Bulgaria’s Economy Minister Expects Substantial Investments from German, US Companies in 2015

Business | April 27, 2015, Monday // 11:05|  views

Bulgaria's Economy Minister Bozhidar Lukarski, photo by BGNES

Economy Minister Bozhidar Lukarski announced that Bulgaria expected to attract investors from the US and China in 2015 and not only from Western Europe.

In an interview for Standard daily, he said that his recent visit to the US made him expect a substantial increase in US investments in a number of spheres, adding that US-based companies had expressed interest in road infrastructure projects and schemes related to the power transmission network.

Lukarski underscored that Germany was expected to be the largest foreign investment source to Bulgaria in 2015.

He said that a major investment of German Behr-Hella Thermocontrol at the Sofia – Bozhurishte Economic Zone was to be unveiled on May 20, stressing that the company planned a major expansion over the next few years.

Lukarski informed that Vidin was also expecting a large-scale German investment and also mentioned “a big Scandinavian company in the furniture segment” without going into details about the plans of the latter.

Asked to shed light on the plans of the Economy Ministry for a new Public-Private Partnership Act, Bulgaria’s Economy Lukarski said that the step had been taken due to occasional complaints of investors from western countries that the sector was plagued by a lack of regulation and the commitments of the local authorities, the state, and the private investor were unclear.

Lukarski made clear that Bulgaria was studying Serbia’s regulatory framework in this area, adding that it had often been cited as a good example.

He went on to say that all industrial consumers of energy would see a substantial decrease in electricity prices as of July 1.

Stressing that the percentage was yet to be specified, he assured that the measure would increase the competitiveness of local companies, as well as boost investor interest in Bulgaria as a business destination.

Bulgaria’s Economy Minister underscored that Bulgaria had the highest price of electricity for industrial consumers in the EU.

He went on to say that the temporary suspension of the production process at the Iganovo site of arms manufacturer VMZ Sopot will take its toll on the financial results of the state-owned company.

In an interview for Standard daily, Lukarski explained that the Iganovo-based warehouse of the arms maker, which was stricken by explosions on April 14, would remain closed for an indefinite period of time due to the ongoing investigation of the accident.

He noted that the state-owned arms manufacturer was undergoing restructuring.

Responding to criticism of opposition party the Bulgarian Socialist Party (BSP) over the preparations for the sale of a profit-making state-owned company, Kazanlak-based "Science, Research & Technology Engineering" (NITI-Kazanlak), he argued that this was the third privatization attempt for the company since 2008.

Lukarski claimed that although NITI-Kazanlak had reported positive financial results for 2014, it amounted to BGN 168 000, “not millions of leva.”

Bulgaria’s Economy Minister declared that the main product of the state-owned entity was an outdated low-priced hunting rifle, adding that it could hardly be labeled “the most competitive weapon on the market.”

“NITI-Kazanlak has long ceased to be a company that defines the structure of the military–industrial complex unlike VMZ Sopot. This is why VMZ Sopot is not being privatized but NITI-Kazanlak is,” he stated.

He explained the lower price tag of BGN 3.6 M with the fact that a plot spanning nearly 120 000 square meters had been subtracted from its assets, thereby reducing its capital substantially.

Lukarski reminded that the estimate of BGN 3.6 M was just an initial price setting the minimum threshold, while the government was hoping to get much more money for the company.

As regards the recent visit of European Commission (EC) Vice-President Jyrki Katainen to Bulgaria and his clarifications on the European Commission's Investment Plan for Europe (also known as the “Juncker Plan”), he pointed out that businesses had probably been surprised to learn that they would not need the government as an intermediary to propose their projects.

He emphasized that the idea behind the Juncker Plan was to encourage public-private partnership and to channel private investment into public or public-private projects with added value.

“Katainen said during his visit to Bulgaria that at the EC would open the door to energy diversification projects and energy infrastructure projects first. However, it must be clear that the Juncker Plan is an investment plan and not a governance plan. Many people assume that it is a new operational program of sorts. No, it is not. There are no grants and there are no allocations of financial resources per Member State or per region. Theoretically speaking, out of a total of 100 public and private projects seeking investments from the fund, the EC may give the green light to 100 German schemes or to 99 German and 1 Bulgarian. Interest in a certain project is entirely market-driven,” Lukarski explained.

Bulgaria’s Economy Minister was optimistic about the chances of Bulgaria accessing funding under the EC’s Investment Plan for Europe, adding that he had submitted three projects, including one for the construction of a terminal at the Stara Zagora airport and one drafted by the Bulgarian Academy of Sciences (BAS) for the development of geoponic farming near Pazardzhik.

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Tags: bozhidar lukarski, Economy Minister, foreign investment, electricity prices, public-private partnership, Public-Private Partnership Act, VMZ Sopot, arms factory, Military-industrial complex, privatization, Behr-Hella Thermocontrol, Juncker Plan, investment plan


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