maintaining the
necessary level of control to prevent abuse.
Closely monitoring the import of foreign goods and services, to ensure that they are
"fairly" introduced into the Bulgarian market. Dumping and heavily subsidised
imports should be restricted, but only in those in cases where they will "unfairly
compete" against Bulgarian-made products. An illegal import / anti-dumping task
force, in constant contact with industry - through the respective associations,
should be set-up to investigate possible violations.
Addressing the existing problems related to the current form of pre-market control i.e. system of pre-market registration of goods of significance for Public health
(foods, household chemicals, cosmetics, paper products etc.). The existing process
constitutes a barrier to business development and competitiveness because:
The process is time consuming;
The criteria for registration are (in some instances) different from the ones laid
down in the EU regulations.
Registration of products which are freely marketed in the EU, sometimes require long
debates at the Ministry of Health (when these products do not comply with the current
BG ordinances). Although the government has declared it's willingness to amend
Public Health Law i.e. to cancel the old "pre-market registration system", and to replace
the latter with a "notification system" adopted in the EU, still the progress does not
seem to be fast enough. Some new draft ordinances (example: the one for cosmetics in line with EU Cosmetics Directive, which was elaborated in 1999) are not
promulgated because they are in contradiction with the "pre-market registration
system".
6.
Hastening the privatisation/deregulation of the natural monopolies
Urgently consider hastening the privatisation and de-regulation processes for electricity
and natural gas, allowing large industrial consumers to “shop” for lower energy costs /
improved service packages.
7.
Promoting investment and FDI in SME’s, based on a “Strategic Cluster
Approach”
The strategy could focus on those manufacturing/processing industries capable of
adding value to Bulgarian produced commodities, defined as “strategic industries” for
future GDP growth.
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4 May 2001
Part of the government’s future industrial/economic strategy should be to help
Bulgarian industry become less vulnerable to the global cyclical trends in commodity
prices whilst adding value-downstream, in Bulgaria. In line with this approach, a
program encouraging FDI in SME’s which could become reliable suppliers to “strategic
industry clusters” (such as metallurgy, oil/petroleum refining, starch industry, soda ash,
etc…).
The strategy could further be stimulated should the banking sector develop financial
products designed to address the financing needs of entire “industrial clusters”, linked
together through their value chains. This strategy could be an excellent tool to reduce
collateral risk and avoid the “domino-effect” threatening some industry clusters.
8.
Border crossing initiatives
The need to facilitate physical cross-border crossings remains a priority. In this aspect
mutual recognition (EU/Turkey, etc.) of certificates of quality / content remains a
priority, as well as reduction in border-crossing time. Bulgarian industry needs
improved “physical” access to export markets for its industrial products (food and Agroindustry in particular).
9.
Post-privatisation follow-up
The need remains for improving on the post-privatisation follow-up and facilitation. The
privatisation agreement commitments of several key companies in the
manufacturing/processing sectors are no longer “pertinent” within the current economic
context, 2-3 years post-privatisation, thus requiring restructuring in some cases. In view
of the expected forthcoming changes at the Privatisation Agency, it is important to not
omit from the “revamped” scope of the PA, the critical activity of post-privatisation
facilitation, including as a key activity within this scope, the restructuring of existing
privatisation contracts.
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25
4
TRANSPORT, INFRASTRUCTURE AND COMMUNICATIONS
This chapter is mainly based on the "National Strategy Transport Sector" from the
Ministry of Transport and Communications dated June 2000. The full version of this
document can be found on the CD-ROM, which accompanies this report. Some
information has been updated. Other information comes from "2000 Country
Investment Profile Bulgaria" from the EBRD. The section on communications is based
on this document.
4.1
Transport and infrastructure
The transport policy of Bulgaria is governed by the principles for the development of
the country, adopted by the Government and achieved as a result of a national
consensus. These policy directions are primarily geared towards membership of the
European Union and NATO, development of free market relations, democratisation of
the processes in the political, economical, cultural and social life of the people.
There are three main priorities in the transport sector:
 Harmonisation of national legislation and transport regulations with those of the
European Union Member States;
 Development of transport infrastructure;

A
Implementation of structural reform and privatisation in the transport sector.
Harmonisation of the national legislation and transport regulations with
those of the European Union Member States
The following laws have been passed or will be passed in the near future:



Civil aviation law – approved and in force since 1.01.1999;
Law on maritime spaces, inland waterways and ports of the Republic of
Bulgaria - approved and in force since 14.02.2000;
Road traffic law – approved and in force since 01.09.1999;

Road transport law – approved and in force since 17.09.1999;

Railway transport law – draft submitted for approval to the National Assembly;

Law for amendment of the Merchant Shipping Code - draft submitted for
approval to the National Assembly.
In the air transport sector the following Regulations are due to be passed: Regulation
for certification of aviation personnel, Regulation for certification and licensing of
aviation operators, Regulation for flight permissions, etc.
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27
The negotiations between Bulgaria and the European Commission for signing a
multilateral agreement for establishing European Common Aviation Area and for a
Protocol on the transitory measures to it have been finalised and signing is due in the
third quarter of 2000. The procedure for joining the revised Convention for
EUROCONTROL is in progress.
In the road transport sector a considerable number of Regulations complying with the
International rules and standards in this field will be passed. A draft Law for ratification
of the "International agreement on adoption of equal technical specifications for road
vehicles, equipment and components, permitted for installation and/or usage of road
vehicles", and "Conditions for mutual acknowledgement of formal approvals, issued on
the grounds of these specifications" (Geneva 1958) is under preparation.
Drafting of the following Regulations is in progress: Regulation on the type approval of
motor vehicles, Regulation on dangerous goods transportation, Regulation on extradimension and heavy road vehicles, etc.
The European agreement on occasional international transport of passengers by bus
(INTERBUS) has already been signed. In addition the Agreement between the
Republic of Bulgaria and the European Union on the conditions for road transport of
goods and for stimulation of combined transport has also been signed.
In the maritime transport sector a number of important European and International
Agreements have been ratified, for example the European Agreement on Inland
waterways and the International Convention on Sea Search and Rescue. The
introduction of a system for traffic control and management in navigation – VTMIS
(Vessel Traffic Management Information System) has already started. A number of
important Regulations are expected to come into force by the end of the year 2000.
These include the Regulation on transportation of dangerous goods, the Regulation on
the rules and conditions for issuing vessel documents, the Regulation on the regime of
navigation in inland sea waterways and in territorial sea waters etc. A Memorandum on
Port State Control between the Black Sea countries, similar to that in use in the
Mediterranean, will soon be ready for signature.
B
Development of transport infrastructure
Road network
The total length of the national road network is 37,288 Km. and the average density is
0.33 Km per square Kilometre (somewhat below the EU average). Approximately 90%
of the roads are with asphalt surface.
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Bulgaria has 324 Km of motorways, 3,011 Km of first grade roads, 3,818 Km second
grade roads, and 29,937 Km third and fourth grade roads. The most common are two
lane roads with overall width between 6.00 and 7.50 m.
Road building in Bulgaria is generally difficult and costly as some 40% of the country’s
territory is mountainous.
The social and economic difficulties suffered by Bulgaria coupled with a lack of finance
for road infrastructure has brought about a deterioration of the roads in general. More
than 28% of main roads are in very poor condition and these, together with the lower
grade roads, pose serious problems. The Implementing Agency "Roads", the national
department responsible for the planning, design, construction and maintenance of the
national road network, in co-operation with the Bulgarian Government, are working
vigorously to correct this situation.
The programme "Transit Roads" was started in 1992 with the financial help of the
European Investment Bank, the European Bank for Reconstruction and Development
and the PHARE programme. More than 600 km of first grade roads with intensive
traffic were rehabilitated under the programme "Transit Roads I". The reconstruction of
approximately 800 km of the main road network was catered for under the programme
"Transit Roads II", carried out between 1997 and 1999. This programme was directed
to the most heavily loaded sections in worst operational condition on the route of the
international roads and the Pan-European corridors.
The former General Road Directorate has already started the realisation of the
programme "Transit Roads III", which will cover the period 1999 – 2002 and cater for
more than 600 km of the main road network.
In addition to the rehabilitation of road surfacing, marking and signage, this Programme
envisages an increase in the load capacity of the road construction up to 11.5 tons per
axle for the sections with the greatest traffic density. After the completion of the third
part of the programme about 85% of the main sections of the road network will comply
with the European norms for quality, safety and loading.
At present the national road network is developing and modernising in line with current
policy of the Bulgarian Government for the development of trade and economic
relations with the neighbouring countries – Greece, former Yugoslavia, Romania and
Turkey. The process of improving the road transport connections with neighbouring
countries includes the following main activities:


opening new border crossings;
construction of new access roads or optimisation of the existing roads to the
standards corresponding to current and expected traffic;
D20010456.doc
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29

