Zentiva made 10.4 million euros from sales last year, not taking into account Sicomed's results.
We expect consolidated results of around 100 million euros group-wide for this year," said Mariana Wencz, country manager of Zentiva Romania.
"We launched the Simvacard service on the Romanian market in February last year, which generated 5 million-euro sales, and introduced the Modafen drug on the Romanian market last August, which contributed 2 million euros to the company's sales," Wencs said, adding that "the sales rose also due to the activity of product promoting teams."
Simvastatin is the market leader in its respective sector, according to company estimates.
Zentiva intends to introduce 12 new products in the market this year.
Sicomed posted a 20 percent increase in sales in 2005 vs. 2004, according to its preliminary results.
In September last year, Zentiva completed the takeover of the majority shareholder of Sicomed, investment company Venoma Holdings Ltd., for 102 million dollars (some 85 million euros).
Zentiva later made an offer to buy more Sicomed shares.
The operation enabled it to increase its shares to 75 percent.
SIF Oltenia and SIF Muntenia, minority shareholders in Sicomed, subscribed during the offer.
Investment fund QVT Fund LP, which owns 12.9 percent in Sicomed, and the other minority shareholders kept their stakes.
This move comes as pork consumption in Romania continues to grow 10 per cent year on year, according to Romania's councillor for agriculture, Achim Irimescu. In January he told CEE-foodindustry.com: ?Last year Romania imported 50 per cent of the national consumption of pork.?
?Although there are seven million pigs in the country only one million are bred for commercial companies,? he added.
Irimescu also said that as the Romanian economy continues to grow steadily he believes the demand for pork will continue to grow, because as wages increase meat consumption does the same.
This is the first time the meat processor has taken production outside Germany and it hopes to start production of meat and charcuterie products in Romania as soon as this autumn but at the latest by the end of the summer 2007, with plans to supply nearby countries such as Moldova, Hungary and Bulgaria.
The Reinhurt factory, currently under construction in Feldioara north of Brasov in central Romania, will produce only national and regional specialities from Romania and other countries in southeast Europe.
The company, which achieved an annual turnover in 2004 of ¤300m (RON1bn), has invested ¤15m on the state-of-the-art development that will work to attain recognised German production standards. And it will initially have an annual capacity of 12,500 tonnes, producing around 20 tonnes of sausage, salami and ham a day.
The German company, which currently exports more than 30 per cent of its production from its five locations in Germany, is to sell the produce in supermarkets and small retail outlets throughout Romania.
This is the second foreign meat processor to invest in the Romanian meat market in the past month, after the world's largest hog producer and pork processor, Smithfield Foods of America, revealed last month that it planned to invest ¤703m in developing its activities there over the next five years.
In March 2004, Smithfield entered the Romanian market after buying the Comtim group and acquiring a majority stake in meat processing company Agrotovis.
The American company paid ¤28m for Comtim and invested ¤170m in developing Agrotovis.
Romania is the only European producer of genetically modified soy; however, representatives of ecological groups say that these cultures should have been forbidden long before Romania was scheduled to enter the EU.
Two-thirds of Romanian soy cultures are genetically modified. They are cultivated on an 88,000 hectare surface, 0.6 percent of Romania's total agricultural surface.
American biotechnology companies Monsato Co. and Pioneer sold genetically modified seeds to Romania ten years ago.
By 1989 Romania was the largest producer of soy in Europe.
The Ministry of Agriculture, Forests and Rural Development announced at the beginning of February that modified soy cultures would be eliminated beginning February 1, 2007 as to comply with EU laws.
These cultures are to be allowed this year, but producers have been required to show on food product labels the presence of genetically modified organism (GMO)'s.
Beginning June 30, producers of all genetically modified crops will be obligated to label these products accordingly. Until now this rule has been applied only to products containing genetically modified soy and corn.
Ecologists said that an earlier ordinance pertaining to this sector would have initiated producers to start developing traditional cultures, which the authorities then should have monitored closely.
Ana Maria Bogdan, a representative for the organization Greenpeace, believes that the restrictions should have been applied starting this year.
"The time is too brief to stop uncontrolled cultures. The traditional cultures will be contaminated with GMO's after Romania's EU accession," said Bogdan.
The representatives of ecological groups believe that GM cultures are impossible to stop because of artificial breeding, natural dispersion of seeds and illegal trade.
"It's chaos," said Ion Scurteli, the president of the Cereal Wholesalers Employers Association and added that farmers sell seeds illegally which may cause suspicions from EU consumers. The government showed that additional regulations for the soy cultures are being developed and compensation for their losses could be given.
"If financial support is required, the government will take this into consideration," said the spokeswoman for the Ministry of Agriculture, Adriana Tibu.
Soy cultivators who used genetically modified seeds and gave up natural seeds, which cost more money, said that the future interdiction will cause losses to soy producers.
Monsato Co. also expressed its disappointment concerning the government's decision.
Jonathan Ramsay, a Monsato representative, explained that the most affected producers will be those who reported double profits, transforming Romanian soy production.
Madelyn Spirnak, a biotechnology advisor for the State Department of the United States, said in September 2005, that genetically modified plants could become the solution to climate changes that affected last years' crops.
Spirnak said experts from several countries, including neighboring Bulgaria, are currently developing research programs for the creation of drought-resistant and flood-resistant hybrids. Among the benefits of this type of culture, the American expert underlined their higher productivity, lower costs and the lowered risk of soil erosion.
Constantin Sin, a councilor in the Ministry of Agriculture, said in February 2005, that the average production of GM soy surged by 500 kilograms to 2.5 tons per hectare last year.
The soy is chiefly farmed in the southeastern part of the country, in counties such as Braila, Calarasi and Ialomita.
Romanian consumers have been using imported edible oil from transgenic soy for over 13 years.
In 2004, the leading countries producing genetically modified soy were the United States - 47.6 million hectares, Argentina - 16.2 million hectares, Canada - 5.4 million hectares and Brazil - 5 million hectares.
According to central bank prime-vice governor Florin Georgescu, the bank authority is within schedule with the project?s enforcement.
?By October 2006, we will have all the necessary instruments in place ? law, regulations, impact study ? so that they be gradually set at the disposition of the banking system and allow the efficient enforcement of these principles as of January 1, 2007,? said Georgescu.
The Basel II regulations will lower the cost of certain credit types, whereas others will grow costlier, depending on the bank?s risk exposure.
Thus, the risk associated to credits to the population will decrease from 100% to 75%, the risk for the banks? placements in broker securities will decrease from 100% to 20% on the short term and to 50%, respectively, on the long term.
The risk for estate-secured credits will also decrease from 50% to 35%.
Conversely, the credit risk will rise from 0% to 50% for loans in a foreign currency raised by the central administration, respectively from 20% to 100% for credits raised by the regional and local administration.
The risk associated with placements in securities issued by entities that are not listed on the bourse will rise from 100% to 150%.
The GEA representative explained that the budget deficit was not entirely tantamount to the public deficit and said that, although many European Union member states exceeded the limit of 3% of the GDP, which was imposed by the Stability Pact, Romania's deficit must be below one percent of the GDP.
"This deficit is a starting deficit for Romania, that is, we have an under average deficit indeed, but we also have an underdeveloped infrastructure, we also have a low capacity of absorbing the community funds and then any cautious man may say, 'You must incur those expenses, they are necessary, and implicitly you must increase the budget incomes too,'" said Voinea.
Romania is on the lower limit both as regards incomes and as regards the budget expenses in point of their share in the GDP, also said the GEA executive manager.
?The Stock Exchange is a sensitive market. Such investigations need to be conducted with discretion and should be made public only when there is enough evidence to prevent any negative psychological reaction,? said Varujan Vosganian after four of the seven CNVM members were heard by the Budget-Finance Commission. Vosganian said that the hearings have re-constituted the events one year and a half ago, specifically of mid-April 2004, when Rompetrol was listed on the bourse and was subject to unusually massive trades, with the buyback price higher than the selling price. The Commission tried to establish if this had been a manipulation and if some of the market?s decision-makers had tolerated the actions of the manipulators.
?The issues related to economic stability or inflation now seem less important than the combat of corruption or the farming issues, just because they are not marked with red flags,? said the FinMin. Vladescu informed the European commissioner that the Finance Ministry is seeking new instruments to increase budget revenues to over 30% of the GDP and that a fiscal program for the next 3 to 5 years will be presented at the end of March. ?We must offer stability and predictability to the business environment, so that its representatives be aware two years in before what taxes and dues they should pay,? said Sebastian Vladescu.
However, the authorities should be careful with medium-term vulnerable issues, states the document. The capital profitability and adequacy rates are high, but the indicators regarding non-performatory credits remain moderate, also as a result of strong economic expansion and rapid growth of the credit in recent years. The indirect exposure through the credit portfolio should be correlated with high levels of the capital indicators and conservative provisioning practices. The IMF warns that the indicators related to non-performatory credits could rise significantly once economic growth reaches a sustainable level.
The other contestants were Alpha Finance Romania, BCR Securities, BRD Securities ? Groupe Societe Generale, CA-IB Securities, IEBA Trust, Intercapital Invest and Swiss Capital.
The financial offer accounted for 60% of the final bids rating.
Raiffeisen Capital & Investment?s financial offer was of 2,9611.6 euros.
The ?Property? Fund will be listed on the Bucharest Stock Exchange within a few weeks, with the amount of stock available for trades standing at about 500 million euros.
?We hope to start listing procedures in one week and have the fund listed in 4 ? 5 weeks,? said the president of the fund?s Surveillance Council Nicolae Ivan.
?We are currently in a marketing campaign to attract potential fund managers on one hand, and potential investors in the fund?s stock on the other hand, so as to ensure liquidity for those who want to sell,? said Ivan.
According to the latest market information, the most substantial compensation deed issued so far (and that will be exchanged for stock) is worth 167 million euros.
Famous international names eye the position of fund trustee, that is expected to bring the winner commissions worth several tens of millions of euros every year.
?We met with representatives of trustee companies 3I, Cheyenne Capital, Salomon Brothers, Nomura, Merril Lynch, Morgan Stanley, Dresdner Bank and Dexia and I believe all of them will submit bids in the contest for the selection of the fund?s trustee,? added Nicolae Ivan, who estimates that the decision will be reached around June 1.
By then, the fund will also select a law councilor from among the 13 bidding international companies.
The construction of Slatina-based factory is part of Pirelli expansion strategy into the Romanian market, following the achievement of another investment within a joint venture in Romania.
In July last year, the launch of the new tyre cord metal production capacity took place in Slatina, belonging to Cord Romania SRL.
In the framework of the new joint venture, Pirelli owns 80%, whereas the Germans from Continental AF control the balance.
According to official statistics, Italy ranked in first place, at the end of last year, accounting for 16.97 per cent within Romania?s total trade exchanges.
At the same time, nearly 19,000 Romanian - Italian companies were active in Romania, with an invested capital amounting to ¤766 mn.
"We believe rents will stall. There is not enough quality office space and customers will refuse to pay more than in other European countries for less valuable services," said Regatta Rentals Department Director Mihaela Raducanu. Commercial Department manager Catalina Jigman from Eurisko shares the same opinion.
Other real estate experts believe that this year could bring a slight growth of Class A offices rents but the trend would be only temporary. Once the offer will become more important, probably in two years time, rents will return to the current level, according to CB Richard Ellis (CBRE) representative Mihai Ghircoias.
As for investment efficiency, the opinion that it will decrease in 2006 is widespread among analysts. "The efficiency of investments in office space will be between eight and nine percent, but this level is still superior to those of other cities in the region, like Budapest and Warsaw, where the offer is much higher than in Bucharest," Jigman estimates.
Ghircoias believes institutional investors (collective investment organizations) are very interested in the Romanian market of office space but no major transactions should occur in 2006. "They currently gathering information and studying it. They will definitely get involved but the exact moment depends on the scope and quality of the offer," said the CBRE representative.
At this point, the main investors on the market are the real estate divisions of large financial institutions, banks, insurers and other multi-nationals.
The EUfonika service allows residential and business customers with a Romtelecom fixed-line subscription to save 20 percent on their national long distance calls and 40 percent on international calls. EUfonika's low prices are supported by Internet Protocol (IP) based Next Generation Network (NGN) technology and an innovative business model that allows a flexible, streamlined organization to operate a high quality service in a most cost-efficient way.
"I am sure that customers will appreciate not only the cheap phone calls that are available through EUfonika, but its simple usage and the established European quality," says Christopher Mattheisen, chief officer of Magyar Telekom's Wireline Services. "We are delighted to support free market competition for Romanian consumers' benefit and increase demand for better prices."
How it works
Customers can order the EUfonika service by calling a toll-free number to register. Users then have to dial the 1688 prefix every time they want to make a call under EUfonika rates; they do remain Romtelecom subscribers, continue to pay the monthly fee to Romtelecom and the calls dialed without the prefix. Only the favorably priced calls initiated with 1688 have to be paid to EUfonika.
Stirom Bucharest was taken over by Yioula Glassworks Greek group in 2003, which considerably restructure and upgraded it.
The glass market was worth around 50 million euros last year, according to Stirom officials' estimates.
Presently, Stirom covers 45 percent of the glass packaging market, with the group's shares in the Romanian market reaching 65 percent.
In 2005, exports represented 23 percent of the turnover posted by Stirom .
The main export destinations were the United States, Hungary, Moldova, Bulgaria, Greece and Israel.
So far, none of the investors that have shown interest in the deal has met the prerequisites for negotiations.
Laminorul has a share capital of 29,397,226.56 RON (1 euro=app. 3.6 RON) and it is a sole manufacturer in Romania of knotted chains for the naval industry, various parts of electrical machinery for road means of transportation and tongs for railroad metal sleepers.
In 2005, the company posted a 38% rise in turnover from 2004, said General Manager of Epicor Scala, Horia Negulescu.
"Last year proved to be the best one since the company was set up, reporting a high increase in turnover and adding 30 clients," Negulescu said.
"The driving force behind this increase was the enterprise resource planning (ERP) system iScala.
We're content to see that the customer-relationship management system Hummingbird accounts for more and more of the turnover," the manager added.
According to Negulescu, 60 percent of the total turnover came from selling the ERP iScala and related services, 22 percent from CRM Ascent and 18 percent from selling Hummingbird, with 22 percent of the company's clients using all three of them. Sales of licences and maintenance services represented 2.5 million dollars of the turnover.
Though Negulescu did not say the exact turnover, he previously estimated four million dollars for 2005, compared with the 2.1 million dollars, the figure released by the Ministry of Public Finance.
Last year, Epicor Scala got 30 new clients from areas such as production, distribution, pharmaceuticals, financial services, media and the IT&C, including ING Bank, Bancpost, Prima TV, Cegedim Romania, Garanta Insurance, Zeelandia, Scandia, Softmedica, Boromir Ind and Hayhurst Robinson, officials in the field say.
In June 2004, Dutch-based Scala Business Solutions was taken over by America-based software producer Epicor, which has over 20,000 clients in 40 countries and an estimated turnover of 300 million dollars in 2005.
The sales of the company grew in the same span of time by about 55 percent and came up to 14 million euros.
The above-mentioned company has a portfolio including more than 80 brands, among which the best-known ones are Bixtonim, Triferment, Colebil, Anghirol and Cavit. Biofarm has had an entirely private capital since 1997.
Two years ago, Biofarm made investments of nine million euros, tripling its production capacity.
Some of the most significant shareholders of the company are the Financial Investment Company (SIF) Oltenia, 13.6 percent, SIF Moldova, 9.92 percent, and SIF Banat-Crisana, 6 percent.
Other natural and legal persons hold the remaining 70 percent of the share capital of Biofarm.
In the first half of 2005, Biofarm exports doubled both in volume and value as against the same time span in 2004.
The Biofarm shares are listed with the Bucharest Stock Exchange and the stock exchange capitalization of the company is about 67 million euros.
Although the bank had assumed an investment programme worth 3.2 million euros, the Bank's profitability was not influenced to such an extent as to affect the future development, said the Bank's president Nicolae Hoanta.
Carpatica Bank will have three goals in 2006, namely the growth in the market share, the extension of the network of units and the distribution channels of its products and services as well as a high profitability level, Hoanta stressed.
The Bank doubled its network last year when it was operating 116 units, but it plans to operate 200 by end of 2007.
Carpatica capitals were worth 137 million RON (round 37 million euros) in December 2005, by 15 percent more than in late 2004.
Set up in 1999, Carpatica Bank has its central hqrs. in Sibiu (central Romania) and its subscribed capital is worth over 91.5 million RON, while its assets stood at 225 million euros in late 2005, double than in the same period in 2004.
At the National Bank of Romania
Bucharest, 23 February 2006
Governor Isarescu, Excellencies, Ladies and Gentlemen,
It is a great pleasure for me to address you today in this historic building. The National Bank of Romania has survived earthquakes, world wars and dictatorship. For more than a century, this institution has been a symbol of stability in Romania.
In the Board Room of the bank hangs a masterpiece of a painting by Grigorescu. It is called ?Out in the Fields? and shows a harvest scene: joyful, warm and flourishing. In 2005, the fields of Romania left a very different picture in the minds of Europeans. Thousands of people were deprived of their homes and many more of their income by the devastating floods. Although deeply saddened, as individuals we could do little to relieve the situation. But as a community, Europe acted to assist Romania in overcoming this disaster. Furthermore, the Commission now stands ready to grant ¤70 million from the EU Solidarity Fund and more than ¤200 million from the pre-accession financial assistance funds PHARE, ISPA and SAPARD. This will help repair the damage and invest in preventive measures for the future. The European Investment Bank and the European Bank for Reconstruction and Development are also offering Romania loan facilities for flood repair and prevention, which may well exceed ¤1 billion. This is an example to all Europeans of the difference that the EU can make, and it shows that our Union is built on the strongest possible foundation: that of solidarity between peoples. I look forward to welcoming Romania in the European Union and I am confident Romania will make an important contribution to the prosperity, solidarity and security of this continent.
I would like to take this opportunity to share with you my views on what I see as the main economic challenges for the EU and for Romania and about the policy response which these challenges require.
The economic outlook
Against the background of a vibrant world economy, the European Union and the euro area have been staging a recovery since last summer. Our latest forecast, which was published two days ago, projects that economic growth will accelerate to 2.2% in the European Union and to 1.9% in the euro area.
This is more than ? percentage point higher than in 2005 and is in line with the fairly strong improvements in survey indicators in the second half of last year and at the beginning of this year. As an example, in January the Commission?s Economic Sentiment Indicator was at its highest level since the summer of 2001.
Investment spending, in particular, is expected to be strong, in view of improved corporate profits and competitiveness, as well as continued favourable financing conditions. The recent moderate improvement in the labour market, if sustained, also suggests a more positive outlook for disposable income and thereby private consumption.
Exports are expected to continue to grow at a swift pace in 2006, due to robust growth in world trade and the lagged benefit from past competitiveness gains. However, as imports will also increase, as a result of stronger domestic demand, their contribution to output growth should be more limited in 2006.
As usual there a number of downside risks. Risks of further significant rises in oil prices -- the recent disruption to oil production in Nigeria underscores this -- and the global current account imbalances also remain a threat to the international outlook, especially if they were to be resolved by abrupt exchange rate movements between major currencies.
On the positive side, in view of the broadening of the economic recovery since last summer, the projected upswing now appears to be more resilient.
In the medium term, our calculations show that potential growth in Europe stands at a rate of 2%. Here, we can do better. For one thing, Europe?s labour force is grossly underutilised. Employment rates in many Member States can significantly improve. In the EU, the employment rate is below 65%, compared to a rate of about 72% in the USA. Also, the average worker in the EU works 1,534 hours per year, compared with 1,782 in the US ? a difference of 16%. In addition, after having peaked in the mid-1990?s, labour productivity growth has been experiencing a gradual decline. And, thirdly, Europe must not fall behind in the ever-accelerating technology race.
Romania and the EU to a large extent share the same challenge and that is to improve both employment rates and labour productivity in order to strengthen our competitiveness and respond to one of the major structural changes facing Europe, which is globalisation.
But globalisation is an opportunity, not a threat. Trade liberalisation is beneficial to all trade partners. It improves the use of resources and allows goods and services to be produced more efficiently. Think of Romania?s successful re-direction of trade over the last decade towards new and more trading partners, which has been a driving force for economic liberalisation, technology imports and new consumption possibilities. And let us not forget that trade also brings increased business opportunities for EU and Romanian firms in the markets of our trading partners as they grow wealthier. China and India now account for 40 per cent of the world?s population, but their per capita incomes are still only 20 and 11 per cent respectively of the EU average. The potential for EU companies is huge! A recently released report by the Commission shows that if the opportunities offered by globalisation are fully exploited, they could bring significant additional income gains. We estimate that 20 per cent of the gains in living standards in the EU over the last 50 years can be attributed to the EU?s growing integration with the world economy and another 10 per cent can be attributed to growing trade between member states. So Europe should aim not to seek shelter from global competition but rather to make full use of the opportunities it offers while minimising the inevitable adjustment costs.
