Bulgarian Energy Puzzle

Transcription

1 issue 99 m a y Analysis: Green Projects Butterfly s Ambition Events: AmCham Teaches Effective Resource Management Meet New Members April Party Presents Six Companies Bulgarian Energy Puzzle A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a Business Park Sofia, Mladost 4 Area, Building 2, Floor 6, 1766 Sofia Tel.: (359 2) Fax: (359 2) homepage: amcham@amcham.bg

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3 ENERGY CONFERENCE Tuesday, May 19, 2009 Renewable and Efficient Energy: Pathways to a Better Future ROYAL BALLROOM, SHERATON SOFIA HOTEL BALKAN U.S. Global Leaders and Experts Meet the Bulgarian Business Growing environmental awareness, energy prices and concerns about energy shortages have resulted in changing attitudes towards new solutions for energy alternatives. Renewable energy is being identified as a top priority by the new U.S. Presidential Office announcing the DREAM action plan for Doubling Renewable Energy in AMerica with in the next three years. At the same time the European Union administration believes the current research on climate change justifies a global response. Bulgaria has a strategic importance within the European energy map but currently energy efficiency is less developed while Bulgaria stands without a diversified supply. The energy demand is rapidly growing and energy consumption per household is on the rise. EU regulations require fast development in the sector to meet goals and future expectations. With support and encouragement from the US, EU and Bulgarian Government the possibilities for investment, social responsibility and technology transfer are unprecedented. Main reasons to attend: Engage high-level decision makers in direct debates on the global policy; Get updates on the latest U.S. technologies and projects; Enhance your understanding of the latest trends & developments; Develop business opportunities during specially designed match-making sessions; Expand your network meet your peers at informal gatherings Supported by: AGENDA 8:30-9:00 Registration 9:00-9:30 Opening Session Opening Remarks Anthony Hassiotis, President, American Chamber of Commerce in Bulgaria Welcoming Address Ivailo Kalfin, Deputy Prime Minister and Minister of Foreign Affairs of Republic of Bulgaria H.E. Nancy McEldowney, U.S. Ambassador to Bulgaria 9:30-10:15 U.S. Industry Developments American Council on Renewable Energy (ACORE) 10:15-10:30 Coffee Break 10:30-11:30 Energy Efficiency & Security: An American Industry Perspective Alliance to Save Energy General Electric 11:30-12:15 Financing Renewable Energy Projects European Bank for Reconstruction & Development UniCredit Bulbank 12:15-13:30 Business Lunch 13:30-14:15 Industry Panel on Solar Energy AES Solar Energy KPMG Bulgaria Popov Ltd. 14:15-15:00 Industry Panel on Biomass IES Europe Erato Holding 15:00-15:45 Industry Panel on Wind Energy AES Wind Bulgaria General Electric Energy Association of Producers of Ecological Energy 15:45-16:00 Coffee Break 16:00-17:00 Closing Remarks: U.S. Renewable Energy Policy Videoconference with Jonathan Shrier, Acting Assistant Secretary for Policy and International Affairs, U.S. Department of Energy 13:30-17:00 Matchmaking Meetings 18:30 Networking Reception sponsored by IES Europe Hosted by H.E. Nancy McEldowney, U.S. Ambassador to Bulgaria Organized by: For registration, please contact the AmCham office at tel: /5 or visit us at:

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5 editorial Dear AmCham Members, Dear readers: It is not a secret that Bulgaria s energy intensity is more than twice the EU average. In essence, we waste energy, while forced to import the bulk of it from abroad. The country s resource vulnerability became apparent during this year s gas crisis caused by the Russian-Ukrainian conflict. Bulgaria is one of the EU member states almost entirely dependent on Russia s gas imports. The disrupted supplies in the winter frightened millions of households and threatened the entire Bulgarian economy. Even without this problem, the country s growing energy demands need to be addressed properly, keeping in mind that today s natural gas pipelines, coal-powered plants and nuclear power stations have viable alternatives. Bulgaria can and should slow down its energy demand growth by introducing more and more energy-efficient technologies, while diversifying the supply of traditional resources by propping up the use of renewable energy sources at the same time. The government focus, however, is still on conventional energy production and importing resources. How it will meet then the EU commitments to fight global climate change and promote renewable energy is still unclear. It seems this task is left to the next government. At the AmCham we consider that the national energy policy should include a number of initiatives that comprise energy efficiency and energy-renewable state and municipal programs and projects, tax incentives, public education, expanded research and development, adequate funding. It is of paramount importance that these policies do not stay on paper. They have to be implemented fast and only then can they build a sustainable energy future and provide for a solid economic health. It is often heard nowadays that the global economic and financial crisis provides many opportunities. Many experts claim that the crisis gives everyone an impetus for creating climate-friendly solutions that could promote economic growth. Energy efficiency and renewable energy are one of these solutions. They can not only reduce the energy costs, but will introduce new technologies, encourage robust job growth, improve the quality of life and, in the end, save our planet from ourselves. It has been a while since foreign dignitaries last descended on Sofia in such numbers. We enjoyed this invasion by heads of state and high-ranking politicians this April during the forum Natural Gas For Europe. Security and Partnership. Representatives of virtually all countries along the oil and natural gas routes from Russia to Europe came to the Bulgarian capital. We saw Russia s Minister of Energy Sergey Shmatko in the company of Natiq Aliyev, minister of industry and energy of Azerbaijan, while politicians from Georgia and Armenia were cavorting with Albania s President Bamir Topi, Greece s Prime Minister Kostas Karamanlis, Croatia s President Stjepan Mesić and Serbia s Boris Tadić. The end users of the pipelines were represented by a number of European top politicians, most prominent among them José Barroso, president of the European Commission. An attentive, if a bit outside observer to this high-profile encounters was U.S. Special Envoy for Eurasian Energy Richard Morningstar. The present-day issue of energy reserves and their transfer from producers to users is immense, and Bulgaria is not going to solve it on the world scale even with such important mediation initiatives. The Sofia energy forum accomplished its tasks and participants left more or less satisfied that at least the conversation is going on. It transpired, though, that world s developed countries are paying more and more attention to energy conservation and alternative sources instead of just worrying about timely oil and natural gas deliveries. The consensus has it that the industrialized countries need a strategy going beyond the end of Putin s rule in Russia. Renewable and alternative energy sources have the apparent benefit of being independent of any political regimes in energy-rich countries; they do not need complicated delivery infrastructure; nor do they require to negotiate routes through regions prone to instability or through countries at different stages of their development. In this issue, we bring up some of the possible opportunities for Bulgaria in this respect (See the articles Bulgaria Seeks Alternative in Renewable Energy Sources on Page 12 and Green Energy Projects on Page 14). Let s allow those who prefer traditional energy sources to read our review of this sector of the economy in the article The Bulgarian Energy Puzzle on Page 4; the rest of us will wait impatiently for some optimistic news from the conference Renewable and Efficient Energy: Pathways to a Better Future, which is scheduled to open May 19 at Sofia s Sheraton Hotel Balkan. Who knows, by the end of the summer, we may all ditch the gasguzzling clunkers we are driving now and jump into hybrid vehicles to start saving the planet for real at last. page 1 Sincerely, Sincerely, Valentin Georgiev Executive Director Milen Marchev Editor-in-Chief

6 contents issue 99 may 2009 AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business opportunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American Chamber of Commerce in Bulgaria. Publisher American Chamber of Commerce in Bulgaria Business Park Sofia, Mladost 4 Area Building 2, Floor 6, Sofia 1766, Bulgaria Tel.: +359 (2) Fax: +359 (2) amcham@amcham.bg Editor-in-Chief Milen Marchev Writers: Boyko Vassilev, Marina Tzvetkova, Mina Georgieva, Panayot Angarev, Yuliana Boncheva Advertising AmCham Bulgaria: Nadejda Vakareeva, nadia@amcham.bg AmCham Bulgaria Magazine: Milen Marchev, milen@milenmarchev.com Deputy Editor-in-Chief: Christopher Karadjov Senior Editor: Irina Bacheva ISSN X The AmCham Bulgaria Magazine reaches a broad audience of AmCham members, leading US, Bulgarian and international companies, US and Bulgarian decision-makers, all AmChams around the world. Subscription is free of charge. If you would like to subscribe to AmCham Bulgaria publications, please contact the AmCham Bulgaria office. 2