increasing category and capacity of existing border crossings.
The breakdown of the roads on the routes of the Pan-European corridors is as follows:
Pan-European corridor IV:
Section Vidin – Sofia - Kulata (Greek border)
Total length 446 Km, Including:
 two lane roads 352 km
 four lane roads 22 km
 motorway 72 km
Section Vidin – Sofia – Kapitan Andreevo (Turkish border)
Total length 558 Km, including:
 two lane roads 299 km
 four lane roads 17 km
 motorway 220 km
 motorway with one completed lane 22 km
Forthcoming rehabilitation measures and construction of new sections:
Rehabilitation 110 km
Construction of motorway sections 70 km
Pan-European corridor VIII (Gjuesevo-Sofia-Plovdiv-Burgas-Varna):
Total length 639 km, including;
 two lane roads 461 km
 four lane roads 35 km
 motorway 143 km
Forthcoming rehabilitation measures and construction of new sections:
Rehabilitation 76 km
Construction of motorway sections 285 km
Pan-European corridor IX (Ruse-Stara Zagora-Makaza/Svilengrad):
Total length 598 km, including:
 two lane roads 399 km
 four lane roads 56 km
 motorway 143 km
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Forthcoming construction works:
Rehabilitation 82 km
New construction 20 km
Construction of a tunnel under Shipka 2 km
Rail network
The railway network of Bulgaria consists of about 4,300 km railway lines, 4,055 km of
which is standard gauge (1,435 mm), the rest being narrow-gauge (960 mm). About
960 km (22% of the whole network) is double track and 2,640 km, about 61.4% is
electrified. The system includes around 400 full stations and 300 station halts. Freight
depots, container terminals and passenger stations would not be capable of dealing
with significant increase in traffic.
The major part of the railroad network is designed for speeds of 80 – 100 km per hour,
with only 150 km of the lines designed for speeds up to 130 km per hour. The
maximum speed allowed over the station switches is 100 km per hour, which in turn
limits traffic speed through the stations.
Weight of trains does not present any limiting condition. The overall weight of a train at
a speed of 80 km per hour is designated for each line between 560 and 1,900 tons. In
practice, the speeds are reduced by 10 – 20% because of poor traction rolling stock.
The signalling system in general conforms to European standards. The signalling
equipment used for the various lines is appropriate for the type of traffic, line capacity
and speed applying. Trains are fitted with radio and Automatic Train Protection is
provided on the primary routes.
Inland waterway transport
The River Danube is both a Bulgarian and an international waterway, regulated by a
number of agreements and conventions, preceding the many changes that have taken
place in Central and Eastern Europe. These regulations and conventions have had to
be revised and amended to deal with the changing circumstances, most notably that
relating to the Rhine – Main – Danube canal.
River transport is still not very significant, with total inland water transport accounting
for around 5 per cent of Bulgarian vessel tonnage. Goods loaded and unloaded in 1997
totalled 3.2 million tonnes at river ports, compared to 20.7 million at sea ports. There
are plans for significant modernisation of ports over the next few years.
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31
The two major ports on this water route are Ruse and Lom. The harbour of Ruse
comprises an intermodal terminal, serving the traffic to Germany and Ukraine, while in
the harbour of Lom there is a terminal of SOMAT (International Road Transport) for
catamarans travelling to Western Europe.
The Port of Vidin is the first large port along the Bulgarian section of the Danube River.
The port area and territory is between km 785+000 and km 795+000. The harbour has
three specialised quays for loading and unloading and 8 cranes, as well as direct
railway and road connections to the national transport network. The existence of a Duty
Free Zone beside the North harbour complex, gives an opportunity for development of
a harbour with the following types of combined transport: Ro–Ro Vidin–Passau, Ro–La,
train ferryboat Vidin–Calafat and automobile ferryboat Vidin– Calafat, together with
ferry transport between Vidin and Western Europe.
The Port complex of Lom has 13 berths, 26 electric gantry cranes with capacity of 5 to
20 tons, as well as other high performance back-up equipment. The port has vast open
and covered warehouses and handles domestic and international freight forwarding,
together with bulk, general and container cargoes.
The Port complex of Ruse
The Port of Ruse–East: The total length is 1,440 m with 10 separate berths and 16
gantry cranes. The open warehouse area is 27,270 sq. m and the covered warehouse
area is 4,042 sq. m. The Port has a Ro-Ro ramp, a ferryboat pontoon with a mobile
bridge, high capacity gantry and auxiliary equipment. It handles bulk cargo, containers,
automobiles, coal, etc. There is a connection with Ruse-North railway station.
The Port of Ruse–West: The quay front totals to 1,200 m, separated into 11 berths,
served by 12 cranes. This port handles mainly general cargo, chemicals, metals and
timber. It has 9,800 sq. m covered warehouse area and 26,140 sq. m open warehouse.
There is a connection with Ruse– west railway station.
The Port complex of Ruse includes also the ports of Svishtov, Somovit and, Tutrakan.
Sea transport
The two major seaports of Bulgaria – Varna and Burgas handle more than 60% of the
national foreign trade freight turnover. These ports have container terminals, Ro-Ro
equipment and many berths for different types of bulk and liquid freight. They are
spread over a substantial area and are connected with the railway and road networks.
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The Port of Varna
Ten years ago Varna was a major seaport, servicing trade with the former Soviet
republics, and its turnover was around 10 million tonnes a year. At present, the amount
of cargo is half as much. The drop in traffic and the obsolete equipment are major
problems for the port’s development. There are hopes that the involvement of big
foreign investors will help its revitalisation. Recent examples are the joint ventures of
the company Port Varna with the Belgian company Union Miniere and the Italian
Italcementi, both signed at the end of 1999.
The foreign companies have purchased manufacturing facilities in Bulgaria and
consider Varna as a suitable outlet for export of their production. Under the terms of the
joint ventures Union Miniere, together with the German company Oiltanking GmbH
Hamburg, and Devnya-based soda ash maker Solvay Sodi will build up terminals. In
return, Port Varna will give the two companies a quay on concession. The terminal will
cost DM 80 million. Italcementi’s project involves construction of a 7.5-kilometre belt
conveyor for transporting and loading cement, which will connect their plant with the
port. This investment is expected to total US$ 13 million.
The Port of Varna – East: Total length of the wharf is 2,072 m. The maximum depth is
36 feet. This port, with 13 berths, specialises in handling general freight, machines,
technical equipment, grain, and containers. The covered warehouse area is 24,000 sq.
m, the sites for open warehouses total 115,000 sq. m.
The Port of Varna – West: Total length of the wharf is 3,432 m.. The maximum depth is
33 feet. Specialising in handling bulk freight, general cargo, cars, timber, containers,
liquid fertilisers, clinker, etc. The total number of berths is 19 and 17 of these are for
loading purposes.
The Port of Burgas
Burgas is the other major Bulgarian port on the Black Sea. It has benefited in recent
years from increased trade flows to Western Europe. The location of the biggest
Bulgarian petrol refinery near the port has made Burgas the main oil delivery and
transit point as well. Lukoil is expanding its activities in the Port of Bourgas very fast.
Major investment projects are currently being implemented to build four new terminals
at the port, at a total cost of US$ 380 million. US$ 120 million of the funding is being
provided by Japanese finance.
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33
East Port: The length of the wharf is 1,965m and the maximum depth is between 24
and 33 feet. Total number of berths – 14, 10 of them are in operation. Covered
warehouse areas – 44,500 sq. m., open warehouse areas – 50,000sq. m. Vessels up
to 25,000 tons can be handled and there is direct connection with the road and railway
networks.
Bulk freight Port: Total length of the wharf – 750 m. with 5 berths. The maximum depth
at berths is 36 feet. Covered warehouse areas – 5 000 sq. m, open warehouse areas –
49 000 sq. m. It handles ships up to 60,000 tons and there is direct connection to the
road and railway networks.
West Port: The length of the wharf is 890 m and there are 6 berths. The maximum
depth at the berths is 36 feet. Covered warehouse areas – 11 000 sq. m, open
warehouse areas – 191 000 sq. m. It can handle vessels up to 40,000 tons with direct
connection to the road and railway networks.
Oil terminal: The length of the wharf is 300 m with 3 berths. The maximum depth at
berths is 24 – 25 feet. Capable of handling vessels up to 100,000 tons with direct
connection to the road network.
Lozovo: Covered warehouse-areas – 14,000 sq. m., open warehouse areas – 21,600
sq. m. No connection to the road and railway networks.
The ports of Varna and Burgas could attract substantial oil transit from the central
Asian republics, which see Bulgaria as a convenient shipping route to west European
oil markets. Recent meetings of Bulgarian officials with counterparts from Kazakhstan,
Uzbekistan and Azerbaijan have given shape to such projects.
Air transport
Bulgaria has 10 civil airports, four of which have international status. The other six
serve agricultural aviation. Air transport activity at the moment is concentrated in Sofia,
Burgas and Varna, which serve mostly international destinations.
Sofia Airport
The main Bulgarian airport is in the capital, Sofia. Some experts see “hub” potential in
Sofia due to its central location in the Balkans. There is a plan to develop and expand
Sofia International Airport with the capacity and modern facilities to deal with the
demand expected early next century. The project is expected to cost up to US$ 200
million and will involve the European Investment Bank and the government of Bulgaria.
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A renewed airport of Sofia was opened on September 4, 2000 after 9 months of
construction works. The International Departure terminal covers at present a total of
1260 sq. m with 19 check-in desks thus allowing 720 passengers per hour. The
enlargement of the transit and before boarding space allows the servicing of 1,400
passengers per hour, meeting the IATA criteria. The zones for security checks,
customs and passport control have been doubled in space. Two new luggage-handling
systems have been delivered by the German company Mannesmann.
The airport has one runway with artificial coating (asphalt/concrete) which is 2,800 m
long and 45 m wide. The Southern section of the airport comprises a main terminal,
government VIP terminal and technical stands with a total area of 288 144 sq. m. The
Northern section comprises a main terminal and front shed sites with a total area of
43,860 sq. m.
Runway and apron conditions at the airport are sub-standard. The present runway
length (2800 metres), surfacing and apron capacity are all limitations to future growth.
The shape, area and surfacing of the present aprons also prevent effective grouping of
operating, long-term parking and technical/maintenance stands.
Burgas Airport
The airport, with modern navigation equipment, has a runway 3,200 m. long.
Varna Airport
The airport has a 55-m wide runway, which is 2,500 m long and modern navigation
equipment.
C
Implementation of structural reform and privatisation in transport
The policy of the Ministry of Transport and Communications in the field of privatisation
is to keep the current share of state capital for a few companies only, depending on
their specific functions and obligations to the state, and according to the Constitution of
the Republic of Bulgaria and the relevant international agreements.
Road transport
All companies dealing with vehicle repairs and taxi transportation have already been
restructured and privatised, as have 89% of the companies for freight and mixed
transport.
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35
The Directorate General "Road Administration" has been established under the
Ministry of Transport and Communications. This directorate will be responsible for road
policy matters including licensing, relations with other countries, etc.
With the entering into force of the new Road transport law – on 17.09.1999 - the former
GRD (General Road Directorate) under the Ministry of Regional Development and
Public Works was transformed into the Implementing Agency "Roads" under the
Minister of Regional Development and Public Works. It will have responsibility for the
implementation of road infrastructure, including ISPA-financed projects. Its statute and
responsibilities are covered by the same law.
Railway transport
In accordance with the Law for the Bulgarian State Railways and Council Directive
91/440/EEC of 29 July 1991 on the development of the Community’s railways, it is
envisaged that only railway infrastructure (railway lines, electric network, stations, etc.)
will remain under State ownership.
The railway industry and other sections of the National Company "Bulgarian State
Railways", together with the commercial activities of railway transport, are subject to
privatisation. The transportation of passengers and freight is expected to be given
under concession after the new Law on railway transport has come into force. A draft
law, which has already been approved by the Council of Ministers, will set up the
Implementing Agency "Railway Administration".
The draft of the new Railway transport law has been submitted for approval to the
National Assembly. The law is a part of the reform undertaken for clear definition and
separation of the roles of the State and the railway enterprises and has incorporated
the key requirements of EU legislation in the field of railway transport. The entering into
force of the law on the 1 January 2002 will allow the complete separation of
infrastructure and transport operations, as well as the creation of all prerequisites for
allowing open access to the railway network.
To date 8 out of 13 railway enterprises have been privatised (concerned with rolling
stock repairs and construction, etc).
Air transport
The Implementing Agency "Civil Aviation Administration" has been established under
the Minister of Transport and Communications.
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4 May 2001
To date 87% of the aviation companies have been restructured. The national carrier,
Balkan Airlines, was sold to Israel’s Zeevi Group in July 1999. Zeevi paid US$ 150,000
for 75 per cent of the company’s shares and pledged to invest US$ 100 million in the
company in the next five years. US$ 20 million is to be invested in the first year, mainly
for the renewal of Balkan’s ancient fleet. After the purchase Zeevi Group selected
management consultant Speedwing, a British Airways subsidiary, to advise on the
restructuring and management of the newly acquired company. Balkan Airlines
handled most of Bulgaria’s international flights. Some have been suspended in recent
years due to a lack of suitable aircraft. Zeevi Group intended to restore many regular
flights, after hiring new planes. Domestic aviation is relatively unimportant. The Zeevi
Group apparently purchased Balkan Airlines to operate in Arab countries. This was,
however, only possible for a very short period of time. Now, Balkan Airlines is bankrupt
and its future is most uncertain.
The EU has assessed that the legislative harmonisation process in the field of aviation
has progressed satisfactorily. The new Civil Aviation Act entered into force in January
1999.
A number of smaller aviation companies are due to be privatised and the process of
privatising agricultural aviation has been fully accomplished. A procedure for a
privatisation of the company Hemus Air is already opened. Some assets of the civil
airports as well as some activities related to land servicing will be given under
concession.
Maritime transport
A step by step privatisation after restructuring is envisaged for non-core activities of the
shipping companies and ports. The separation of the qualification centre from the
"Navigation Maritime Bulgaria", plus separation and subsequent privatisation of the tug
fleet and the Bulgarian Register of Shipping are being progressed. It is proposed that
the ports will be re-structured and given under concession, either totally or in part,
which is provided for in the draft Law on marine areas, inland waterways and ports.
The Implementation Agency "Maritime Administration" has been established under the
Ministry of Transport and Communications as well as General Directorate "Port
Administration".
At present only 12% of the long-term assets scheduled for privatisation before end of
2000 are still left within the Ministry of Transport and Communications.
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37
4.2
Communications
Bulgaria inherited relatively high line density from the pre-transition period. Recent
investments increased further the fixed line telephone penetration from 31.8 lines per
100 inhabitants in 1997 to about 33.6 lines per 100 inhabitants in 1998. The quality of
the network is less advanced. The level of digitalisation of local lines was quite low
in 1998, at only 8 per cent. Digitalisation is more advanced for the international and
long distance networks, at 100 and 80 per cent respectively. Although mobile
telephone penetration has trebled during 1998, the level is still low at 1.6 per 100
inhabitants, leaving considerable room for growth.
A long-term programme of digitalisation has begun, primarily aimed at improving
business services. Its first phase, Project DON (Digital Overlay Network), was
completed in 1998, with assistance from the EBRD. This put in place a new
international exchange, 11 trunk exchanges and a number of local exchanges (all
digital), two optical rings, digital relay links and more than 100,000 new subscriber lines
with access to digital exchanges. A second phase of the programme is currently being
implemented, with the aim of broadening local line digitalisation.
The adoption of the new Telecommunications Law in 1998 introduced a liberalised
regime for activities in the telecommunications sector. All services were liberalised
except voice telephony and leased lines, which will be opened to competition on 1
January 2003. This is well in advance of the WTO commitment of 1 January 2005.
One major facet of the reconstruction remains - the privatisation of the national
telecommunications provider, BTC, which will finally remove the conflicts of interest
which are bound to exist in a mixed market environment with the State as policy maker
and regulator, and the State as telecommunications operator. Subsidiary to this, but
none the less essential to telecom development, is the award of a second GSM
license.
The Bulgarian Telecommunications Company (BTC) is in the process of privatisation.
The government is negotiating a deal with a consortium of OTE (Greece) and KPN (the
Netherlands). Under the deal, OTE-KPN would obtain 51 per cent in BTC, which has
a monopoly on fixed-line communications. The final outcome after long and many
discussions, however, has been the termination of the negotiations and the collapse of
the deal. The consortium would also receive 51 per cent of analogue cellular operator
Mobikom and a licence to establish the country’s second cellular GSM operator.
The launch of a second GSM service will mean that there will be two directly
comparable and directly competing service providers in the same market sector.
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The contest between the second licensee and MobilTel bids fair to be a significant
event in the development of the Bulgarian market economy. Examples from other parts
of Europe have shown that in general such competition provides a win-win situation for
all; the size of the telecom market increases, spurring on development elsewhere in the
economy, and market forces drive the introduction of the latest products and services.
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39
5
PRIORITIES FOR INVESTMENT BY THE BULGARIAN AUTHORITIES
5.1
Priority investments in transport infrastructure
The development of transport and transport infrastructure is one of the priorities set out
in the Programme of the Bulgarian Government. The implementation of Bulgaria’s main
objective – the accession to the European Union, NATO and the other Euro-Atlantic
structures - highlights the necessity for a national transport system comparable to a
European one.
According to an interdepartmental programme on the development of transport
infrastructure drawn up by the Ministries of Transport and Communications and of
Regional Development and Public Works 1,200 million Euro will be needed for
rehabilitation and construction of roads of national and international importance; 250
million for local roads; and 3,800 million Euro for other transport infrastructure projects.
This programme will create 15,000 jobs in the road construction industry. Projects
relating to the international transport corridors will be financed through loans (28%);
grants (21%); national budget (27%); concessions and BOT (build-operate-transfer)
ventures (13%); and own resources (11%).
The combination of an advantageous geographic location and Bulgaria’s determination
to achieve its objectives in joining the EU have committed the Government to
completing a number of projects along the routes of five of the ten Pan-European
Transport Corridors, as determined by the Pan European Conferences of Transport
Ministers in Crete (1994) and Helsinki (1997).
The participation of Bulgaria in the TINA project is a very important component of the
development of transport infrastructure. The starting point of the TINA process is the so
called TINA backbone network based upon the 10 Pan-European Transport Corridors
approved with some adjustments at the third Pan-European Transport Conference in
Helsinki in 1997. For this backbone network, construction costs have been estimated
on a common base using existing information and input from the TINA countries.
For the Republic of Bulgaria the TINA backbone network is defined and adjusted by
sections and transport modes on the base of the 5 Pan-European Transport corridors,
passing though the territory of the country (see the TINA network map). The cost of
aligning the backbone network in Bulgaria to EU standards has been estimated in the
TINA report at Euro 4,095 million, of which the road network accounts for Euro 2,165
million and the railway network Euro 1,930 million.
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41
To this has to be added the cost of aligning the "additional network components" for
both road and rail, as well as the estimated costs of developing to EU standards of
Bulgarian airports, seaports, inland waterways and combined transport terminals.
The following describes the main alignment of the five corridors crossing Bulgaria:
Trans-European Transport Corridor IV
Dresden / Nuremberg – Prague – Vienna / Bratislava – Budapest – Arad – Bucharest Constanta / Craiova – Sofia – Thessaloniki / Plovdiv – Istanbul
Trans-European Transport Corridor VII
The River Danube
Trans-European Transport Corridor VIII
Durres – Tirana – Skopje – Sofia – Plovdiv – Bourgas - Varna
Trans-European Transport Corridor IX
Helsinki – Saint Petersburg – Moscow / Pskov – Kiev – Ljubasevka – Chisinau –
Bucharest – Dimitrovgrad – Alexandroupolis
+ Kiev – Minsk – Vilnus – Caunas – Klaipeda / Kaliningrad
+ Ljubasevka – Odessa;
Trans-European Transport Corridor X
Salzburg – Ljubljana – Zagreb – Belgrade – Nis – Skopje – Veles – Thessaloniki
Branch A Gratz – Maribor – Zagreb
Branch B Budapest – Novi Sad – Belgrade
Branch C Nis – Sofia (Dimitrovgrad – Istanbul through corridor IV)
Branch D Veles – Prilep – Bitolja – Florina – Via Ignatia – Igoumenitsa
The Programme of Transport Sector Development also includes the construction and
development of:

Construction of a second bridge over the Danube linking Vidin with Calafat.


Sofia National Airport.
Restructuring, rehabilitation and modernisation of rail transport, including
reconstruction and electrification of railway Plovdiv - Svilengrad - Greek/Turkish
border.
Rehabilitation, modernisation and development of the national road network.
The construction of a grain terminal, a silos storage facility and the construction of
railway and road transport loading/unloading facilities in the port of Varna.


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

The construction of a roll on/roll off and container terminal on the island beneath
the Asparuh Bridge in Varna.
The construction of five terminals in the port of Bourgas: liquid cargo; bulk cargo;
general cargo; ferry boat and Ro-Ro; containers as well as new breakwaters.
The building and re-construction of the following terminals and facilities in Port
Rousse: zone for bulk cargo; container terminal; zone for general cargo handling;
repair complex for port machinery; container repair facility; grain terminal; zone for
custom bonded cargo handling; Ro-Ro terminal; DAEWOO terminal; transit riversea cargo zone; avant-port area; administrative and storage zone; storage zones.
Building and reconstruction of infrastructure and equipment in the port of Lom.

Construction of a container and combined transport terminal in the port of Vidin.


As a result of the adopted national transport policy for priority development of the
transport corridors and the already established fruitful co-operation between the
European Union and Bulgaria in the field of the strategic planning of the TransEuropean transport networks, significant experience was gained when determining the
national transport priorities in relation to the Pan-European corridors. Business and
master plans, pre-investment and feasibility studies, financial schemes for construction,
etc. for all major infrastructure projects in the country (including rail infrastructure,
roads, sea and river ports, Sofia and Bourgas airports) were prepared between 1992
and 1999. Projects for the rehabilitation of the Bulgarian State Railways and the
national road network were also prepared.
In this context, a large-scale study was financed under the PHARE programme and
with the participation of European consulting companies. The summing up document
for the planned development of the transport infrastructure of Bulgaria was produced
under the title "Forecasts and Investment Programs for the Development of the
Transport Infrastructure of Bulgaria for the period till years 2000 and 2010."
In accordance with the described priorities and principles for planning and construction
of infrastructure projects, the Government of Bulgaria has developed and adopted a
four-year Middle-term National Investment Programme for the period 1998 – 2001. This
Programme clearly determines the obligations of the State Budget for development of
the country’s overall infrastructure requirements, including the transport sector. There
are 25 Ministry of Transport and Communications projects approved in the National
Investment Programme. These have been allocated a total State budget contribution of
approximately Euro 480 million for the period 1998 to 2001 (this figure excludes other
possible sources of financing).
The transport part of the Programme consists of projects with multinational importance
situated along the Pan-European Corridors.
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43
The projects in the Programme and in the Strategy of the Ministry of Transport and
Communications for development of the transport infrastructure are listed with an
indicated ranking, according to their priority.
In addition to the Middle-term Investment Programme, the Ministry of Transport and
Communications has elaborated an Investment Programme for Development of the
Transport Infrastructure of the country, with 36 national investment transport projects
and the investments necessary for their construction till year 2015 (estimated total cost
of approximately Euro 4,890 million).
This programme includes the 25 projects covered by the Middle-term National
Investment Programme of the Government. The projects are in the field of railway,
combined, road, maritime (sea and inland waterways) and air transport. They are
primarily situated along the five Pan-European Transport Corridors passing through the
territory of Bulgaria. The funding for these projects will include investments by the State
budget and other financial sources such as taxes on liquid fuels, credits by the
international financial institutions, public-private and private concessions, and EU
financial instruments.
Included as well are the cross-border co-operation programmes with Turkey and
FYROM, to be launched in 2001. They involve 80 projects worth 408 million Euro in
total. By 2005 the Regional Development Ministry is planning to build sections of the
Trakia, Maritsa, Lyulin, Strouma and Hemus highways in order to complete the national
motorway ring, and to construct the Sofia-Nis transit road.
5.2
Companies offered for privatisation in transport and communications
Five projects for privatisation in the field of transport and communications in their
brochure "Privatisation in Bulgaria - Investment Opportunities"2:
Telekomplekt SP JSC
Activities: cable installation, radio and TV installation and internal installation of
communication equipment, services in the field of building mechanisation and
transport.
Location: Sofia.
2
This brochure is published by the Foreign Investment Agency; Privatisation Agency; Ministry of
Economy; Ministry of Regional Development and Public Works; Ministry of Transport and
Communications; and State Agency of Energy and Energy Resources.
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Bulgarian River Shipping SP JSC
Activity: cargo shipping.
Location: Rousse.
Bulgarian Sea Shipping SP JSC
Activity: cargo and passenger sea transportation.
Location: Varna.
Hemus Air SP Ltd.
Activity: air transportation.
Location: Sofia.
Zhelezopaten Complex SP JSC
Activities: commercial and forwarding services; passenger transportation; wholesale
commercial activity in industrial raw materials.
Location: Devnya.
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45
6
EXISTING DONOR ACTIVITIES IN BULGARIA
6.1
Bilateral donor activities
There are many bilateral projects in all sectors. Particularly, Germany and Italy are very
active in Bulgaria.
6.2
Multilateral donor activities
6.2.1
European Union
The major objectives of the support of the European Union to the Bulgarian transport
system are:

Opening of the Bulgarian transport system for EU member states and the
neighbouring countries.

Restructuring the transport sector in accordance with European standards and
market economy principles.
Development of infrastructure, technological modernisation, new investments.

This support is financed by different programmes:


Phare National Programme for the Bulgarian transport sector.
Phare Multi-country Transport Programme.

EU Cross-Border Co-operation Programme (CBC).
Through the Phare National Programme the European Union has supported mainly
investments in the overall development of transport in Bulgaria and infrastructure.
The Phare Multi-country Programme has funded above all pre-investment studies, staff
training, as well as some specific projects of upgrading border crossing facilities.
The CBC programme in its transport components aims towards the development of
communications with Greece currently the only EU member country neighbouring
Bulgaria, and Romania. The railway section from the town of Doupnitza to the southern
border is in the course of modernisation and new road links to Greece are being
constructed and rehabilitated.
In the period 1992-1999 Bulgaria has received under the Phare National Programme
about ECU 94 million. For the CBC Bulgaria Euro 86 million have been allocated.
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47
Some of projects financed under the above mentioned programmes are:

Reconstruction of the carriageway of Danube Bridge currently the only road link of
Bulgaria to Central Europe.

Modernisation of management of Bulgarian Railways Company and enhancing
safety (Euro 17 million).

Another large project of the Bulgarian railway infrastructure, which has been
completed, is the renovation of 64 km of railroad (Euro 20 million).

The upgrading of Doupnitza -Koulata railway under CBC programme (Euro 33
million).

Rehabilitation of part of the “Hemus” highway.

Transit Roads 1 Project (1995 -98) for the improvement of 750 km of roads with a
total amount of Euro 97.4 million. Of this, Euro 10.4 million has come from the
Phare Programme; Euro 35 million from EBRD; and Euro 31 million from the state
budget of Bulgaria.