We are, of course, aware that globalisation inevitably involves adjustment, and that it is or will be often costly and painful for certain sectors and regions. We must mitigate this adjustment by increasing flexibility and re-educating and assisting those workers who are worst affected.
Romania, as a future EU Member State, will share our common European response in the re-launched Lisbon Strategy for growth and jobs. No longer a low-cost economy, strictly speaking, but not yet an economy driven by specialisation, high-skill industries and innovation either, Romania faces double-edged competition in the global market place. Low-cost countries, competing on their best terms, stand ready to snatch market shares from low value added industries in Romania. The global market opening of textile trade in 2005 took a toll on one of your main export industries, and is a clear example of the challenge of globalisation. Cost efficiency and adaptation of production structures is crucial in a time of global competition and is a challenge, for example, for those parts of Romania?s industry which suffer from low energy efficiency.
For Romania, full integration into the EU?s internal market is another major challenge, but the fact that it offers a home market of 450 million people also presents a great opportunity in the light of globalisation. Vigorously implementing its structural reform programme should allow Romania to cope with the competitive pressure and market forces within the EU. But Romania should aim to do more than just cope! EU accession provides Romania with an unprecedented opportunity. For the ten most recent Member States we have estimated that membership of the EU will raise their GDP growth by up to two percentage points per year over this decade. That is only natural since enlargement of the internal market acts as a catalyst for economic growth by opening business and investment opportunities to all European enterprises. Enlargement is therefore a win-win situation provided that accession is well prepared.
To fully reap the benefits of the internal market and globalisation, Romania should make further progress in structural reform. I wish to highlight four of the areas which are crucial for unleashing Romania?s growth potential.
First, the process of reforming ailing state-owned companies should be completed. Important progress has been made in the energy sector. Serious reform or privatisation of the large number of companies left in the hands of the State after more than 15 years of economic transition should be completed. A serious effort should also be made to dismantle non-viable enterprises which have persistently made losses and built up large debts. This is a tough choice, but it is often the only choice. Postponing it can only make things worse.
Second, much more needs to be done to improve the functioning of the judiciary. Cumbersome and protracted court procedures continue to hamper the business environment. I fully recognise ongoing initiatives. But contract enforcement via the judicial system still remains a long and complex process. The time and cost required to resolve bankruptcy cases remain particularly unfavourable. Is it really surprising that Romanian companies do not make use of the judiciary in insolvency cases when the recovery rate for bankruptcy cases stands at 17.5% compared to an OECD average of nearly 74%? Is it really surprising that bankruptcy is often not perceived as a real threat, when it takes on average more than four and a half years to conclude a bankruptcy case compared to one and a half years in the OECD? Unless the legal and institutional framework in the future offers speedier procedures and more creditor protection, the judicial system will continue to be unable to provide an effective exit mechanism from the market. That limits competition.
Third, good governance in public administration and in the business sector must be promoted. Without good governance, there can be no level playing field. Romania will have to ensure effective enforcement of the fight against corruption. This is a battle that requires many offensives ? from attacking the relatively petty corruption by public servants to attacking the high level corruption by those who abuse public office for personal enrichment with a sense of impunity. We trust that Romania will vigorously pursue the fight against corruption at the highest level, and we will present our full analysis of what it has achieved in our upcoming Comprehensive Monitoring Report.
Fourth, successful EU integration requires a sufficient amount of human and physical capital, including infrastructure. After years of underinvestment, the transport, energy and irrigation networks have depreciated and even if the quality of infrastructure is now again on the rise, there is a large need for further investment. Romania has learnt the lesson that to use the quantity of money made available, projects must offer ?quality for money?. Investment priorities must be carefully considered, transparent procurement procedures must be respected, and project implementation must not stay on paper but get off the ground. Romania needs to ensure that it can meet these requirements in order to be fully ready for the large increase in EU transfers foreseen under the next financial perspectives. ¤6 billion will be made available by the EU during 2007-09 under our Structural Fund programmes. Using this money well and wisely may give a significant impetus to potential growth. Seize the short time left before accession to get ready so that Romania will not lose out on a unique opportunity to strengthen its long-term competitiveness.
The Lisbon Strategy - a policy response for both the EU and Romania
We know what needs to be done to address the structural weaknesses in the EU. We need to step up the implementation of a comprehensive set of structural reforms in product, labour and capital markets. We need to invest more in our human, physical and knowledge capital, and we need to reorganise our economy. This is the way to become more productive and to increase employment. This is the way to make our economies truly global and dynamic, to make them more resilient and adaptable. This strategy will enable us to make the best of globalisation and cushion the social and economic adjustment it entails. This strategy will help us to handle the effects of population ageing, which alone might cut the rate of potential growth in half by 2040.
We should therefore wholeheartedly implement the Lisbon Strategy, which was renewed in 2005 because reforms had not been implemented fast enough or comprehensively enough. The revamped Lisbon strategy therefore aims to improve implementation by increasing national ownership of the reform process and simplifying its governance. The strategy will focus more intensively on its main objectives: growth and employment. This means increasing investment in R&D and education to enhance the EU?s capacity to innovate. It also means cutting red tape, removing obstacles to the mobility of workers and developing better regulation to improve the business environment in Europe. Member States submitted their National Reform Programmes in the autumn of 2005. These programmes set out the Member States? own reform strategies, which follow general policy guidelines for the whole EU but are tailored to their individual needs. This should increase national ownership of the strategy.
For Romania, the Lisbon Strategy is not an objective for the future, but an essential part of today?s answer to the challenges. We therefore hope that Romania will submit its first National Reform Programme already this autumn. The EU and Romania share the need for investment in human, physical and knowledge capital in order to strengthen the foundations for long-term growth. Implementing Lisbon will help change Romania from a factor-intensive economy to an innovation-intensive one, not overnight, but step by step over the coming years. Knowledge is one of the main ways for Romania to add value to its products and services. Better education, more R&D, simpler regulation, labour market reforms that boost job creation and productivity growth: like the EU, Romania needs it all to unleash its growth potential.
The positive impact of structural reforms on growth is well documented. A recent Commission study shows for example that the reforms under the Lisbon Strategy, if fully implemented, could increase the EU?s potential growth rate by 0.5 to 0.75 percentage points. That is certainly an opportunity that should not be missed, particularly when the current potential growth rate of the EU is estimated at around only 2%. These figures may even underestimate the potential benefits of the Lisbon strategy, since they do not take fully into account the effects of capital market integration and ignore the complementarities between reforms in the different domains.
For Romania, fully embracing Lisbon is an important part of meeting its challenges, but it is not the whole answer. Policy-makers must also address the shortcomings I mentioned earlier, which do not fall directly under the Lisbon Strategy. And Romania must pursue these structural reforms while sustaining a steady course in its macroeconomic policies. Stability is an immense support to sustainable growth. Priority should therefore be given to re-establishing a prudent policy mix, notably by making sure that fiscal and public sector wage policy helps to reduce the imbalances in the Romanian economy. And priority should also be given to demonstrating foresight, for example by implementing a comprehensive reform of the pension system in order to prevent public pensions becoming increasingly underfinanced.
My message today is clear. And it is positive:
* Europe is moving forward with confidence to meet the challenges. The new partnership approach in the Lisbon Strategy is working well and is fully valid for Romania. The EU?s renewed strategy for growth and jobs has the potential to create millions of new jobs and give a significant boost to long-term growth.
* Strengthening competitiveness and reaping the benefits of European integration are key to the future economic success of the EU and to unleashing the growth potential of Romania. But the path ahead is long and hard and requires commitment to a long-term programme of vigorous reform efforts.
There is great potential in Europe. There is great potential in Romania. Let us make the most of it!
The ministry specified that the Romanian party obtained guarantees from the South Korean counterpart of the Authority for the Recovery of State Assets (AVAS), KAMCO, that all the debts of Daewoo Automobile Craiova to Daewoo Great Britain have been yielded to DWMotor Company.
Daewoo Automobile Romania was founded in 1994 as a joint-venture of Automobile Craiova and the South Korean car manufacturer. When General Motors took over Daewoo, in September 2002, following its bankruptcy, the plant in Craiova was not included in the transaction.
The Office for State Participations and Industry Privatization (OPSPI) is authorized by the government to negotiate for the return of the South Korean group's 51 percent stake in Automobile Craiova to the Romanian state.
Romanian authorities plan to resell their share in Automobile Craiova to a strategic investor as soon as the factory returns to the state's possession.
General Motors, Ford and Renault Nissan are allegedly some of the investors potentially interested in acquiring the plant.
The volume of exported Romanian products dimineshed by half in 2005, claimed the general secretary of the National Association of Romanian Exporters and Importers (ANEIR) Mihai Ionescu on Thursday in a press conference. "After the double shock of last year, the appreciation of RON by 20 percent and the increase of utility tariffs by a further 20 percent, the year 2006 begins with a depreciation of the euro with approximately 0.2 RON and a new adjustment of power and gas prices," Ionescu said. The effects of this situation will affect both Romanian and foreign exporters, he added.
The sectors that suffered the most from it are the glass industry and paper sector, but the chemical industry and that of furniture also suffered heavy losses, said the representative of exporters.
"Exports have been gambled on the roulette of foreign exchange and of certain pledges Romania assumed in front of the European Union. They will result in transforming Romania from a modern member of the EU into a modern colony," Ionescu warned.
He claims that because of this situation the country's trade deficit will grow to 12 billion euros this year as the number of bankruptcies among exporters will double.
Ionescu claimed that many foreign companies intended to shut down their local production facilities and relocate to Albania and Ukraine.
The vice president of the Romanian Association of Businesspersons (AOAR) Constantin Sava said the situation when businesses would no longer be able to make investments or even pay taxes and salaries was not far. He foresaw and economic disaster by the end of 2006.
Last year some 400 million euros were invested in tourism, of which 68% in hotels. Other 15% funded B&Bs, 11% - transport vehicles, and 6% - ski tracks management.
Famous international chains like Marriott, Hilton, Sheraton and Four Seasons eye Romania lately.
Golden Tulip Hotels franchised four hotels in the past year, and assessed ten others for a future expansion. Cendant Group, with the brands Howard Johnson and Ramada, plans to franchise some 30 hotels in the next ten years.
Accor Group, via its partner Continental Hotels, will add a Novotel hotel brand in Bucharest to the three Ibis hotels it manages in the country, also targeting the two-star hotels.
?The next three years operators in the hospitality industry will aim rebuilding historic sites in center cities, build the infrastructure for the rural and ecologic tourism or the sea- and river-ports on the Black Sea and the Danube," said Paul Marasoiu.
This year started the construction of some 58 hotels all over the country. Investments for three-star hotels are stagnant, but those for four- and five-star hotels are on the rise, particularly in big cities like Iasi, Timisoara, Constanta, Cluj, Arad, and Sibiu. I
nvestors will move then towards Suceava, Baia Mare and Targu-Mures.
On 2006 some 1,600 new hotel rooms will open in Bucharest, of which 44% - of five-star standard, 25% - of four-stars, 8% - of three-star, 10% - hotel apartments, and 13% - of two star standard.
Last year 1,500 new hotel rooms entered the hospitality market of three- and four-star standard, of which 78% in new buildings. Business tourism continues to be the driving engine in the hospitality industry, giving 76% of its revenues. Last year this market segment grew 36% in Bucharest, according to Peacock Hotels- GHM. "Unfortunately Romania has to opt out of six to seven important events per year because it has limited capabilities to organize events on a large scale,? said Paul Marasoiu. For an event bringing in 2,000 participants the revenues could reach 5 million euros, but Romania may not host events for more than 1,500 people.
As IMF points out growth has slowed, disinflation has slowed considerably, and the current account deficit has widened.
The direct tax cut and substantial credit growth, together with increases in public sector wages, exacerbated excess demand pressures.
To prevent further pressure on the exchange rate, interest rates were lowered.
Although the authorities' successful privatizations and energy sector reforms are commendable, there have been delays in other areas of structural reform.
According to IMF?s view, the current juncture offers a unique opportunity to strengthen policies that would reduce macroeconomic imbalances and set the stage for sustainable growth.
With EU accession approaching, Romania needs a clear and coherent set of policies aimed at realizing its full potential and raising living standards.
The mission believes that, from a macroeconomic and structural perspective, the following requirements stand out: achieving significant disinflation, permanently strengthening the fiscal position through revenue-raising measures, narrowing the current account deficit, improving the business environment, increasing incentives for job creation, and ensuring the capacity for the effective utilization of EU funds.
I. Key Points
1. Macroeconomic imbalances continue to widen. Specifically: ? Economic growth has slowed. Real GDP growth is estimated at 4 percent in 2005.
? Inflation remains stubbornly high. CPI inflation stood at 8.6 percent y-o-y at end-2005, against the National Bank of Romania's (NBR) end-2005 target of 7.5 percent (with a ±1 percent band). ?
2. Credit growth remains strong.
? The current account deficit has widened and is estimated at 9.4 percent of GDP in 2005. Import growth continues to outpace export growth. However, rising FDI and EU transfers covered about 90 percent of the deficit, with private capital inflows financing the rest and supporting substantial reserve accumulation.
? Romania's external competitive advantage has narrowed. 4.
The government consolidated its fiscal position, although procyclical public sector policies exacerbated domestic demand pressures. Monetary policy seems overburdened by conflicting objectives, undermining the NBR's ability to meet its inflation goals.
Progress on structural reforms has been mixed.
II. Macroeconomic Outlook and Policy Recommendations
Policy Mix and Outlook
3. Sustainable growth requires macroeconomic stabilization and renewed structural reform efforts.
4. With appropriate policies, staff sees sustainable economic growth at 5-6 percent. Fiscal and Incomes Policies
5. Tight fiscal policy should remain the centerpiece of Romania's macroeconomic strategy, especially given the likelihood of continued capital inflows and strong private sector growth. 6. Strengthening revenue is imperative.
7. A strict wage policy is essential for successful disinflation. 8. Additional measures will be needed to balance the 2006 budget and make it consistent with achieving macroeconomic stability.
9. An ambitious and transparent medium-term budget framework is needed. Monetary Policy
10. The immediate challenge for the NBR is to strengthen public confidence in its commitment to inflation targeting.
11. In this context, an immediate tightening of monetary policy is necessary?both to bring the 2006 target closer within reach and to ensure that inflation can feasibly arrive at the center of the target range for 2007.
12. The authorities' prudential restrictions on credit flows have had a significant effect over the short run, particularly on the mix between foreign-currency and local-currency lending.
13. From the experience of other countries, however, the effectiveness of such measures will likely diminish over time.
14. In order to ensure the development of a sound and efficient financial system, the authorities should be wary of viewing prudential-style measures as a substitute for more traditional stabilization instruments.
Financial Stability and Financial Sector Development
15. Financial soundness indicators (FSIs) suggest that the banking sector is well-positioned to absorb adverse shocks, but the authorities need to be alert to medium-term vulnerabilities.
16. Substantial progress has been made in strengthening the regulatory and supervisory framework.
17. Further implementation of FSAP recommendations should continue Structural Reforms
18. Convergence to EU living standards will require further structural reforms.
Compared with the revised figures, the 2005 FDI figures were 0.3 percent over the 2004?s.
The National Bank of Romania (BNR) initially reported a 2004 FDI of ¤4.098 bln., which it eventually adjusted upward, so that the 2004 investment reached ¤5.183 bln.
According to ARIS, direct foreign investment attracted by Romania in 2005 reached record figures, by far better than the 2004 figures, as direct investment from abroad was attracted by the privatisation of Petrom.
2005 recorded no significant investment in privatisations, because, although conclude in 2005, the ¤2.2 bln funds for the acquisition of Banca Comerciala Romana by Erste Bank will only come in this year.
According to ARIS, its data match statistics with BNR but there is no comparing the revised 2004 FDI figures with 2005 provisional data.
?Compared with the 2005 provisional data reading FDI of EUR 5.197 bln, there is a rise in investment in 2005 of 0.3 percent, irrelevant because provisional 2005 data are compared against the revised 2004 data,? according to ARIS.
According to ARIS, the revised data comprises, besides the actually paid-up capital of foreign investors, the loans granted by parent companies to their subsidiaries in Romania, all factors also taken into account by BNR when quantifying FDI.
Additional elements relate to the size of the profit ploughed back and loans for less than one year granted by the parent companies, both of which are data centralised by the National Statistics Institute (INS).
?Cooperation started between BNR and INS in 2002 for the identification of a mechanism that would reflect the real investment flows in accordance with the calculation methods of the International Monetary Fund (IMF), under a pilot research project that centralises detailed information about the FDI flows actually performed by the companies included in a representative sample.
The FDI figures announced by BNR is higher that the official projections of early last year of ¤3.2-3.8 bln.
The appeal lodged by Regal to the Court in Kiev was rejected. Gainsford expressed his concern regarding the Ukrainian business environment and mentioned they would redirect their attention to other exploitation projects in Romania and Egypt. Frank Timis, businessman of Romanian origin, owns a part of Regal but he no longer is part of the company?s board, leaving his positon at the beginning of June, after the disappointing results of drilling undertaken in Regal?s main exploitation project, Kallirachi 2 in Greece which led to a dramatic drop in the company?s shares price.
The Romanian business lawyer that emerged as a symbol of capitalism after 1989 is now a small "powerhouse" with a productivity of 120,000 to 150,000 euros, writes Ziarul Financiar in today's issue.
The business lawyer, without whom there is no sale of the biggest bank or
corporation, or the start of a business by an investor, contrasts with the
image of the courtroom litigator, without excluding it.
"The market of business law services reached almost 100 million euros at the end of last year, driven by the substantial volume of mergers and acquisitions," Florian Nitu, managing partner of Popovici & Asociatii law firm, told Ziarul Financiar. He estimates the number of business lawyers at about 600.
The top ten business law firms in Romania account for more than 40
million euros, which is almost half of the market.
Business law fees may vary from 50-60 euros an hour to 400-500 euros an hour and even more for the top lawyers or for partners, the highest position one can attain in a law firm. Sometimes, in the case of other law firms having a different organizational structure, the highest-ranking position in the firm is the associate position.
The private transactions and the privatizations conducted last year
propelled Nestor Nestor Diculescu Kingston Petersen to the top spot among
business law firms in terms of turnover, which revolved around 7 million
Ion Nestor, the founder of NNDKP, was the lawyer retained by the state in the sale of Banca Comerciala Romana to Austrian Erste Bank, the biggest transaction on the Romanian market in the last fifteen years- 3.75 billion euros.
The only international giant operating in Romania, the London-based law firm Linklaters, is among the top firms in this market. The multinational elite in Romania has recently seen the addition of Salans, Schoenherr, Cameron McKenna and Gide Loyrette Nouel, the last of these having made 2.3 million euros in revenues in 2005.
Gheorghe Musat, managing partner of Musat & Asociatii, says the rate of growth of the market should reach somewhere around 20 percent. "One must not forget, however, that there is a tight interdependency between the business law operations and Romania's economic development, therefore the economic factor needs to be taken into account," Musat says.
Unfortunately in Romania, businesspersons who made a fortune from other activities build hotels by compiling elements they saw and liked in hotels throughout the world without any concern for a unitary concept.
Another issue the Peacock Hotels official outlined is the lack of reliable information based on which investors could elaborate business plans. Marasoiu said that if one demanded the National Statistics Institute (INS) a simple statistics regarding the number of tourists in a certain period that person would obtain a report presenting in an undifferentiated way real tourism along with small frontier traffic with Moldova, Bulgaria and Hungary.
The official called attention on the great opportunity Romania has from the obvious modification of traveling habits caused by the recent social, economic, political and religious changes that affect the world today. Romania could have a huge advantage if it manages to prove as a viable alternative to traditional destinations, which are no longer safe for parties involved in various divergences of different natures throughout the world.
Right now, Romania has no appropriate international conference and exhibition center like most European capital cities do. As a result, the country must refuse events involving the participation of over 3,000 persons each year. "There will be a Francophone Summit this year in Bucharest but I already pity the 2,500 participants for the many hours they will have to spend in city's traffic jams between their numerous hotels and the various locations in which the work of the summit will take place," said Marasoiu. A great amount of investment must be carried out in the city's infrastructure as a mere base for future developments.
As for Bucharest, its position in the very center of the continent provides great potential to become an important event-organizing center.
The Peacock representative said that at this point the tourism in Bucharest relied almost exclusively on the business segment while the leisure part was almost negligible. In a number of years the business segment would drastically reduce and if by that time the leisure component is not ready to take the lead hard times will come for local tourism, warned Marasoiu.
The Peacock representative estimated the level of investment in the next three years at 1.1 billion euros nationwide. After a few years when investments concentrate on Bucharest, the focus would redirect towards other major cities including Timisoara, Iasi, Cluj-Napoca, Sibiu, Arad and Constanta. Another trend is the expansion of international players on the local market. After Mariott, Hilton, Tulip Hotels, K+K and Accor Group already present, important names like Hyatt and Radisson prepare their entry on the market. Several investment funds are also probing the market and estimating its opportunities.
Broad strategic approach
As of November 2005, the Bank had made cumulative commitments of ¤2.9 billion to projects for Romania.