7 amcham bulgaria Contents Board of Directors of the American Chamber of Commerce in Bulgaria President Mr. Anthony Hassiotis Bulgarian PostBank Vice President Mr. Stefan Ivanov Citibank N.A. Vice President Ms. Tanya Kosseva-Boshova Landmark Property Bulgaria Treasurer Mr. Rossen Plevneliev Lindner Immobilien Management cover story The Bulgarian Energy Puzzle... 4 By Mina Georgieva Who Is Who In The Energy Sector... 8 Members Mr. David Butts CMS Cameron McKenna Bulgaria Mr. Atanas Garov Colliers International Bulgaria Mr. George Georgiev Motorola Bulgaria Mr. Thomas Higgins Balkan Accession Fund Mr. Zachary Hampson Grenville Bulgaria Ms. Dana Leff AbCRO Bulgaria Mr. Peter Lithgow AES Maritza East 1 Mr. Bernard Moscheni BTC Bulgaria Seeks Alternative In Renewable Energy Sources Ex-Officio Member Mr. Scott Pozil Executive Director Valentin Georgiev US Senior Commercial Attache analysis Green Energy Projects Butterfly s Ambition...16 By Boyko Vassilev amcham events AmCham Teaches Effective Resource Management...20 Meet New Members April Party Presents Six Companies...22 news AmCham Project on Improving Commercial Registration in Bulgaria Commercial Registration In Bulgaria Improved, Some Issues Remain...26 By Zornitsa Markova, Market LINKS member news Council of American Overseas Research Centers Welcomes New Member Center...28 AmCham Takes Part in Investing Across Borders Project...28 Intellectual Property Top Award Given To Long-Time Patent Specialist...30 new members...30 Premier Tours tourism Pamporovo Hotels Survey Tourists Preferences M (East) AG. AA KRES EOOD. ABB Bulgaria EOOD. Abbott Laboratories S.A.. AbCRO - Bulgaria. Accor Services Bulgaria. ACO Building Elements Ltd.. ACSIOR Ltd.. ADIS Ltd.. Advance International Transport (Balkan) EAD. AES Corporation. AFA OOD. AIG Bulgaria Insurance & Reinsurance Company EAD. AIG Life Bulgaria. AIMS Human Capital. Air France. Alcoa Packaging Bulgaria. Alexander Hughes Bulgaria OOD. ALEXANDROV GROUP CORPORATION. Alfred C.Toepfer International. Alliance One Tobacco Bulgaria. Allied Pickfords Bulgaria. Alter Ego Company OOD. American College of Sofia. American English Academy American Resarch Center in Sofia. American University in Bulgaria (AUBG). Anglo-American School of Sofia. Anton Preslavski, Liebert Hiross. APIS - BULGARIA Ltd.. APOLO Ltd.. Aries Commerce. Ashtrom International Ltd.. Association Integra-BDS. Astra Zeneca UK Ltd.. Astral Holidays AD. AT Engineering 2000 Ltd. Auditing Company Versi and Partners Ltd.. AVON Cosmetics Bulgaria Ltd.. BAE Systems International Ltd.. Balkan Accession Fund. Balkan News Corporation Plc.. Balkan Star Automotive EOOD. Baxter AG. Bayer Bulgaria EOOD. BC Serdon Berlitz Schools of Languages. BG Radio. BMG Ltd.. Bodyguard-Fire-K Ltd.. Borislav Boyanov & Co.. Braykov's Legal Office. British American Tobacco. Brown Forman Beverages Worldwide Sofia Branch LLC. Bulgaria Platinum Group EAD. Bulgarian American Enterprise Fund. Bulgarian Charities Aid Foundation (BCAF). Bulgarian Land Development EAD. Bulgarian Property Developments PLC. Bulgarian Telecommunications Company AD. Bulgarian VIP Travel Business Media Group. Business Park Sofia EOOD. CallPoint New Europe AD. Candole Partners EOOD. Car Rental Bulgaria Ltd.. Carlsberg Bulgaria AD. Cefin Bulgaria EOOD (IVECO dealer). Center for the Study of Democracy. CENTURY 21 Bulgaria. Chelopech Mining EAD. Chris Thompson, Independent Consultant. Cisco Systems Bulgaria. Citibank N.A.- Sofia Branch. City University of Seattle. Cleves EOOD. CMS Cameron McKenna EOOD. Coca-Cola HBC Bulgaria AD. Coface Bulgaria Credit Management Services EOOD. Colgate-Palmolive Adria. COLLIERS International. ConsulTeam Recruitment and Selection Ltd.. Cook Communications. Corstjens Worlwide Movers Group. CPM Consultancy Sllc. Crystal Developments LLC. Curtis / Balkan Ltd.. D&IC (Dun and Bradstreet Representative). DeConi International. Deloitte Bulgaria OOD. DENIMAR Ltd.. Denkstatt. Devin AD. DHL Express Bulgaria Ltd.. Diageo Bulgaria Ltd. Diamed Ltd. Dimitrov, Petrov & Co.. Djingov, Gouginski, Kyutchukov, & Velichkov. DLA Piper Weiss-Tessbach Branch Sofia. Dobrev, Kinkin & Lyutskanov Law Firm. Domaine Boyar International AD. Dr. Emil Benatov & Partners. Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg, Ph.D.. DuPont de Nemours International S.A.. DynCorp International LLC. Economedia AD. Effekten Und Finanz - Sofia AD. Ekotoi - Service Ltd.. Electron Progress EAD. Eli Lilly and Company. Elido (Lamel Ltd.). Elmec Sport Bulgaria EOOD. Elta consult AD associated partner of CB Richard Ellis for Bulgaria. Emerson Process Management AG. Emporiki Bank Bulgaria EAD. Encouragement Bank AD. Enel Maritza East 3 AD. Enemona SA. Engineeringservice Sofia Ltd. Environmental Quality Management, Inc.. Epsilon Interactive International. Equest EAD. ERATO HOLDING Plc. Ernst & Young Bulgaria. European Bank for Reconstruction and Development (EBRD). Faustina Group Ltd.. Flying Cargo Bulgaria Ltd. - Licensee of FedEx. Force Delta Ltd.. Forem Consulting Bulgaria. Fortel Engineering LTD.. Forton International JSCo. Foster Wheeler Energia Polska, Branch Office Bulgaria. Foundation for Local Government Reform. G4S Security Services Bulgaria JSC General Electric International. General Security ltd.. Genmark Automation Bulgaria Plc.. GlaxoSmithKline. Global Benefits Group GBGI CEE LLC Representrative Office. Goodyear Dunlop Tires Romania. Grand Hotel Sofia. Grenville Bulgaria. Grey Worldwide Bulgaria EOOD. HelmsBriscoe. Hewlett-Packard Bulgaria Ltd.. Hild Group. Hilton Sofia. Holiday Inn Sofia. Honeywell EOOD. Hotel Yastrebets Wellness & SPA. IBM Bulgaria. IBS Bulgaria Ltd.. Ideal Standard Bulgaria. Immo Industry Bulgaria. In Time Ltd. Industrial Holding Bulgaria. ING Bank Sofia Branch. Interbrands Marketing & Distribution Inc. OOD. Interdean. International University College. Investbank Plc.. IP Consulting Ltd.. ISI Emerging Markets (Internet Securities, Inc.) JobTiger Ltd.. Johnson & Johnson Doo.. Johnson Controls Electronics Bulgaria. Junior Achievement Bulgaria. Kaliakra AD Kamenitza AD. Kamor Auto EOOD. Katilin Popov Enforcement Officers. Kempinski Hotel Grand Arena Bansko. Kimimpex Trade and Leasing Ltd. (2be). Kolbis International Transfer Corporation. KPMG Bulgaria. Kraft Foods Bulgaria. LANDMARK Property Bulgaria. Lexim Sofia Ltd.. Lindner Immobilien Management EOOD. Lirex BG Ltd.. Lowe Swing Communications. M & M Air Cargo Service Bulgaria Ltd.. M3 Communications Group, Inc. A Hill & Knowlton Associate. Magnetic Head Technologies. Maria Vranovska, MD, MBA. Mars, Incorporated. Marsh EOOD. MARTERN EOOD. Mathnasium (Rossimat Ltd.). MB Communications.. MBL Ltd.. McDonald's Bulgaria Ltd.. Mellon Bulgaria EAD. Merck Sharp & Dohme Bulgaria. Mercurius-Sofia. Microsoft Bulgaria. Miltech Ltd.. Mmd, Corporate, Public Affairs & Public Relations Consultants. Mobiltel EAD. Monbat Plc.. Moody International Ltd.. Moten Sport. Moto-Pfohe Ltd.. Motorola Bulgaria EAD. National DISTRIBUTORS. NATO Defense College Anciens' Association. NDT Equipment Supplies Ltd.. Neochimiki Bulgaria S.A.. Neterra Communications. Neumann International AG. New Europe Corporate Advisory. New Europe Directories Bulgaria. Nexcom Bulgaria EAD. On Bulgaria Ltd.. Opet/Aygaz Bulgaria EAD. Oracle East Central Europe Limited - Branch Bulgaria. Orbit Ltd. Orkikem Ltd.. OSG Records Management. Outsource Partners International. Ozone Laboratories Bulgaria PANDA - IP Ltd.. Pedersen & Partners. Penev & Partners Law Offices. Penkov, Markov & Partners OOD. Pfizer Luxembourg SARL, Representation Office Bulgaria. Philip Morris Bulgaria EOOD Pioneer Semena Bulgaria EOOD. Piraeus Bank Bulgaria AD. Plesio Computers Jsc. Popov Legal Office Postbank (Eurobank EFG Bulgaria AD). PostPath. Praktiker EOOD. Pratt & Whitney. Premier Tours. PricewaterhouseCoopers. Procter & Gamble Bulgaria. ProSoft. PSG Payroll Services Ltd. Radisson SAS Grand Hotel. Reader's Digest EOOD. Regus Bulgaria Ltd.. Renault Nissan Bulgaria SRL. Rising Force Co., Ltd.. Rockwell/Intelpack. S&T Bulgaria. Sanofi - Aventis Bulgaria EOOD. SavantElbul Bulgaria Ltd.. Scandinavia Motors Ltd.. Schenker EOOD Schering - Plough Central East - Bulgaria. SEAF Management Bulgaria EOOD. Sheraton Sofia Hotel Balkan. Sherita M Ltd.. Siemens EOOD. Sienit Ltd.. SigmaBleyzer Investment Group LLC - Representative Office. SKE Bulgaria EOOD. Sodexo Group. Sofstroy AD. Soravia Bulgaria Ltd.. Stanton Chase International Bulgaria. Stefan Dimitrov, Norman Realestate Co. Ltd.. Symix Bulgaria OOD. TechnoLogica EOOD. TeleLink EAD. The Coca-Cola Company Bulgaria. Tishman Management Company Ltd.. Tissue Bank Osteocenter Bulgaria EAD. TMF. Totema Engineering. Trans Company Ltd.. TravelStoreMaker.com. Trinity Corporate Services. Tumbleweed Communications Corporation EOOD. UniCredit Bulbank. Unimasters Logistics Plc. Unique Estates. Unisys Bulgaria Branch. United Bulgarian Bank United Consulting Ltd.. United Healthcare Bulgaria Group of Companies. United Medical Communications. Vaptsarov Holding AD. Vector Management Bulgaria EOOD. Videolux Holding / Technopolis. VIP Security Ltd.. VISA Europe. VM Finance Group. VSK Kentavar Ltd.. Welcome to Bulgaria. Westinghouse Energy Systems Bulgaria Branch. Winslow Developments. World Courier Bulgaria. WorleyParsons Europe Energy Services Ltd.. Wrigley Bulgaria EOOD. Xerox Bulgaria Ltd.. Yavlena EOOD. Zlati Dinev Studio in partnership with Outerbridge/Morgan. page 3