Development of Sofia Airport (Euro 7.8 million).
Bulgaria expects to receive for the period 2000 -2006 up to Euro 420 million for the
development of transport infrastructure to be financed by the ISPA programme.
Six priority projects have been defined by the Bulgarian authorities for potential ISPA
funding:
1. Reconstruction, development and extension of Sofia Airport.
2. Rehabilitation of road sections along the route of the Pan-European Transport
Corridors - "Transit Roads III".
3. Reconstruction, electrification and upgrading of the railway line Plovdiv Dimitrovgrad - Svilengrad - Kapitan Andreevo for speed up to 160 km/h.
4. Construction of Danube bridge Vidin - Kalafat.
5. Construction of Ljulin Motorway.
6. Construction of Strouma Motorway.
Also the bilateral Phare programme in the sectors transport, infrastructure and
communications continues to exist. The following projects are planned in these fields:
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
Facilitation of Danube Border Crossing
Short-term assistance in the fields of assessment of the current situation of the
border crossing, harmonising of procedures and working practices, information
exchange and technical facilities.
Budget 300,000 Euro

Supervision of construction of the new border crossing road Makaza
Supervision services on the construction works of a new road 18 km from Podkova
to the Bulgarian-Greek border
Budget 2,000,000 Euro

Supervision of construction of a cut and cover tunnel between the check points
Ilinden and Exohi
Supervision of the construction works of a "cut and cover" tunnel on BulgarianGreek border along the direction Goce Delchev - Drama. The border crossing and
the checkpoint from the Bulgarian side are currently under construction.
Budget 500,000 Euro

Railway Organisation Restructuring – management development of the railway
infrastructure company
The Project shall provide assistance to the Bulgarian administration in the process
of separation of BDZ, the Bulgarian State Railways, and in the establishment of the
new Railway Infrastructure Company. The Project includes study and appraisal of
the current status of the Bulgarian railway restructuring, training of the
administration staff and also the development of the inter-organisational legislative
framework.
Budget 2,000,000 Euro

Transit Roads Rehabilitation Project III (TRRP III); Sections on Pan-European
Transport Corridors; Northwest and Central Region, Republic of Bulgaria
Transit Roads Rehabilitation Project III (TRRP III) is oriented to the most trafficked
and in bad operational condition sections along the main Pan-European Transport
Corridors.
The proposed under ISPA co-financed Project incorporates rehabilitation and
supervision of works to the I-5, A-2, I-6, and I-1 highways along the Pan-European
Transport Corridors No IV, No VIII and No IX. With the completion of the TRRP III,
in addition to the already completed TRRP I and II, it is expected that approximately
85 % of the primary road network of the country will be brought to an internationally
accepted standards of service.
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49

Erection of a Winter Camp For Winter Pass of 39 River Vessels, Navigating on the
Danube River within the Territory of Bulgaria
The first stage of the erection of the site includes a partial building of a vertical quay
gravitational wall with the relevant infrastructure: water supply and drainage
system, kiosk switch gear and a local site lighting system. The second stage
includes finalisation of the vertical gravitational wall (558 m) with the relevant
infrastructure to it: water supply and drainage system, local site lighting system,
telephony and vertical planning.

Construction of Waste Water Treatment Plants in the Maritsa river basin - Stara
Zagora, Dimitrovgrad and Haskovo
A.
Stara Zagora:
A.1.
New Stara Zagora wastewater treatment plant with secondary treatment
provided by extended aeration activated sludge process, capacity 60
200 m3 /d (ADF) or 268 000 p.e. and facilities for mechanical sludge
dewatering;
A.2
Intercepting collectors: 1.3 km (DN 800 – 2000);
B.
Dimitrovgrad;
B.1.
New Dimitrovgrad wastewater treatment plant with secondary treatment
provided by extended aeration activated sludge process, capacity 16
520 m3 /d ( ADF) or 62 300 p.e. and facilities for mechanical sludge
dewatering;
B.2
The new pumping stations (Tchernoconovo and Marino), capacities 100
and 500 m3 /h respectively;
B.3
Intercepting collectors and pressure mains for pumping stations, 5.5 km
(DN 200 – 600);
B.4
Secondary collectors for some 10 000 people of the left bank of Maritsa
river, 31 km ( DN 400), (Tchernoconevo 18 km, Vulkan 4 km, Marino 9
km). This infrastructure will provide for the connection of the left Bank
residential areas to the new wastewater treatment plant;
C.
Haskovo :
C.1.
New Haskovo wastewater treatment plant with secondary treatment
provided by extended aeration activated sludge process, capacity 25
740 m3 /d (ADF) or 101 000 p.e. and facilities for mechanical sludge
dewatering;
C.2
Intercepting collectors: 3.45 km ( DN 1500 – 2000)
Budget:
Total amount – EURO 61 413 182 for Stara Zagora, Dimitrovgrad & Haskovo
ISPA contribution – EURO 32 549 766 for Stara Zagora &Dimitrovgrad
EIB contribution – EURO 18 013 494 for Haskovo
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
Supervision of Waste Water Treatment Plants for 3 cities – Stara Zagora
Dimitrovgrad & Haskovo
The Employer’s Representative will observe and control the implementation and
completion of the construction work under FIDIC– Orange book, Design Build and
Turn Key.
Budget <4.3 million Euro; 7% of construction amount

Development of telecommunication infrastructure of the Bulgarian and Romanian
electricity companies for improvement of data exchanges between their
Dispatching Centres and UCTE
Identification of the best technical and financial solution for the improved
telecommunication infrastructure, the total investment cost and the technical
specifications of the necessary equipment to be procured for interconnection of the
power networks. Investigation on the data interface of both National Dispatching
Centres with the UCTE Accounting Centre and the technical and financial solution
for data communication with the Accounting Centre.
Budget 300,000 Euro