The Bank plans to continue to bring an important contribution to transition over the strategy period by focusing on projects addressing the above challenges and for which it remains additional.
The proposed strategy of the Bank will remain broad to ensure a balanced approach to sectoral development, in order to assist Romania in its advancement of the transition process and readiness to become an EU member.
This means also a broadening of the Bank?s products to be made available, such as equity, local currency funding and public-private partnership structures.
The focus is to deepen and broaden the role of the private sector in the Romanian economy.
Only in exceptional cases will the Bank rely on state guarantees to underpin its projects.
Accession to the EU and the fight against corruption The government has made the accession to the EU and the fight against corruption its top priorities.
Progress towards reaching the standards of a market economy has been recognised by the Bank in its annual exercise of monitoring structural reforms developments in its countries of operation.
Following the many positive steps taken by the government to improve the business environment and its efforts to listen to the concerns of investors, businesses have noticed improvements in the areas of access to finance, macroeconomic stability and a large decrease of the cost of doing business between 2005 and 2002.
In other areas, improvements have not yet been perceived. This is due mainly to delays and/or ineffectiveness in the enforcement of some new laws and regulations.
The functioning of domestic markets is not yet at the level of well running market economies.
As highlighted in the 2005 Comprehensive Monitoring Report of the European Commission on Romania, corruption remains a key problem affecting the functioning of the economy.
Strong economic growth Economic growth has been strong but is likely to moderate in the run-up to EU membership.
Its drivers have shifted from investment towards private consumption, which is fuelling an import boom.
Reducing direct taxation, liberalising the capital account and introducing a formal inflation targeting regime pose new monetary and fiscal challenges.
Currently these challenges are not being met by an appropriate set of economic policies.
This is resulting in widening domestic and external deficits, a state sector starved of funds for major social sector reforms and investments in infrastructure, and has already produced a partial loss of the competitiveness gains achieved in previous years. To improve competitiveness and attract higher FDI, which is necessary to cover an increasing current account deficit, the authorities will need to tighten their set of economic policies and make them coherent and credible, and at the same time pursue the continuation of structural reforms.
In particular, high on the agenda are the reform of the labour market; the alignment of domestic gas prices with international gas prices; and, last but not least, efforts to increase transparency and accountability in the fight against corruption.
Over the last years, Romania has managed to attract significant and steadily increasing inflows of FDI, as a result of political determination to reduce the role of the state in the economy and thanks to the relatively low labour costs experienced to-date.
As privatisation approaches its final stages and the real exchange rate appreciation typical of a successful transition path is taking place, Romania needs to strengthen its ability to attract green-field FDIs, which are dependent on an improved investment climate and on the provision of a skilled and competitive labour force, within the tight framework of EU market rules.
Key transition challenges EBRD noted that a number of key transition challenges must be addressed to build on past efforts and enhance the competitiveness of the country:
The business climate needs to further improve in order to attract much needed larger FDI inflows, which are expected to slow down once current large privatisations come to an end.
Efforts to ensure a stable and more transparent regulatory system must be increased.
Reform of the public administration needs to advance and the reform of the justice system needs to be effectively implemented.
Efforts to increase transparency and accountability must be intensified.
The administration ability to efficiently absorb EU funding remains a serious bottleneck.
Many locally owned medium-sized companies are ill prepared for an open competitive market and will face considerable investment needs for which raising financing will be a challenge.
Access to foreign currency loans for Romanian companies is likely to be constrained by the high and possibly increasing reserve requirements imposed on the commercial banks borrowing in hard currency.
According to the preliminary results of Sicomed, its profit dropped by about 4.6 million euros in 2005.
In September 2005, the Czech medicine producer Zentiva entirely took over the majority shareholder of Sicomed, the investment company Venoma Holdings Limited.
The contract implied the transfer of about 102 million dollars in cash, to which one can add 1.8 million dollars for regulating the financial situation of the company Venoma, a step following which the investment company will stop working.
Subsequently, Zentiva launched a public bid for buying 204.39 million shares, that is the remaining 49 percent of the share capital of Sicomed.
Zentiva anticipates that the acquisition will bring profit per share in the very first year.
The above-mentioned company also expects to get annual savings of up to 5 million euros.
In the first half of last year, Zentiva was also interested in the medicine producer Terapia in Cluj-Napoca (central Romania).
Sicomed Company produces a wide range of medicines covering most therapeutic areas.
The main production capacities of the said company are the oral solid forms section and the injection section.
Sicomed ensures more than 25 percent of the necessary medicines in Romania.
The Sicomed products are also exported to Russia, Azerbaijan, Belarus, the Republic of Moldova and Hungary.
The company, which owns TV stations in central and eastern Europe, said in documents submitted to U.S. securities regulators that it entered into a series of share transfer agreements on Friday with Adrian Sarbu, the general director of its Romanian operations, and a company controlled by him.
The deals increase CME's stake to 90 percent in Pro TV and service company Media Pro International, and to 75 percent in production company Media Vision SRL.
Sarbu has the right to sell his remaining 10 percent stake in Pro TV and MPI to Bermuda-based CME (CETVsp.PR: Quote, Profile, Research) under a put option agreement entered into in July 2004 at a price to be determined by an independent valuation.
The put option can be exercised from March 1, 2009, for the 20-year period that follows, CME said. It has a floor price of $1.45 million for each 1 percent stake that is sold.
The company's Prague-listed shares were up 0.6 percent at 1,435 crowns at 1159 GMT. They closed at $58.53 on the Nasdaq on Friday, the last day they were traded.
The shares are owned by the state, through MCTI, and will be sold throughout several stages, a general scheme having not yet been drafted.
Zsolt Nagy, the minister of communications, stated that Romania will sign in the following days a contract with Credit Suisse First Boston (CSFB) for financial consulting services offered for listing the state owned shares.
In late July, the MCTI was authorized by the government to start proceedings for the selection of international consultants for the privatization of the Romanian Postal Service, the national Company of Radio Communications and the completion of the privatization process of RomTelecom.
After the privatization announcement MCTI received 12 letters of intent from international investment banks that wanted to offer consulting services throughout the sale of the government's shares in RomTelecom.
After evaluating the letters of intent, the candidates were notified of the results in the pre-qualification process and the chosen candidates were invited to submit more details about the offer.
The major shareholder in RomTelecom is the Greek group OTE, which controls 54 percent of the social capital, the remainder belonging to the Romanian state.
The final figure is expected to be higher because the bank didn't report some investments, such as reinvested profit by foreign companies, the Agency for Foreign Investment said in a statement.
In 2004, the central bank similarly reported that foreign companies and residents invested euro4.08 billion (US$4.86 billion) in Romania, which included the sale of state-owned oil company Petrom to Austrian group OMV AG for euro1.5 billion (US$1.8 billion) to the government.
Analysts believe Romania's perspective to join the European Union in 2007 or 2008 and low labor costs have made the country more attractive for foreign investment.
The government also overhauled the tax system in January 2005, introducing a flat tax of 16 percent which replaced taxes of 18 percent to 40 percent for individuals and 25 percent for corporations.
Investors have complained however, about Romania's inefficient court system and suffocating bureaucracy.
The foreign direct investment figure for 2004 has recently been adjusted upward to euro5.18 billion (US$6.17 billion) based on additional data from the National Statistics Institute, which included reinvested profit and other investments not reported by the central bank, the agency said.
The company's shares fell Friday and Monday, after a Bucharest court on Thursday rejected prosecutors' demands to arrest Rompetrol's chairman Dinu Patriciu and two other managers -- U.S. citizens Phil Stephenson and Colin Hart -- on charges of defrauding the state and conspiracy.
The judges ruled that the defendants were not properly notified by prosecutors about the hearing, but scheduled another hearing for Friday.
Patriciu, a Liberal politician, has been investigated since 2003 by prosecutors on various charges relating to his activity with the company, which he built up from scratch into a major regional player on the oil market. Patriciu has denied any wrongdoing, saying that auditors have concluded the company has paid its taxes correctly.
He claimed the investigation is politically motivated and Rompetrol, a Netherlands based group, has sued Romania for US$100 million (euro85 million) in an international arbitration court, claiming the investigation was abusive and was damaging the business.
Patriciu has sought to reassure investors, saying that he made contingency plans and the company's operations won't be affected.
Magistrates refused to issue an arrest warrant against Patriciu last year on charges of tax evasion and money laundering, citing lack of evidence.
Rompetrol has also filed a US$1 million (euro850,000) suit against the Romanian Intelligence Service, claiming that Patriciu's telephones had been tapped without a proper warrant in 2004.
The company had a turnover of about US$2.5 billion (euro2 billion) last year.
In January, Rompetrol acquired France-based oil group Dyneff SA for an undisclosed amount.
The three oil land gas fields, each covering about 1,200 acres, were discovered by the then national oil company, Petrom, and are all located within 60 miles of Romania's capital, Bucharest.
The licenses were awarded to TransAtlantic based upon its commitment to certain work programs on each of the respective fields over the next 3 years.
TransAtlantic will be the operator and 100 percent working interest owner of the fields.
The Izvoru Field was discovered in 1968 and produced 1.35 million barrels of oil from 26 wells.
The other two fields, Vanatori and Marsa, were both discovered in the 1970's and both produced oil and gas but were not fully developed.
Thanks to this project, the main headquarters will be connected to CET Grozavesti, CET Sud,CET Progresu, CET Titan and CET Vest.
The solution is based on implemented a microwave program to interconnect branches, as well as on cable networks and telephone digital centers for data transmission, voice and Internet traffic for each electrical plant.source
In the same period, the overall volume of new orders in constructions stood at 6.359 billion RON, up by 1.858 billion RON, compared to Q4 2004. At the category nonresidential buildings, the volume of orders stood at 1.413 billion RON, up by 203 million RON over the Q4 2004.
A significant rise was registered for the civil engineering sector, namely from 2.806 billion RON in Q4 2004 to 3.216 billion RON in the same period of last year.
Last week, a delegation from the Greek Embassy led by first commercial councilor Lambis Kounalakis and first commercial secretary Pantelis Gassios visited Cluj-Napoca to prepare a meeting with local business people and authorities.
The conclusion was that a business forum would be organized at Cluj-Napoca in April and some 30 Greek companies already confirmed their participation.
Greek business people are especially interested in the construction and construction materials sector, the IT sector, textiles, foodstuff and infrastructure.
"We are prospecting the market and searching for opportunities to place significant investments," Kounalakis said adding that the interest mainly comes from companies that already have businesses in Romania.
According to the latest data from the Romanian Trade Register, Greece ranks ninth in what concerns capital investments in Romania, with 3,000 companies operating in the country.
Until now, Greek investments targeted the banking sector, the telecom field, construction, food industry, sea transportation, textiles, insurance and others.
Bilateral trade between Romania and Greece until November 2005 were of some ¤768.79 million, up by 3.72 percent compared to 2004.
The two companies decided to open R&D centers for technology in
Romania that will employ thousands of local engineers, said presidential
adviser Theodor Stolojan.
"The American company Oracle decided to create the development center in Romania for the entire Southeastern Europe region and more," said Stolojan during a seminar on electronic communications and Information Technology (IT&C). The official also announced that Renault made a similar decision. The center to be opened by the French carmaker will employ approximately 2,000 Romanian engineers, added Stolojan.
"We have investments that aim to turn Romania into a country that exports services and creates high added value," emphasized Stolojan. However, the IT&C industry could rely on the outsourcing activities for up to five years, recently stated the representatives of the Romanian Association for the Electronic and Software Industry (ARIES). Alexadru Borce, president of the association, believes the main advantage of the local outsourcing industry is the low cost of labor, which will hike after Romania integrates into the European Union. "In Romania, a series of companies already have problems related to labor costs, potential clients are moving away to other countries such as the Ukraine or Russia," said Borcea. The ARIES representative recommended that the local companies stipulate funds and invest in the research and development activities.
"Outsourcing was one of the elements which supported the increase of the software exports," said the minister of communications, Zsolt Nagy, adding that, in his opinion, Romania will maintain its advantages for another ten years. "The outsourcing activities allowed the IT&C industry to participate in large, international projects, which then supported the acknowledgement of the local work force's quality, he added.
Software exports boosted by 20 percent last year and reached 280 million euros, according to Nagy. Moreover, the volume of investments in IT&C amounted to 1.8 billion euros, without including the direct investments, added the minister. The turnover of the sector totaled 4.1 billion euros last year, accounting for eight percent of the Gross Domestic Product.
According to the minister, the IT&C sector in Romania is the best prepared for EU accession, both legally and regarding issues of competition.
Romania lags behind on R&D investmentsRomania spent 235 million euros for Research and Development activities (R&D) last year; five times less than the investments carried out by the European Union. Thus, in past years, the funds allocated by the government for R&D had a constant ratio in the Gross Domestic Product (GDP) according to a study carried by the European Statistics Institute, Eurostat. The government allocated 235 million euros last year - the same as in 2003 - representing a 0.4 percent ratio in the GDP. Bulgaria allocated 0.51% of the GDP last year, amounting to 99 million euros.
The average in the European Union was 1.9 percent of the GDP, representing the equivalent of approximately 195 billion euros. However, the sums allocated by the European government for R&D recorded a slight decrease in the GDP last year compared with 2003 and 2001, 0.2 percent and 0.3 percent, respectively. The funds actually increased in value by 1.3 percent.
Hungary allocated the highest GDP ratio for Research and Development from Central and Eastern European countries: 0.89 percent of the GDP, representing 721 million euros. Poland invested 1.13 billion, the equivalent of 0.58 percent of the GDP, while Slovenia financed the domain with 418 million euros, or 1.61 percent of the GDP.
According to Eurostat, the EU members which granted a special role to the R&D sector were the Northern European states. Sweden allocated both the highest GDP ratio and largest sums for research and development - 3.74 percent of the GDP, representing 10.4 billion euros. Finland came in second, with 3.51 percent of the GDP allocated, representing 5.25 billion euros, while Denmark invested 2.63 percent of the GDP, worth 5.1 million euros.
The delegation of the International Monetary Fund would appreciate it if
the Romanian authorities would pursue strong action to confirm the initiated
reforms and would resume dialogue to finalize the stand-by agreement.
Romania still has many challenges to face this year, the last before European Union accession, believe representatives of the IMF who discussed macro-economic aspects with the government. The discussions are part of the yearly consultation stipulated by IMF's statute. One of the delegation's conclusions point out that Romania and the international institution could resume the stand-by agreement before its expiration date. "We left several notes for BNR and the government and I believe that it is possible to revise the stand-by agreement before its conclusion," stated Emmanuel van der Mensbrugghe, chief negotiator of the IMF in Romania.
Closed in July 2004, the convention is valid for two years but it derailed last fall after the authorities and IMF failed to reach common grounds on macro-economic policies.
Thus, IMF's representatives believe that the budget draft for this year is unrealistic, as is the budget deficit target. Moreover, the institution's analysts expect macro-economic slippage, especially of the inflation rate and current account deficit. IMF also noted the lack of structural reforms.
Therefore, adopting measures to boost the revenues' level is imperative as the reduction of expenses as stipulated by the budget is unsustainable, considers IMF. Moreover, the budget deficit could amount to one percent of the Gross Domestic Product if the wage policy includes hikes. "After a significant increase of wages, the government's policy in the sector should be recalibrated to respond to the demands of an economy with a low inflation rate," states the IMF report. Thus, they recommend a single yearly hike for wages of employees in the public sector. Wages should also reflect the professional training, otherwise representing only exaggerated hikes of the wage fund.
"To construct a well-balanced budget and generate a continuous growth of revenues, firm measures for the revenues area are needed," states the IMF report, advising the government to diminish the capital expenses to ensure that the budget deficit target is within reach.
Moreover, the experts of the financial institutions pointed out that Romania will need to pay its contribution to the European Union's budget and to co-finance the EU funded projects. To compensate, IMF requested the government a better-balanced budget, or even with a surplus. The authorities rejected the measure.
IMF recommends RON appreciation
"There is still room to accommodate a supplementary appreciation of the
national currency (RON)," states an IMF release. The Fund's analysts suggest
the Romanian authorities reduce the excessive volubility of the foreign
exchange market and to continue the RON's appreciation as it does not have a
significant impact on the inflation rate.
IMF advises the government to employ interest rates as the main instruments for fight against inflation and proposed considerable hikes of the interest rates for both the monetary policy and sterilization operations. "Maintaining compromises in the monetary policy transmitted contradictory signals to the public," states the IMF release, pointing out that the central bank missed its inflation target due to compromises. The inflation rate was of 8.6% last year, 0.1 percent above the superior margin of the inflation target - 8.5 percent.
At the same time, IMF advises the government to apply a restrictive fiscal policy, which should allow it to fight against inflation without pressuring the exchange rate. Taking into consideration the present policies, IMF expressed its concern regarding the ability to reach the inflation target, set at five percent, plus/minus one percent.
VAT hike could increase budget revenues
The Fund's representatives stated that increasing the value-added tax
(VAT) or the flat tax could boost the budget revenues. Moreover, the
government could expand the taxpayer's base, increase administrative and
property taxes and improve the management of the revenues. According to IMF,
reducing the contribution for social security as announced by the
authorities will decrease the revenues' level, thus, supplementary measures
to compensate are necessary, pointed out the IMF's officials.
The government admitted the fact that the taxpayer's base must be expanded but refused the other two recommendations.
The IMF's analysis of Romania's economic situation is considered important in view of EU accession. The Delegation of the European Commission in Romania stated in October that there is no official connection between accession and the IMF agreement. However, the Delegation advised that its status could show important information about the macro-economic stability. The European Commission will release the country report in May, which could recommend the accession in January 2007 or its postponement by a year to continue reforms.
The bird flu threat, value-added tax uncertainties and problems faced in 2005 by the German company in Romania were the main factors in this decision.
"TUI Scandinavia decided to cancel the program last week. It is about the contracts for Mamaia, Neptun and other country destinations, four charter flights coming from Sweden, Denmark and Finland being canceled," said Popescu, who is also the director of Danubius.
TUI bought 70 percent of the shares belonging to Danubius in 2003.
The official explained that tourists were informed that the Romanian touristic season starts May 1 but when they arrived in Black Sea resorts found out that the season starts later.
"TUI initially wanted to shorten the contracted period for 2006 but the bird flu and the VAT issues appeared," said Popescu.
He stated that the prices for the summer season are announced abroad parallel with the summer season, between August and September.
The TUI Scandinavia contracts represent 30% of the Danubius sales.
The company lost 8,000 potential tourists.
Popescu showed that the contracts closed with TUI Germany might fall and the company will make a decision the international tourism fair held in Berlin (March).
"We are very keen on closing the contract but the situation on the German market does not look too good," said Popescu.
TUI brought to the Black Sea resorts 30,000 tourists in 2005.
Industry representatives have criticized at the end of 2005 the poor state of the tourism infrastructure, high prices and inadequate services, considering that international destinations have more to offer.
Romania's medium and long-term foreign debt advanced 33.4 percent December 2004 to December 2005, closing the year 2005 at 24.408 billion euros.
Public external debt and publicly guaranteed external debt was 11.321 billion euros as of end-December 2005, making up 46.4 percent of the total medium and long-term external debt.
Non-publicly guaranteed external debt was 12.138 billion euros at the same date, up 54.2 percent year over year.
Medium and long-term debt servicing ratio stood at 18.2 percent in 2005, compared with 18.4 percent one year before.source
Poalim Capital Markets executive VP International Corporate Finance Amir Aviv said this was Poalim Real Estate?s flagship project out of the fund?s 13 deals to date. He said many international chains were interested in the Constanta Mall, including Zara, Marks and Spencer, McDonald?s (NYSE:MCD), Kentucky Fried Chicken, as well as Israeli food, fashion and pharmacy chains that want to open stores in Romania.
Constanta, a port and vacation city on the Black Sea, is Romania?s second-largest city with 400,000 residents, and another 400,000 in the region. One million tourists visit Romania?s Riviera every year.
One billion euro works would have been granted through this contract without a tender, violating the public acquisition procedures. Oana Marinescu, the government's spokeswoman, said that the initial version of the contract contained the "single offer" terms.
However, Dan Voiculescu, the president of the Conservative Party, said that the agreement contained the term "single tendering" (meaning one tender) that was badly translated as "single offer". "The agreement must comply with the present laws regarding public acquisitions and the contracts must be closed through tender," said Marinescu.
She explained that, technically speaking, the decision can be cancelled because the stipulations of the document did not enter into force.
The Ministry of Foreign Affairs will renegotiate the new terms of the agreement with the Swiss party. The negotiations will be followed by a new government decision that will approve the renegotiated contract.
The initial agreement was signed by the state secretaries of MEC and FDEA on June 16, 2005 and was approved by the government on September 22, 2005.
President Traian Basescu said that the Ministry of Administration and Interior must verify the normative acts issued by the former government because many of them favored the "illegal interest groups." Basescu also referred to the Swiss-Romanian cooperation agreement, which could have led to illegal contracts. However, Codrut Seres, the minister of Economy and Commerce, showed that the document represents a general economic collaboration agreement between Romania and Switzerland. Its purpose is to promote economic agreements and attract foreign investments to Romania.