8 cover story The Bulgarian Energy Puzzle By Mina Georgieva The international Energy Summit Natural gas for Europe. Security and partnership took place in Sofia in the end of April. According to Bulgarian President Georgi Parvanov, the Summit is part of Bulgaria s efforts towards active, equitable and mutually beneficial dialogue with countries of the Black Sea region and the Caspian region, Central Asia and the Middle East, and the EU member states. 4 Bulgaria s energy sector is expanding, but the state is still far away from its goal to emerge as the regional link between the European Union and the Black Sea littoral states, the Financial Times wrote in an analysis about a month ago. Today, Bulgaria has already assumed the commitment to participate in three pipeline projects the natural gas transits Nabucco and South Stream, and the oil pipe from Bulgaria to Greece. These three projects are still at an initial phase, however. Bulgaria s priority is to restore its previous role as a leading exporter of electricity to its Balkan neighbours. It lost this position after some of the reactors at the Kozloduy Nuclear Power Plant were decommissioned as agreed within the framework of Bulgaria s Accession to the European Union in January The last piece in Bulgaria s energy map its energy strategy, presenting the vision of the government for the energy sector future until was added late last year. The document, according to many analysts, is a mixture of all kinds of ideas intensive exploitation of coal deposits, development of nuclear energy, increased share of renewable sources and measures to improve energy efficiency. The incumbents are well aware of the major risks for the energy security of the state, Prime Minister Sergei Stanishev admitted in January. Climate changes and the increasing dependence on the import of resources and energy, as well as the rising energy prices are seen as major future problems. It is also a fact that 70 percent of Bulgaria s gross energy consumption comes from imports. Bulgaria is almost fully dependent in the import of natural gas and crude oil, predominantly from the Russian Federation. Natural gas is supplied via a single route, whose capacity is utilized almost to its maximum, from a single supplier Russia. There are no inter-system connections between Bulgaria and neighbouring states. Besides, there are still no functioning mechanisms at an EU level for solidarity actions in case of limited or discontinued deliveries of natural gas to member states, as well as no coordinated EU foreign policy to third countries. Lignite coal deposits in Bulgaria are the only local compact energy resource for electricity generation as well as a source of energy independence and long-term employment. Local coal, however, is of a low calorific content, and with high levels of sulphur, ashes and nitrogen oxides. Environmental restrictions will result in high production costs and reduced operative capacity of coal-burning utilities. Bulgaria s energy strategy seems somewhat unclear also because of the lack of priorities and the unspecified manner of utilization of the generated amount of electricity. The strategy provides to increase energy generation by 70 per-

9 cover story cent by 2020, while consumption is expected to rise by 31 to 38 percent, which will allow to export up to 20 billion kwh of electricity. Currently, the government motivates the need to proceed with the construction of the Belene Nuclear Power Plant mainly on the assumption that the electricity generated there will be dedicated to export. Currently, the National Electricity Company (NEC) collects a major portion of its revenue from exports. The strategy provides also for the construction of new power lines to Greece, Serbia and Macedonia. Exports have always been treated as a priority, and that is why a second power line was constructed to Turkey in line with the bilateral agreement on electricity exports in exchange of investments in infrastructure. The power line is not in use after Turkey stopped electricity imports form Bulgaria five years ago. The price of electricity If the new clean coal technologies are introduced, then the price of a kwh of installed generating capacities will double, according to experts at the Ministry of Economy. New technologies will result in higher electricity prices. The construction of a new 670 MW utility by the U.S. AES will cost 1.1 billion Euro, and the construction of the new thermal power plant Maritsa-Iztok 4 will cost several times more. The project cost will be additionally increased by the construction of storage facilities for carbon dioxide. According to consultant Georgi Minev, the price of electricity generated by this utility may be higher than that from the Belene nuclear plant. The cost for the construction of the nuclear utility will exceed 4 billion Euro. The price of the electricity generated there, according to expert estimates, will be as high as 5 to 6 Eurocents per kwh, regardless of the claims by the incumbents that the price will be competitive at some 3.5 eurocents per kwh. The Belene nuclear power utility must be commissioned in The price of the electricity generated by the conventional electricity generating utilities will also rise after 2013 as they will have to purchase emission permits. The European Commission is proposing a scheme, which provides for the issuance each year of permits for a specific amount, which the power utilities will have to buy instead of using them free of charge. Bulgaria has proposed, within the Environment and energy package, to pay less than 100 percent of the emission permits until 2013 while gradually increasing the amount of the paid permits. Power utilities will be treated as commercial enterprises. A decision on the issue is expected next year. Forecasts indicate that the electricity costs for households will increase by 10 to 19 percent over the next several years as a result of the implementation of environmental commitments. The energy strategy admits that, currently, the price of electricity for households and industry is among the lowest for all EU member states. Meanwhile, E.ON announced that its investments in Bulgaria are not profitable. Electricity prices will continue to rise as currently they are much lower than in Romania. The regulatory framework and the overall attitude of the State Commission of Energy and Water Regulation in terms of investments will have a major impact. According to Eurtostat estimates, the average price of electricity for industrial users in the 27 EU member states stood at Euro per kwh in 2007, compared to Euro per kwh in Bulgaria for the same period. Electricity prices for households in the EU are by 40 percent higher that the prices paid by commercial enterprises. The main reason for the excessive use of electricity in Bulgaria is attributed to the low prices maintained by the energy regulator. The price of electricity must be two times higher compared to thermal energy and natural gas. Energy strategy highlights The construction of new power lines to Greece, Serbia and Macedonia. Energy generation will increase by 70 percent by Power consumption in Bulgaria will increase by 31 to 38 percent by Export of 20 billion kwh of electricity A 16 percent share of alternative energy sources Increased coal-burning capacities at the Maritsa-Iztok complex. New combined-generation capacities. The energy strategy does not provide an answer to a problem, which experts and economists have been raising for a long time the competitiveness in terms of page 5

10 cover story 6 Increasing the coal-burning capacities at the Maritsa-Iztok complex is a part of the Bulgarian Government energy strategy. electricity prices of the new Belene nuclear power utility. According to the NEC management, the strategic investor in the Belene project, RWE, will seek for markets in the region and will not be able to sign a long-term contract for selling electricity to NEC. Still, the interest in nuclear energy in Bulgaria remains high. The energy strategy does not provide for the construction of two new generating units at Kozlodiu, although experts claim that this option would also attract investors interest. Experts are worried much more by the fact that the strategy relies too heavily on coal-burning power utilities, although the existing deposits of high-quality coal are not seen as sufficient. Nevertheless the coal lobby in Bulgaria has launched the idea for the construction of a new 600 MW coal-burning utility at the Maritsa-Iztok complex, as decided by the incumbent government in The competitive tender for the appointment of an investor is scheduled for next year. Several potential candidates have already manifested their interest the German company RWE, the Brikel company owned by Hristo Kovachki, the U.S. AES, which is currently engaged in the Maritsa-Iztok 1 project, the Czech CEZ, and others. The Maritsa-Iztok 4 project will bring about a change in the coal mining business. The Maritsa-Iztok Mines company claims it can increase coal output from million tons to 35 million tons after the commissioning of the new utility. We can provide an additional 7 million tons for a new utility, said Ivan Markov, the executive director of the mining enterprise. Experts claim that assuring Bulgaria s independence in terms of imported energy resources requires the rational utilization of the coal deposits. The total amount of coal deposits is estimated at 200 million tones, and will be exhausted within 10 years at the current output rates. The rest of the coal deposits used by power utilities have a high sulphur and ashes content, which requires modern technologies for enrichment and investments in sulphur treatment plants. The operators will be forced to purchase carbon credits because of pollution, which will increase their costs and prices. With the support of the European Commission, large energy companies have started developing projects for catching and storing emission gases, but there is still not a single utility in Bulgaria employing such a technology. Call for savings Experts are adamant that Bulgaria must substantially reduce the amount of energy used by the industry. Energy consumption by the industrial sector amounts to 36 percent of the total, which is seen as a very large share. Services consume some 9 percent, which is a very small share compared to the rest of the EU member states. The energy intensity of the transport sector is estimated at 30 percent, the housing sector consumes some 22 percent, and the agriculture a token 3 percent, according to analysts. Besides, added value in industry is generated by energy efficient sectors, while sectors consuming large amount of energy report virtually no profit. It is very important for Bulgarian enterprises to initiate their own measures for energy efficiency in order to raise their competitiveness, experts claim. There are financing schemes in place for energy efficiency within the framework of various operative EU programs, but these schemes are difficult to manage and the state will have to invest a lot of efforts in building the relevant administrative capacity. The share of the energy generated by renewable sources must be increased to 11 percent by 2010 and to 16 percent by 2020, according to the energy strategy. Bulgaria has a significant potential in developing wind and biomass energy generation, while geothermal energy options are still being researched. High economic growth rates in Bulgaria have resulted in a 3 percent increase of energy consumption a year. Thus, even in case the plans to reduce energy intensity by 9 percent over the next nine years are fulfilled, increased energy consumption may be met only by commissioning new energy utilities. Does Bulgaria really need new generating capacities? In view of the collapse of energy consumption and the energy crisis, after the construction of the Maritsa-Iztok 1 project and of the new coal burning utility Bulgaria will need additional capacities only after 2020, according to some experts. The energy strategy claims that Bulgaria will be able to meet domestic consumption demand by 2020, which is expected to increase by at least 31 percent, compared to 2005 data. The critics of the plans to build large generating capacities claim that savings accrued as a result of energy efficiency measures and the commissioning of renewable energy sources will make energy sector expansion plans redundant.

