Download Energy

Energy Sector Overview
 Positioning of Bulgaria as a reliable base for the
transit of oil, natural gas and electric power and
as a regional dispatching centеr
 Biggest exporter of electricity on the Balkans –
6,790 GWh
 Available electricity generation capacity–
10,234МW
 Trend towards greater energy independence
through development of local energy resources
1
Investments in the Energy
Sector
Project: Rehabilitation of U 1-4 & construction of
FGDs at units 5 and 6 of Maritsa East 2 TPP
 Rehabilitation of 4x150 MW units + installation of FGDs & Construction of
FGDs at units 5 and 6
 EPC Contractor U1-4: Mitsui Co Ltd, Japan
EPC Contractor FGDs 5&6 : tender May 2004
 Total investment EUR 226 M financed by JBIC – 85% of the project's cost
75 million euro, co-financed by ISPA (grant), EBRD (credit) and Maritsa East
 Status: financial arrangements in process, S&P assigned 'BB' long-term
corporate credit rating to Maritsa East II TPP
2
Investments in the Energy
Sector
Project: Construction of replacing capacity on the site of Maritsa East 1
New capacity 2x335 MW + installation of
FGD`s
Total expected investment: EUR 900 M
Project financed: BOO
Status: financial arrangements in process,
expected financial closure end 2004
Expression of interest:
AES;
Mitsui + ENEL
3
NABUCCO GAS PIPELINE PROJECT
Gas Bridge between Asia and Europe
BASIC DATA
 The pipeline length – 3.400 km
 Consumption estimated: 20-25 billion m3 p.a.
 Status: Feasibility Study ongoing; New pipeline effective
operation expected 2012;
 Starting at Georgian/Turkish and Iranian/Turkish border
leading to Central and West European markets
 Estimated investments costs – 4.4 Billion Euros
4
The Regional Perspective
New natural gas interconnections
The main destinations:

Increase of Russian natural gas transit through Bulgaria
to Greece, Turkey and FYROM.

Opening up of opportunities for Russian natural gas
transit to Italy by means of a transit gas pipeline viewed
as part of the development of European corridor № 8.

Construction of a gas pipeline between Bulgaria and
Serbia and Montenegro for Russian natural gas transit.

The “NABUCCO” Project
5
Credit Rating of Bulgaria
Bulgaria has proven higher investment credibility
June 2004 Standard&Poor’s gave an investment-
grade foreign-currency rating
BBВ- (stable outlook) by Standard&Poor’s;
BBВ- (stable outlook) by Fitch IBCA;
Bа1 (stable outlook) by Moody’s;
BBВ- (positive outlook) by the Japan Credit
Rating Agency
6
Tax Reform – Budget 2005

Corporate tax: 15%

Income tax rate: min - 10%; max - 24%
Increasing the amortization norm for new plant and
equipment: 50%

Expenditure on research and development of the
companies are not subjects to taxation


Tax Preferences:
 establishing new enterprise
 expanding of an enterprise
 increasing the average number of employees
7
Investment Categories
Third category – universal measures (Euro 5 - 25 mln.)
 Submission of information, prepared and processed in advance;
 Certificate, specifying the investment category and the type of
administrative services, provided by the central and local
executive authorities;
 Minimum deadlines.
Second investment category (Euro 25 - 50 mln.)
 Individual administrative services;
 Individual information services;
 Institutional support.
First investment category (above Euro 50 mln.)
 Universal measures;
 Institutional support;
 State aid for developing the necessary elements of technical
infrastructure.
8
Requirements to investors


Establishing a new enterprise, expanding
or modernizing an existing one
Term of project implementation – up to 3
years

Creating new jobs

Economic efficiency
9
Investment incentives in
Bulgaria
 15% corporate income tax in 2005
 0% corporate tax in areas with above average
unemployment
 Depreciation rates – 2 years for computers and related
equipment and 3 1/3 years for manufacturing
equipment
 2-year VAT exemption for imports of equipment,
consumables and components related to investment
projects valued over € 5 million
 0% capital gains tax
 The highest bracket for personal income tax is only 29%
for monthly income over € 300
 The Employment Agency’s Programmes and measures10for
employment of young people
Innovation Strategy
measures for stimulating innovative and research
potential
 Stimuls for research, related to industry and the co-operation
among R&D units, universities and business;
 Improvement of the innovations funding, evolving
mechanisms for attracting private equity/capital;
 encouraging implementation of new technologies;
 support for the establishment of clusters in sectors,
traditional for our country;
 support for newly established companies and firms that
develop successfully in view of enhancing their innovative
potential;
 creating mechanisms for attracting foreign investment in the
spheres of science and technology.
11