The contract was based on the Swiss-Romanian agreement and Prime Minister Calin Popescu Tariceanu request that Seres suspend the contract until any possible violation of the acquisition law is eliminated. After that, Seres denied the information regarding the one billion euro contract. "The contract does not contain sums or companies and the name of VA Tech or Portile de Fier does not appear in it; the contracts regarding Portile de Fier were closed by the former government," said Seres. Swiss VA Tech won a contract to upgrade the "Portile de Fier" hydroelectricity facility. After the upgrade, the turbines of the installation failed and a new upgrade was required.
Oana Marinescu, the government's spokeswoman, said that Romania would have been obligated to pay 1.5 billion euros if the contract had been cancelled.
Marinescu mentioned that the contract now complies with Romanian laws.
Laszlo Borbely, the delegate minister for public works, stated at the beginning of the month that the Ministry of Transportation, Constructions and Tourism (MTCT) could increase in 2006 the funds allocated to the highway project from 100 to 500 million euros. The additional funds would come from finances obtained from the privatization of the Romanian Commercial Bank (BCR) and from credits.
Work on the Brasov-Bors highway will be resumed as soon as possible, depending on weather conditions and the completion of the work schedule for 2006, said the minister.
At the end of 2005, Minister of Transportation Gheorghe Dobre announced that the renegotiation of the contract with Bechtel, initially completed in 2003, had been completed and that the highway could be finished sometime after 2012.
The structure of foreign investments in Romania will considerably change
in the years to follow as the state capital still to be privatized is
running low, said Adrian Nitu on Friday, the advisor to State Minister
Gheorghe Pogea. Greenfield investments will have an increasingly more
important share in the structure of foreign direct investments as the rate
of privatizations slows down, Nitu explained. Greenfield investments are
direct investments in new businesses, as opposed to investments in
The advisor added that when investors analyze the countries where they
plan to start businesses, one of the decisive factors is state incentives
they are likely to obtain.
Romanian authorities elaborated a state aid strategy to be submitted to
European authorities in Brussels for advice before being approved by the
government, said the official. Although the Competition Council has its own
regulations on the matter, to date there are no state incentive systems of
the central and local authorities which would give a clearer representation
of what can be done to support investors, said Nitu.
The Executive Director of the Foreign Investors Council (FIC) Ruxandra
Bandila affirmed that there would be a period of transition before
greenfield investment supremacy is achieved. Bandila gave the example of
Slovakia, where foreign direct investments (FDI) decreased by 24 percent the
year that this transaction period occurred. However, she added, Romania has
a better perspective to get through the transitional phase because the
adoption of the 16 percent flat tax makes multinationals interested in
paying taxes in Romania rather than somewhere else. "Greenfield investments
could become very attractive, but we need to change our attitude and
determine the needs of the investors," added the FIC official.
According to data from the Romanian Agency for Foreign Investments (ARIS), the value of foreign investments with significant economic impact (over one million dollars) for 2005 was over 1.8 billion dollars.
Last year 251 investment projects were completed, of which greenfield investments represented a value of 908 million dollars compared with 910 million euros (1.1 billion dollars) from other types of investments.
Local laws stipulate the exemption from the payment of customs taxes and value-added tax for imported equipment and raw materials if the value of the investment tops one million dollars.
Business travel was the drive of the industry, which collected 845 million euros from foreigners last year, namely more than 1% of Romania's Gross Domestic Product for 2005. The amount is more than double the revenues from each year, 2000 to 2004, when they stagnated at around 400 million euros. The hotels targeting businesspeople, the airlines, the travel agencies, all the players in this sector of the economy felt the business grow last year. "The number of tourists has constantly increased over the last five or six years. The business travel segment has witnessed 15 to 20 percent growth since 1990 and it is only natural for a business tourist to spend more money on hotels and services." Claudia Stan, marketing manager of the Aerotravel travel agency, one of the top five players in this business commented for Ziarul Financiar.
"The number of foreign tourists using tourism packages went up 15 pecent, while business travel increased by 20 percent," says Traian Badulescu, spokesman for the National Association of Travel Agencies.
Business travel accounted for 60 to 70percent of the total tourism revenues in the last ten years.
With the upcoming EU accession, more and more foreign companies are opening subsidiaries on the domestic market.
The amount Romanian tourists spent abroad in the previous years used to exceed grossly the amounts entering the country on this segment. The situation reversed in 2005, about ten years later. Tourism revenues went up by 108 percent in 2005.
The last year with a similar growth rate was 1994, and that was largely caused by the trend of the ROL/USD exchange rate.
Paying attention to the new trend introduced by foreign companies moving to Romania, the domestic players are making increasingly larger investments in the segment aimed at businesspeople.
The market of the hotels for businesspeople witnessed its most flourishing year in 2005 and not only because several international hotel companies entered the market, but also because of the large investments in actual hotels.
According to his statement, transformation will include programs meant to
diversify the service range, and also change the agencies network. These
measures aim to increase the volume of the business and the efficiency of
the bank, training of personnel, the improvemement of the IT structure and
of the quality of services. ?We said that we will reduce the surface of our
agencies, but that does not mean authomatically that we will close down
agencies and fire people. Romania is a developing market, where expanding
the agency network is normal, and where qualified personnel is needed. I
cannot say, though, that all employees will keep their jobs?, says
BCR will still be run by Nicolae Danila and it will keep its name within the group. The main activity of the Romanian bank in the next 12 months will be to maintain the relationship with its clients, so that it will remain leader on the market. ?The growth potential, and the future opportunities on the Romanian market, which is still under-penetrated, determine us to expect good results for our operations here?, declares Andreas Treichl
In December 2005 Erste Bank won the auction for 61.88% of BCR shares, offering EUR 3.75 mln. 25% of the shares were owned by International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD). The rest was owned by the Romanian state.
For the upcoming period, the technical offers will be analysed for the privatization of the Societatea Comerciala filiala de distributie si Furnizare a Energiei Electrice ? Electrica Muntenia Sud ? SA.
The eight bidders who presented their bids by Jan 31, 2006 are ? AES Corporation USAm, Eez As ? The Czech Republic, Enel SpA ? Italy, EVN AG ? Austria, GAz de France ? France, Iberdrola SA ? Spain, RWE Energy AG ? Germany, Union Fenosa International ? Spain.
Note that the contribution on the group results is minimal.
The company will proceed to the gradual transfer of part of its productive unit in Italy to Romania.
Marfin analysts said that working costs are substantially lower (c. 1/10) in Romania while along with the size of the local market could provide a comparative advantage to the group.
The transfer is expected to be intensified in 2006-07.
FY:06 estimates for the Romanian subsidiary call for top line growth of 27-28% and bottom line growth of 25-26%.
The Romanian side was represented in the meeting by Eugen Tapu-Mazare, State Secretary with Ministry of Economy and Trade and by representatives of the ministry, of Conpet and of Oil Terminal.
The relevant ministries will sign the Agreement Memorandum over March 21-22, where the Minister of Economy Codrut Seres will represent the Romanian side.
Romania is one of the five countries involved in the construction of Constanta-Trieste oil pipeline.
Romania will benefit for a 20-year period from 2.27 billion dollars for 40 million tonnes a year transit capacity, 3.1 billion dollars for 60 million tonnes a year transit capacity and 4.39 billion for 90 million tonnes a year transit capacity.
Constanta-Trieste Oil Pipeline is the most direct way towards Europe.
The Interstate Committee, currently under Croatian chairmanship, is made up of Romania, Serbia and Croatia, while Italy and Slovenia are observer members.
By connecting the pipeline to the Trans Alpine Pipeline Network, Germany, Austria and other western states become target markets.
The new oil pipeline is an alternative to the Russian energy sources.
The highest influence on the deficit was determined by the evolution of the commercial deficit, which went up 46.6 per cent, from EUR 5.323 bln to EUR 7.806 bln.
In 2004, the negative balance of the current account was EUR 5.099 bln.
BNR data do not include the evolution of the payment balance on components (revenues, current transfers etc.), as these will be most probably published on February 20.
Minister of State Gheorghe Pogea announced in January that the initial data for 2005 point to a current account deficit of approx 9 per cent of the GDP, above the level of 7.5-8 per cent of the GDP estimated by the authorities at the beginning of last year.
The International Monetary Fund estimates a deficit of 9.4 per cent of the GDP for 2005.
This year?s investment project consists of the installation of a new brew house and the expansion of beer filtration and storage capacities in Buzau. The current bottling line will be replaced with a new line, with a capacity rate of 45,000 bottles/h. The construction work and installation of the new equipment requires the demolition of some old buildings, while others will be refurbished.
?Besides the expansion of the production capacity, this important investment project will facilitate future expansions and competitive costs, which will lead to the alignment of the operations of URSUS Breweries in Buzau to SABMiller's standards?, declared Cristian Matei, the manager of the Buzau brewery.
The brewery in Buzau was the first acquisition by SABMiller plc in Romania in 1996 and has an annual capacity of 800,000 hl and approximately 300 employees. Up until now, total investments made by URSUS Breweries in the Buzau brewery have been more than US$ 13 million.
Dieter Schulze, the President of URSUS Breweries, declares: This is the largest investment made by URSUS Breweries since it entered the Romanian market and re-confirms our commitment to the development of Romanian beer brands with heritage. It also benefits our consumers, by having their brands of choice brewed by world class employees in state-of-the-art breweries.?
URSUS Breweries, a subsidiary of SABMiller plc, is the second largest brewer in Romania, with an estimated annual market share of 22%. URSUS Breweries currently holds 4 breweries with a total capacity of 3 million hl and about 1,300 employees. The company has operations in Cluj-Napoca, Timi?oara, Buz?u, Bra?ov and Tunari. The brands owned by URSUS Breweries are: URSUS, Timi?oreana, Ciuca?, Stejar, Peroni Nastro Azzurro and Pilsner Urquell.
He said that the future use of the building, as the Museum of Bucharest, matches the project of City Hall with respect to the Historical Center. "We have an extremely valuable cultural fund which unfortunately is not put on display properly," Videanu said.
Bucharest currently has a museum, which is located in Sutu Palace, at University Square, but the mayor deemed this building "not large enough to comprise the historical values of Bucharest.
Purchase and consolidation works for the CEC building are an older plan of Bucharest City Hall, which was voted on at the end of November 2005 by the General Council. According to the decision made at the time, the consolidation works would last three years. The building located at 13 Victoriei Avenue is a historical monument. Its construction began on July 8, 1897 in the presence of King Carol I. Designed by French architect Paul Gottereau, it was finished in 1900.
The relevant ministries will sign the Agreement Memorandum over March 21-22. Romania is one of the five countries involved in the construction of Constanta-Trieste oil pipeline. Romania will benefit for a 20 year period from 2.27 billion dollars for 40 million tonnes a year transit capacity, 3.1 billion dollars for 60 million tonnes a year transit capacity and 4.39 billion for 90 million tonnes a year transit capacity.
Constanta-Trieste Oil Pipeline is the most direct way towards Europe. The Interstate Committee, currently under Croatian chairmanship, is made up of Romania, Serbia and Croatia, while Italy and Slovenia are observer members. By connecting the pipeline to the Trans Alpine Pipeline Network, Germany, Austria and other western states become target markets. The new oil pipeline is an alternative to the Russian energy sources.
During the period to come, the technical offers will be analysed for the privatization of the Societatea Comerciala filiala de distributie si Furnizare a Energiei Electrice ? Electrica Muntenia Sud ? SA. The eight bidders who presented their bids by January 31 2006 are ? AES Corporation USAm, Eez As ? The Czech Republic, Enel SpA ? Italy, EVN AG ? Austria, GAz de France ? France, Iberdrola SA ? Spain, RWE Energy AG ? Germany, Union Fenosa International ? Spain.
Qatar's Emir showed interest in re-launching this project which had been "designed", as President Basescu said, since the beginning of 1992, being abandoned in the last years. "They want to make it, if we want it too", President Basescu told an informal meeting with the reporters. He says that Qatar's alternative to this project is its achievement with Croatia. According to the Romanian leader, the responsibility rests with Romania now, the more so since the Doha authorities "intend to enter South-Eastern Europe" through this project.
The BT Securities official said that, normally, the market recovers its losses, unless any information that would continue the descending trend should emerge.
"There were unexpected corrections that appeared especially at the end of the session and affected all the listed shares. There were no discriminating decreases for particular companies, as usually happens when negative information referring to them appears," said Nilas.
Another broker said that pressure on sales prompts investors to withdraw from the market and show prudence towards their operations.
The five financial investment companies (SIF) reported the highest decreases, the BET-FI index lowering by 3.58 percent. The share operations performed by the SIF totaled seven million euros.
The BET index, calculated based on the evolution of the most liquid companies, lost three percent.
The value of the operations performed on BVB totaled 16.1 million euros.
Modernizing the water pipes in Bucharest implies investments of over 26 million euros, money which will be totally invested by the French water company Apa Nova, said General Mayor Adriean Videanu yesterday.
He added that he cannot say at the moment if such works are to lead to an increase of tariffs.
Videanu explained the company is expected to complete the investment project by the end of this month when a special experts' commission will come to Bucharest to assess the process and mediate the tense relations between the water company and local authorities.
Representatives of the French company announced recently that it will contribute with almost eight million euros for repairing and modernizing water pipes in Bucharest.
However, according to a release from the company, if the mayor decides that Apa Nova has to cover the whole costs of the modernizing process, and forces the company to invest 26 million euros, water tariffs will increase, as they have to recover the 19 million euros difference.
The head of the company said that they did not calculate the increase of price, explaining that he has to discuss such a measure with the mayor as well.
The old water pipes that are to be changed are a source of conflict among Bucharest residents. A pipe distributes water to several blocks of flats. In some areas people have water meters installed in their apartments and pay only what they consume. However, there are buildings where such water meters are missing and people living there can pay more than they consume, including for water leaks from pipes.
Modernizing the pipes network would mean installing meters in every building in the city.
The mayor's office has received thousands of requests from residents complaining that they pay too much money for water and asking for measures, including repair and modernizations.
At the same time, the mayor's office explained that the water leaks are more and more numerous, especially because most of the pipes are old and rusty. Also, a report completed in 2004 by international experts pointed out to the French company which is the major shareholder of Apa Nova that one of the responsibilities stipulated in the contract says that the company has to repair all broken and rusty pipes.
The company responded to the allegations saying it had installed meters in 99 percent of the Bucharest buildings.
Nevertheless, the department at the mayor's office responsible for water distribution issues has fined Apa Nova with 1.5 million euros, claiming that the company did not install as many meters as it says, adding that the deadline for this expired last year.
The company had four years, until the fall of 2005, to finish installing water devices.
According to the mayor's office 10 percent of the buildings in Bucharest are lacking such meters.
According to sources inside Portugal's parliament, as quoted by Bucharest Daily News, no final date for the vote was set, but the assembly is expected to vote on the treaties by the end of the month.The Portuguese government had sent the draft law regarding Romania and Bulgaria's EU accession to the parliament's foreign affairs and European affairs committees in September of last year.
The company currently holds four facilities in Switzerland and the United States and it is about to build another one in Romania to be specialized in aluminium extrusion.
The aluminium will be used mainly to make spare parts for aircraft.
The investment will create some 250 jobs.
About 15-20 percent of the profit made in the first four years of activity will be reinvested.
According to BVB, SIF Moldova held 55.18 percent of the Ceahlau stock late last year; Broker SA financial investment company - 15.81 percent, while the rest of 29 percent belonged to other shareholders.In 2004, the company posted a net profit amounting to 18.3 billion RON and a net turnover amounting to 403.55 billion new lei, while total revenues amounted to 456.48 billion ROL and total expenditures to 425.36 billion ROL.In order to be traded in the second-tier category of BVB, a company traded on the RASDAQ has to post a turnover in excess of 2.5 million euros and own a registered capital exceeding 0.5 million euros; the percentage of the free-float shares has to be higher than 10 percent or to exceed 50,000 euros, while the number of shareholders must exceed 1,000. (1euro sells for 3.6 RON or 36,000 ROL).
With the 4 million euro investment we will create 150 new jobs? Talal El Solh, CEO and president of Caroli Foods said. The construction of the new factory will cost 4 million euros, an amount representing 40% of all investments to be made by the company in 2006. Financing is made from company sources, completed by foreign financing obtained by Caroli Foods. Production equipment and processes in the new factory will be according to ISO 9001:2000 and HACCP standards. Caroli Foods is one of the leaders in the field in Romania with an estimated market share of 12%.
The group produces three brands: Caroli, Gorumet and DFamilia, including 150 products, of which 41 launched in 2005. Over the 12 years of activity, Caroli Foods has invested tend of million euros in processing and distributing salami and sausages. The group has 1000 employees, of whom two thirds are between 18 and 35 years old. The business figure of the group was last year 62 million euros, on the rise by 40%. Caroli Foods is made of the companies Caroli Prod 2000, TC Affaires and INDCARF.
At the end of 2005, the bank held assets worth 615.7 million euros, up by over 177 percent compared to December 2004.
The level of its own capitals stood on December 31, 2005 at as much as 59.7 million euros, compared to 29.9 million euros on December 31 2004, registering a 131-percent increase.
This month, Banca Romaneasca increased its share capital by almost 67.7 million euros, reaching over 110.7 million euros.
At the same time, it doubled the market share from 0.98 percent in 2004 to 1.9 percent in October 2005.
The National Bank of Greece, the largest financial group of Greece with an 87.14 percent stake, holds Banca Romaneasca.
For this year, the bank sets as major objective the development of the territorial management, from 45 units presently to at least 65 units later this year.
The consumer credit company is also financing cars acquisitions and closes auto insurances.
Providential has offices in the Czech Republic, Hungary, Poland and Slovakia.
The company's crediting activities amounted to 966 million euros and its net profit was of 85.4 million euros, in 2005.
Provident Confidential started its activity over 125 years ago and is listed on the London Stock Exchange.
Sandor Csanyi, the bank's president, said that the total number of branches will reach to 70 and OTP's final objective is to have 200 branches in Romania.
"The Romanian division reported losses in 2005 and the next few years will show similar evolution because of the high costs in creating new agencies," said Csanyi.
OTP postponed its Romanian investments for more than a year and did not succeed in buying banking assets.
The benefits could range from 2.27 to 4.39 billion dollars over
20 years, depending on the capacity of the new oleo duct, according to Hill
International's feasibility study.
The five states partnered in the project, Romania, Serbia, Croatia, Italy and Slovenia, should sign an agreement for the construction of the pipeline by the end of March. "We are still waiting for a positive answer from Slovenia," said Iuliana Dumitru, the spokeswoman for the Ministry of Economy and Trade.
The full length of the pipeline will be 1,360 kilometers and should originate at the Constanta harbor, passing through Serbia, Montenegro and Croatia, before ending in Trieste, Italy, where it will connect with the Trans Alpine Pipeline - TAP, which supplies oil to Austria and Germany. The pipeline will supply oil to refineries in Southeastern Europe, Italy, Austria and Bavaria (Southern Germany), stated Henry Owen one of the financial advisors of the project. The oleo duct will also fill oil tankers through the existing Trieste-Genoa pipeline, he added.
Among the companies who have expressed interest in the project are
General Electric Energy Oil & Gas and China National Oil Corporation.
Chevron, Texaco, British Petroleum and Austrian oil group, the majority
shareholder of Petrom, also have shown an interest in the project.
The costs for the pipeline are estimated between 2.2 billion and 4.6
billion dollars, depending on the transport capacity chosen for the oleo
duct, the construction of which should begin next year.
For Romania, the projected costs for three designs, which would transport between 40 and 90 million tons of oil per year, could range from 1.1 billion dollars to 2.1 billion dollars.
Advantages of the project also include a direct route for transportation of Caspian crude oil to Europe and significant transit financial benefits. In Romania alone, the project could lead to the creation of 5,000 jobs during the construction phase and 1,000 jobs during its operational life, estimated at 25 years.
Of the pipe's total length, 649 kilometers would be on Romanian soil,
fitted with three of the six pumping facilities required for the project.
Moreover, Romania has a well-developed infrastructure in the transportation,
storage and processing of crude oil. It has its own refineries with a total
processing capacity of 34 million tons per year crude oil, or about half of
the production forecast to be achieved from the Caspian Sea area. Romania
also has petrochemical plants for secondary processing, which will give
them, after the upgrading process, competitive conditions compared with
those existing in well-developed countries, delivering high-quality products
at international standards, while observing ecological provisions.
Transportation of oil products to existing refineries in Romania (a great
part of this oil is processed locally-near Constanta - in the Midia -
Navodari Refinery) is carried out by pipelines (the network comprises 2,454
km of main pipelines and connection between refineries and storehouses),
railways, or by car.
Due to existing infrastructure and its geographical position, Romania can
offer a competitive price for the transportation of crude oil from the Black
Sea's east coast harbors to an open sea. For instance, the price of
transportation of crude oil from Novorossiysk, Russia to the Adriatic Sea,
through Romania, is about 12.5 dollars per ton.