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12 cover story Who Is Who In The Energy Sector Energy by renaming the existing Bulgargaz Holding EAD, approving new articles of incorporation and a appointing a new board of directors. The tasks of the new holding are to develop standards for corporative management and the creation of a new unified organizational structure. The holding was tasked also to draft a strategy for its own development. It will be in charge of managing strategic projects and investments. The holding will be involved also in risk management, strategic and financial supervision of its companies, which, at least in principle, will preserve their operational independence. The assets of the Bulgarian Energy Holding were set at a total of 8.5 billion Leva. Annual revenues are targeted at 3.5 billion Leva. It will employ some 21,000 people. The holding consists of the following structural units: Control room of Kozloduy EAD Nuclear Power Plant The ambitions of many Bulgarian political leaders to restructure the country s energy sector date back to the launch in 1999 of the Program for Restructuring Bulgaria s Energy Sector. This project, however, requires large investments at a time when the tremors on the international financial markets have substantially reduced the investors readiness to assume risks. 1. Maritsa-Iztok Mines EAD the company is engaged in lignite coal mining (the total volume of lignite coal deposits was estimated at billion tons in 2007). The company sells its output to the Maritsa-Iztok 2 EAD coal burning power utility, to Enel Maritsa-Iztok 3 AD and Brikel AD. The output volumes between 2004 and 2007 stood at 22.3 million tons, 20.9 million tons, 21.5 million tons and 23.9 million tons, respectively. Operative revenue stood at As a result of the global crisis, the price of financing has gone up in Bulgaria as well, that is why foreign investors have started to show restraint regarding any capital investments in this country. Leading economists in the United States and Europe expect that the crisis will affect also countries, which are strongly dependent in external capital, which have more than a 5-percent current account deficit and which are developing at a relatively high rate by using large credits. Bulgaria is included in this group. Bulgarian Energy Holding AD was established in September 2008 in line with a decision of the Ministry of Economy and A view at Maritsa-Iztok Mines

13 cover story Main performance indicators of the structural units within the Bulgarian Energy Holding (BEH) AD BEH AD structure BGN million Assets Relative share Number of employees Relative share Sold (transferred) electricity GWh Relative share Revenue from operations BGN million Relative share Maritsa-Iztok Mines EAD Maritsa-Iztok 2 EAD , , Kozloduy EAD 1, , , NEC EAD 4, , , ESO EAD , , , Bulgartransgaz EAD , , Bulgargaz EAD ,359* - 1, Bulgartel EAD BEH total 8, , ,713** , Source: Ministry of Economy and Energy * million cu. m.; ** GWh million Leva, million Leva, million Leva and million Leva. The company is planning investments in the rehabilitation and repairs of heavy mining equipment, in the upgrading of technological installations and in the construction of new production capacities. 2. Maritsa-Iztok 2 EAD coal burning power utility the company uses lignite coal to fire up its 8 generating units with an aggregate output power of 1500 МW. The company has a 17-percent share in the total electricity generation in Bulgaria. The main line of business of the company is to generate and sell electricity. Headquarters of Bulgargaz in Lyulin District, Sofia The company is selling electricity to both the regulated and the free energy markets but its main client is the Bulgarian Electricity Company (NEC) EAD. Sales of electricity generated by Maritsa-Iztok 2 for varied between and billion kwh, and the revenue from sales stood respectively at million Leva, million Leva, million Leva and million Leva. Ongoing investments are dedicated to rehabilitation and modernization of the generating units, and the construction of sulphur treatment installations for a total of 300 million Euro, to the construction of a gypsum dehydrating station and rehabilitation of the pump station for a total of 26.7 million Euro. 3. Kozloduy EAD Nuclear Power Plant - this is the largest electric utility in Bulgaria. It has two generating units with an aggregate output capacity of 2000 MW and accounts for 34 percent of the total installed generation capacities in this country. The Kozloduy NPP is selling electricity to both the regulated and the free energy markets, as its main line of business is the generation of, and trade in electricity. NEC EAD is its main client. The investments in the power facility are dedicated to improving the operational safety of the generating units and to the construction of the Kozloduy EAD hydro-electric power station on the Danube. 4. National Electricity Company (NEC) EAD is the largest producer of electricity in Bulgaria with a total of 2,563 МW in installed capacities and owns the country-wide electricity distribution network. NEC operates on the free energy market as its line of business includes not only the generation but also trade in electricity. The company is focusing its investments in the construction and rehabilitation of the Tsankov Kamak hydroelectric node (a total of 220 million Euro), the Dolna Arda cascade, the rehabilitation of the electricity distribution network (153 million Euro), the constriction of the inter-system power page 9

14 cover story nication operators and corporate users with a developed communication network outside Bulgaria. The company s investments are aimed at the creation of a spectrum of services in all major Bulgarian cities. A stable influx of direct foreign investments is expected between 2009 and 2015 (at the rate of 3 billion Euro per year), as well as investments from European Union funds (some 1.5 to 2 billion Euro per year). The bulk of these investments will be dedicated to energy sector and processing industry restructuring. Domestic investments are also set to increase, with gross capital formation expected at 24 percent of the GDP, with a tendency towards a longterm persistent increase. As seen on the table, the National Electricity Company accounts for the highest relative share of the assets and the revenue of the Bulgarian Energy Holding. Bulgargaz is the second largest company within the holding in terms of revenue. In terms of relative share of the assets, amount of electricity sales and the number of employees, the Kozloduy EAD is the second largest company within BEH. Maritsa-Iztok 2 EAD coal burning power utility is the third largest company in terms of electricity sales. Generally speaking, the major producers of electricity, and the sellers of electricity and natural gas contribute a substantial share of the overall performance of the holding. 10 The power plant Maritza Iztok at Gulabovo line Chervena Mogila (16.6 million Euro), the construction of the Belene Nuclear Power Plant (3.997 billion Euro, scheduled for completion in ). 5. Electricity System Operator (ESO) EAD - launched in January 2007 as the operator of the electricity distribution system in Bulgaria as a NEC EAD daughter company. 6. Bulgartransgaz EAD launched in January 2007 as the combined operator for distribution, transit and storage of natural gas as a Bulgargaz Holding EAD daughter company. The company owns the gas distribution and the gas transfer network and the Chiren natural gas storage facility. The quantities of natural gas transited between 2004 and 2007 stood at 13,514 million cu. m., 15,490 million cu. m., 15,190 million cu. m. and 17,190 million cu. m, respectively. 7. Bulgargaz EAD the company is the main supplier of natural gas in Bulgaria. It was transformed into a daughter company of the Bulgargaz Holding EAD in January its main clients are heating utilities and industrial users. The company has dedicated its investments in the construction of new facilities (4.7 million Leva), and in reconstruction and rehabilitation (8.5 million Leva). 8. Bulgartel EAD launched in 2004 as the operation of the telecommunication system. Its clients include telecommu- In terms of revenues from operations, the Bulgarian Energy Holding was listed on the 55th place among the 500 largest energy companies in Central and East Europe. The holding will have to invest heavily in its structural units in order to raise revenues and to compensate for the insufficient funds spent in these companies over the last decade and complete the required reconstruction and expansion projects and to build new capacities. Privatization is seen as the major factor in this aspect, and that is why it is necessary to speed up this process in all energy sub-sectors. After it is reformed, the energy sector may attract larger foreign investments, which are the backbone of financing as the capabilities of the state to invest in energy (direct financing, revenue from privatization of energy assets etc.) are limited.

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16 cover story Bulgaria Seeks Alternative In Renewable Energy Sources Bulgaria has introduced preferences for the producers of energy from alternative sources in order to create incentives for the development of this energy sub-sector. The state-owned electricity company has assumed the commitment to purchase energy from renewable sources at higher fixed prices for a period of 12 years. It is still unclear, however, whether these incentives will be sufficient to set off the delay in terms of developing alternative energy sun, wind, geothermal waters and biomass. In line with its agreements with the European Union, Bulgaria has assumed the commitment to provide incentives for the development of renewable energy sources (RES), so that the share of energy generated by these sources would amount to 10 percent of the overall energy production in this country by This is less than the general commitment within the EU, where the share of RES is set at 12 percent for the same period. Currently, however, alternative energy sources in Bulgaria generate less than 1 percent of the overall energy balance. And there is only a small chance to raise this share to 10 percent within the next three years. 12 Transition to alternative energy sources is an important perspective for Bulgaria, for a number of reasons. Bulgaria is relatively poor in terms of its own conventional energy resources, which makes it overly dependent on imports. Bulgaria has mainly lignite coal deposits with very high sulphur content, which makes them expensive from an environmental point of view the construction of sulphur treatment plants substantially increases the price of electricity generated by burning lignite coal. Bulgaria has also substantial uranium deposits, which may be used for the purposes of nuclear energy, which currently amount to about 40 percent of the overall energy balance. The hazardous uranium mining technologies, however, led in 1992 to a decision to decommission the uranium ore mines. In recent years foreign investors have started manifesting interest in the development of the existing deposits. The re-commissioning of the mines will however be challenged actively by the public, which is still frightened of the consequences from the existence of these mines, and would require the use of modern, safe and respectively very expensive technologies for uranium extraction. Available data indicate that 7.3 percent of the gross domestic consumption of electricity in 2008 in Bulgaria was attributed to RES. The indicative target set in Bulgaria s EU accession agreement is to raise the share of RES biomass, water, sun, geothermal and wind increased to 11 percent of the gross domestic electricity consumption. The Act on Renewable and Alternative Energy Sources and Biofuels has introduced incentives, favouring the introduction of technologies using RES. The Act grants priority to RES operations when connecting to the transfer and distribution network, the compulsory purchase of the RES-generated energy at preferential prices (with the exception of hydro-electric power stations with a capacity of more than 10 MW), etc. The use of RES for electricity generation contributes to reducing the amount of conventional fuels and to lowering the emission of greenhouse gases. The consumption of alternative energy improves the security of energy supplies, creates new market opportunities for businesses and opens new jobs. Some 90 percent of the RES energy last year was generated by hydro-electric power stations. The first wind energy park with an installed capacity of 35 MW was commissioned. Several small photo-voltaic electric power installations with an overall capacity of 87 kw were also connected to the electricity grid. The quantity of electricity produced by RES is expected to increase over the next several years. The Tsankov Kamak hydroelectric node, with an installed generating capacity of 80 MW and a target annual output of 158 GWh, is scheduled for commissioning in Several small hydro-electric power stations are also in the process of construction.