Strengthening the Regulatory Framework for Telecommunications
 Technical assistance to the State Telecommunications Commission for their
institutional review and development of strategic plan for institutional
strengthening;
 Support for the implementation of the adopted strategic plan.
Budget 1.7 million Euro
6.2.2
EBRD
The EBRD is pursuing the following objectives:
1. Enterprise sector
The EBRD will continue to promote privatisation, post-privatisation restructuring and
sound corporate governance of selected companies in the enterprise sector, through
both debt and equity investments. In the case of large enterprises, the EBRD will
continue to work alongside foreign strategic partners as well as with domestic
investors. Project selection will be oriented towards transactions that have clear
demonstration effects in order to promote the transition process to the largest degree
possible.
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The EBRD intends to support the development of small and medium-sized enterprises
in particular. Where possible, this will be achieved through further work with local
financial institutions, an increased focus on private equity funding and the provision of
term funding through general and sectoral credit lines to local banks. In addition, the
EBRD will also make use of the availability of funds under the joint EBRD-EU SME
Programme for Accession Countries.
2. Infrastructure
The EBRD will proactively support the rapidly growing interest by private investors in
the infrastructure sector, particularly in power generation, in telecommunications and in
certain municipal services. The future water concession and the district heating
projects with the Sofia Municipality should constitute landmark transactions. Besides,
the EBRD will also continue to provide selective sovereign-based support for crucial
sectors such as district heating, energy transmission and transport. Lastly, the EBRD
will continue to provide guidance on the restructuring of the energy sector.
3. Financial sector
The EBRD will assist in the completion of the restructuring of the financial sector by
taking a leading role in the privatisation of several of the remaining state-owned banks
responding to the needs of strategic investors. The EBRD’s involvement will be aimed
at improving regional networks in Bulgaria and will help attract strategic investors and
strengthen corporate governance. At the same time, the EBRD will actively manage its
current portfolio of equity investments to increase shareholder value. The EBRD will
also support pension reform efforts by strengthening institutional capabilities in
managing voluntary private pension funds and will consider targeted measures to
promote the still non-existent local capital market.
List of projects as per December 31, 2000
Private industrial sector
Danone-Serdika
In March 1994, the EBRD made an equity investment of €1.2 million in DanoneSerdika, a joint venture between Danone and Serdika-Sofia. Danone-Serdika is
Bulgaria's leading yoghurt manufacturer and is the country's first privatised dairy
company. The Bank's investment has contributed to the upgrading and modernisation
of the existing product line and equipment, with a view to improved quality and a longer
shelf-life for existing products, as well as the launch of new products. Two subsequent
capital increases for a total of €2.7 million were subscribed by the EBRD.
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Delta Dairy
In December 1994 the EBRD made an equity investment of USD 3.4 million in Delvi-P,
an ice-cream production joint venture sponsored by Delta Dairy SA, a leading Greek
dairy products manufacturer. Delvi-P is a joint venture between Delta, Vitalact (former
state-owned dairy recently privatised by Delta) and Lb Bulgaricum (a Bulgarian yoghurt
research and production company). The proceeds of the EBRD investment were used
to expand Delvi-P's existing ice-cream production capability and install new production
lines. Delvi-P is EBRD's first successfully completed and repaid private sector
operation in Bulgaria.
AsteraIn
October 1996 the EBRD made a loan of USD 10 million to Astera AD, a leading
Bulgarian personal care products company, which acquired Aroma AD in a privatisation
transaction, a long-standing Bulgarian producer of cosmetics and personal hygiene
products. The proceeds of the loan have supported the privatisation and modernisation
of Aroma. This was EBRD's first private sector industrial transaction with a 100 per cent
Bulgarian owned company.
Storco
In October 1996 the EBRD extended a USD 8.25 million loan and made an equity
investment of USD 1.75 million in Storco AD, one of Bulgaria's largest fruit and
vegetable processing companies. The funding was provided to finance Storco's postprivatisation investment programme, including the upgrading of its food-processing
facilities, restructuring of its operations and the improvement of its raw material
supplies. Storco was privatised in November 1995 through the sale of 80 per cent of its
share capital to Luxcraft Trading Ltd, a holding company owned by the Geller Group
(Israel).
Solvay-Sodi Devnya
ADIn June 1997, the EBRD made an equity investment of USD 40 million to facilitate
the privatisation and modernisation of Varna based Sodi Devnya AD, a world-wide
leader in the production of soda ash. The privatisation transaction was one of the
largest ever signed by the Bulgarian Government. The project sponsor is Solvay SA, a
Brussels-based international chemical and pharmaceutical group. Solvay-Sodi's
management is implementing a USD 66.5 million five-year investment programme,
including follow-up privatisation of three major suppliers in the Devnya region Thermo-Electric Power Plant Devnya, the Lisitchevo Limestone Quarry and the Geosol
salt mine.
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53
Domaine Boyar
In June 1998 the EBRD approved a €25.9 million syndicated loan for Domaine Boyar
AD to fund the modernisation and expansion of the production facilities of two existing
wineries and the construction of a third greenfield winery in the town of Sliven. This
was EBRD's first commercial co-financing transaction in Bulgaria. The financing
consists of an € 18.6 million loan from the EBRD and an € 9 million loan from ING
Bank. The EBRD has also committed a € 2.2 million equity investment in the company.
Celhart
In November 1998 the EBRD approved a USD 13.9 million loan and USD 1.5 million
equity investment for Celhart AD to fund the modernisation and expansion of the pulp
and kraft paper production facilities at the plant in Stamboliiski. The project sponsor is
the Isiklar Group from Turkey, a major player in the paper sack industry. To enlarge the
factory capacity, a follow-up investment of USD 10 million was approved in May 2000
(adding up to a total cost of the project of USD 75 million). The financing of the project
has been undertaken jointly and on equal terms with the IFC.
Foodstores (Ramstore) Bulgaria
A loan of USD 12.8 million to Ramstore Bulgaria A.D., a wholly owned subsidiary of the
Turkish retailer Migros Turk T.A.S in June 2000. The EBRD's loan will finance the
construction of a chain of hypermarkets and supermarkets across the country,
improving the efficiency of the local food distribution sector. The total project cost will
be USD 36.5 million. Migros Turk T.A.S is the largest retailer in Turkey.
Sofia Water Concession
EBRD extended a €31 million loan to Sofijska Voda AD, the country's first privately
managed water and wastewater company, under a project to improve the water system
of Bulgaria's 1.2 million people capital. The water and wastewater concessionaire
company is majority owned by International Water UU (Sofia), whose ultimate parent
companies are Bechtel Enterprises Holdings, Inc., Edison SpA and United Utilities plc.
The loan supports the utility company's capital expenditure programme for the first five
years of the concession, as well as various financing and start-up costs. Initial
investments concentrate on the rehabilitation of the water and sewerage networks to
reduce leakage and infiltration and improve continuity of supply.
Rila Solutions
In December 2000 the EBRD participated in the second round of financing of Rila
Solutions, an internet and wireless solutions company founded by George Soros and
BTC in 1998, through a USD 3 million equity investment providing the rapidly growing
company with essential early-stage capital.
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As a result of EBRD's assistance and participation, Rila Solutions raised a total of USD
9 million from the EBRD and other investors, including ARGUS Capital Partners, a
private equity fund, in this round of financing. The proceeds from this investment will be
used to support the growth of the Company by attracting top engagement managers in
the key West European and US markets. Rila Solutions is the first EBRD investment
supporting the development of the high-tech sector in Bulgaria.
Financial sector
International Commercial Bank (formerly Bulgarian Investment Bank)
The recently renamed International Commercial Bank (Bulgaria) is a private sector
investment bank established to provide corporate finance services and medium to longterm loans to small and medium-sized private sector companies.
The Bank was founded in 1994, with EBRD holding 46% of the shares. The other
shareholders were five Bulgarian commercial banks and BNP. In 1995, the Commercial
Bank of Greece was attracted as a strategic sponsor and assumed management
responsibilities for BIB in 1996. Currently the EBRD owns 8% of the share capital.
BNP-Dresdner (Bulgaria) Bank
In September 1995 BNP-Dresdner (Bulgaria) Bank was opened in Sofia, a joint venture
between France's Banque Nationale de Paris and Germany's Dresdner Bank, each of
which holds 40 per cent of the capital. The remaining 20 per cent is held by the EBRD.
The bank specialises in trade and corporate finance, offering financial services to
international and Bulgarian companies. A total of € 4.9 million was invested by the
EBRD.
Caresbac
In October 1994 the EBRD signed a USD 4 million equity investment agreement with
the investment company CARESBAC-Bulgaria. The company is owned by Small
Enterprises Assistance Funds (SEAF), at 65.8% and EBRD (34.2%). CARESBACBulgaria focuses on supporting SMEs through equity investments, mainly in agriculture,
food processing and light manufacturing, with an emphasis on the export sector. The
Fund is targeting the low end of the investment spectrum with investments of USD
50,000 - 250,000. The Fund has a portfolio of 23 investments at a cost of USD 6
million.
Euromerchant Balkan Fund
Euromerchant Fund is a venture capital fund established to invest primarily in small
and medium-sized Bulgarian and Romanian joint ventures with foreign companies and
promising medium-sized local companies. With a participation of USD 8.3 million, the
EBRD is a lead investor in the USD 27.3 million fund. Global Finance SA, the fund
manager, is a Greek financial services company.
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The Project Sponsor is the Athens-based EFG - €O Bank. IFC is also an investor in the
fund. The fund is fully invested and has committed USD 23 million in 11 investments, 5
of which are in Bulgaria.
First Investment Bank
In October 1996 the EBRD signed an agreement with First Investment Bank (FIB), a
private Bulgarian bank for a credit line of USD 6.5 million (since fully repaid) for onlending to small and medium-sized enterprises. In the first quarter of 1997 the EBRD
acquired a 20 per cent equity stake of FIB in the form of a capital increase to facilitate
the availability of financing to SMEs. Additionally, in August 1999, the EBRD arranged
a €13 million syndicated loan for FIB, comprising an A-Loan portion of €5.0 million for
the EBRD's own account and a B-Loan portion of €8.0 million for the account of
commercial banks. The transaction represented the first financial sector operation in
the region following the end of the Kosovo crisis.
United Bulgarian Bank
UBB was established in 1993 through the consolidation of 22 local banks, largely spinoffs from the Bulgarian National Bank. UBB is a full service universal commercial bank.
It was the first large Bulgarian bank to be fully privatised in mid 1997. EBRD took a
35% participation along other institutional shareholders. The privatisation deal was
concluded together with Bulbank (acquiring 35% of UBB) and AIG New Europe Fund
(30%). In June 2000 the majority stake of 90% of UBB was sold to the National Bank of
Greece, EBRD has kept a 10% stake.
Black Sea Fund
The EBRD invested USD 20 million in the Black Sea Fund (BSF), which closed in
August 1998 with total capital commitments of USD 62 million. BSF is a follow-on fund
to the Euromerchant Balkan Fund, which is fully invested. The core countries in which
BSF will invest are Bulgaria, Romania, Ukraine and southern Russia (with a possibility
to consider opportunities elsewhere in the Balkan and Caucasus regions). BSF will
provide much needed equity capital to local small and medium sized enterprises and
will promote the formation of joint ventures thereby facilitating foreign direct investment
in the Black Sea region.
Post Privatisation Fund
A joint project between the EBRD and the European Commission, signed in December
1997. The EBRD committed €30 million for direct equity investment in medium size
private or privatised enterprises with good growth perspectives across the entire
industrial sector. The size of individual investments is in the range of € 1 to 3 million.
Additional equity of €10 million is provided by the Fund Manager, Europa Capital
Management AS (Czech Republic).
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The BPPF is complemented by a technical assistance grant of €15 million provided by
EU Phare, mainly for pre-investment due diligence and post-investment support. As of
31 December 2000, the Fund had made six investments for €14 million, of which EBRD
invested €10.3 million. Investee companies are active in food manufacturing, medical
supplies, IT, micro-electronics, packaging and wine.
Grain Receipt Programme - SG Expressbank
Together with other institutions, the EBRD has worked closely together with the
Bulgarian Ministry of Agriculture in developing and enabling lending agricultural
producers against warehouse grain receipts. On the 26 of July 1999 the EBRD signed
a Memorandum of Understanding with the Ministry of Agriculture, through which the
Bank makes available up to DEM 50 million to Bulgarian commercial banks for a period
of up to 4 years, to be on-lent yearly to agricultural producers against warehouse grain
receipts. On the same day, the Bank signed the first loan agreement under this
framework with SG Expressbank for an amount of DEM 10 million, which was renewed
on 30 June 2000. Warehouse receipts will enable farmers to borrow against their grain,
using warehouse receipts as collateral. This will provide commercial banks with a safe
and easily enforceable mechanism for financing the agricultural sector.
IØ Fund: B&C Bulgaria
The IØ Fund is a Danish Government Sponsored Developing Financial Institution
which co-finance JV projects in the CEE countries with Danish JV sponsors. EBRD is
to co-finance the projects put together by the IØ Fund, mainly of SME's.
Under the co-financing facility, EBRD has made one investment in Bulgaria, which is in
B&C Bulgaria - a company that produces women's knit clothing. It is a joint venture with
GERA, a Bulgarian company and BC, a Danish private company.
Trade Facilitation Programme
The Trade Facilitation Programme includes a range of products aimed at facilitating
intra-regional and international trade of the countries of operations, consisting of (i)
EBRD guarantee facility, allowing confirmation of trade finance instruments issued by
client banks without cash collateral, and (ii) possibly, short-term pre-export advances to
client banks. International Commercial Bank (Bulgaria) was the first beneficiary of this
facility in Bulgaria. EBRD has signed agreements for Trade Facilitation Financing with
International Commercial Bank and United Bulgarian Bank.
Bulgarian Insurance Group
In December 1999, the EBRD signed a US$ 5.15 million equity investment in TBI
Holding, a joint venture between Kardan Ltd of Israel and Deutsche Bank private
equity. The company will invest in and actively manage insurance and pension fund
management companies and health insurance funds in Bulgaria. It holds controlling
stakes in Pension Fund Doverie and Bulstrad Insurance and Reinsurance Plc.
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57
The project promotes the development of capital markets in Bulgaria, contributing to
the implementation of comprehensive pension reform. In December 2000 a new
investment with the same sponsor was made to fund similar initiatives at a regional
level, expanding the funding available to the Bulgarian project to US$ 9 million.
Small and Medium-sized Enterprises Facility
Union Commercial Bank (Unionbank) was the first bank in Bulgaria to benefit from a
dedicated SME finance facility launched in 2000 by the EBRD and the European
Commission. The signed €3 million credit line aims to promote the growth of Bulgaria's
small and medium-sized enterprises (SMEs). Unionbank has also received a
substantial technical co-operation package aimed at developing its SME lending
programme, as well as a grant to help cover the costs of building this business, both
funded by the European Commission's Phare programme.
Bulgarian Tourism/SME Credit Line
In July 2000 EBRD signed USD 5 million credit line with the Bulgarian-American Credit
Bank. The Line will facilitate investments in the Tourism and SME sector. The credit
line was extended at a very crucial moment of the Bulgarian tourism sector
development, when almost all the industry has been privatised and financing is needed
to improve the quality of the service offered, thereby making Bulgaria a preferred place
for tourism.
Public infrastructure sector
Maritza East II Power Station
In June 1992 the EBRD provided credit of €39.5 million for construction work at the
Maritza East II power plant. The loan was to help finance the completion of a lignitefired generation unit and the retrofitting of sulphur dioxide removal equipment to comply
with environmental legislation. The total cost of the operation was €114.0 million,
including the project components financed by the European Investment Bank and the
National Electricity Company of Bulgaria.
Eurovision
Bulgaria was one of 15 central and east European countries to benefit from the
extension of the Eurovision network. In July 1992 the EBRD granted credit of €12.0
million to help finance the design, supply and installation of earth stations in the
countries, thus enabling them to be linked to the Eurovision network by satellite. Each
country borrowed €0.9 million for the partial financing of one transmit-and-receive earth
station.
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Bulgarian Telecommunications Company
In September 1992 the EBRD approved a loan of €32.0 million to Bulgarian
Telecommunications Company (BTC), the national telecommunications operator. The
loan was designed to finance the modernisation of Bulgaria's telecommunications
facilities, including the installation of nearly 100,000 line units of switching capacity in
large cities throughout the country, a transit network inter-linking them, and new earth
station and international gateway facilities. The total project cost was €187 million, cofinanced by the European Investment Bank, BTC and other sources.
Bulgarian Transit Roads
This major road construction project involved completion of a 32 kilometre section of
the Trans-European Motorway between Plovdiv and Orizovo as well as improvements
to some 800 kilometres of primary roads serving regional and long-distance transit
traffic. The EBRD loan totalled €38.9 million, with an in-kind contribution from the
Government of Bulgaria and a further loan from the European Investment Bank making
up the total project cost of €95.7 million.
Bulgarian Railways Restructuring
With co-financing from the World Bank, export credit agencies (ECAs) and EU Phare,
the EBRD has contributed USD 45 million to a major railway restructuring project. The
ECA financing (USD 12.0 million) was organised by the EBRD, and is for track renewal
machines, with the Bank financing 40 per cent of the corresponding contracts. The
EBRD is also financing a turnkey project for coach rehabilitation, equipment for
workshops and locomotive parts. This was the first loan under the EBRD's export credit
loan arrangement programme (ECLAT).
Bulgarian Wholesale Markets
In December 1995 a loan agreement was signed to finance the construction and
rehabilitation of modern agricultural wholesale market facilities designed to provide
competitive outlets for private sector suppliers and traders of fresh agricultural
products. In order to facilitate implementation, this project was redesigned in 1999 and
reduced in scope. A new loan agreement (replacing the existing one) was signed on
the 5th August 1999 for USD 10 million. The new project will cover the construction of
up to four markets in Bulgaria.
6.2.3
World Bank
Since Bulgaria joined the World Bank in 1990, Bank assistance to the country has been
aimed at fostering sustainable development and economic growth by investing in
physical and social sector infrastructure, and by accelerating structural reforms and
rapid development of the private sector.
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59
In parallel, Bank-financed activities have been addressing poverty through
improvements of the social safety net and other social sector programs. The most
recent addition to the social sector portfolio is the Health Sector Reform Loan (US$63.3
million) designed to stop deterioration of the population's health.
World Bank lending to Bulgaria to date comprises 23 operations for a total original
commitment of US$1.44 billion, including 9 adjustment operations (US$850.8 million),
13 investment loans (US$580 million), and a Bank-managed Global Environmental
Facility (GEF) grant for US$9.9 million. The infrastructure projects continue to hold the
biggest share of the active portfolio (excluding adjustment operations)--almost 78
percent--all approved before 1996. Portfolio development in recent years indicates a
shift in priorities toward the social sector, now amounting to 17 percent of commitments
in active operations. Support for the agricultural sector and in the field of environmental
remediation and protection accounts for some 5 percent of the total active loan
portfolio.
The World Bank is presently not involved in many projects in the fields of transport,
infrastructure and communications. The World Bank is implementing transport and
trade facilitation projects in Bulgaria and projects focussed on improving border
crossings and customs facilitation. The total budget of the project is US$ 12.5 million
(US$ 7.4 million IBRD loan; US$ 1.5 million grant from US Government; US$ 3.6
million contribution Bulgarian Government). The project will cover: (i) elements of
Customs Administration Institutional Reform (US$0.9 million); (ii) support to the
private sector via training and provision of information (US$0.5 million); (iii) participation
in a regional experience sharing program on integrated systems for border agencies
(US$0.1 million); (iv) improvement of border crossing facilities (US$10.5 million); and
(v) services to implement the project and the program (US$0.5 million). This is part of a
wider programme for the whole Balkan area in Southeast Europe.
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7
MARKET OPPORTUNITIES PER SUB SECTOR
For the identification of market opportunities following sub sectors have been covered:



Freight transport.
Public passenger transport.
Transport by mode; air, water, road, and rail.