Market is also an important advantage. Romania has a crude oil deficit for its internal needs of seven million tons per year. Furthermore, the total crude oil necessary in neighborhood countries is about 70 million tons per year. After processing, the light products can also be exported back to some Central Asian countries.
Estimated at 60-75 billion barrels, the oil reserves in the Caspian Sea region align Romania and the Black Sea on a strategic axis, with numerous economic advantages. Thus, with investments of approximately two billion dollars, Romania could earn, from transit tariffs alone, 600 million dollars yearly. A feasibility study carried out by Italian company ENI shows that Romania's input for the project would actually amount to 1.2 billion dollars, for a transportation capacity of 30 million tons of oil per year. Moreover, Romania's refining capacity amounts to 34 million tons per year, but it only processes 13 million tons yearly. Thus, the new pipeline would allow the refineries to function on full throttle, boosting growth potential of local refining companies such as Austrian controlled OMV/Petrom and RomPetrol.
New pipelines could satisfy Europe's needs
Presently, most of the oil extracted in the Caspian Sea area is
transported by sea or through pipelines owned by the former Soviet Union.
The crude oil available for export in the region will boost to 344 million
tons per year by 2020, compared with the 50 million tons per year
transported out of the region at this time.
The European market for the pipeline requires 298 million tons per year, with a significant growth potential if it is connected to the Italian pipeline systems, which reach as far as Genoa.
Economic experts believe that the future oleo duct could efficiently carry approximately 60 to 90 million tons of crude per year, which would ensure Europe's strategic needs.
Moreover, the pipeline will contribute to reducing traffic through the Bosporus - Dardanelles straits, according to Financial Times. However, although Turkey intends to reduce traffic, its government has every intention of holding on to energy and tax control. Turkey does not allow the transit of more than 25-30 million tons of oil per year, considerably under Europe's needs.
Rizea believes that the tax breaches the European legislation and is expected to have a strong impact on companies operating in the sector. "After 2005, when the significant depreciation of the European currency against the national RON spelled disaster for exporters, 2006 could be even harder as the Romanian currency continues its appreciation," said Rizea. The hike of utilities tariffs and new taxes will also have negative effects on the industry, he believes.
The value of the furniture production dropped last year to approximately 1.24 billion euros, compared with last year's 1.28 billion euros. The furniture exports amounted last year to 908.1 million euros. "If this year the production will remain at the same level as in 2005, the exports will continue to decrease by at least five percent," said Rizea. Moreover, he stated that contracts worth hundreds of million of euros were lost last year. The furniture producers will focus on the internal market this year, he added, because they fear the fluctuations of the exchange rate.
Other legislative actions included on the government's agenda include the annulment of the law for promoting foreign direct investments (FDI) with impact on the economy (which exceed one million dollars or the equivalent). The Romanian Agency for Foreign Investments (ARIS) is promoting a new law to stimulate FDI.
The government's strategy for the year also stipulates that the Ministry of Economy and Trade will develop a law to regulate the debts of closed mines. The ministry also has to present a strategy regarding the defense industry. The document should be presented to the government in the second half of the year, after the National Supreme Defense Council approves it.
The beer industry should get governmental support as well, as the Ministry of Agriculture is developing a draft law to promote financial support measures to companies operating in the sector.
Bursa's main story centers on the fact that the Bucharest Stock Exchange
may permit operations with shares of important companies abroad, which may
prove interesting for investors.
"Romanian investors would be amazed if they found out that the Bucharest Stock Exchange could include transactions of shares of important international companies such as Coca Cola or Mercedes. "This is not a joke, the president of the Bucharest Stock Exchange, Septimiu Stoica told Bursa newspaper. "This is not a very new creation. The idea appeared about two years ago, but it was left in a stand-still because of other priorities (such as the merger between the two markets). Although everybody's focus now will be on bringing new share issuers of the Bucharest Stock Exchange quota, state bonds, margin buys and sales, we do not exclude this product from the range of instruments proposed for being transacted at the Bucharest Stock Exchange," Stoica also said. Like any other product, it can be adapted function of the requirements of the market," he sad. Investors in Romania will be able to operate with shares "duplicated after the foreign ones, through the intermediary of a new financial product - the Romanian Depository Receipts. This mechanism offers the possibility of operating on the Bucharest Stock Exchange with shares listed on other markets, by creating new duplicated values, which are blocked by a depositary. Septimiu Stoica also said that "in an emerging country, there are shares that can be interesting for Western investors who could purchase them either through the intermediary of the Stock Exchange (this meaning including the respective risks) or through buying depositary receipts which show, in fact, the original bonds. The Bucharest Stock Exchange president mentioned that among these products are the American Depository Receipts or the European Depository Receipts. At the same time, Stoica said that the procedure can function the other way around as well. "We aim to bring important bonds, from developed countries under the form of duplicated bonds to our capital market," he said."
Overall investments Romania needs to attain the standards of the
European Union could top 40 billion euros according to representatives of
the banking environment.
Infrastructure investments are the main economic growth resource of Bucharest said the General Mayor of Bucharest Adriean Videanu yesterday at a municipal infrastructure seminar organized as part of the European Finance Convention. The municipality sees the infrastructure as a priority because both the public and private sector could benefit enormously from the development of the peripheral and semi-peripheral areas of the city, said the official.
At this point, 92 percent of the revenues of the municipality come from local taxes and the collection of value-added tax (VAT), according to Videanu who argued that other financial resources were necessary to fund the numerous projects of the city hall. Most of the needs would be covered through private-public partnerships said the official.
At this point, Bucharest has a potential for private foreign direct investments of approximately four billion euros, especially in the public infrastructure. "We have projects worth 1.2 billion euros under way and by the end of my mandate we will complete projects worth 2.8 billion euros in Bucharest," said Videanu.
Bucharest bonds issue in January 2007
Another funding source could be a new municipality bonds issue, which
local authorities plan to do no later than the beginning of 2007. "I believe
that besides international financial institutions, another excellent source
of funding can be the internal market," said the mayor of Bucharest. The
issue would be denominated in local currency and could be worth between 400
million euros and 500 million euros, depending on the estimates of the
municipality regarding the investment necessities.
Videanu explained that the advantages of an internal bonds issue could be double. On one hand, they would finance the infrastructure projects but on the other, they could successfully replace the sterilization operations of the National Bank of Romania (BNR).
Sterilization is the central bank's activity in the domestic monetary market, often under the shape of foreign currency acquisitions, to reduce the impact on money supply of its intervention activities in the foreign exchange (FX) market.
In 2005, BNR carried out sterilization operations, sometimes at high interest rates, in order to control inflation. This resulted in an operational loss for the central bank high enough for the favorable differences from the re-evaluation of the foreign currency reserve to be unable to cover. If part of the monetary excess on the market would finance infrastructure projects, it would indeed relieve the central bank of a substantial amount of pressure. Besides, as the mayor stated, that money would no longer be temporarily withdrawn from the economic circuit as it happens in the case of sterilization operations.
The Bucharest city hall has sold, last year, on the international market a bonds issue worth 500 million euros.
40bn euros to reach EU standards
Present at the seminar, Reinhard Platzer, president of Dexia
Kommunalkredit Bank, estimated that Romania needed about 40 billion euros
worth of investments to achieve compliance with the European Community
acquis. "About ten billion euros would represent investments in the public
infrastructure of Bucharest, hospitals, schools and roads, that is why
Romania needs funding sourced as efficiently as possible," stated the Dexia
official, quoted by Rompres.
According to the president of the Romanian Commercial Bank (BCR) Nicolae Danila, at the national level for the 2004 to 2006 period the necessities would attain 12 billion euros. These funds would finance the development of the transportation network, human resources as well as the balanced development of all regions. For the 2007 to 2013 period necessities would reach, however, the considerable sum of 58 billion euros, believes the BCR representative, destined for infrastructure, rural development, environment protection, competitiveness and regional development. Danila said financing could come from European structural funds, state budget funds, and international financial organizations and from private sources. The latter could amount to 5.3 billion euros, he added.
640 million invested in rural infrastructure
The Minister Delegate for Public Works Laszlo Borbely, who also
participated in the seminar, said Romania needed to elaborate a strategy of
territorial development, so that infrastructure projects throughout the
country can be carried out effectively. "For the last 15 years we have
refused to do things the communist "five-year plan" way. We now have to
learn to plan not five but ten years ahead," said the government
The Ministry of Transportation, Constructions and Tourism (MTCT) intends to make a 640 million-euro loan from the Council of Europe Development Bank (CEB) to finance the development of infrastructure in rural areas, announced Borbely.
The first payment of 300 million euros would finance the renovation of bridges and dumps in rural areas. The credit would have a three-year maturity and will be discussed with the CEB administration board two weeks from now.
The segment that has the largest gap to cover is the infrastructure of small towns (with less than 50,000 inhabitants), said the minister. This is because of the lack of funding for this particular segment. Rural areas have been supported by SAPARD funds, large cities by ISPA programs but small cities were forgotten. To solve this problem Romanian authorities are currently negotiating with CEB another 340 million euros loan that would fund the modernization of water networks.
Asked by press representatives about Bucharest infrastructure projects he mentioned two important projects. The Esplanada residential project is being discussed within the frame of a private-public partnership and negotiations could be complete in March this year. The other major project, the renovation of Casa Radio, depended on how soon the authorities would find a reliable investor who could prove the existence of the necessary financial resources.
The MTCT official also disclosed that for the Brasov-Bors highway project, promoted by Bechtel, the government could allocate this year up to half a billion euros, provided that the American company manages to spend the whole 300 million euros initially provided.
The bilateral trade registered a deficit of EUR 500 M in 2005. The trend shows that Romanian industry has eroded significantly over the past year, given the RON depreciation, higher energy costs, and most notably, delayed infrastructure works, the economic and commercial attaché of France?s Embassy, Phillipe Boin, said.
According to Mr. Boin, Romanian imports from France kept their dynamic pace, up 17 per cent compared to the earlier year, to EUR 2.1. bln. They account for circa 6.7 per cent of Romania?s overall imports, behind the imports from Germany - 14.7 per cent and Italy - 15.4 per cent.
In 2004, Romanian imports from France accounted for 7.1 per cent of the total. Equipment (28 per cent), auto vehicles (19 per cent), chemical and pharmaceutical products (14 per cent), textiles (12 per cent) and plastics (7 per cent), along with consumer goods, foodstuffs and cosmetics, make the biggest share of the imports.
Romania exports to France stagnated at EUR 1.64 bln in 2005, Boin also said.
What Romania had mainly exported to France last year was cars, see the Dacia effect, Boin said, although other components, such as metal and mechanical products took a plunge, while textiles stood flat.
France ranks third among Romania?s foreign investors, EUR 3.3 bln, behind
Austria and the Netherlands, but ahead of Germany. According to Boin, French
investments focus on the banking and energy sectors. Saint Gobain, Dacia
Renault and Michelin are the top French investors in Romania.
?The Austrian Parliament discussed recently the issue and already made its first step in relation to the issue. We will wait for the publication of the European Commission?s report on the progress of the two countries and then we will take a decision?, Karin Gastinger said in an interview with Deutsche Welle.
The Austrian Minister of Justice stated she relies on the current Bulgarian government, which, according to her, has the political will to cope with the problems.
Company management hoped to resume production shortly, because of the millions dollars of losses incurred by stopping production.
The delay of restarting all the installations could create a crisis on the Romanian chemical fertilizer market right before the spring agricultural works.
Interamerican president Timo van Voorden criticized the government's project of health reform saying it had numerous flaws if adopted it would turn out to be inefficient. The official also referred to the "reluctance for dialogue" of health authorities when Interamerican, along with other private health insurers, offered the Ministry of Health their support based on the experience of insuring millions throughout Europe. Van Voorden added that it was hard for the public health system to provide quality medical services when less than 4 percent of the gross domestic product was allocated to health. At the same time EU members invested an average 11 percent of a significantly higher GDP. "One cannot expect the public health system to improve with that kind of funding" said the Dutch executive.
The meeting is part of UNPR's strategy to support trade relations and secure borders considering the anticipated EU accession.
Andreev expressed his support to eliminate visas for businesspersons that invest in the two countries and continue trans-border projects to create business offices along the Danube. "The Danube should become a business environment and not a border. Starting 2007, once the Euro regions will be created, the Danube will become a highway that should be used with the purpose of creating business opportunities," added Milut.
UNPR's president said that the trade relations between Romania and Bulgaria are minimal and the Bulgarian businesspeople should create proper conditions for the development of the business environment. "Through a public-private partnership we should succeed in creating the needed infrastructure for a business environment," said Milut.
Romania and Bulgaria agreed to promote a cross-border cooperation action plan that will regard the development of infrastructure, protection as well as management of the environment, economic development and bilateral actions between citizens, institutions and small communities. The PHARE CBC program, which started in 1999 and is set to end once Romania and Bulgaria enter the European Union, grants financial support to cross-border cooperation during the pre-accession period.
After the accession, both countries will receive structural funds to continue the programs. The program focused on financing large investment programs until now but the new program due end in 2009 will direct the available funds to supporting initiatives in the domain.
The Board also reasserted the institution?s determination to carry on with the massive sterilization of liquidity in excess on the monetary market.
Seeking a higher predictability and efficiency in attracting one-month deposits on term, the BNR Board announced that bids for such deposits shall take place every Monday.
The central bank Board also analyzed and approved the quarterly Report on inflation, a document that will be made public in a press conference on February 15, 2006, when the schedule over the coming 12 months of the BNR Board meetings dedicated to monetary policy will be announced.
The evolution of inflation is one of the drawbacks of Romanian economy identified by the BNR Board.
At the end of 2005, inflation stood at 8.6%, as opposed to 9.3% in 2004, exceeding the upper limit of the 6.5 ? 8.5% variation interval associated to the initial target of 7.5%.
?The deviation occurred on the background of ample adjustments of administered prices, of the substantial increase of available incomes further to the introducing of the flat tax, of price hikes for foodstuff under the effect of the severe floods that hit Romania in 2005 and of the expansion of the non-governmental credit.
Despite that, the basic inflation that can be effectively influenced by the monetary policy has followed a descending trend that has accentuated towards the end of 2005.
Other negative effects on Romanian economy were the slowdown of the economic growth rate, the maintaining of consumption at an unsustainable level, a demand significantly higher than the domestic output (which has deepened domestic and foreign imbalances) and a vigorous credit expansion.
To the positive aspects count the high dynamics of investments, the reinvigoration of the credit in domestic ?lei? associated with a slowdown in the expansion of credits in foreign currency, the substantial increase of the forex reserves (that currently represent the equivalent of 6.1 months of imports), so that the conditions were in place for the central bank to no longer intervene on the currency market since October 2005, whereas the controlled flotation of the national currency was maintained.
After the thorough survey of this economic picture, the BNR Board decided to adopt a set of measures meant to tighten monetary policy and lead to disinflation as a main effect.
This set of measures will be associated with the sped-up implementation of the legislation on credit activities performed by non-banking institutions.source
Import taxes on poultry will be hiked to 70 percent from 45 percent for six months, said government spokeswoman Oana Marinescu.
She said the European Union had approved the measure. Romania hopes to join the EU in 2007.
Bird flu has been found in birds in 26 Romanian villages since October, with the deadly H5N1 strain confirmed in most of those locations.
Tens of thousands of chickens have been culled in an effort to stop the spread of the disease. There have been no reported human cases of bird flu in Romania.
successful deployment of the Amdocs Self Service software at ROMTELECOM. Amdocs Self Service is helping the wireline company to comply with market deregulation requirements and handle its relationships with more than 10 Other
Licensed Operators (OLOs) delivering voice and data services over the ROMTELECOM network connecting the end user's premises to the local ROMTELECOM switch (local loop unbundling). Amdocs was also the systems integrator for the
project and provided ROMTELECOM with consulting and business process services as well as user acceptance testing and training, ensuring a cost-efficient delivery.
"This deployment is the successful result of a joint effort by teams from ROMTELECOM, Amdocs and the OLOs which worked together to refine system requirements," said David Craig, chief technology officer at ROMTELECOM. "With
Amdocs Self Service advanced functionality and Amdocs systems integration expertise, we were able to address the guidelines provided by the Romanian National Regulatory Authority for Communications efficiently and at a minimum
Amdocs Self Service can scale to support growing entry volumes and provides the OLOs with an online system for reporting and monitoring their end-users' orders and trouble tickets. Amdocs Self Service also enables the
OLOs to receive aggregated billing information for all the ROMTELECOM products and services they resell in one consolidated bill and over a secured Web environment. Amdocs Partner Manager, already deployed at ROMTELECOM for convergent and automated support for all partner billing and revenue settlement needs, will further streamline ROMTELECOM's relationships with the OLOs, helping ROMTELECOM quickly launch new and complex OLO relationships and manage these relationships cost-efficiently.
"As global markets deregulate, players that own the last mile need effective systems that can help them quickly support new OLO relationships while minimizing the associated ongoing costs," said Michael Matthews, chief marketing officer at Amdocs. "Amdocs Partner Manager and Amdocs Self Service provide operators with value-added business power for adapting to these new market conditions while ensuring cost of ownership advantages."
Amdocs Self Service and Amdocs Partner Manager are part of the Amdocs portfolio of industry-leading software products that include content revenue management, billing, CRM, self-service, order management and mediation. The
comprehensive portfolio eases and accelerates the adoption of an integrated customer management (ICM) strategy, helping carriers build profitable relationships with customers.
ROMTELECOM is the largest telecommunication company in Romania. The company is owned 54% by OTE International, a fully owned subsidiary of OTE Greece, and 46% by the Romanian state. ROMTELECOM provides telecommunication products and services that address the needs of Romanian consumers and business customers. Key services include fixed voice, leased lines, intelligent network services, ADSL and data services, among others. By 2005
the company had an installed base of approximately 4,34 million phone lines.
For more information visit ROMTELECOM at http://www.romtelecom.ro.
Amdocs combines innovative software and services with deep business knowledge to accelerate implementation of integrated customer management by the world's leading service providers. By delivering a comprehensive portfolio
of software and services that spans the customer lifecycle, Amdocs enables service companies to deliver an intentional customer experience(TM), which results in stronger, more profitable customer relationships. Service providers also benefit from a rapid return on investment, lower total cost of ownership and improved operational efficiencies. A global company with revenue of $2.039 billion in fiscal 2005, Amdocs employs about 12,000 IT professionals and serves customers in more than 50 countries around the world.
For more information, visit Amdocs at http://www.amdocs.com.
Amdocs Forward-Looking Statement
This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the mobile, wireline and IP business segments, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F, filed on December 28, 2005.
Access Communications for Amdocs
Media Relations Manager
Corporate Affairs Division, Romtelecom SA
The United States and Brazil account for 83 percent of Romania's poultry imports. The association of poultry producers welcomed higher duties. "It's a very good news for us. He hope that within six months the hard hit sector would be able to revive itself," Ilie Van, chief of Romania's Poultry Producers Association, told Reuters. Losses since Romania detected its first bird flu case, mainly from lower sales and higher storage costs, had reached 124 million lei ($42 million). On Saturday, authorities found new suspected bird flu cases in the Danube delta and confirmed the presence of the virus in a nearby village. Last week, Romania confirmed the presence of the H5 type in poultry in the south of the country near the border with Bulgaria. It had also found suspected cases in fowl close to the Black Sea port of Constanta, authorities said on Monday.
The Black Sea state which hopes to join the EU in 2007 was Europe's biggest soy grower until 1989 and remains the continent's sole producer of gene-spliced soybeans, brought a decade ago by US biotech giants Monsanto Co and Pioneer.
Environmentalists have accused firms pioneering GMO?s of using poor east European states as a back door to a reluctant EU which effectively had a moratorium on new gene crops and products between 1998 and 2004.
"The ministry decided to ban the cultivation of genetically modified soy from next year to comply with the European regulatory norms," Constantin Sin, the agriculture ministry's GMO expert told Reuters.
Monsanto officials in Bucharest were not immediately available to comment.
Biotech firms say their technology helps fight hunger and poverty but environmental groups and many Europeans oppose GMO?s, which they fear might be unsafe for humans.
Romania, where there is almost no reluctance to embrace biotech foods among its 22 million population, put 61,000 ha under soy in 2004. The acreage had risen to 88,000 ha last year, or 0.6 percent of the country's total farmland.
Gene-spliced soy, which is used by Romanian farmers as animal feed, is the only GMO crop cultivated in Romania and accounts for two thirds of its overall soy output.
Sin said the ministry is also drafting legislation to ban sowing genetically modified seeds from previous years' crops in 2006. The bill will come into force later this year, he added.
"The bill aims to discourage farmers from planting (genetically modified) soy. There will be fines worth thousands of euros for those who don't comply with it," Sin said.
He said a switch to traditional soy crops would help farmers - who started growing GMO?s tempted by the higher profit margins - to benefit from badly needed EU aid once the country joins the wealthy bloc.
The 17% rise in natural gas tariff, the increase by 2 per cent of the electric energy price, have resulted in an annualised increase rate of consumer price toward 9 per cent.