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18 analysis Green Energy Projects 14 Wind-Power Production Capacity to Reach 3,000MW by 2020 Most of the new green energy projects drafted in 2008 and the first two months of 2009 are in the field of wind-power generation. All other sectors of renewable energy production enjoyed significant interest except for biofuel projects. Despite the rapid deterioration in the economic environment in the second half of 2008 and early 2009, the number of newly initiated wind-power projects remains encouraging. The association of green energy producers projects that the country s capacity for electricity production from wind farms will reach 3,000MW by The association also expects a steady increase from less than 100MW in 2008 to 500MW by the end of 2010 and about 1,000MW in The estimates are based on ongoing projects and expert assessments on the potential for utilization of wind resources in the long run. About EUR 500mn are to be spent on windpower generators and EUR 100mn on solar installations in 2009, according to other estimates of the association. Main Wind-Power Projects A local licensed representative of Japan s Mitsubishi Heavy Industries intends to invest more than EUR 102.3mn in a renewable energy complex near the northern city of Pleven. The company is to install wind-energy generators and solar panels. In July, Mitsubishi inaugurated a 35MW windpower complex in the district of the Black Sea town of Kavarna together with its local partner Inos 1. The locally registered Winslow Group has earmarked more than EUR 100mn for renewable energy projects by mid The plan comprises installation of solar panels in north-eastern Bulgaria by end-2010 and two wind-power parks by end Winslow Group runs four subsidiaries with interests in residential and holiday properties, agribusiness, and conventional and renewable energy projects. Greece s energy company Alpha Grissin Infotech SA is planning to invest EUR 400mn in the construction of a 400MW wind-power park in the country. The first power supplies are expected in In 2007, Alpha Grissin Infotech SA set up a new company with Germany s Deutsche Bank for construction of solar and wind-power parks in Bulgaria and Greece. The new company, Deutsche Aeolia, currently operates 3 energy projects valued at a total of EUR 65mn. The locally registered AES GEO Energy, controlled by the US energy company AES and the Bulgarian-German company Geo Power, signed financial agreements for setting up a EUR 270mn wind power park near the northern Black Sea town of Kavarna. A consortium between EBRD, the International Financial Corporation, UniCredit Bank and its local subsidiary UniCredit BulBank will provide a EUR 223mn loan. AES will secure the remaining amount. AES GEO Energy will install 52 wind generators with total capacity of 156MW and annual production of 340GWh. Bulgarian-Austrian consortium Wind Energy is planning to invest EUR 300mn in a wind-power complex in the north-eastern region of the country near the Black Sea coast. The company will install 125 generators with total production capacity of 250 MW. The company s investment estimates include works for building related infrastructure. Construction works may start in 2010 at earliest and should be completed in three years. EVN Naturkraft, part of the Austrian energy company EVN, and Germany s wind farm developer ENERTRAG informed about plans to invest EUR 100mn in a windpower project in the northern Black Sea town of Kavarna. The investors will install 25 windpower generators with total capacity of 50 MW and annual production of 140 GWh. The capacity of the park will be expanded to 80 MW at a later stage. The local company Vetrokom has received a first-class investment certificate for its project to construct EUR 80mn wind energy park in the central town of Kazanlak. The company will install 20 turbines with total production capacity of 50 MW. Field works are to start this spring and should be completed by end Solar Energy Japan s Itochu Corp is planning to invest JPY 100bn (EUR 610mn) in building a solar power park in the country until The Japanese have earmarked a total of JPY 110bn for investments in solar power facilities in Europe. The projects will be developed together with the Norwegian solar power technology firm Scatec As, of which Itochu Corp recently has bought a 10% stake. Local minerals extractor Kaolin is planning to install solar panels for production of electricity, which will reduce the carbon dioxide emissions of the company. For this purpose, the company set a new subsidiary in 2008 named Solarpro. Hydropower The hydropower company VETs Svoge launched on May 9, 2009, the first of This article is based on extracts from ISI Emerging Markets IntelliNews publications: Bulgaria This Week and Bulgaria Country Report. For more detailed information please contact ISI Emerging Markets office in Sofia at or info_bg@securities.com

19 analysis the planned nine production units on the Iskar River, near the town of Svoge. The power production capacity of the first plant is 3MW and is expected to produce 19GWh of electricity annually. Investments are estimated at EUR 9.5mn. The project is run by Petrolvilla Bulgaria (owned by Italy s Petrolvilla&Bortolotti), which holds 90% of the share capital of VETs Svoge, and the municipality of Svoge controlling the remaining 10% stake. The total investment for construction and commissioning of the nine hydropower plants with total capacity of 25.7MW is estimated at EUR 80mn. The last unit of the complex is expected to start operations in Austria s energy company EVN has revealed interest in completing the 175MW hydropower complex Gorna Arda in south-eastern Bulgaria. The cabinet plans to call a tender for completing the complex. The project is estimated at about EUR 200mn. It has been designed to meet energy demands of Turkey with possible direct supplies to large industrial consumers. It has started as a joint venture between the National Electricity Company and Turkey s investors but problems with the financing scheme have delayed construction works. Local company Finauto has started construction of a 9.2MW hydropower plant on Arda River in the southern district of Haskovo after applying for a 35-year power generation licence, a note published on the website of the state energy commission informs. The plant will operate two units of 4.6MW each. It should be operational by September Biofuels Local farmers reduced the land area seeded with energy crops to 300,000 decares in 2008 from 900,000 in 2007 due to unfavourable market conditions and risks of lower EU financed subsidies in the sector, according to data presented by the ministry of agriculture. The narrowing is driven by weak supplies of grain corps last year that have pushed up prices of basic foods to record highs. This has urged farmers to reallocate resources to traditional agricultural crops. On the other hand, inefficient state regulations have failed Wind Power Station at the village of Samovit, near the city of Pleven. to set up a functioning domestic market for biofuels that keeps demand for related inputs at very low levels. The energy legislation however supports the use of certain energy crops by power producers through higher prices paid by the state electricity company for use environment friendly primary resources. Energy Efficiency The EBRD is contemplating credit lines to local banks for a total of EUR 55mn in support of industrial energy efficiency and small renewable energy projects. The Bank has already started discussions with local lenders willing to take part in the project. The initiative is backed by the EU-sponsored international fund for decommissioning of the nuclear plant in Kozloduy. The lending facility will tackle deficiencies in the energy service market and will transfer and build expertise related to sustainable energy financing among participating banks, companies, and investors. page 15

20 analysis Butterfly s Ambition A gas project, supported by the West, scores in Europe and Asia, and changes the rules of the game By Boyko Vassilev José Manuel Barroso, on the left, and Sergei Stanishev, Bulgarian Prime Minister during their joint presconference at the Energy Summit Natural gas for Europe. Security and partnership in Sofia. 16 First, Russia s Prime Minister Vladimir Putin decided to skip coming to Sofia, where he was expected by President Georgi Parvanov. Then President Dmitry Medvedev decided not to meet with Sergei Stanishev in Moscow and Bulgaria s prime minister was forced to spend his time by visiting a bookstore and a discotheque. All these events happened within two or three days to a government, which often described by its opponents as being pro-russian. What happened, actually? Have the incumbents in Bulgaria really changed? Have they decided to challenge Russia immediately before the elections? One could hardly believe that, so let us search for a strange answer to a clear question. According to the proverbial Edward Lorenz paradox, if a butterfly spreads its wings at one end of the world, it can cause a tornado in the opposite end. In our case the Bulgarian tornado was caused by a very strange butterfly of a Turkmenistanian origin. The Sofia Energy forum held on April 24-25, 2009, was quickly surrounded by similar meetings in Europe and in Asia. Everybody was referring to Prague and Budapest. Few however paid any attention to what happened almost simultaneously with the event in Sofia the forum in the capital of Turkmenistan, Ashkhabad. There, President Gurbanguli Berdimohamedov, the heir to our Father Turkmenbashi Saparmurad Niyazov, gave a signal that he will follow an independent gas policy, opened both to Russian and Western interests in Central Asia. The large Russian delegation, headed by Deputy Prime Minister Vladimir Sechin, was not overly excited. The tectonic layers of gas policies in Central Asia have moved. One would make a mistake to think that Gazprom is simply a company, supplying natural gas to foreign clients. The gas is not only Russian. Gazprom relies on gas from Central Asia and the Caspian basin, which may be bought cheaply and sold expensively, because of three factors Russia s geopolitical position, Gazprom s business strategy, and last but not the least, the absence of alternative routes in the region. Geography does not provide many options:

21 analysis U.S. Special Envoy for Eurasian energy Richard Morningstar with Bulgarian President Georgi Parvanov during the Sofia Energy Summit. if anyone wants to export gas, the only available option is to use the existing Gazprom infrastructure and accept its conditions. This creates a strategic reserve behind Gazprom. At a certain moment it will not need any more to develop any new deposits in Siberia as it will fuel its ambitious projects with natural gas for instance from Turkmenistan and Kazakhstan. GE Energy The accounts are simple: if Turkmenistan is left with no alternative, the conditions will be dictated by Gazprom. An alternative, however, is already emerging on the horizon the Nabucco project, which has for a long time been the laughingstock of Russia s gas moguls. Nabucco? Well, this is an opera, Gazprom chief Sergei Miller is known to have said jokingly. It is true that when you have an international gas pipeline project backed by America s power, if you have a consortium in place to build the pipeline, if you have the political statements of most European governments that they firmly support the projects and treat it with priority well, if you have all this but lack the most important component, the gas to be transited by the future pipeline then, regrettably, it would look not even like an opera, but rather like a musical. Current events call for innovative solutions. Visit us at ge.com/energy to learn more about the 2.5xl wind turbine. page 17 Actually, this is the main issue for Nabucco: the source of gas. From Turkmenistan, Azerbaijan, Iran or even Algiers or Egypt? Some see this problem as political, and others as purely geographical. Some of the source states are

22 analysis During the Stanishevs visit to Moscow, Russian Prime Minister Vladimir Putin denied his country had disagreements with Bulgaria over plans pushed by Moscow for a new South Stream pipeline to ship Russian gas to Europe. 18 governed by unfriendly political rulers; others are surrounded by competitive neighbors, while the rest are simply on the other side of a sea and will have to liquefy their gas in order to pump it into the Nabucco pipes, which in itself asks a lot. As a result, Nabucco is more of a topic than a practically implemented project and in a material published in the AmCham magazine we have already described how all these issues infuriate the East Europeans. Well, Gazprom has scored although the ball was aimed at its own goal. The January crisis, the scandal with Ukraine and the stoppage of gas deliveries to Europe shocked not only Sofia, Bratislava, Budapest and Belgrade. It seems that Ashkhabad and Baku have asked the same East European question: What if tomorrow we find ourselves in Ukraine s boots? The fear of a new crisis has spurred Nabucco as a mustang in front of prairie fire and the outstanding issues started gradually to fade away. Turkey has started recently to look for a compromise on future gas transits, then a consortium with a might Western participation was established, and today oh, miracle - President Gurbanguli Berdimohamedov has started giving signals to the West. It is only logical that Gazprom s mood went down to the freezing blue to use the words of a prominent American classic of capitalism, whatever is bad for Gazprom, it is bad also for Putin, Medvedev and for Russia. And although Berdimohamedov seemed to switch sides in Prague on May 8 and declined to sign for Nabucco, 1 all the signs are in place that Turkmenistan is looking for its own independent way to bargain successfully with both parties. Thus, April 2009 turned into the month of the high gas geopolitics. Immediately before the Sofia meeting Russia published its energy statement, which was interpreted by some observers as a genuine energy strategy. Russia s gas hub consists of the two large Gazprom projects the North Stream (via the Baltic Sea to Europe) and the South Stream (via the Black Sea and Bulgaria to Europe). In the absence of Prime Minister Vladimir Putin the person, who had to test these ideas on an international soil was the Minister of Energy Sergei Shmatko. He came to Sofia with the South Stream in his briefcase. The other two key participants were the President of the European Commission Jose Manuel Barroso and the newly appointed Special Envoy for Eurasian energy Richard Morningstar. The three of them gave interviews, participated in lengthy news conferences, and they wanted their voice to be heard. The result? 2:1 for Nabucco against the South Stream. There are many questions regarding the South Stream and the participating states will have to answer them, told me in an interview Ambassador Morningstar. This was an indicative statement until yesterday, there were questions regarding Nabucco. As far as Barroso is concerned, on the eve of the elections for the European Parliament and after he announced his candidature for a second mandate as President of the European Commission, he came to Bulgaria to defend the European energy strategy and to state the adamant will of Europe to prevent the shameful January 2009 from happening again.