Public works and water management.
Telecommunication, postal services, information and communication technology.
Criteria for the assessment of market opportunities for Dutch enterprises:




There is a need for (additional) technology and know how, which the Dutch industry
can supply.
The Netherlands should have an international competitive advantage (Competitive
edge) in this technology or market.
Investments from the Dutch enterprise are likely and most probably effective.
There should like to be a promising spin-off for other enterprises.

There is likely to be a growing market (potential), not or hardly depending on
Government budgets or spending.

Projects in this sector should be able fit within the PSO+ framework and meet the
PSO+ criteria and requirements.
Identification and assessment of market opportunities in Bulgaria
Based on the criteria mentioned above an assessment has been made of the different
sub sectors for possible PSO+ projects.
This does not necessarily mean there are no sound business opportunities in the sub
sectors indicated as “no key area” for PSO+. In some sectors the level of investment
required is very high, whereas it appears difficult to develop a pilot project. In some
sectors Dutch supply or interest is inadequate or not available (e.g. public transport
operations). In other sectors the supply will have a one-off character (tender system),
and durable business relations will be unlikely.
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61
Sector
Road transport
Goods / Freight
Reasonable opportunities in distribution
services, conditioned transport and
heavy transport
Passengers
Bus operations city and
intercity: no key area.
Conditioned transport of perishable
products.
International bus lines; no
key area.
Towing services and service stations.
Reasonable opportunities in international
transport, following economic
development.
Bonded warehousing, VAL services and
regional distribution.
Tank cleaning and chemical waste
management.
Leasing facilities for commercial vehicles.
E-commerce and business planning.
Supply industry
Design, manufacturing and marketing of
trailers, semi-trailers, tankers and special
vehicles.
Manufacturing of buses
(sub-urban and intercity).
Manufacturing of tanks for fuels, liquid
gas and chemicals for the automotive
sector
Manufacturing of cable beams for
automotive industry.
Production of on-board computers for
commercial vehicles.
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Transport by rail
Opportunities for forwarders;
no key area
Government controlled;
no key area
Supply Industry
Manufacturing of railway components.
Manufacturing railway
components
Automation railways and traffic systems.
Automation railways and
traffic systems.
Not relevant
Inland water
transport
Not applicable yet.
Supply industry
Navigation communication and safety
systems; no key area.
Sea transport and Based on present performance; no key
ports
area.
Supply industry
Air transport
Supply industry
Public works &
water
management
Maritime communication and safety
systems.
Opportunities in forwarding and storage
activities.
.
Airport maintenance.
Massive investments planned in road
construction and maintenance;
Opportunities in supply of modern road
building machinery and technology.
Water management and distribution in
Plovdiv. Design of water distribution
systems; no key area.
Telecommunicati
on and ICT
Postal services
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4 May 2001
Production of measuring devices (metres)
for water and gas.
Manufacturing and application of optical
fibre cable technology.
Development integrated postal services.
63
Key areas for PSO projects
Provision of integrated logistics services (bonded warehousing; high-quality physical
distribution; tank cleaning). Manufacturing fuel tanks. Production and assembling
(semi-) trailers. Manufacturing of buses.
Road construction technologies (equipment and materials).
Conditioned transport of perishable products.
Business opportunities / project ideas identified for Dutch enterprises
In spite of the fact that government influence and interference in the market economy is
still present in Bulgaria, the ongoing privatisation of the industrial sectors in
combination with the huge market potential offers increasingly sound business
opportunities.
The PSO programme for Bulgaria is and will prove to be very effective in view of the
stage of economic and institutional development of the country. The sectors transport,
in particular road transport, road infrastructure as well as agricultural production and
distribution offer many opportunities to Dutch enterprises, which we have summarised
below more specifically.
It should be noted that project ideas as listed below do not necessarily qualify as PSO+
project.
Road transport (freight)



Reasonable opportunities in distribution services, conditioned transport and
heavy transport.
Conditioned transport of perishable products.
Towing services and service stations.

Bonded warehousing, VAL services and regional distribution.


Tank cleaning and chemical waste management.
Leasing facilities for commercial vehicles.



E-commerce and business planning.
Design, manufacturing and marketing of trailers, semi-trailers, tankers and special
vehicles.
Manufacturing of tanks for fuels, liquid gas and chemicals for the automotive sector.


Manufacturing of cable beams for automotive industry.
Production of on-board computers for commercial vehicles.
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Road transport (passengers)


Production of intercity buses and coaches in Omürtag.
Production of sub urban buses for Sofia.
Ports and maritime transport

Maritime communication and safety systems.
Air transport

Airport maintenance services Sofia International Airport.
Public works and water management


There are various opportunities for co-operation in the sector maintenance and
construction of roads, especially in the field of supply of road construction
machinery and technologies and transport equipment.
Water distribution systems in Plovdiv. Production of measuring devices for water
and gas.
Telecommunication