The calculation basket of the consumer price index indicates a decrease in the share held by utilities, respectively electric energy, natural gas and central heating, by almost 1 per cent.
The prices of edible goods and tariffs charged for services remained moderate, with raises only by 0.3 per cent, and 0.5 per cent respectively.
Within the category of services, the most significant rise was registered for the tariffs charged for water, sewerage and sanitation, by 3.6 per cent.
National Bank of Romania and the Government have announced an inflation target of 5 per cent for this year, with a margin of plus/minus one per cent.
Economic analysts remain circumspect as to reaching this inflation target and they believe that last year scenario may very well repeat this year, the inflation rate being surpassed.
The inflation target foreseen by authorities in 2005 was surpassed by 1.6 per cent as against the forecast released in the beginning of the year, reaching 8.6 per cent, according to the results presented by INS.
Economists appreciate that the inflation rate cutting process will be resumed over the next months, since BNR may tighten the monetary policy, but the annual level may exceed BNR target.
The fear regarding the failure in complying with the inflation rate for this year has been shared also by IMF experts.
The macro-economic targets foreseen by IMF in 2006 indicate that the inflation rate may advance to 6.5 per cent, which stands for a surpassing, up by 1.5 per cent as against the forecasts released by the Romanian officials.
?BNR will have difficulties in reaching an inflation target of 5 per cent, with a margin of plus/minus one per cent. For this year, IMF anticipates 6.5 per cent inflation rate, a level that is over the target indicated by the officials in Bucharest, which has been explained by the adjustments in regulated prices,? according to those declared last week in Bucharest by IMF chief negotiator for Romania, Emmanuel van der Mensbrugghe.
IMF recommends BNR to preserve a prudent monetary policy and event to ?tighten? some of its components.
According to IMF representative, the central bank will succeed in returning along a deflationary trend only in the next 18 months, so that it could fit into 2007 target of 4%.source
And Straja is the best chance for the Jiu Valley to get rid of its bad name, with welcoming skiers to the best ski location there is in Romania today.
It seems hard to believe, but Straja, right up the mountain from the now impoverished Lupeni miners? city may turn into the dream destination for skiers.
The obvious pluses Straja presents are the wide open plateau and the five kilometers long ski track with electric lighting for skiing at night. For comparison, just imagine the Dorului Valley, at Sinaia resort, on the Prahova Valley, and double that image in your mind, to picture the opportunities Straja presents.
Furthermore, all ski tracks have automated systems for whisking the skiers up the slopes.
Straja developed as a ski resort during the last decade. Shepherds? hamlets once stood were mountain cabins lay now and offer a total of 2,000 beds for less than 20 US dollars a night. The downside for accessing this paradise is ? the difficult access. Or maybe this is what it helps it stay a paradise ?
The fact is that a ride over the top of the trees lasts 25 minutes, which may be a lot of time for some to stay suspended in a chair out in the open, while the nine-kilometer long forest road may be covered by all-terrain vehicles only.
Emil Parau, one of the main investors at Straja plans to solve by the end of this year the problem of the difficult access to the ski slopes, and pave the road linking them with the Jiu Valley plus construct a thousand car plots.
One may not escape skiing once one arrives at Straja. Renting skis costs 18 lei sabout 5 eurost, which is the lowest price in Romania. The skiers? riding system taking them up the mountain gives one the option to either stop half way to the top, or to go on to the peak for taking the best view of the valley and the full length of the ski tracks.
The very skilled may show off their expertise in going down the Giant Slalom and the Special Slalom tracks.
It looks so good; it is so top experience that one may forget one is in Romania, a country not quite first among European nations in terms of development.
The people coming here are also top, if having the latest model of ski gear may be an indication of that. Most skiers here are from western Romania, from cities like Timisoara or Arad, where people look more to Western Europe than to Bucharest.
They also prefer now Straja to other mountain resorts like Semenic, Muntele Mic or Parang, which are closer by.
"We can ski here day and night. In fact, there is nothing else to do here, since a ski track is opening in front of you, anywhere you go,? said Anca Neacsu, a skier from Timisoara.
After the auction organized by the Ministry of Public Finances, which was considered ambiguous by some people, the Romanian state has a list of seven consortia and law firms which could represent Romania at the International Centre for the Settlement of the Investment Related Disputes (ICSID) of the World Bank. The lawyers will defend Romania?s economical interests as well as its image. This is a few million dollars stake for the state as well as for the law firms.
THE COURT. A group of seven firms was created this way, a group of seven valid consortia that will represent the state at the Arbitration Court. Each of the seven firms will be named for each case by the MPF afterwards without any other auction. The choosing of the firms is very ambiguous because the regulations regarding this matter as well as the order of Minister of Finances, Sebastian Vladescu, are very ambiguous. "The selection of the seven law firms has been made indeed by the MPF (after an ambiguous and totally "opaque" auction), but I hope that the involved public institutions will prove to be correct in choosing the commissioned lawyers that will defend the country?s interest in Washington", Gheroghe Musat, associate lawyer at Musat&Asssociates, stated. At present, according to the ICSID webpage, Romania is involved in four trials at the International Arbitration Court. One of them is the continuation of the Noble Ventures trials, for which the MPF is yet to choose the attorneys. In exchange, the consortium formed by the Tuca&Associates and White&Case LLP law firms has been named to defend the Romanian state in the trial with EDF, which started in 2004. According to Cornel Popa, lawyer at Tuca&Associates, the first hearing took place this week.
DUTY-FREE. The story of the trial is much older. In 1992, EDF Services LTD and SKY Services LTD associated with TAROM and the Otopeni-Bucharest International Airport, for a period of ten years, merging into EDF Asro LTD and SKY Services (Romania) LTD. EDF took care of the administration of the duty-free shops in the Otopeni Airport. In 1998, the Customs? administration suspended the authorizations for EDF for accounting irregularities, and, in 2001, TAROM broke the partnership with EDF. EDF owner, Rick Weil stated afterwards for Financial Times that the Adrian Nastase cabinet head asked 2.5 million US dollars as bribe, in 2001. In September 2002, the Government adopted a decree that interdicted the existence of all the duty-free shops in the airport. Accused of breaking the bilateral agreements between Romania and the German Federal Republic and between Romania and Israel, the Nastase administration has been sued by Canadian law firm Appleton &Associates.
THE MICULA BROTHERS. The Micula brothers, who also have Swedish citizenship, put the law on the Romanian state after the Romanian authorities annulled several facilities for the European Drinks Group for the investments in the under-privileged areas. Nestor Nestor Diculescu Kingston Petersen and Freshfields Bruckhaus Deringer have been chosen by the MPF to represent the state in this case. Starting from the 10th of January, Romania has been involved in another lawsuit in which the complainant is Spyridon Roussalis, owner of Marine Continental.
MILLIONS. These law firms, chosen to defend Romania in Washington, have worked with the state before and they received important sums in honorariums, or have represented Romanian or foreign companies in privatization trials, great transactions or in litigations. With approximately 200 clients and a turnover that got nine times greater than in 2000, according to Doru Bostina, Bostina & Associates had clients like the Romanian Post, Postelecom, Cosmote, MCTI, Intrarom, Intracom or the Romania Lottery. "Business law is more than simply law", Manuela Nestor, partner at NNDKP, says. She says that not referring only to the law firm?s turnover, estimated at 7 million euros in 2005, but to the development of the business-law market in our country during the past years. NNDKP clients? Great names like Microsoft, Philip Morris or OMV for the Petrom takeover, as well as the Romanian state for the BCR privatization. Honorariums? The law firms don?t jump to saying the sums they cash in. "From hundreds to thousands of euros", Manuela Nestor says. It depends.
TRANSACTIONS. The amount of transactions varies from one year to the other as well, according to Gheorghe Musat. "There have been years in which the value of the transaction went over 1 billion US dollars, like in the year of the SIDEX privatization, where we have been the advisers of the buyer", Musat adds. With a turnover of approximately 5 million euros for 2004, which increased by 5%-10% for 2005, the Musat & Associates law firm has more than 500 clients. Some of the most important transactions are: the BancPost acquisition by GE Capital, the privatization of the Agricol (Agricultural) Bank to Raiffeisen Bank, the acquisition of SIDEX Galati by Mittal Steel and so on. For the successful transactions of Tuca & Associates, Cornel Popa reminds the acquisition of Sicomed by Zentiva.
The school in Band was full of people at 10 o?clock in the morning for the official testing of the PLC. The minister for IT&C, Zsolt Nagy; the president of the Mures country council, Edita Em'ke Lokodi; and village mayor Mircea Rusu sthe same with the famous Romanian folk music singert were all present.
And Nagy was the one to make the first inaugural phone call to test the PLC system was working.
The authorities decided to invest in the development of the PLC pilot project at Band because it was one of the least connected villages to systems of communication.
So one year later and for 20,000 euros expense, authorities had something to show off for: 10 PCs, 50 phones, 50 modems and the connecting equipment and a working PLC system.
Nagy said the inauguration day was of great importance for the people of Band village, as now they were ?a click away? from the world. ?I am sure this is the way to go for providing access to communication network in the rural areas,? Nagy added.
After six months of operation the impact on the community of the PLC system will be evaluated and a national strategy for implementing the solution countrywide will be drafted.
The costs for phone and 64kb/s Internet access stay at around 5 euros and 7 euros per household.
Companies BIT Telecom, Radiocom, and Electrica worked to bring the PLC system to the village of Band.
|Issue likely to be announced today, part of war chest for European buys.|
|Ranbaxy Laboratories Ltd is set to announce a $400-million foreign currency convertible bonds (FCCBs) issue tomorrow as it braces up for a couple of acquisitions in Europe.|
|Besides the much-touted Betapharm Arzeniemittel GmbH bid in Germany, the Indian pharmaceuticals major is close to acquiring Romanian firms, Terapia and Sindan.|
|Ranbaxy executives declined to comment but a pharmaceuticals industry source close to the development said, ?The top executives of the company have been virtually shuttling between Romania and Germany.?|
|The $400 million worth of FCCBs are expected to be part of the war chest Ranbaxy will need for the Romanian targets and for Betapharm if it wins the bid. Ranbaxy is believed to have offered the owners of Betapharm, 3i Group, as much as ?500 million, 50 million more than Dr Reddy?s bid at ?450 million.|
|Deutsche Bank and Citibank have been appointed to take care of the FCCB issue. ?There is a lot of buzz around the issue but it is company policy not to comment on speculation,? said a Ranbaxy spokesperson.|
|?Even though the bids have not been opened and the winner is not known, Ranbaxy is issuing this FCCB as money cannot be raised at the press of a button. With three possible acquisitions in the offing (one in Germany and two in Romania), the company seems confident that at least one to two deals will pass muster,? explained a financial analyst.|
|Late last year, Ranbaxy received a board approval for raising as much as $1.5 billion which the company had kept aside ?as an enabling provision?. The intent was to raise the money as and when opportunities arose.|
|For long, acquisitions have been on Ranbaxy?s radar and the efforts to grow inorganically seem to have intensified with Malvinder Singh taking over as the chief executive officer and managing director of the company. Singh, in the past, expressed the intention to make Ranbaxy grow inorganically and have the company among the top five generic players worldwide.|
|The bids for Betapharm are expected to be opened in a week?s time. Apart from Ranbaxy, Dr Reddy?s, Wockhardt and Nicholas Piramal were also in the fray for Betapharm.|
|While Wockhardt and Nicholas Piramal have fallen by the way side, Dr
Reddy?s and Ranbaxy are said to be in the last round of bidding.
Romania agreed during EU negotiations to increase the price of
natural gas from internal production to 270 dollars per 1,000 cubic meters,
compared with the present price of 115 dollars.
"We must do something to protect customers who will not be able afford these prices," said Achim Saul, the deputy general manager of the Romanian gas distributor Distrigaz Nord. He advised that the prices are expected to triple and the acquisition costs will increase significantly.
The price of natural gas, both from imports and domestic production, represents approximately 80 percent of the final price which is paid by consumers, according to Distrigaz Nord officials.
The minister of Economy and Trade, Codrut Seres, stated that the formula used to calculate import gas prices is used throughout Europe and agreed upon by all companies who are party in such contracts. Thus, the price is set by using the international quotes of diesel and fuel oil, corroborated with a discount, and granted in accordance with the contracts maturity and imported quantities.
According to the minister, the local production of natural gas covers 60% of Romania's needs, while the rest must be imported. Seres stated that the price paid for natural gas by consumers was of approximately 252 - 254 dollars per 1,000 cubic meters in the last quarter of 2005, similar to that paid in other European countries. For this year, although the National Regulatory Agency for Natural Gas (ANRGN) had estimated last November a price of approximately 320 dollars per cubic meters, the minister announced yesterday that contracts stipulate an average of 280 dollars per 1,000 cubic meters.
Gas price could increase again
The tariff for natural gas supplied to captive consumers (the population
and public institutions) could increase by seven percent in April to 282
dollars per 1,000 cubic meters. The increase was proposed by the National
Regulatory Authority for Natural Gas (ANRGN) and aims to align the local
prices with those of the European Union, a clause of the EU accession
negotiations. Taking into account the impact on the population, the
authority could extend the deadline until the end of 2008 to ensure a
smoother transition to European prices.
Thus, the price of gas extracted from local deposits would increase by the end of this year to 145 dollars per 1,000 cubic meters and should reach 200 dollars by the end of next year. Subsequently, the price for captive consumers should rise from 263 dollars to 294 dollars per 1,000 cubic meters by yearend. The tariff is expected to be of 336 dollars per 1,000 cubic meters at the end of 2007.
Gas prices have already boosted by 20 percent last month.
Government to keep control on gas marketThe authorities have decided against the privatization of the national gas producer and supplier Romgaz by selling at least 51% to a strategic investor.
The government announced that the re-organization and privatization processes of Romgaz will carry on in accordance with the proposals to be forwarded by the consultant within six months. The decision to renounce to the strategic investor was made after a report of the Ministry of Economy and Trade showed that the privatization would have been unfavorable for Romania.
Romgaz is the main gas producer in Romania and holds the largest quantities of gas stored in Romania.
President Traian Basescu discussed the sale of the gas producer with members of the government at the beginning of the year and established that the chosen method should carefully consider all the effects on the market. Prime Minister Calin Popescu Tariceanu stated at that time that Romania should benefit from its own natural gas deposits.
Many improvements will be completed by the end of the year, yet European officials are still concerned because of the volume of work concentrated in 2006. Flutur explains that this situation is because Romania had no appropriate legislation and no budget until January 1, 2006.
This year Romania has to absorb over 450 million euros, which is a whole lot of money commented the minister adding that if the "Farmer" program is successful, the absorption capacity will be improved.
The government official admitted that the reform of agriculture has been left to the last second and the last 16 years have been wasted especially as far as the structural reform is concerned. "We must admit we are far behind and if somebody wonders why that is, well, the answer is because in rural areas popular measures caused the fragmentation of land instead of supporting a functional market economy". Flutur says he is now the one who must take responsibility for the certain unpopular measures, which have to be taken if Romania still wants to join the union.
Asked how he saw the agricultural year of 2006, the minister said it is the year when farmers would have to start specializing and occupying the various sectors of the market. It is also a year when the model of subvention which people are used to would change to the European model. "It is the year of the farmer, in which we hope to see many new agricultural entities appearing and the year of the market's organization," said Flutur. The authorities will make use of all intervention mechanisms to fight tax evasion, while not impeding the free development of the market, Flutur promised. If the weather conditions allow it, production will be very generous and would prepare farmers for the year 2007 when they will get more money from the EU, said the official.
Asked how he explained that although the farmer program was launched last the interests of farmers was not that big so far, Flutur said it happened because there was no money. On the contrary, the interest was quite high, he said, as by the end of 2005 over 3,000 projects had been submitted to the Ministry of Agriculture but the program relyed on budget financing and the budget was not approved until the end of the year, then difficult tender procedures came which did not allow the program to start before a few days ago. There are many projects and the interested farmers must learn to deal with the procedures. "This is why we created the Unique Office and tried to simplify the bureaucracy of farm authorization. But every program must be well prepared and people must be taken by the hand and talked into going to the bank," said the minister. It was not easy because one cannot beat the bureaucracy overnight, Flutur explained.
At the question whether the revenues obtained from agriculture related activities could be taxed 16 percent starting 2007, the government official said he did not yet discussed the matter with his counterpart from the Ministry of Public Finance. He expressed his opinion that the mission of the agricultural authorities was the development of farms and the creation of an environment that could be taxed like any other economic field. Flutur specified that it would be a mistake to tax something that does not work properly before giving it time and resources for organization.
The minister expressed its belief that Romania has a good chance to join the EU in 2007. "The acid test is corruption and the government is determined to fight it to the end," said Flutur.
Last week, a delegation from the Greek Embassy led by first commercial councilor Lambis Kounalakis and first commercial secretary Pantelis Gassios visited Cluj-Napoca to prepare a meeting with local business people and authorities.
The conclusion was that a business forum would be organized at Cluj-Napoca in April and some 30 Greek companies already confirmed their participation.
Greek business people are especially interested in the construction and construction materials sector, the IT sector, textiles, foodstuff and infrastructure.
"We are prospecting the market and searching for opportunities to place significant investments," Kounalakis said adding that the interest mainly comes from companies that already have businesses in Romania.
According to the latest data from the Romanian Trade Register, Greece ranks ninth in what concerns capital investments in Romania, with 3,000 companies operating in the country.
Until now, Greek investments targeted the banking sector, the telecom field, construction, food industry, sea transportation, textiles, insurance and others.
Bilateral trade between Romania and Greece until November 2005 were of some ¤768.79 million, up by 3.72 percent compared to 2004.
The cable will be connected to the 400-kV station based in Constanta (southeastern Romania) and to the 400-kV station in Pasakoy, Turkey.
Experts proposed the cable voltage to be 400 kV, but a final decision will be taken after the feasibility study is made.
The cable will have 600-MW capacity, it will be 400-km long and will be placed at a maximal depth of 1,000 meters below the sea level.
Transelectrica officials say the project might be finalised in two years, by 2009.
"This cable is important for the Romanian energy exports", Gal stressed.
Electricity consumption in Turkey has climbed 7-8 percent over the recent period and Turkey, therefore, might soon face a power demand, he explained.
In June 2005, Transelectrica and its Turkish counterpart company Teias signed a memorandum of understanding aimed at jointly working out a survey on the adequacy of building a high-voltage undersea cable to link the two countries' energy systems.source
BNR will also continue to significantly sterilise excess liquidity via open-market operations, to maintain the prudential measures aimed at containing non-government credit expansion, especially in what concerns its foreign exchange component, as well as to implement rapidly the legislation regulating the lending activity of non-bank financial institutions. According to a press release of the BNR Administration Board, the inflation rate reached 8.6 percent at the end of last year versus 9.3 percent in 2004, marginally overshooting the upper limit of the target band of 6.5-8.5 percent, associated with the 7.5 percent target.
The slippage arose due to sharp adjustments in administered prices, substantial increases in disposable incomes following the introduction of the flat tax, rises in volatile food prices under the impact of floods, as well as non-government credit expansion.
The overall analysis of economic developments reveals a slowdown in economic growth, with consumption staying at an unsustainable level and with strong investment dynamics.
Domestic output has lagged significantly behind demand expansion, deepening both external and domestic imbalances.
Credit expansion continued, with leu-denominated loans witnessing a revival of their growth while foreign exchange credit saw a deceleration in pace following the BNR measures implemented in the latter part of 2005. The approaching European Union integration implies the achievement of significant disinflation, an overriding objective that requires a mix of tight economic policies - monetary, fiscal and wage, together with an acceleration of structural reforms.
Under the circumstances, the NBR Board adopted a comprehensive set of measures to tighten monetary policy. The measures to tighten monetary policy, along with rapid implementation of the legislation regulating the lending activity of the non-bank financial institutions will help bring inflation back on the trajectory set under the forecast horizon, which has been extended to eight quarters from six quarters previously coming into line with the time frame of complete transmission of monetary policy impulses through the economy. The BNR Board also considers that maintaining the inflation targets at 5 percent for 2006 and 4 percent for 2007 while implementing a consistent package of restrictive economic policies and providing a medium-term outlook would better anchor inflation expectations, thus ensuring a smooth achievement of an effective disinflation process and the convergence towards the inflation levels recorded in the EU.source
Back in 2004 FDI in Bulgaria's northern neighbour have reached the record-high EUR 5,2 B and forecasters expect similar figures for 2005 and 2006, the reported prepared by BA-CA, the owner of Bulgaria's HVB Bank Biochim and Hebros Bank says.
BA-CA also forecasted that Romania will attract EUR 8 B, which will be mainly due to the privatization of the biggest Romanian bank Romanian Commercial Bank (RCB). The FDI level is expected to go down to EUR 5 B in 2007. After the conclusion of the major deals, however, the green field investments are expected to gather speed.
Bulgaria is expected to attract EUR 2,2 B in 2006, the amount will be the same in 2007.
Talking at a news conference for foreign reporters in Berlin, Minister Steinmeier declined to specify a concrete date.