23 analysis On this global geopolitical backdrop, Bulgaria has a simple but ambitious objective: to have both the Nabucco and the South Stream pipelines passing through its territory. This would bring Bulgaria energy, economic and even political benefits Bulgaria s membership in NATO and the EU is defended by Nabucco, while the traditional friendship with Russia would materialize in the South Stream. Is it possible however, when playing bridge with champions, to make a grand slam as President Parvanov phrased it? What would happen if the champions get nervous? What if they quarrel? What if they ask you to make a choice? Тhese were the questions that the Bulgarians asked themselves after Prime Minister Putin, nervous because of the varying success on the gas front, cancelled his visit to Sofia and postponed the signing ceremony for the South Stream for the visit of Prime Minister Stanishev to Moscow. This was, however, not the end of the catches. Unexpectedly, the South Stream negotiations stumbled on the pipes: the Russians asked again to use the existing Bulgarian network, while the Bulgarians, again, insisted on a separate line. Then a Gazprom representative hit another neuralgic point for the Bulgarian government the bilateral gas agreement. The leaders were said to have hammered out an agreement that the trade in gas must be carried out without intermediaries, but suddenly the Russians said that as there will be no intermediaries, then they should be allowed to sell directly to Bulgarian end users. These developments were topped by the fact that President Dmitry Medvedev decided to postpone his meeting with Stanishev in Moscow without giving any explanations. The butterfly may be spreading its wings today in Ashkhabad, yet tomorrow it may be elsewhere. Today, natural gas is hot, but what about tomorrow? Who is currently creating the energy of tomorrow? And would Bulgaria be able to calculate where the wing will blow and where the tornado will strike? While the gas dramas were still going on, the public BNT Channel One television was airing a reality show with young men and women, who want to become leaders. One of the disputable questions was: Tourism or high technologies should have a higher priority for Bulgaria? It may be odd, but the two young people engaged in the dispute chose tourism. As even young people do not dream of high technologies any more, the grand plans for industrial and energy power may simply fade away. And then Bulgarian will start associating the butterfly not with the Lorenz paradox but with a green meadow, roasted lamb and rural tourism. By that time Putin, already retired, will not avoid Bulgaria any more, as he will be met not with complex energy dilemmas but with ski runs and beaches. If we are not ambitious, we shall remain in the backyard of energy politics, President Parvanov told me in an interview. I started thinking about the ambitions of the young Bulgarians and chose to remain quiet. The catches challenged Bulgaria s President and the Bulgarian government to ask: Haven t we already reached an agreement? Why do politicians agree on something, while gas moguls do something different? At the end, Putin and Stanishev talked for a while, while aides were sewing a button to the suit of Russia s President, Medvedev met with Bulgaria s Prime Minister, and the South Stream agreement was signed with the parameters that were agreed a long time ago. The April gas agitation could hardly be described as a normal commercial bidding. Moscow will start treating Nabucco not as an anecdote about the Verdi opera, but as a competitive reality. Countries like Turkmenistan will start looking for an adequate translation of words like diversification and alternative. And Sofia will learn that the way to the energy grand slam it will have to make more and more choices, and frequently to make painful choices not between the good and the better but between bad and worse. page 19

24 amcham events AmCham Teaches Effective Resource Management Not less than 50 representatives of AmCham members attended the meeting, among them Colliers International Bulgaria, denkstatt, CMS Cameron McKenna, Motorola Bulgaria, NECA, Coca-Cola, etc. 20 Have you been thinking of the fate of a paper piece, or in the professionals language, its lifecycle? Where does the paper come from and where does it end its life? The same question could be applied to your lunch meal, or to the machinery in a factory. What is a prerequisite for sustainable resource management? Product is born, bought, used, and recycled as nutrient or technical capital. Setting up an ambitious task to define the resource management, the AmCham Corporate Social Responsibility (CSR) Committee convened in the end of March. The meeting focused on managing of the environmental resources as water usage, office waste management, paper & periodical practices, electronics use. What gets measured, gets managed, said Ward Miller, a consultant with Denkstatt when explaining the main concept in utilizing of every type of resources in business. At the meeting two more companies presented their activities in the mentioned fields: Kiril Zdravkov, executive director of Ecopack Bulgaria talked about the effective separate collection of packaging waste, and Mihaela Pierova, marketing manager, Devin, presented a lightweight PET bottle project of the company. Miller further explained to AmCham members the concept of the sustainable development and design of the services, called cradle to cradle or C2C, as environmentally-intelligent design helping customers purchase and specify products that are pursuing a broader definition of quality. C2C is guaranteeing the proper utilization of resources during their life cycle. It is different from the mainstream practice cradle to grave that only partially explains the impact of economic activities on the environment, Miller said. He gave some practical advice to the companies and their employees: To set rules for the air conditioning; to change/reduce the light bulbs; to take out a light bulb or two from multi-socket installations; to maintain temp 25 0 C in the summer and 22 0 C in the winter; to purchase only electronics with A, A+, or A++ Ward Miller with denkstatt explained to the AmCham members the concept of the sustainable development and design of the services, called C2C or cradle to cradle. energy rating; turn off other office equipment using power outlets with timers; to perform an energy audit of the office; to install a building automation/management system for monitoring and control; go forest free create corporate policy for a volunteer day when employees plant trees as a work day. Since 2004 Ecopack Bulgaria has recycled 226,162 tons of packaging waste, Kiril Zdravkov said. Here are the basics: For every color container there is designated day in which all containers in the same color are serviced; the collected packaging waste is transported to the sorting line; at the sorting line, the waste is separated according to material, pressed and packed in bales. If we recycle 1 kg of paper, we will save the use of 32 l of drinking water. If we recycle one glass bottle, we will save energy for four hours lighting with a 60 W electric bulb. Devin presented a project for decreasing the PET weight of their bottles by 15 percent. The benefits are ecologic, as by decreasing the waste of PET, and economic as by the increase profitability per bottle, plus improving the bottle emotional and functional benefits. In April Devin received the eco responsibility award in the prestigious competition Eco Innovator in the category Resource Management for decreasing the PET weight of DEVIN bottles. Kiril Zdravkov, executive director of Ecopack Bulgaria talked about the effective separate collection of packaging waste.

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26 amcham events Meet New Members April Par t y Presents Six Companies Mr. Philip Welsh, Manager of Trinity Corporate Services meets Trayanka Orphanidu with Force Delta. 22 Over 100 businessmen and guests joined the well known AmCham Meet New Members party on April 15, which was held at the Radisson SAS Grand Hotel in Sofia. Anthony Hassiotis, AmCham President and CEO of Eurobank EFG Bulgaria, welcomed the guests by emphasizing the role of the newly launched three AmCham board committees (Business Promotion Committee, Public Affairs/Advocacy Committee, Membership Development Committee). He encouraged the businesses to actively support the committees work. At this party s spring edition six new AmCham members were presented to the audience: Adecco Bulgaria by Ivaylo Slavov, country manager; Bulgarian Property Developments by Philip Pashov, executive director; Mars Incorporated Bulgaria by Iva Hristova, sales manager; MB Communications, Lilyana Zagorcheva, managing director; Savantelbul Bulgaria, by Jivko Jeliazkov, director, and Trinity Corporate Services, by Philip Welsh, manager. Adecco S.A. is a world leader in workforce solutions. Every day, 700,000 Adecco associates help 150,000 clients achieve their business goals through its network of over 33,000 employees and 6,600 offices in over 70 countries and territories around the world. Adecco delivers an unparalleled range of outsourced solutions, flexible staffing and career resources to corporate clients and qualified associates. Bulgarian Property Developments was established in 2004 with the intention of investing in property in Bulgaria. BPD was the first company specializing in Bulgaria to be listed on AIM, the second tier market of the London Stock Exchange. The company s objective is to build up a balanced portfolio of industrial real estate, offices, and trade centers in order to achieve diversifications in respect to geographical scope, type of the properties, timeline progress. The major part of the company s funds is invested in green field projects, but investments will also be made in finished products generating constant revenue. Mars Incorporated Bulgaria is a global company with 219 offices and 98 factories around the world. Many Mars brands are among the category leaders and are now available in over 100 countries on five continents with a total turnover of $28 billion. The company has developed 11 leading global brands from M&M S, Twix, Mars, and Snickers in snack food, to Pedigree, Whiskas,

27 amcham events Cesar and Sheba in pet care, and Uncle Ben s in food. With the acquisition of Wrigley on Oct. 7, 2008, Mars now is a global leader in chocolate, a global leader in gum and the number two in confections. MB Comms. is a trade mark of MARSI B Ltd. The company is a communications consultancy whose experts combine a decade - long, rich local and international experience in: corporate communications, financial & IR communications, public affairs & institutional relations. Our sectors of expertise are: industry & production, energy, banking and finance, information technologies, telecommunications, pharmaceutical, construction, development and real estate as well as retail. Established in 2006, SavantElbul Ltd. is a British-Bulgarian Construction Consultancy Company, delivering professional consultancy services that cover the full range of activities in design, technical support, cost and overall project management. Currently is working on commercial, residential, hotel and entertainment projects in various Bulgarian cities. Trinity Corporate Services offers a comprehensive range of management and administrative services including accounting and management reporting, corporate secretarial services, human resources and payroll, fiduciary and domiciliary services, company formations and dissolutions, shelf companies and VAT compliance. The Swedishowned Trinity is headquartered in Warsaw, with offices in Sofia, Bucharest, Krakow & Wroclaw and 170 employees across the region. The guests were willing to find more about the six companies at their stands. Anthony Hassiotis, CEO of Eurobank EFG Bulgaria standing next to Iva Hristova, Sales Manager of Mars Incorporated Bulgaria. Mr. Ivaylo Slavov, Country Manager of Adecco Bulgaria Mr. Jivko Jeliazkov, Director of Savantelbul Bulgaria page 23 Philip Pashov, Executive Director, Bulgarian Property Developments in the middle meets with Stefan Ivanov with Citibank Sofia (on the right). Liliana Zagorcheva with MB Communications gives out the raffle award to Tom Higgins with Balkan Accession Fund.