Co-operation and investment in optical fibre connection.
Postal services

Development of integrated postal services.
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65
8
DUTCH BUSINESS OPPORTUNITIES IN BULGARIA
1. Co-operation in the design, manufacturing and marketing of trailers, semitrailers, tankers and special vehicles
Recipient:
“PRK” S.A.
9300 Dobritch, 66, rue Kaliakra
Tel: +359 58 25466
Business activities:
Bulgarian company producing trailers, semi-trailers,
containers and some specialised vehicles such as
garbage collectors. PRK is the only trailer producer in
Bulgaria supplying homologated trailers. Their capacity is
10 (semi-) trailers per month, 400 employees and staff.
Purpose of the project:
Explore and define technical and economical feasibility of
joint production and marketing of semi-trailers, tankers
and/or special vehicles for Bulgarian and export markets.
Possible Dutch partners:
Trailer manufacturer, component suppliers, manufacturer
of special vehicles.
Hardware:
Transport equipment (pilot), manufacturing equipment.
Technical assistance:
Technical training, Organisation, Marketing.
Possible results:
Assessment of manufacturing capabilities and
technologies applied, assessment of (future) market
potential and opportunities, exploring areas of cooperation (design, manufacturing, marketing,
components, etc.), feasibility, business plan. Spin-off:
financial participation. Co-operation with truck distributors
(sales, service).
Business environment:
Competition from imported high quality, but relatively
expensive products. Financing can be problematic on the
short-term (high interest rates). Dobritch is in Free zone
area.
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67
2. PRK to co-operate with Dutch specialist in renting / leasing / trading in
special vehicles for municipality services
Recipient:
“PRK” S.A.
9300 Dobritch, 66, rue Kaliakra
Tel +359 58 25466
Business activities:
Bulgarian company producing trailers, semi-trailers,
containers and some specialised vehicles such as
garbage collectors road sweepers, firefighters.
Purpose of the project:
Define feasibility of sustainable co-operation with Dutch
specialist company through marketing and supply of
equipment and services to the private and public
companies active in municipality services in Bulgaria.
Possible Dutch partners:
Specialist supplier of municipality servicing equipment like
Street sweepers, compactors, fire-fighters, etc. or:
Supplier of municipality services.
Hardware:
Pilot equipment (special superstructures or dedicated
trucks), maintenance equipment.
Technical assistance:
Repair and maintenance of special equipment, Marketing,
improving organisation. Training in waste handling.
Environmental aspects.
Possible results:
Production and supply of Bulgarian built (assembled)
special vehicles and equipment for municipality services.
Marketing organisation for such services, feasibility study,
business plan, leasing options.
Business environment:
Municipality services companies/departments are in the
process of being privatised. Procurement of specialist
equipment is often problematic due to lack of financing
possibilities. Leasing based on municipality contracts is
an option. Full operational lease when the market is
mature. Bulgaria has an adequate legislation for leasing
or rental operations.
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3. Co-operation in the field of high quality tanks for fuels, liquid gas and
chemicals for the automotive sector and fuel/gas distributors
Recipient:
Termotechnika - JSC
4004 Plovdiv, 136 Bratia Bakton str
Tel: +359 32 766 135
Fax: +359 32 767 153
Business activities
The company has almost 30 years of experience in the
production of thermo-technical equipment.
Main products:
 Tanks for fuels and liquid gases up to 50 m3 capacity
for underground and ground storage of liquid fuel
according DIN 6608.
 Complete local heating installations.
 Combustible systems for boiler installations.
 Water preparing equipment for boiler installations.
 Water-pump and compressor stations.
 Heat exchangers and tanks working under pressure.
 Equipment for boiler installations.
Purpose of the project
Co-operation in the production, marketing and supply of
high quality tanks for fuels, liquid gas and chemicals.
Possible Dutch partners
Especially the production of tanks for fuel and liquid gases
for petrol and gas stations could be of interest for Dutch
investors.
Oil industry, constructors of petrol and gas stations, LPG
equipment suppliers, tanker producers, etc.
Hardware:
Supply of production equipment, tools and testing
equipment
Technical Assistance :
Training production systems and methods
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69
Possible results:
Assessment of output quality level. Assessment of market
potential. Production of high quality tanks. Component
supply. Business plan. Technical and financial feasibility
studies.
Business environment:
The growing use and storage of liquid fuels and chemicals
requires high quality equipment according to European
standards.
4. Quality improvement of agricultural products through implementation of new
technologies and conditioned transport
Recipient:
Subsidiary company of Pro Business (Ruse region).
Business activity:
Production and selling of mushrooms for the national
market. They presently have a national market share of
30-40%. The mushrooms are being grown in 10 natural
caves. The company uses its own transport means. They
also produce 50% of the national market for compost.
Purpose of the project:
Improving quality of production, products and distribution.
Higher revenues and development of export potential.
Possible Dutch partners:
Mushroom growers, retailers and agri-transport
specialists.
Hardware:
Production and distribution equipment (conditioned
transport).
Technical Assistance:
Training in new production technology, research,
marketing and physical distribution (conditioned
transport).
Possible results:
Higher production and higher quality. Better quality
products in the distribution chain including export, through
improved transport technologies. Higher revenues
through better selling prices and marketing.
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Business environment:
Good existing base for quality improvement and
expansion of activities. Selling price in Bulgaria 2.53 DM /
kilo. In FYROM the price is 5 DM / kilo.
5. E-commerce business planning for transport companies
Recipient:
Advisors and dealers of transport / production equipment
Business activities:
Advisory services for the industries, which are in need of
financing for their planned investments. Identification of
financing opportunities, development of bankable
business plans through the use of special programs.
Purpose of the project:
Development of dedicated programs for the transport
sector.
Possible Dutch partners:
Companies active in business planning services and/or
automation services for the transport sector.
Hardware:
Computers and dedicated software.
Technical assistance:
Training in applications, marketing of services.
Possible results:
Better quality advisory services for the transport (related)
industry, improved financing possibilities, advanced
assistance in business planning.
Business environment:
The application of e-commerce and computer related
advisory services have been relatively well advanced in
Bulgaria. Identifying financing possibilities for private
enterprises is still a major constraint.
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71
6. Manufacturing of buses in Omürtag
Recipient:
KENTA Bus manufacturing plant, Omürtag.
Business activities:
Production of Intercity buses and coaches. Capacity is
approx. 10 per month.
Purpose of the project:
Production of buses based on Dutch automotive
technology for launching customer Kometa Bus, the
public transport operator in the town of Sevlievo.
Possible Dutch partners:
Bus manufacturer, chassis manufacturer, engineering
company.
Hardware:
Design and technical drawings, production equipment,
prototype in CKD (in parts and components) for local
assembly.
Technical Assistance:
Prototype building and production know how. Production
of manufacturing equipment (jigs, moulds, etc). Marketing,
export, component procurement, etc.
Possible results:
Prototype based on modern Dutch automotive technology
for launching customer. Production start of first 20 units.
Development of supply in quality components for the bus
sector.
Business environment:
There is a bus factory in Botevgrad, which used to
produce licensed Setra buses. Presently, this factory is
not working. Sevlievo is a booming town with 100,000
inhabitants due to new investments of two American
companies American Standard (sanitary products; 95%
exports) and ABB. They are in need of labour force from
the whole region. A transport plan to get the labour force
living in the region to Sevlievo for work indicated the need
for 20 buses.
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7. Production of buses for sub urban Sofia
Recipient:
Kenta Bus production plant in Omürtag (see pt 6).
Business Activity:
Production of Intercity buses and coaches. Capacity is
approx. 10 per month.
Purpose of the project:
Development and supply of sub urban type of buses for
the private bus operators in greater Sofia.
Possible Dutch partners:
Bus manufacturer, chassis manufacturer, engineering
company,
Leasing company.
Hardware:
Design and technical drawings, production equipment,
prototype in CKD (in parts and components) for local
assembly.
Technical Assistance:
Prototype building and production know how. Production
of manufacturing equipment (jigs, moulds, etc). Business
plan, marketing, export, component procurement, etc.
Possible results:
Prototype based on modern Dutch automotive technology
for private bus operators in greater Sofia. Investment
advising for private operators (financing). Development of
supply in quality components for the bus sector.
Business environment:
There is a bus factory in Botevgrad, which used to
produce licensed Setra buses. Presently, this factory is
not working.
The market for city buses in Sofia and Plovdiv is
extremely difficult to penetrate. Sofia is favouring
Mercedes and MAN buses, while Plovdiv has made a deal
with Volvo. Negotiations for delivering of new city buses
start normally after the election of the new mayor.
Currently imports of used buses.
Renting of city buses could be profitable alternative for
current practices.
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73
Price of a city bus body is DEM 68,000 ex VAT incl.
(better quality) imported components (e.g. from Turkey).
Total price of the city bus could be just below DEM
200,000 if imported chassis are used.
With regard to the financing or funding of the city buses
the municipalities are no longer independent; they need
permission from the Ministry of Finance. If approval is
there the payments will be guaranteed.
8. Supply of modern road building machinery and technology
Recipient:
Contractors in the road building sector
Business activities:
Road construction, road maintenance.
Purpose of the project:
Given the enormous backlog and the planned
investments in road infrastructure through the ISPA funds,
there will be a growing need for high quality road building
machinery.
Introduction of Dutch road building technologies should
improve efficiency in road building as well as road quality
(durability).
Possible Dutch partners:
Manufacturers or suppliers of road construction material,
contractors in road building, engineering firms.
Hardware:
Supply of (used) road construction equipment.
Technical assistance:
Transfer of technology as well as repair and maintenance
know how.
Possible results:
Construction of better quality roads, efficiency
improvements, better competitive position of joint
Bulgarian – Dutch contractors in road construction.
Business environment:
Currently there is a regular import of road building
machines (especially rollers) from e.g. BBL Equipment BV
in the Netherlands. Competition is mainly from German
and French suppliers.
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Given the investments in road infrastructure through the
ISPA funds, there will be a growing need for high quality
road building machinery. The approved road construction
plans have been listed in this report.
Unlike the situation in Ukraine and Romania, the bitumen
in Bulgaria is of high quality. The raw material is coming
from the Lukoil refinery in Bourgas.
9. Bonded warehousing, VAL services and regional distribution
Recipient:
Forwarding and Transport enterprises.
Business activities:
International forwarding, import and export, haulage
services.
Purpose of the project:
Through pilot project determine feasibility and potential of
bonded warehouses, Value added services and regional
distribution.
Possible Dutch partners:
Forwarders, carriers, trading firms.
Hardware:
Construction of warehouses. Equipment for internal
transport.
Technical assistance:
Training in logistics, organisation, marketing.
Development of a feasibility study and business plan.
Possible results:
After proven feasibility investments in warehouses,
handling and distribution equipment, resulting in modern
DC.
Business environment:
Favourable circumstances for investments in the transport
and distribution sector. VAL services will benefit from
availability (skilled) labour, low investment costs (site,
premises) and little competition. There is a need for
quality distribution services in spite of the high number of
transport operators active in Bulgaria (obsolete
equipment, unreliable deliveries).
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75
10. Modernising REI production facilities. Improve infrastructure and logistics in
the plants, increase efficiency, application of new, modern technologies
Recipient:
REI HOLDING – Financial and Industrial Group.
Business activities:
Financial Industrial Group REI Holding is a privately
owned international company active in manufacturing,
trade and consultancy to the electrical, railway transport,
machine building and financial management industries. Is
said to be market leader in national electro-technical and
railways sectors. It owns 47 companies and employs
3000 people. Turnover is over US$ 250 million.
Purpose of the project:
Improve infrastructure and logistics in the plants, increase
efficiency, application of new, modern technologies.
Possible Dutch partners:
Manufacturers of railway components, electrical
equipment, special machinery for railways and automotive
sector. Advisors in logistics and engineering firms.
Hardware:
Manufacturing equipment, transport material.
Technical assistance:
Training in new production technologies, repair and
maintenance, logistics, organisation and management.
Possible results:
Feasibility, business plan, co-operation and joint venture.
Business environment:
REI holding companies compete with the state owned
companies in Bulgaria. It has developed relations with
some Dutch companies, also in the framework of PSO
project preparation.
The privatisation law for the railway sector adopted at the
end of 2000 offers good opportunities to the REI
companies. Maintenance of railway network and rolling
stock will be taken over by private companies through
tenders. Railways operations (use of the railway network)
will be open for private carriers in 2002. The network
remains state owned.
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11. Automation of the railways; traffic systems and ATB (Automatic Rail Track
Monitoring)
Recipient:
EAZ PLC Plovdiv (established In 1949), subsidiary of REI.
Business activities:
EAZ PLC is a leading national producer of low voltage
apparatus and a complete range of professional electrical
equipment. Approx. 55% of EAZ’s production is being
exported. Computerised design process, ISO-9001,
accredited laboratory, IEC standards.
Purpose of the project:
Improvement of Rail infrastructure and rail transport
safety through the application of up-to-date traffic
systems, including automatic safety devices.
Possible Dutch partners:
Railways operators, suppliers to railway industry, rail
engineering companies.
Hardware:
Equipment and devises related to traffic systems
Technical Assistance:
Transfer of technology and know how. Repair and
maintenance training, etc.
Possible results:
Local production of traffic system, implementation (test)
on rail track. Feasibility study and business plan.
Sustainable co-operation. Supply of components to REI
subsidiaries.
Business environment:
Supply to the state owned “railways infrastructure
company”, also after the privatisation of the railways
operations in 2002. Best opportunities are likely to occur
in a co-operation with Bulgarian manufacturers.
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12. Production and assembly of cable beams for the automotive industry (buses,
trucks and cars)
Recipient:
EAZ PLC Plovdiv (established In 1949), subsidiary of REI.
Business Activities:
EAZ PLC is a leading national producer of low voltage
apparatus and a complete range of professional electrical
equipment. Approx. 55% of EAZ’s production is being
exported. Computerised design process, ISO-9001,
accredited laboratory, IEC standards.
Purpose of the project:
Pilot project to determine the economical and technical
feasibility of producing cable beams for the automotive
sector.
Possible Dutch partners:
Manufacturers of trucks, buses or cars. Cable producers.
Supply industry to automotive sector.
Hardware:
Production and testing equipment.
Technical assistance:
Transfer of manufacturing know how, testing and quality
control.
Possible results:
Cost effective manufacturing facility for complicated cable
beams. Feasibility study and Business plan.
Business environment:
At EAZ in Plovdiv there is 60,000 square meter available
for new activities. There is a skilled and qualified
workforce available (unemployed). Possibly co-operation
with following REI subsidiaries:
ENERGOCABEL PLC (Established in 1919) is the sole
Bulgarian manufacturer of aluminium and copper wire rod,
ACRS and a wide range of aluminium and hard drawn
copper conductors and cables. Approx. 45% of production
is exported. Energocable’s accredited laboratory and ISO9001 guarantee quality compliant to international
standards.
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GAMAKABEL PLC (established in 1968), is a major
Bulgarian cable and conductor manufacturer. Production
includes household connection cables, telecommunication
and radio frequency, control and power cables. Exports
42%. (Europe, Africa, Asia).
13. Co-operation in the field of production of high quality measuring devices
(metres), including distance reading option for distribution companies. (gas
and water distribution)
Recipient:
REI Holding (subsidiary to be selected).
Business activity:
Financial Industrial Group REI Holding is a privately
owned international company active in manufacturing,
trade and consultancy to the electrical, railway transport,
machine building and financial management industries. Is
said to be market leader in national electro-technical and
railways sectors. It owns 47 companies and employs
3000 people. Turnover is over US$ 250 million.
Purpose of the project:
Feasibility of the manufacturing and maintenance of water
and gas meters. Development of business plan.
(Privatisation of the sector: Gas and water distribution
companies will own the measuring equipment and are
responsible correct and safe functioning).
Possible Dutch partners:
Manufacturers of gas and water meters, distributors of
gas and water.
Hardware:
Equipment for production and testing.
Technical assistance:
Transfer of manufacturing, testing and maintenance know
how.
Feasibility study, business plan including approach
privatised utility sector.
Possible results:
Production, distribution and servicing of high quality water
and gas meters.
Business plan. Positive impact on energy and water
consumption, and a positive effect on environment.
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79
Business environment:
Likely to be an excellent business opportunity, since the
privatised energy and water sector will have to install
many reliable, durable and safe meters, which are
currently not produced in Bulgaria.
14. Co-operation in the field of manufacturing and application of optical fibre
cable technology
Recipient:
REI Holding (subsidiary to be selected).
Business activities:
Financial Industrial Group REI Holding is a privately
owned international company active in manufacturing,
trade and consultancy to the electrical, railway transport,
machine building and financial management industries. Is
said to be market leader in national electro-technical and
railways sectors. It owns 47 companies and employs
3000 people. Turnover is over US$ 250 million.
Purpose of the project:
Joint development and production of optical fibre cable.
This would be an entirely new activity for the company,
but essential in view of their presence in the cable
industry including supply to the telecom sector.
Possible Dutch partners:
Producers of optical fibre cables. Cable distribution
companies.
Hardware:
Production and test equipment.
Technical assistance:
Transfer of manufacturing, testing and application knowhow.
Possible results:
Manufacturing of optical fibre cables, business plan,
export potential.
Business environment:
Since there is already a wide application of electronic data
transfer in Bulgaria, the need for a modern cable network
will become urgent.
REI has no experience in producing these high tech
cables.
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15. Mobile repair and maintenance services for trucks and buses
Recipient:
AEBTRI – Service Ltd.
Business activities:
AEBTRI - Service Ltd. is founded and wholly owned by
AEBTRI to develop commercial services for the members
of AEBTRI and third parties.
AEBTRI is the association of road transport companies in
Bulgaria.
Purpose of the project:
Improve the repair and maintenance service for Bulgarian
and foreign trucks and Buses in Bulgaria.
Possible Dutch partners:
Companies specialised in international truck and bus
service. Truck dealers. Association of transport
companies.
Hardware:
Repair and maintenance equipment, mobile workshops.
Safety equipment.
Technical assistance:
Training on repair and maintenance for trucks and buses,
marketing of services.
Possible results:
Co-operation and establishing of professional mobile
repair and maintenance service for the transport sector.
Self-sustaining based on business plan.
Business environment:
As long there is not a dense network of truck dealers and
service points the mobile service is indispensable.
It should be recognised however that truck manufacturers
have their own international service network for their
customers.
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81
16. On-board computers for trucks and buses including digital tachograph
devise and navigation systems for vehicles
Recipient:
AEBTRI – Service.
Business activities:
AEBTRI - Service Ltd. is founded and wholly owned by
AEBTRI to develop commercial services for the members
of AEBTRI and third parties.
Purpose of the project:
Improve transport operations, harmonise with
international practises and standards, increase safety.
Improve tracing and tracking of trucks for better planning,
discourage truck jacking, safety improvement.
Possible Dutch partners:
Suppliers of on board computers and navigation systems,
service providers.
Hardware:
Onboard computers and navigation systems.
Technical assistance:
Training in Maintenance and repair of the equipment,
training in effective application.
Possible results:
Pilot and later wider use of the systems by the
professional road hauliers. Improvement of route planning
and road safety.
Business environment:
In Bulgaria there is a good basis for the use of modern
telecommunication. Computer applications and EDP are
more advanced than in many other CEE markets.
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17. Establishing a leasing company for the commercial vehicle sector
Recipient:
AEBTRI – Service.
Business activities:
AEBTRI - Service Ltd. is founded and wholly owned by
AEBTRI to develop commercial services for the members
of AEBTRI and third parties.
AEBTRI is the association of road transport companies in
Bulgaria.
Purpose of the project:
Pilot to set up a leasing operation. Feasibility study.
Business plan. Stimulate new investments.
Possible Dutch partners:
Leasing companies, Banks.
Hardware:
Equipment for leasing company; office equipment.
Technical assistance:
Transfer of expertise how to set up a leasing company,
how to organise and operate it. Feasibility study, business
plan. Management training. Marketing training. Training
on modern leasing concepts.
Possible results:
Facilitate the modernising of the Bulgarian truck fleet
through offering competitive financing to hauliers by an
AEBTRI leasing company. Better quality trucks and buses
on the road for enhancing road safety and reducing
pollution.
Business environment:
According to the figures provided by AEBTRI more than
17% of the international truck fleet is older than 15 years
and 60% older than 10 years.
The number of new trucks sold in 2000 lies between 100200, which is a very small amount considering the total
fleet of trucks for international transport of 13033.
Domestic transport is currently not attractive due to fierce
competition from driver-owners, operating obsolete
vehicles under difficult economic conditions. Moreover
transport is increasingly being carried out by own account
operators.
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18. Co-operation in the field of (Sofia) airport maintenance
Recipient:
Company specialised in (airport) technical maintenance
services.
Business activities:
Airport maintenance services, maintenance of
equipment.
Purpose of the project:
To introduce modern, well-managed airport maintenance
services.
Possible Dutch partners:
Companies specialised in technical maintenance.
Hardware:
Maintenance equipment. Safety equipment.
Technical assistance:
Management training, technical training. Business plan.
Possible result:
Co-operation with Bulgarian partner company. Better
position for Dutch companies to offer services for the new
Sofia Airport.
(For Dutch suppliers there are possibilities for passenger
bridges, conveyor belts, airfield lighting, cables, airport
interior (seats, stairs, counters, FIDS, illumination and
auxiliary equipment, sun blinds, etc.))
Business environment:
Tender market, co-operation with Bulgarian partner is
prerequisite.
The development of Airfreight is modest, there are no
storage problems. The development of the regional
Airports will be difficult due to the limited number of
passengers. Best chances are for Varna, since it also
handles tourist charters.
The bankruptcy of the Bulgarian Airline Balkan Air will
have a positive impact on the revenues of the Sofia
Airport, since foreign airlines pay their airport charges.
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The following list contains merely project ideas, which still needs further elaboration:
19. Water management and distribution project in Plovdiv. Design of a water
distribution system and assistance in setting up management and
operations
20. Maritime communication and safety systems
21. Management training at Ministry of Transport emphasising Public Private
Partnership implementation (PSO Pre-Accession)
22. Tank cleaning and chemical waste management
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85
9
CONCLUSIONS