The German government is aware of the commitments, entered into during the negotiations for the expansion of the European Union and will launch the ratification procedure in time to conclude it by the end of the year, he added.
The minister noted that the two countries have launched a real offensive with the numerous visits of their officials to Germany, but it is still early to say whether January 1, 2007 is a feasible target date for EU accession.
Sofia is hoping that all member states will ratify its EU accession treaty before the European Commission monitoring report in the spring of 2006, fearing a delay in its accession due to a delay in the ratifications.
If the notification of the ratification in all member states is not completed by 31 December 2006, the accession treaty will not enter into force and it will have to be renegotiated.
According to ANEIR official, 2005 was the worst year since 2000 till now as for the commercial balance account, the trade deficit amounting at 10.3 billion euros (15 percent of the GDP) and for the first time the exports are declining.
He said that this is a consequence of Romania's National Bank failing to prepare the hard currency market to be able "to defend exporters by hard currencies fluctuations." "Industry posted a growth of just one percent, there were more than 1,000 bankruptcies among private companies and more than 100,000 unemployed", said Ionescu.source
In 2004 BEI granted Romania 950 million euros for investments with the main focus of projects being in the infrastructure sector.
Among the financing agreements approved by BEI in 2005 is the 300 million euros credit for reconstruction of the Curtici-Simeria railway and a second one of the same value for overhauling of the infrastructure damaged by floods.
Credit for 250 million euros was also granted for the Cernavoda-Constanta highway.
BEI granted Romania 6.26 billion euros credits starting in 1990, mainly for transportation infrastructure, education and health.
The financial institution announced that will increase the financing for Bulgaria, Turkey and Croatia.
In 2005 the funds given to these countries totaled one billion euros.
"Turkey will be one of the key nations in the following years," said Roth who is convinced that this country will become an EU member in spite of the opposition showed by some European governments.
BEI included in this year's financial plans a total 50 billion euros and decided to increase the amount of financing given for research and education projects.
"Europe must focus on research and development," said BEI's president, Philippe Maystadt.
Roth said that BEI could finance the Russian-German project regarding the construction of a gas pipe-line that would go under the Baltic Sea, in spite of the opposition showed by Poland and the region states.
The official said that BEI could cover 30% of the project's costs, estimated at six billion dollars.
Maystadt said that the institution did not make a decision yet.
Romania has virtually no domestic medical equipment industry, and therefore has to import 80% of its requirements. For more sophisticated items, imports supply 100% of the market. Lack of funding for healthcare means that potential demand for new equipment is huge. In the first half of the 1990s, the market tended to fluctuate due to the differing availability of funding, much of which is obtained through international credits. Since 1996, however, growth in the market has been much more stable, despite the country's inferior economic performance.
There are two ways to reach end users in Romania; direct selling to hospitals and through state tendering. To reach hospitals directly, the appointment of a good local distributor is essential. Emphasis needs to be placed on the marketing and promotion of products, since this is reportedly not an area in which local agents excel. The principal purchasing criterion for hospitals and other end users is price, although if an expensive product is needed, reputation is also an important consideration.
This report comprises four main sections: Medical Device Market Outlook, Background Data, Healthcare System, and Accessing the Medical Device Market. The Outlook section provides analysis of the market and five-year forecasts by technology category, national data projections and key market developments. Other sections provide a wealth of background and market access information, including population trends, morbidity and mortality, health expenditure, organisation & administration, hospital services, ambulatory care, medical personnel, trade data and essential industry contacts.
The deadline for providing the consultancy services is established at December31, 2009, which is the same as the date when the EADS contract for border security works expires.According to the tender organisers, the tender will start on February 10, and the consultancy contract will be awarded to the bidder having submitted the best technical and economic offer, according to the value for money ratio.The participation fee is 1,500,000 RON, some 410,000 euros. Qualifying for the tender are bidders with at least five years of experience in the field, having concluded a contract worth at least 1 million euro, VAT excluded, over the past three years, for similar consultancy services.
The contract with the winning bidder will include a provision according to which 80 percent of the contract value should return to Romania in the form of investment.In December 2005, the Romanian Government authorised the Romanian Ministry of Administration and Home Affairs to acquire, through the General Border Police Inspectorate, consultancy services for the integrated border security system.
Milut talked about Romania's interest in finding alternative energy solutions by signing a cooperation agreement with the employers union in Azerbaijan.
At Hasanov's request, Milut presented the situation of the Romanian energy system and UNPR's actions in finding alternative energy sources.
The two parties agreed that the price of energy and natural gas in Romania could jeopardize the investments realized in this sector. "The solutions that the two countries could promote in the future can build an alternative for the present projects," said Milut.
The Azerbaijan ambassador expressed his hopes that Romania will be involved in projects concerning the transportation of oil and natural gas through the Batumi and Poti ports.
The ambassador appreciated the good relations between Romania and his country and reminded that Romania was the first country in Europe who, in 1991, recognized Azerbaijan's independence.
The park, named Bucharest West, will be located on the Bucharest-Pitesti highway, close to the Militari Shopping Center.
About 60 percent of the space will be allocated for industrial and production facilities, while 20 to 30 percent could be reserved for offices. The constructed areas could cover about 600,000 square meters.
The main access road is under construction and the first buildings could be completed this summer.
A portion of the facilities would be sold, while another share would be available for rental.
Truck manufacturer Schwartzmuller has already bought five hectares of land in the industrial park and is negotiating with the developer the rental of an additional 30,000 square meters of land and buildings.
Portland Trust has previously developed the office buildings Opera Center I and II and Bucharest Business Park. The buildings were subsequently sold to the Austrian investment fund CA Immo for approximately 29 million euros and 50 million euros, respectively.
One of the shareholders of Portland Trust is the American company Apollo Real Estate Advisors, which launched a real estate investment fund in 2005 worth 2.5 billion euros. About 40 percent of this capital goes towards financing projects in various European countries, including Romania. Apollo has been operating in Europe since 1995. Its portfolio includes real estate properties totaling 1.45 billion euros in Great Britain and is involved in a commercial center project in Poland, to be rented to bulk-goods retailer Metro. Total investments of the group in Europe and America value 3.9 billion euros.
Revenues for the Nation's Capital are estimated in 2006 at more than 1.6
billion euros, two thirds of which will be invested in the town's
"This year we will open a construction site costing more than one billion euros," stated Adriean Videanu, Bucharest's General Mayor. The official added that more than one billion euros of the city's budget is represented by international credits. Without credits, the municipality would not be able to carry out the projected investments for this year, pointed out Videanu.
Bucharest authorities will begin construction on the Basarab overpass, the construction of a tunnel from the Voluntari Bridge to Mihai Bravu Street, measuring five kilometers in length and six lanes in width, the upgrade of trams on 25 of the city's boulevards and the improvement of approximately one hundred central boulevards of the city. Parking lots with a total capacity of 14,000 cars will also be built at 23 major intersections and the city center. The construction of the 178 million euro Basarab overpass will start this spring and last three years at most. One of the selection criteria for the contractors is the duration of the work, according to Videanu.
"It will be a construction site which will certainly create frustration, irritation and road blocks," advised Videanu, pointing out that the situation could last for as long as two years.
Approximately 70 percent of the Capital's internal revenues, which amount to 446.4 million euros, are allocated for heat and public transportation subsidies, said Videanu.
The budget project will be submitted for approval tomorrow.
Last year, Bucharest had a budget of 813.8 million euros.
Historic Center renovation to be put out to tender soon
The renovation of Bucharest's Historic Center will affect more than 160
families living in the area and City Hall is presently examining its options
to evacuate them, including the acquisition of new apartments.
The project is estimated at approximately 200 million euros, to which the municipality will contribute 34 to 54 million euros. The remainder should be provided by Romanian or foreign investments.
However, before any work begins, the authorities must resolve issues concerning renovation of the Historic Center area, including restoration of property rights of the owners abusively dispossessed by the communist regime.
"The restoration of Bucharest's Historic Center must be a national priority, which should unite public authorities, private investors and society," said Videanu.
Water management plant for Bucharest
"Dumping Bucharest's waste waters in the Dambovita River is an ecologic
disaster," said Videanu, pointing out that the measure affects the river,
the Danube Delta and the Black Sea coast. The authorities will begin
construction works for a water management plant for Bucharest in fall. The
project, estimated at 253.3 million euros will spread over four years in two
"It is the largest ISPA project in Southeastern Europe," said Videanu. The financing for the project will be provided by the ISPA (70 million euros), the local and state budget (approximately three million euros), external credits from the European Investment Bank (25 million euros) and the European Bank for Reconstruction and Development - (ten million euros).
The general mayor of the Capital emphasized the importance of the project for Bucharest and the country. "It will significantly reduce pollution of the Arges and Dambovita rivers," stated Videanu, pointing out that the project could also create revenues for the city.
Doosan Heavy Industries & Construction., which is part of the
South-Korean Doosan Group, is in advanced talks over the acquisition of
heavy machinery manufacturer Kvaerner IMGB, Ziarul Financiar writes.
The South-Koreans had been testing the waters in view of the takeover of the company, held by the Norwegians at Aker Kvaerner, since December 2004, a little while after becoming partners for the construction of the world's biggest hydro-electric plant, located in China.
The Aker Kvaerner group, which owns more than 99 percent in Kvaerner IMGB
Bucharest, announced, shortly after taking over the Romanian company in
1998, that it was looking for a strategic investor to take over IMGB and the
obligations undertaken through the privatization contract.
The latest signs from Kvaerner pointed to Norwegians having become unwilling to sell the company, as it was getting increasingly more profitable. The sale of Kvaerner IMGB is a deal that could amount to as much as 30 to 50 million US dollars (25-43 million euros), according to estimates made by industry sources.
The Kvaerner IMGB and Doosan representatives made no comment on the
subject by the time the story was ready for print.
Founded in 1896, Doosan is one of the oldest and biggest South-Korean corporations, with a turnover of approximately 10 billion euros (11,520 billion won) in 2005 and an operating income of some 600 million euros (692.6 billion won).
Doosan Heavy Industries & Construction Co Ltd., whose revenues are put at 2.75 billion euros (3.18 billion won) and whose operating income is estimated at 192 million euros in 2005, has business divisions operating across a number of markets: turbine and generator manufacturing, equipment for nuclear power stations, thermoelectric power stations and desalination factories.
The quoted sources add that Doosan is interested in taking over IMGB in
order to boost its liquid steel output and to be able to position itself as
a supplier in Cernavoda, which entails completion of the works to make the
plant's reactors operational.
Aker Kvaerner recently increased the share capital of IMGB by 57 million dollars (44 million euros).
"In order to solve the situation CFR SA currently has to put up with, a restructuring programme might be needed and a decision to rebuild the system. Privatisation might be a solution to cover the debts and help the company switch to profit, although I think more solutions to be included in a coherent a plan will be needed," Shinji Naruo, expert manager of the Japanese International Cooperation Agency /JICA/ told Rompres.
Naruo, which has been working for two years with the Romanian railway infrastructure national operator, voiced optimism while referring to the future of the CFR SA. "I have visited all the CFR branches and I have noticed that the company is in fact a competitive one, despite the old technology it uses. Still, it needs help from the government and a plan to help it switch to profit," Naruo explained, also complaining about the frequent changes of the management.
The International Monetary Fund and the Romanian authorities identified three problems of the local economy: a lower growth rate, the inflation rate and the high current account deficit.
The IMF believes that the Romanian economy could boost this year by 5 -
5.5 percent, compared with the 4 percent growth rate estimated for last
year, stated Emmanuel van der Mensbrugghe, chief negotiator of the IMF for
Romania. Prime Minister Calin Popescu Tariceanu stated recently that the
Gross Domestic Product increased last year by 4.7 percent. The result
amounts to almost half of that recorded in 2004, when the GDP hiked 8.3
The State Minister Gheorghe Pogea announced in mid January that the economy's growth rate last year was lower than the government's estimates of 5.5 - 5.7 percent, mainly due to the floods, which seriously affected agricultural production, delayed several infrastructure projects and required massive funds for reconstruction of damaged areas.
The government set its target for the growth rate at six percent for this year. However, a durable economic growth demands a boost of public capital expenses, according to IMF representatives. Thus, careful fiscal management is required at the same time as an increase in the budget revenues' share in the GDP and application of a strict wage policy.
Regarding the Fiscal Code, Mensbrugghe recommended authorities take the necessary measures to ensure that the Law will come into effect by January 1, 2007. To reach that goal, Parliament should approve the law before June, added the IMF official.
The present level of revenues in the GDP, which amounts to 30 percent, falls short of meeting the European average, as the minimum ratio in the member states' GDP is 35 percent, pointed out Mensbrugghe, emphasizing that Romania could have significant problems in managing structural funds expected from the EU in the following years.
The IMF official also recommended the government switch the focus of public expenses, which are now carried out mostly at the end of the financial year. "I recommended attentive fiscal management throughout the year," said Mensbrugghe. Regarding the wage policy, the IMF believes that several increases over the same year could be successfully replaced by a single, beneficial hike. Moreover, wage increases announced for this year surpass the forecasted productivity rate.
Trade account deficit to drop
Mensbrugghe estimates that the current account deficit could drop this year to 9 percent of the GDP, compared with the 9.4% value recorded last year. The level would be a reasonable goal, given correct economic policy, added the IMF official. Mensbrugghe noted that although the commercial deficit is still high, Romanian exports maintain a constant rate of increase.
Inflation rate to exceed government's forecasts
The inflation rate could reach 6.5 percent by the end of this year, which
would exceed government estimates, believe the IMF representatives. The
target inflation for this year is five percent, plus/minus one percent.
According to IMF, the central bank will return to its anti-inflation course
in the next 18 months, which could allow authorities to reach an inflation
rate of four percent in 2007.
The main issue anticipated for the year is the fight against price hikes of utilities (gas, electricity, water etc), according to IMF experts, which recommended BNR maintain a cautious monetary policy and even strengthen some of its components.
Last year, the inflation rate amounted to 8.6 percent, exceeding the upper margin set by the National Bank of Romania (BNR).
IMF optimistic about stand-by agreement
"We left several notes for BNR and the government and I believe that it
is possible to revise the stand-by agreement before its conclusion," stated
Mensbrugghe. The present stand-by agreement closed by Romania and the IMF
derailed last fall after representatives of both sides failed to concur on
macro-economic issues. The IMF pointed out at the time an unrealistic
budget, economic imbalances (inflation rate, current account deficit),
slippage of wage policy and lack of structural reforms. The IMF
representative also noted the same issues during the meetings with Romanian
authorities between January 25 - February 6, but expressed his optimism that
Romania is on its way to progress.
Recently, the Minister of Public Finances Sebastian Vladescu stated that Romania will resume negotiations with the IMF if an evaluation of the agreement would turn out positive.
The number of Romanian individual buyers on the stock-exchange set a new record in January, and nearly 2,000 more accounts were registered than last year.
Whereas Romanians bought shares worth almost 220 million euros in January, the foreign investors bought stocks worth over 125 million euros.
Through the privatization contract, Erste Bank gave the SIFs the possibility to exit by listing the BCR shares within three years since taking over the majority share package.
If following the purchase, BCR's stock exchange quota increases, SIF Muntenia will request a price at least equal to that paid to purchase the majority share package - EUR 7.65 per share - to start negotiations.
Thus, the package owned by the SIFs is worth some EUR 1.87 billion.
The other 8% of BCR are owned by the employees, and it is worth some EUR 500 million.
According to Romanian officials, five international companies - Hungary's MOL, Gaz de France, Russia's Lukoil, and Germany's Wintershall and Eon Ruhrgas - had expressed an interest in taking the Romgaz package.
Romgaz produces 6.7 billion cubic metres of gas a year. MOL's annual gas production is half of this amount.
"Further to the analysis made by the executive and the data presented by the Ministry of Economy and Commerce, the conclusion has been reached that in the current context of the energy market, the privatization of this company with a strategic investor would be disadvantageous for the Romanian state," Reuters cited government spokesperson Oana Marinescu as saying.
Romgaz's 2005-2010 strategy involves modernising production and expanding their storage capacity to 30 million cubic metres from the current 18m3/day. Romgaz had total equity of USD 132 million in 2005.
?The delay in the privatisation could be negative for MOL, as the pricing of the gas reserves might change," K&H Equities has said on Tuesday, reiterating their ?Hold' recommendation on the stock.
Deputy Director of Europa Department Susan Schadler, head of IMF delegation to Romania Emmanuel van der Mensbrugghe and IMF representative to Bucharest Graeme Justice presented the main issues the delegation was focused on during its visit to Romania. They referred to the budgetary spendings level in 2006, especially those on salaries' levels, to the measures linked to attaining the inflation target, as well as measures for the current account deficit reduction. IMF representatives consider that a correlation between the evolution of the budgetary spending and inflation targeting policy is needed.
Yet this Mission's members pointed out a certain improvement as against the situation in the last autumn that led to the negotiations' suspension.
Senator Varujan Vosganian presented to the IMF Mission the objectives of fiscal policy for the upcoming period, aimed at securing the necessary financial support for integration, giving a boost to the private sector, adoption of the Community acquis, especially as for the Value Added Tax (VAT), keeping the budgetary deficit at low levels, as well as the administrative capacity upgrading.
Varujan Vosganian stressed the authorities have no intention to increase the flat tax or VAT.
Varujan Vosganian expressed hope that IMF would decide to resume the accord with Romania so that it could be finalized till mid-year.
The projects will be in infrastructure such as roads and motorways, education, healthcare and justice, Pogea said.
"Romania is ready to fund these infrastructure projects,'' said the vice premier.
In the last governmental meeting, the public debt ceiling for 2006 was approved, allowing the Ministry of Finance to borrow more than 4.6 billion euros from international markets and 2.7 billion euros (Romanian leu currency equivalent) from the domestic market.
The vice premier said that in three weeks at the latest, he will finalize a portfolio with priority investments in Romania's counties.
The consumer price index could be approx. 0.7 per cent in January and 8.7 per cent as compared to the corresponding month of last year, which means the annualised inflation rate is again on the rise.
In December, the inflation rate was 0.5 per cent.
The annualised inflation rate would reach 8.7 per cent in January as compared to 8.6 per cent in December 2005.
?The main element that triggered a higher inflation in January must be the increase in regulated prices, such as natural gas and electricity,? said Ionut Dumitru, analyst with Raiffeisen Bank.
The inflation target set by Romanian officials for this year stands at 5%, for the moment, with a plus/minus one per cent margin, vice-governor of the National Bank of Romania (BNR) Cristian Popa stated recently.
Economic analysts are sceptical with respect to the inflation target, and believe the scenario in 2005 will be repeated, with adjustments operated on the inflation target.
Economists believe the inflation reduction process will be resumed in the coming months, as BNR may tighten the monetary policy, yet the annual level may exceed the BNR target.
Estimates indicate the 2006 target will be slightly exceeded.
This should make the BNR more prudential this year, if the inflation route doesn?t stick to plans, says Merrill Lynch-London economist Murat Ulgen.
The inflation target forecast by authorities for 2005 was exceeded by 1.6 per cent as compared to early year estimates, to 8.6 per cent, according to data released by the National Statistics Institute (INS).
The 2005 inflation rate also exceeded the inflation target announced by Governor of the National Bank Mugur Isarescu in early December - 8.2-8.5 per cent.
The rise in prices in December was 0.5 per cent, according to INS data.
According to analysts, an actual inflation rate higher than estimated was predictable, given the substantial increases in utility prices during the year.
Analysts also believe BNR will keep the monetary policy interest rate unchanged, at 7.5 per cent per year, for fear of a strong RON appreciation.
The plant with state-of-the-art equipment covers an area of over 20,000 square metres and has already operational three of its eight production lines which produce 12.5 tonnes of Tempo biscuits, 6 tonnes of biscuit sticks and 9.5 tonnes of Biskrem biscuits. The overall production capacity of the three production lines is of 12 tonnes a year.
''The plant is the result of the efforts that have started three years ago. Its construction represents a strategic decision with significant impact on Ulker businesses. At the beginning the plant's production targeted the Romanian market, then it was exported to Eastern Europe and Western Europe,'' said Ender Bolat, general manager of Eurex Alimentare, a Romanian company belonging to Ulker group.
The first production line of the new plant was commissioned in June, the second in September and the third in February, and another one is to be commissioned within the next two weeks. The company estimates the $23 million-investment will pay off in three years at the most after the commissioning of all the 8 production lines.
Ulker products have been present on the Romanian market for 12 years now, the volume of sales increasing up to $5 million. Until the construction of the new plant, the biscuits were imported from Turkey.
About a half of the production produced by the new plant in Romania, which currently employs 3,000 people, is bound for export.
For this year the company forecasts about 20 million euros in turnover, with imports accounting about a quarter of this value.
The Christian-democrats? initiative to postpone the ratification of the treaty was not successful.
Next Tuesday, the MPs will vote the Accession Treaty of Romania and Bulgaria.
It is expected that the parliament will ratify the treaty, despite the pressures made by Christian-democrats, the government majority.