28 news AmCham Project on Improving Commercial Registration in Bulgaria Legal analysis concludes: Companies need trademark protection In line with its policy to facilitate a more transparent investment and business environment in the country, and to protect the legitimate interests of its members, the American Chamber of Commerce in Bulgaria is conducting a project entitled "Increasing the Transparency and Accountability of the Commercial Register in Bulgaria". The project is funded by Fund Bulgaria, Balkan Trust for Democracy, Belgrade. Its goal is to improve efficiency and effectiveness of the Commercial Register through improved dialogue between the business community and the responsible state institutions. The project is carried out in partnership with the major Bulgarian business associations: the Bulgarian Chamber of Commerce and Industry, the Bulgarian Industrial Association and the Confederation of Employers and Industrialists in Bulgaria. In this issue we present to you two of the project deliverables: a legal analysis of the Commercial Register policies and practices conducted by Penkov, Markov and Partners, and a summary of the findings from a survey with business representatives - clients of the Commercial Register, on their satisfaction and identified areas for improvement, conducted by Market Links. For more information on the project please visit Commercial Register section, or contact Sevdalina Voynova, AmCham Government Affairs Director, at s.voynova@amcham.bg. 24 Under the assignment from the American Chamber of Commerce in Bulgaria, a legal team of qualified lawyers of Penkov, Markov & Partners, Attorneys-at-Law, prepared a legal due diligence review and analysis of the policies and practices of the Commercial Register and the consistency of the legal framework relevant to the commercial registration in Bulgaria. The due diligence aims to evaluate the policies and practices of the Commercial Register in the process of commercial registration, as well as their interaction with the rest of the legislation in force relevant thereto. The analysis considers the significance and the certainly positive impact of the new regime for commercial registration, introduced with the entry into force of the Commercial Register Act since Jan. 1, 2008, for the development of the commercial exchange in Bulgaria, the stability of the social relations connected to the business, as well as the improvement of the investment climate in the country. The unification of the registration, the transparency and easy access to the information, and the speeding up of the processes, concerning the registration of circumstances, which are subject to mandatory registration are only part of the examples for the positive influence of the new regime for commercial registration, immediately after the entry into force of the new Commercial Register Act. The role of the due measures with regard to overcoming the initial difficulties in the beginning of the operation of the Commercial Register and the considerable improvement of its functioning have also been noticed, for example the overcoming of the conflict with the provisions of the Accountancy Act, which implied that the merchants should be re-registered within the first six months upon the introduction of the new Commercial Register, the provision of an opportunity for the merchants to refer to the documents already submitted to the Register when filing subsequent applications etc. At the same time the key element of the analysis is to identify the currently existing gaps in the regulation as well as the inconsistencies and drawbacks of its application. With their ascertainments and recommendations the team of Penkov, Markov & Partners aims to contribute for the increasing of the transparency and the effectiveness in the operation of the Commercial Register by analyzing in their integrity and interaction all relevant provisions, contained in the specialized regulation, the provisions of the rest of the legislation relevant thereto (with a focus on the Commerce Act, the Civil Procedure Code, the Tax and Social Security Procedure Code, the Accountancy Act, the Tariff on the state fees collected by the Registry Agency and the Personal Data Protection Act), as well as the accumulated practice of the registration officials. In the analysis an attempt is made not only to specify the nature of these issues, but also to suggest possible ways and methods of their resolving. Part of the problems established and examined in the analysis are connected with the necessity for improvement of the legal rules concerning the trade names of the companies, their protection as trade marks, avoidance of the discrepancies caused by the procedure for appeal against refusals provided in the current provision of Article 25 in the Commercial Register Act, the establishment of a possibility for providing applicants with a timeline for correcting established omissions and incompleteness in the documentation, improvement of the regime for representation of the traders by third persons before the Register, the necessity for improvement of the regulation of the ex officio institution of liquidation proceedings in respect of traders that failed to re-register within the timeline etc. Since part of the established problems is caused by gaps and incompleteness in the legislation, the latter raises the necessity of improvement or respective supplement of the law. Therefore, recommendations are made for providing an explicit, exhaustive and clear regulation with view to overcoming of the drawbacks. Other problems result from inconsistent or controversial interpretation of the legal regulation or from the necessity for improvement of the technology for announcement and registration in the Commercial Register. Therefore, with a view to the specifics of each problem in question the analysis attempts at giving precise recommendations and suggestions for their overcoming, as well as reflecting in an objective way the policies and practices of the Commercial Register by placing exact emphases on where improvement of the consistency of the legal regulation can be reached. Please read the full text of the analyses at:

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30 news Commercial Registration In Bulgaria Improved, Some Issues Remain The American Chamber of Commerce in Bulgaria (AmCham) is implementing a project titled Increasing the transparency and accountability of the Company Register, funded jointly by Bulgaria Fund and the Balkan Trust for Democracy. The project is carried on in partnership with the Bulgarian Chamber of Commerce and Industry and the Confederation of Employers and Industrialists in Bulgaria. By Zornitsa Markova, Market LINKS 26 A business survey was conducted by Market Links, an independent public opinion polling agency, at the commencement of AmCham commercial registration project in order to gauge current levels of awareness and satisfaction with the range of services delivered by the new Company Register. Within the survey, the opinions of 115 representatives of the business community were recorded, including aspects of the services delivered via customer helpdesks and online. The opinion poll had 66.1 percent of respondents from Sofia, 24.3 percent administrative district centres and 9.6 percent from smaller agglomerations situated across Bulgaria. Approximately 40 percent of respondents work in the service sector, 20 percent in the industrial sector and 13.9 percent in the trade sector. The results of the survey demonstrate that the services offered by the new Company Register are widely familiar amongst respondents and approximately 90 percent of them have already used at least one of the available services. Half of the respondents have used more than 10 services since the Company Register was rolled out at the beginning of According to respondents, the most commonly used service provided by the new Company register is company re-registration (87.8 percent), followed by declaring circumstances relating to the company standing (72.2 percent). In certain cases, respondents have given more than one answer to the questions. A relatively balances spread (circa 40% of all respondents) has been noted in terms of the preferences of users with regard to the manner of use of individual services, inter alia, conducting business in person, representation by lawyers or online. A share of 28.7 percent of respondents has opted for conducting their business by an appointed representative. One of the most frequently mentioned points of inconvenience is the requirement that appointed attorneys have to be registered lawyers, which precludes the possibility for other members of the legal profession to act in that role. Most of the problems identified in the course of the survey relate to the period immediately after the launch of the new Company Register. Respondents report that later those initial obstacles were largely overcome, although not sufficiently rapidly. The amendments to statutory regulations concerning the registration of trading companies was initially hailed as a step towards faster registration of sole Bulgarian ministry of Justice developed a website of the commercial register, where the all of the registered companies are listed. The website has a Bulgarian only version for now. traders, companies and cooperative undertakings, a task users were assured would not take longer than a day. In practice, however, respondents share that too many errors still occur and registration deadlines are unnecessarily prolonged. These are among the main stated reasons why company registration fails to be authorised approximately 40 percent of respondents state that they failed to obtain such authorisations whilst each case of failure to complete an administrative procedure requires the payment of the respective administrative fee in full again and frequently causes deadlines to be missed. Three main categories of problems are yet to be addressed: In the first place, respondents point out problems relating to the standard of customer service. Help desk officials are perceived as being insufficiently competent and unable to provide adequate consultations regarding a number of standard queries. Problems are also reported relating to the failure of desk clerks to provide necessary assistance in the process of accepting applications for processing. This often results in incomplete and inaccurately completed applications being returned for correction. In respect of the online environment, users respectively point out the need for the system to generate error reports in the case of incomplete entries and alert the user before an application is sent in for processing and the relevant fee has been paid. At the same time, no working mechanism has been set up which allows feedback or assistance via consultations to be obtained. Users also share their concern over the fact that telephone enquiries are often not attended to or are addressed by officials who do not have the necessary competence to deal with the respective enquiry. The second major category of identified problems relates to the range of e-services provided by the Company