From 1991 to 1996 progress in Bulgaria was slow and erratic. Its most recent
history is characterised by the remarkable turnaround that occurred after the
change of leadership in 1997. Since then Bulgaria has re-energised long pending
structural reforms. The IMF supported currency board had a positive impact on the
country’s financial discipline, privatisation has accelerated, and price control has
been liberalised.

Bulgaria’s economy showed its increasing resilience to adverse external
environment – the Kosovo conflict, continuing effects from the Russian crisis and
shrinking demand in the Euro area – especially in the first half of 1999.
Fiscal policy was tightened (consolidated budget deficit came in at only 1%),
important steps were taken in the area of privatisation, banking sector reforms,
agricultural liberalisation, energy pricing and legal reforms, required to improve the
prospects for sustainable economic growth and European Union accession.
The Government has prepared a programme for the year 2001 in which the
privatisation of SOE’s is defined as a key element of the structural enterprises (over
600) in the sectors of industry, construction, agriculture, tourism and trade. The
plan envisages preparatory stage of the privatisation of certain facilities in the
sectors of infrastructure and public services – energy, railway transport, water
supply and sewerage.
A report published by the Bulgarian International Business Association “BIBA White
Paper on Foreign Investment – Issue 2001” reads that substantial scope for
improvement remains, which could substantially ameliorate the “business climate”
and overall competitiveness of industry. It specifies issues such as: Public-Private
partnership / legislation drafting and implementation, quality/productivity culture in
industry, public administration performance and education, transport sector
technology and infrastructure, law implementation and enforcement, border
crossing initiatives.



9.1
Transport, infrastructure and communications
 Government Transport policy directions are the result of national consensus and
primarily geared towards membership of EU and NATO, development of free
market relations as well as democratisation of political, economical and social
processes.
 Main priorities are: Harmonisation of national legislation and transport regulations
with those of the EU member states, Development of transport infrastructure and
Implementation of structural reform and privatisation in the transport sector.
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 Harmonisation includes regulations on the type approval of motor vehicles,
Regulation on dangerous goods, regulations on extra-dimension and heavy road
vehicles. The agreement on occasional international transport of passengers by
bus has been signed. In the maritime sector a number of important European and
International agreements have been signed, for example the European Agreement
on Inland waterways and the International Convention on Sea Search and Rescue.
 The social and economic difficulties suffered by Bulgaria, coupled with a lack of
finance for road infrastructure has brought about a deterioration of the roads in
general. Moreover road building in Bulgaria is difficult and costly as some 40% of
the country’s territory is mountainous.
 The programme ‘Transit Roads” rehabilitated 1400 km of the main road network up
to 1999. Financing came from the EIB, EBRD and the Phare programme. Currently
“Transit Roads III” is covering the rehabilitation of another 600 km, to be completed
in 2002.
 According to the Inter-departmental programme on the development of transport
infrastructure drawn up by the Ministry of Transport and Communications and of
Regional development and Public Works 1,200 million Euro will be needed for
rehabilitation and construction of roads of national and international importance.
The programme will create 15,000 jobs and financing will come from national and
international sources. The participation of Bulgaria in the TINA project is a very
important component of the development of transport infrastructure.
 River transport is still not very significant, with total inland water transport
accounting for around 5% of Bulgarian vessel tonnage. There are plans for
significant modernisation of ports over the next few years.
 The two major seaports of Bulgaria – Varna and Burgas handle more than 60% of
the national foreign trade freight turnover. These ports have container terminals,
Ro-Ro equipment and many berths for different type of bulk and liquid freight. The
drop in traffic and the obsolete equipment are major problems for the Varna Port
development. The port authorities hope for foreign investments. First joint ventures
have been realised with a Belgian and Italian enterprise.
Burgas has benefited in recent years from the increased trade flows to Western
Europe and the transport related to the biggest Bulgarian petrol refinery, owned by
LUKOIL a rapidly expanding Russian owned oil company. It is proposed that the
ports will be restructured and given under concession, either totally or in part.
 A renewed Sofia airport was opened in September 2000. There is a plan to develop
and expand the airport with the capacity and modern facilities to deal with demand
expected early next century. The US$200 million project will be financed by the
EIB and the government.
 According to new laws and directives it is envisaged that only railway infrastructure
will remain under state ownership.
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

The railway industry and other sections of the National Company "Bulgarian State
Railways", together with the commercial activities of railway transport, are subject
to privatisation. To date 8 out of 13 railway enterprises have been privatised
(concerned with rolling stock repairs and construction, etc).
Telecommunication: Bulgaria inherited relatively high line density from the pretransition period. Recent investments increased further the fixed line telephone
penetration. The quality of the network is less advanced. Although mobile
telephone penetration has grown fast there is considerable room for growth.
The adoption of the new Telecommunications Law in 1998 introduced a liberalised
regime for activities in the telecommunications sector. All services were liberalised
except voice telephony and leased lines, which will be opened to competition on 1
January 2003. This is well in advance of the WTO commitment of 1 January 2005.
9.2




Donors and financing
There are many bilateral projects in all sectors. Particularly, Germany and Italy are
very active in Bulgaria.
The EU is an important donor to Bulgaria. The major objectives of the support are
the opening of the Bulgarian transport system for EU member states, Restructuring
the transport sector in accordance with European standards and market economy
principles, Development of infrastructure, technological modernisation and new
investments.
In the period 1992-1999 Bulgaria has received ECU 94 million from the Phare
National Programme. For the Cross Border Co-operation programme Euro 86
million has been allocated. Bulgaria expects to receive Euro 420 million for the
period 2000-2006 for the development of transport infrastructure through the EU
ISPA programme. Priority projects have been identified.
EBRD is a major financing institution for Bulgaria. The EBRD will continue to
promote privatisation, post-privatisation restructuring and sound corporate
governance of selected companies in the enterprise sector, through both debt and
equity investments. In the case of large enterprises, the EBRD will continue to work
alongside foreign strategic partners as well as with domestic investors. Project
selection will be oriented towards transactions that have clear demonstration
effects in order to promote the transition process to the largest degree possible.
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

9.3



The EBRD will proactively support the rapidly growing interest by private investors
in the infrastructure sector, particularly in power generation, in telecommunications
and in certain municipal services. The future water concession and the district
heating projects with the Sofia Municipality should constitute landmark transactions.
Besides, the EBRD will also continue to provide selective sovereign-based support
for crucial sectors such as district heating, energy transmission and transport.
Lastly, the EBRD will continue to provide guidance on the restructuring of the
energy sector.
Since Bulgaria joined the World Bank in 1990, Bank assistance to the country has
been aimed at fostering sustainable development and economic growth by
investing in physical and social sector infrastructure, and by accelerating structural
reforms and rapid development of the private sector.
In parallel, Bank-financed activities have been addressing poverty through
improvements of the social safety net and other social sector programs.
The World Bank is presently not involved in many projects in the fields of transport,
infrastructure and communications. The World Bank is implementing transport and
trade facilitation projects in Bulgaria and projects focussed on improving border
crossings and customs facilitation.
Business opportunities for Dutch Enterprises.
The implementation of the massive road construction and rehabilitation plans offers
opportunities in the field of road building technology and machinery.
Automation of the railways including traffic and safety systems.
Co-operation in the design, manufacturing and marketing of trailers, semi-trailers,
tankers and special vehicles.

Co-operation in renting/leasing/trading in special vehicles for municipality services.




Co-operation in the field of high quality tanks for fuels, liquid gas and chemicals for
the automotive sector and fuel/gas distributors.
Quality improvement of agricultural products by conditioned transport.
E-commerce business planning for transport companies.
Co-operation in the manufacturing of buses in Omürtag

Co-operation in the production of buses for suburban Sofia.

Development of Bonded Warehouses, Value Added Logistics services and
regional distribution.

Modernising REI production facilities. Improve plant infrastructure and logistics,
increase efficiency through application of new technologies.
Production and assembly of cable beams for the Automotive industry.



90
Co-operation in the field of production of high quality measuring devises (meters),
including distance reading option for distribution companies (gas, water).
Co-operation in manufacturing and application of optical fibre cable technology.
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







Application of On-board computers for trucks and buses including digital
tachograph devise and navigation systems for vehicles.
Establishing a leasing company for the commercial vehicle sector.
Co-operation in the field of Sofia airport technical maintenance.
Co-operation in water management and distribution project in Plovdiv. Design of a
water distribution system and assistance in setting up management and operations.
Application of maritime communication and safety systems.
Co-operation in tank cleaning and chemical waste management.
Management training at Ministry of Transport emphasising Public-private
partnership implementation.
Development of integrated postal service.
Privatisation progress in Bulgaria offers a wide range of business opportunities for
Dutch enterprises. Local financing is one of the main problem areas, due to the high
interest rates charged. Cross border financing is increasing.
Investment climate is continuously improving largely due to a consistent economic and
financial policy. There is uncertainty with regard to the outcome of the next elections.
The still widespread poverty and lack of social facilities in Bulgaria may lead to a
change towards a less consistent economic policy.
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REFERENCE MATERIAL BULGARIA (AVAILABLE ON CD-ROM)
1.
2.
3.
4.
5.
92
White Paper on Foreign Investment in Bulgaria - 2000; Bulgarian International
Business Association.
National Strategy Transport Sector; Ministry of Transport and Communications;
June 2000.
2000 Country Investment Profile Bulgaria; EBRD.
Pre-Accession Status Bulgaria - November 2000; Transport policy and
Telecommunications and Information Technologies.
Useful addresses.
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