31 news Register. The website is perceived as badly organized in terms of sections, containing information that is incomplete, lacking in good navigation tools and comprising a number of non-functioning facilities, the search facility being a case in point. The software glitches that occur in the process of filling out application forms frequently result in error messages displayed on the screen and the server is often overloaded which results in loss of time and the need for the same information to be entered several times. What users point out as striking is that information available from other public bodies (for example, particulars relating to the good standing of a company) may not be used online which rather defeats the point of facilitating users by providing e-services. The third major problem identified by respondents is the absence of accurate, clear and comprehensive information about the full range of services delivered by the Company Register. On the other hand, respondents point out the great number of different forms and applications that have to be completed and the frequently inadequate instructions designed to aid them in the process, which are sometimes duplicated and fail to serve their function. In terms of the cost of the services provided by the Company Register, 41.7 percent of respondents described it as commensurate as compared to the volume of business and turnover of the companies, while 33 percent reported costs as negligible. Nevertheless, the fees collected for registration are most frequently described by being within acceptable limits (53.9 percent of respondents), while 32.2 percent of respondents describe them as high. On the other hand, many of the respondents share their concern over the universal access to all particulars entered into the system that is currently allowed, including in respect of personal details of authorised signatories, annual accounts, template power of attorney forms used by companies and banks, shareholder registers of listed companies, lists of shareholders present at meetings and specimens of their signatures. This is seen as creating the potential for powers of attorney to be falsified or for serious frauds to be committed. One suggested possibility to avert similar problems is for access to information to be subject to appropriate controls and removing the current protection of anonymity afforded to persons searching the register. This will ensure that the exchange to information will not be a one-sided process and traders will have information about the persons seeking information or looking up their details online. All respondents state their satisfaction with the exhaustive and complete information available through the Company Register. The main advantages of using the services that are now available are associated with facilitated participation in public procurement procedures as a certificate of good standing is not required any longer and contracting authorities may carry out searches online solely on the basis of the relevant company registration number of the applicant. Concerns have solely been raised over the database, which allows searches to be carried out on the basis of a limited number of pre-defined criteria and that the option to look up the history of any company fails to provide relevant information concerning any given circumstance relating to the business conducted by companies. The possibility to lodge online applications, thus saving 25 percent of applicable fees, is seen as a cost-saving opportunity by 25 percent of respondents. Notwithstanding the problems identified by the users of e-services above, this possibility is seen as an incentive by approximately 56.5 percent of all respondents. Taking into account the fact that 18.3 percent of respondents were not aware of this option, improved awareness is seen as having the potential to make e-services more popular. Even so, approximately 25.2 percent of the companies do not see this option as an advantage. In this sense, a conclusion may be drawn that e-services would represent an advantage solely if steps are taken to ensure that it functions appropriately. Concerning the transparency of the information stored in the database of the Company register, both advantages and disadvantages are pointed out by respondents. On the one hand, businesses are convinced that the availability of that information makes the business environment more predictable and businesses more responsible because of the possibility to verify that the bona fide status of the parties to a transaction and to prevent the submission of inaccurate or false information. page 27

32 member news Council of American Overseas Research Centers Welcomes New Member Center The Council of American Overseas Research Centers (CAORC) Board of Directors welcomed the American Research Center in Sofia (ARCS) as the newest member Center at the annual board meeting on April 25, The members of the Council of American Overseas Research Centers have centers in Afghanistan, Algeria, Bangladesh, Bulgaria, Cambodia, Cyprus, Egypt, Greece, India, Iran, Israel, Italy, Iraq, Jordan, Mexico, Mongolia, Morocco, Nepal, Pakistan, Sri Lanka, Tunisia, Turkey, West Africa, West Bank/Gaza Strip and Yemen. They serve as a base for virtually every American scholar undertaking research in the host countries. The American Research Center in Sofia (ARCS) was established in 2004 as an organization dedicated to facilitating academic research in Bulgaria for North American scholars and collaboration between scholars from North America and countries in Southeast Europe (Albania, Bulgaria, Kosovo, Macedonia, Montenegro, Romania and Serbia). Cornell University is the host institution of ARCS in the United States. ARCS is registered in the United States as a notfor-profit corporation and in Bulgaria as a non-profit foundation. ARCS is exempt from Federal income tax under section 501 (c) (3) of the Internal Revenue Code. Contributions are deductible from Federal income tax. A principal aim of ARCS will be to foster research and collaboration between North American scholars and those in Southeast European countries, formerly deprived of access to Western scholarship. Albania, Bulgaria, Kosovo, Macedonia, Montenegro, Romania and Serbia share a remarkable historical heritage and strong cultural ties. Sofia is well situated intellectually and politically as host city for an international research institution; inasmuch as it has not been directly engaged in recent troubles between countries of Southeast Europe, and is relatively centrally located, it has a great potential to provide an intellectual setting for careful and unbiased assessment of Southeast Europe's past. The intellectual community thus realized should become a significant resource for overcoming some of the longstanding ethnic and national problems in the region. 28 AmCham Takes Part in Investing Across Borders Project The American Chamber of Commerce took part in the Investing Across Borders project of the International Finance Corporation, as one of the contributors from Bulgaria. The principal objective of the IAB project is to stimulate reforms leading to a more business-conducive, transparent and secure environment for foreign direct investment. The project involves four surveys: 1) Investing in sectors measures restrictions on foreign equity ownership in a variety of sectors. 2) Starting a foreign business measures the process for establishing subsidiaries of foreign companies in your country s largest business city 3) Accessing land measures the process of leasing land in your country's largest business city and examines land rights and land information available to investors. 4) Arbitrating disputes examines your country's legal framework on domestic and international arbitration, enforcement of arbitration awards, and mediation. AmCham expresses special gratitude to: Penkov, Markov & Partners, Colliers International Bulgaria, and Grenville Bulgaria for their contributions. Investing Across Borders website org offers more information about the project.

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34 member news Intellectual Property Top Award Given To Long-Time Patent Specialist On April 24 the National portal for intellectual property IP Bulgaria ( announced its decision Dr. Krastio Iliev to be awarded with the award for contribution to the development of intellectual property. The main objective of the award is to give due recognition and to actively encourage people to respect intellectual property in the country. Dr. Iliev is an engineer by training. He started his professional development at plant Struma and then became actively engaged in innovation as a research associate at the Institute of Mechanical Technology, where he worked for 13 years. In 1968 he became a senior research associate, and in 1970 as a result of the research he received a doctorate from the Institute of Odessa. Dr. Iliev has three inventions resulting from his achievements in research and development research. His experience was valuable in his work in the Council of Ministers as an advisor on licensing activity. He headed the Institute of Inventions and Rationalization. During his presidency in 1982, Bulgaria became the first country to host a forum of patent organizations. Under the guidance of Dr. Iliev, Bulgaria achieved a lot in raising the level of experts dealing with intellectual property. In 1987, some 4,200 applications for inventions were filled out. Currently the applications are 10 times less ( per year). Dr. Iliev has been actively working on Bulgaria s accession to the International Patent Cooperation Treaty. As a result, Bulgarian inventors are now allowed to have easier and cheaper protection of their inventions out of the our country limits and they get also an opportunity to use information on innovation carried out in the world. Dr. Iliev carried out active cooperation with WIPO (World Intellectual Property Organization) and developed a program for the growth of intellectual potential of young people in Bulgaria. Following the adoption of the Patent Law in 1993, Dr. Iliev became the first president of Bulgarian Patent Office. He is a lecturer and an active supporter of education, who launched in UNWE the specialty Economics and Management of Intellectual Property. Dr. Iliev is a Bulgarian and European patent agent, industrial property agent, working with the Bulgarian Industrial Association. He is a prominent expert in the field of intellectual property, respected by many colleagues in the world, and a symbol of the Bulgarian IP professional community. Other prizes for contribution to the development of intellectual property were awarded to: Eng. Tyanko Stoilov (recognized expert in the field of intellectual property, who organized lectures for inventors in Plovdiv for many years); Ina Kileva (deputy minister of culture); Vladimir Yossifov (long-time director at the World Intellectual Property Organization, working for the promotion of innovation in the world, who with his overall work, performance and international reputation, built positive image of Bulgaria as a country actively present in the global IP policy); Dr. George Sarakinov (recognized expert in the field of copyright); Ivan Georgiev - Rembrandt ( ) (painter - the father of abstract expressionism in our country), Ivo Hadjimishev (photographer create an image campaign Piracy Rob ), Violeta Radkova (stage, a representative of the prominent artists in Rousse), Maria Sekerdzhieva (deputy minister of justice, negotiator for intellectual property during the accession talks with the EU). new members 30 Established in 1997, Premier Tours is today one of the biggest Bulgarian travel companies. Starting 2009, the company became part of the American Express Business Travel network one of the worldwide leaders with more than USD 26 billion managed travel expenses for Our clients are more than 200 corporate clients, leaders in their fields. With well equipped offices in Sofia, Varna and Plovdiv we cover completely all major Bulgarian cities and we are quick and efficient. More than 50 young, creative and experienced professionals, completely devoted to the needs of our valued customers are available 24/7. For the business traveler we offer the complete range of travel services air tickets, hotel accommodation and rent-a-car at extremely competitive rates, but at the same time at very high level of service. Additionally, we offer the widest selection of leisure travel possibilities - package holidays of all major German tour operators, cruises from almost every cruise company in the world and the possibility for tailor-made individual trips. Our team will gladly make all arrangements for a successful company incentive in Bulgaria or abroad - group travel, team-buildings, presentations, meetings and congresses. Contacts: Rositsa Georgieva Executive Director Tel.: Fax: manager@premtours.net Web: Address: 43, Bregalnitsa Str Sofia

35 tourism Top View of the newly built church in Pamporovo Pamporovo Hotels Survey Tourists Preferences Key findings: 53 percent of the tourists choose their destination and hotel on the internet; Among foreign tourists, the majority are English, Russian and Macedonian, while this year the interest from Greece, Serbia and Romania was restored; Most of the remarks are related to infrastructure; best reactions are reserved to service and personal treatment received from staff; 89 percent of participants in the survey are satisfied with the booking system and its reliability. Pamporovo hotel owners, supported by the municipalities of Smolyan and Devin, announced the results of the survey of tourist s dispositions in the region initiated by complex Royal Lodge. It lasted four months and its goal was to establish visitors preferences, remarks and dispositions. The number of the collected inquiry cards Hotel Evridika in Pamporovo from visitors (almost 3,600) was far lower than the expected. The organizers explanation of the fact is that a survey attempt of this scale is made for the first time and hotel owners do not have established mechanisms for gathering such feedback. Next year the inquiry will be supported by a more page 31

36 tourism active communication campaign. Nevertheless, the results provide some important data about the trends and where things need improving. According to the respondents, 53 percent of the tourists choose destination and hotel on the internet. It is explained mostly with the travelers preference to establish direct contacts with their hosts. Among foreign tourists the majority is still comprised of English, Russian and Macedonian tourists, while this year the interest from Greece, Serbia and Romania has been renewed. The number of English tourists is slightly decreasing compared to previous years. One third of the complaints are about the infrastructure in Pamporovo and best reactions are related to the quality of services and personal treatment received from the staff the record 92 percent are evaluating the service of chambermaids and ski instructors as very good. Some 89 percent are satisfied with the booking system and its reliability Internet again plays a key role in the booking convenience. The Restaurant at Panorama Hotel More than 90 percent of the hotels in the region welcomed the initiative, first of its kind, but only few of them managed to really call on their guests to fill the inquiry cards. The initiators from Royal Lodge promised to carry on the idea also next year. Krassen Krastev, Royal Lodge owner, commented: If we want to provide competitive and much desired tourist services, it is important to look straight at the truth and ask our clients what are their expectations and remarks. Next time we will look for and will have a greater number and more detailed opinions. 32