They had announced they would reject the treaty because corruption is still flourishing in Romania and reform in justice is slow.
The debate ended with the intervention of foreign minister Ben Bot, also a Christian democrat, who did not share the opinions of the party colleagues.
He said that they should be critical but honest adding that the government backed the accession of the two states and it was the moment of encouraging not criticism.
Answering the questions asked by MPs, the minister said the Netherlands had to gain from the accession of Romania and Bulgaria to EU because they would be new sales markets and stability in the area would grow.
One of the most debated topics was the migration of cheap labor force from Romania and Bulgaria to the Netherlands, a phenomenon feared by most parties.
Ben Bot considers that the Dutch economy would not be affected by the integration of the two countries, as it did not suffer from the accession of Spain or Portugal.
In the end Bot concluded: ?We must give a positive signal.
The government is confident that both countries do their best to implement reforms and I think they have already fulfilled accession criteria in proportion of 80-90%.
He said it was not just the opinion of his government but of 24 other governments.
In his turn, the minister for European affairs, Atzo Nicolai, remarked the progress made by both countries and expressed his full support for their accession.
Nicolai thinks no other criticism is needed since the possibility of delaying accession by a year is the most efficient way of pressure.
British Minister for Europe Douglas Alexander yesterday pledged Great
Britain's support for Romania in its process of EU accession, but urged
officials to speed up reforms.
"The pace of reform and rebirth that Romania has achieved is a testament to your citizens and your democracy," said Alexander, encouraging the EU candidate to urgently address negative issues identified in the European Commission's monitoring report last year.
During the press conference held together with Integration Minister Anca Boagiu yesterday, Alexander said Great Britain will ratify Romania's treaty accession for the report issued by the European Commission in May.
"We were keen to send a signal of the importance of seeing Romania and Bulgaria as EU members," Alexander said. However, he added that the Great Britain's intention is not to diminish the EU Commission's work.
When asked how the other EU countries will react if the Commission's report is negative, the British MP refused to make any predictions.
Nevertheless, he urged authorities to solve issues that were red flagged in the EU report, such as agriculture, border security and intellectual property.
Alexander said Romania needs to receive an even better report in May 2006 when the Commission's next progress report is issued.
He advised the Romanian authorities to keep fighting corruption, an issue he considers extremely dangerous for democracy and economic development. Alexander sees corruption as an element that can blight the rewards of EU membership and the benefits of the country's citizens.
"Corruption, in all its forms and in particular high-level corruption, is an insidious disease that attacks the very lifeblood of all countries it affects - its people. It damages democratic institutions and decision-making processes, courts of law, businesses, prospects for foreign investment," the British MP said.
However, Alexander said that if the essential preparations for EU membership are carried out on time, January 1 will see Romania and Bulgaria taking their rightful places alongside 25 other countries within the European Union, Alexander explained.
It all depends on Romania's force to fulfill its commitments.
"The ball is very much at Romania's feet," he said.
The minister admitted he was surprised to see how much Bucharest has grown in the few last years.
"Arriving in Bucharest today, I hardly recognize it as the country that emerged from oppression and dictatorship in 1989. Would any of you (...) have thought that in the space of the six years since those first negotiations with the EU began in February 2000 that so much could be achieved?" Alexander said.
The British MP recognized the work of Romanian officials and their commitment in continuing reforms. Moreover, he praised the progresses made in the justice field.
"I want here to pay tribute to the commitment of Minister of Justice Monica Macovei, in her unstinting work to reform the judiciary," Alexander said.
Nevertheless, Alexander said development and reform in Romania should not stop at accession.
"Like every other nation, Romania must continue to improve. In the main acquis-related areas Romania still needs to do more work - agriculture, borders, environment, intellectual property - all of which are essential if Romania is to be competitive in the EU," said Alexander.
Integration Minister Anca Boagiu thanked Alexander for contribution of he and his colleagues in supporting Romania in its efforts to join the European Union, especially during the Great Britain's EU presidency.
"I can tell you, Douglas, that we will accede on January 1, 2007," she assured the British MP. Boagiu said Britain has always had an innovative view over the EU enlargement, as it was during its term that Romania carried out most of the necessary reforms.
"Great Britain is an exigent friend. An exigent friend tells you the truth. (...) Great Britain was practically an advocate of Romania's cause and a fair partner as long as we have fulfilled our commitments," Boagiu said.
According to sources in the tractor industry, Mr Amrit Sagar Mittal, vice-chairman of the Hoshiarpur-based ITL, will be visiting Romania next week for discussions with the Forma Botosani team. When contacted, Sonalika International chairman L D Mittal refused to comment. Sources say Sonalika is looking at some other assets in other East European countries as well.
Forma specialises in the production of spare parts for tractors as well as agri machinery. Apart from agri vehicles it is also involved in mill works and castings, forge and sinter products. Sonalika has been aggressively diversifying in the auto business of late. First, it invested Rs 200 crore in a passenger vehicle facility and now it wants to develop a Rs 1.5 lakh car.
ITL is the flagship company of the Sonalika Group. The group itself is targetting revenues of about Rs 1,500 crore this fiscal with growth pegged at a 35 percent clip. At the recent launch of its first passenger vehicle product the Rhino Rover, company top brass indicated that ITL will contribute two-third of this turnover.
The company has also been raising funds through small chunk sales of equity. Currently Citibank holds 10 percent stake in ITL and 20 percent in the passenger vehicle subsidiary International Cars and Motors.
Company officials have also indicated that a UK-based private equity firm will pick up another 10 percent stake in the company and may even pick up some stake in the tractor flagship as well. Romania has attracted interest from those sniffing for M&A thanks to its imminent entry into the European Union. The company is in the process of privatising a number of its state-owned businesses.
Certain market observers attributed the halt in the SIFs? upward trend to President Traian Basescu?s recent statements regarding the groups of interests that dispute control over the SIFs.
Attending the presentation of the 2005 activity review of the Ministry of Administration and Home Affairs, Basescu said that it is no secret that media trusts are fighting intensely because ?of the tycoons behind them, who either defend RAFO, or Rompetrol, or conceal the illegalities from FNI, or defend and conceal their vigorous actions for getting control over the SIFs, or plan to participate in the privatization of CEC.?
SIF representatives admitted that certain investors buy shares, in an attempt to get control over the societies.
?It is no secret that certain groups accumulate SIF shares. Because of the shareholders? dispersion, one can take control of a SIF with an investment of 40 ? 50 million euros,? said Muntenia Invest president Pavel Szel.
On Friday, bourse-listed shares increased on average by 0.53%, whereas the SIFs scored an average depreciation of 0.07 percentage points.
The BET-C composite index that reflects the overall evolution of bourse-listed shares increased 25.8 points (0.53%), reaching 4,850.44 points, whereas the BET index, that reflects the evolution of the most liquid shares, went up 57.2 points (0.7%), reaching 8,282.97 points.
Trades with shares and securities totaled 45.1 million RON, respectively 12.51 million euros or 15.1 million US dollars. The BET-FI lost 40.11 points (0.07%), reaching 54,026.86 points.
Drugs producer Biofarm was the most liquid share, with trades worth over 6.3 million RON and a closing price of 0.6350 RON/hare.
Next came Petrom, with trades worth 5.98 million RON, and a closing price of 0.6300 RON/share.
SIF2 Moldova ranked third, with total trades worth 4.77 million RON and a closing price of 2.66 RON/share, followed by Rompetrol Refinery, with trades worth 4.53 million RON and a closing price of 0.1230 RON/share.
The most substantial price increases were reported by Carbid Fox Tarnaveni ? 14.9%, Electrocontact ? 8.45%, Policolor ? 6%, Carpatica Bank ? 3.17% and Vel Pitar ? 3.08%.
Conversely, the companies that scored the most substantial decrease were Zimtub Zimnicea ? 8.96%, Comelf Bistrita ? 7.88%, MJ Maillis ? 5.78%, Mefin Sinaia ? 3.64% and SOCEP Constanta ? 3.49%.
The increase in EUR terms was 95%.
The bank?s investments, worth RON 64 Mn, have mainly targeted the unit network expansion.
In 2005, 100 new units were opened, and existing ones were modernized.
Also, funds were used for financing operations of the bank?s subsidiaries.
The total assets of Banca Transilvania amounted at the end of the year to RON 4.9 Bn, posting an increase of 189% in YOY terms.
The bank?s shareholders? equity was RON 539.7 Mn at the end of December 2005.
The bank currently has a market share of more than 3.5%, with 215 units.
According to the president of the Romanian Agency for Foreign Investment (ARIS), Ana-Maria Cristina, the three projects belong to Calsonic Kansei - Japan, Egger - Austria and Moser Baer - India.
"The three investors asked for individual schemes of state aid, but, because the legislation does not allow us to do it, we have to wait for the adoption of the modifications of the investment law.
I do not even want to think what would happen if we could not assign these facilities," ARIS president said.
She showed that Egger has asked for all types of state aid, namely aid for regional development, for new jobs opportunities, and the value of the facilities would reach the maximum ceiling allowed by the regulations.
On the other hand, the adoption of the legislation on investments was delayed and might be approved by mid this year.
"At this moment, there is being established a governmental strategy in state aid assignment, which will be probably completed in March.
The strategy's role is to identify the ministries whose budgets could include the state aid scheme and the conditions for their assignment," said Cristina.
She added that the law on investments would be adopted after the finalization of this strategy, which is being set by a committee headed up by the minister of state Gheorghe Pogea and which includes the representatives of the Competition Council.
Japan's Calsonic Kansei announced that it intends to invest 100 million EUR for the construction of an auto parts plant inside the industrial park Ploiesti.
Egger has scheduled investments of 210 million EUR in a plant for wood processing in Suceava, while Moser Baer intends to assign 300 million EUR in a CD-manufacturing plant in Giurgiu County.
In 2005, another three important investors gave up the locations in Romania in favor of other countries in the region.
The French household appliance producer, Elco Brandts has chosen Poland for an investment of EUR 23 M, while the German Lorries constructor MAN gave up an investment of near EUR 40 M in a new plant in Romania, choosing Poland instead.
The French group Montupet did not reach an agreement with the authorities in Cluj regarding the price for the land where it would have built an auto parts plant worth EUR 36 M.
Montupet later decided to build the unit in Ruse, Bulgaria.source
"Our strong performance in the quarter ended December 31, 2005, shows that Romanians have positively responded to the combined strength and propositions of Connex and Vodafone. The growth of the contract subscribers proportion and of ARPU confirm the success of our value driven strategy. This result makes us very optimistic about the future as we will focus on leveraging global scale into the marketplace. We will keep on delighting our customers in order to remain the operator of choice for all Romanians" said Liliana Solomon, Chief Executive Officer Connex Vodafone.
The number of 3G users in the Connex Vodafone network was 97,322 at December 31, 2005 - this has now exceeded 100,000 3G subscribers.
"I am happy to witness our customers' strong interest in 3G services eight months only since launching. We will continue to drive the market by further enhancing our 3G services portfolio and expanding the network coverage", added Liliana Solomon.
Figures from The Mobile World analysts note that at the end of Q3 2005, Orange was the market leader with 51% of the market to Connex's 45%. The remainder was picked up by Cosmorom and the CDMA operator, Zapp Mobile.
The euphoria generated by the successful privatisation deal in connection with the Romanian Commercial Bank (BCR) at a record price of EUR 3.75bln, and by the upcoming completion of the privatisation of the entire Romanian banking sector, did not last long, said the BA-CA analysts.
They said the Government will review the CEC privatisation strategy and cancellation of the privatisation process now in progress.
Taking into consideration to the amounts raised from the BCR privatisation, the Romanian authorities have not been happy with the offers they have so far received for the CEC, all revolving around EUR 300 M.
The Romanian officials were expecting the CEC sale price to be somewhere around EUR 500 - 600 M.
The Authorities in Bucharest intend to postpone the privatisation of the bank by at least two years, during which time CEC would be restructured, possibly by the sale of shares to the EBRD and to the International Finance Corporation (IFC), as in the case of BRC, to render it more attractive to investors.
The decision could be erroneous.
The investing interest in connection with CEC may decline in the course of time, as the saturation of the banking sector is mounting?, warned the BA-CA specialists.
Furthermore, the analysts believe that, if the CEC market share that had dropped from 9.8 per cent to 4.5 per cent by September 2005 continues in the future, the authorities cannot even count on the price they would receive now, as the importance of the bank in the relevant market will have declined.
At the beginning of the year, Romanian Premier Tariceanu announced the Government would make a decision on the opportunity of privatising CEC after having looked into the offers tendered.
The Government then announced they were looking into the possibility of changing the CEC privatisation strategy in keeping with the formula employed for the BCR privatisation, and that the sale of the majority stake to a strategic investor might be deferred.
This is to say that the privatisation of CEC will be conducted in the same way as the privatisation of BCR was, where, in the absence of acceptable tenders, a decision was made that the process should begin by selling stocks to EBRD and IFC.
According to the privatisation request for tenders sent to the interested investors, the Ministry of Public Finance representing the Romanian state as sole shareholder in CEC retains the right to stop the process whenever deemed necessary.
The seven interested investors were originally invited to submit binding offers before the 28th of November 2005, but the deadline was then extended indefinitely, obviously awaiting the completion of the BCR privatisation.
Erste Bank, the winner of the largest Romanian bank for which it paid EUR 3,75Bln, was also on the list of the potential investors in CEC, alongside the National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.
The project includes office buildings and commercial spaces, on a 60,000 sqm surface.
The fund was launched last year, with an initial capital of EUR 125 million and is mainly interested in developing office projects, commercial spaces and logistic parks.
According to the representative of the state?s consultant in this privatization, PwC, the final procedure focuses either on selecting five companies or the continuation of the negotiations with only one bidder, in case the difference between its offer and the offers of the other companies is significant.
Until the end of last month, the 10 companies involved in this privatization process were to submit engaging offers, however by this deadline only eight companies have respected the procedures, while the German giants E.ON and EnBW withdrew from the race.
The companies that are still interested in the electricity suppliers in Bucharest and Ilfov and Giurgiu counties are AES (USA), CEZ (Czech R.), Enel (Italy), EVN (Austria), Gaz de France, Iberdrola (Spain), RWE Energy (Germany) and Union Fenosa International (Spain).
CEZ and Enel are already active on the local market.
The sale of the 67.5 per cent package of the company?s shares is expected to be accomplished in June 2006.source
With last year?s GDP estimated by the National Forecast Commission at EUR 78 bln, this means the trade deficit accounted for 13.2 per cent of the GDP, which upset analysts? optimistic scenarios.
Last year, the import rise pace continued to be higher than the export growth, within the context of increased consumption of imported goods, particularly favoured by crediting.
Also, a slow-down was reported in the export growth pace.
This was generated by appreciation of the national currency in particular during the summer, upsetting exporters? calculations and encouraging an increase in consumption and imports, which widened the gap between the two trade components.
Thus, exports increased in 2005 by 17.5 per cent, to EUR 22.255 bln, as opposed to a 21.3 per cent rise in 2004, to EUR 18.934 bln.
In the case of imports, the rise reached 23.9 per cent, to EUR 32.568 bln in 2005, an increase rate similar to the one reported in the previous year.
As far as the foreign trade evolution in December goes, exports picked up 18.8 per cent to 1.818 bln, while imports rose 20.1 per cent to EUR 3.106 bln.
INS also presented data on the goods imported for inward processing (IP) purposes.
Of the total imports in 2005, as much as 76.2 per cent was accounted for by permanent imports and 23 per cent by temporary imports of goods for active processing in the country.
In 2005, the leading place in the export structure was claimed by clothing products, followed by mechanical, electrical machinery and devices and recording appliance.
Iron and steel product exports increased by 12.8 per cent to EUR 3.29 bln, and mineral product exports by 81 per cent, to EUR 2.46 bln.
The category made up of mechanical machinery and devices, electric appliances and equipment, and sound and image recording appliances ranks firms in the structure of imports in 2005, with EUR 7.629 bln, up 22.1 per cent as compared to 2004, followed by mineral products with EUR 5.072 (up 43.8 per cent).
Romania?s main trade partners in 2005 continued to be European Union Member States, accounting for 67.6 per cent of the export markets and 62.2 per cent of the total import sources.
Loans in ?lei? increased 6.9 percent in December 2005 (6.4% in real terms) against the previous month, whereas credits in foreign currency expressed in lei decreased by 2.3% (expressed in euros, the credit in foreign currency dropped 2.9%).The non-governmental credit increased in December by 1.7% (1.2% in real terms), reaching 60.67 bn RON. Credits in lei went up 6.9% (6.4% in real terms), whereas the credit in foreign currency, expressed in lei, decreased by 2.3% (expressed in euros, the credit in foreign currency dropped 2.9%). On December 31, 2005, the non-governmental credit was by 45.3% higher than on December 31, 2004 (33.8% in real terms) mainly due to the 70.3% increase of the component in lei (56.8% in real terms) and to the 29.1% increase of the foreign currency component expressed in lei (in euros, the increase of the credit in foreign currency was 39.3%).
?As one of the State?s major taxpayers, I disagree of this way of capitalizing CEC. Why should we agree to capitalize CEC with public money, from our common pocket, when several private investors expressed interest in doing it?? former BRD president declared exclusively for BankingNews. Baltazar considers that privatization is the only viable solution for CEC, as the price obtained should not count more than the business model proposed by the potential investor.
BALEA LAC, Romania (Reuters) - Tucked away in a remote valley in Romania's Carpathian mountains, a tiny ice hotel has opened to try and attract tourists and their cash to the unspoilt forests of some of Europe's greatest wilderness.
A refuge for brown bears, wolves, bison, lynx and a wealth of other wildlife and plant species found nowhere else, the region needs money to tackle the poverty that environmentalists say could threaten the mountains.
Arnold Klingeis hopes his eight-room hotel, built 2,000 metres (6,500 ft) above sea level and accessible only by cable car in the winter, will attract tourists interested in nature. Nearby areas could be further developed for skiing, some say.
"This area has the resources to become a European tourist attraction. But we need investment," said Klingeis, a 27-year-old Romanian-born German who runs the hotel, during its opening.
"In the winter there are no foreigners here and local developers don't have the budget for a ski lift."
Made of ice from a nearby lake, the igloo-shaped hotel cost less than 10,000 euros (7,000 pounds) and took a month to build. Next to the sheepskin-covered ice beds, a local artist put icy copies of the sleek sculptures by Romanian-born modernist sculptor Constantin Brancusi.
Romania, one of Europe's poorest countries which hopes to join the European Union next year, is struggling to build up its tourist industry saddled with crumbling, communist-era infrastructure.
Government officials estimate that up to 6 million tourists visit Romania each year, heading for Black Sea beaches dotted with mineral mud spas or following the footsteps of notorious mediaeval ruler, Vlad the Impaler, whose life inspired Bram Stoker's "Dracula".
The uninhabited slopes around Balea Lac, an icy lake surrounded by some of the highest peaks of the Carpathians, a vast mountain chain that spans much of eastern Europe, could be another attraction, local residents said.
"This pristine charm is what used to attract people to the Alps," said Paul Philippi, a retired theology professor from the nearby town of Sibiu.
"The Alps don't have it any more. These mountains...have sheep and not much more," he said, leaning against an ice table in one of the new hotel's bedrooms.
At the moment, Balea Lac attracts only the most devout skiers, who scramble up the slopes, with only one small, beginners' lift available to give them a pull.
According to Romania's National Ski Federation, there are 23 ski runs in the mountainous country and only five of them meet international standards.
A seven-nation plan to protect the Carpathian mountains, backed by the United Nations, came into force last month, seeking to protect wildlife, promote sustainable development and preserve the cultures of the up to 18 million inhabitants.
Environmentalists say that cash is needed to prevent poverty-driven over-exploitation of natural resources and pollution. A structured development of the area would be more environmentally friendly and that costs money.
In the valley of Balea Lac, mountain lovers say there is plenty of room for tourists and their cash.
"This area is beautiful. It's got huge potential," said Sorin Brinzan, a 26-year-old bartender from Bucharest who skis around the lake, on the slopes of Romania's two highest peaks.
"We believe in this project," he said, while a hotel worker behind him used an electric drill to turn cubes of ice into drinking glasses and filled with them palinca, a Romanian type of plum brandy popular in eastern and central Europe.
Many local residents say mountain villages are better off than some other regions in Romania, where average monthly salaries are less than $250 a month and many city dwellers cannot afford their winter heating bills.
As in any region in Romania, local authorities are struggling to find new employment sources after communist-era industries collapsed following the 1989 fall of the Ceausescu government.
In Sweden, cash spent by tourists beating a trail to the world's first ice hotel built 125 miles north of the Arctic Circle, created jobs in a depressed region.
"This is not a very poor area but we need investment," said Dorin Magda, the mayor of the nearby village of Cartisoara, standing below an icy vaulted ceiling that crowns the new hotel's bar and sports a twinkling disco ball.
"Before 1989 there was industry. Now we need to find a new direction."source
Both officials agreed that the two countries must cooperate closely to complete the project.
Nabucco refers to the construction of an oleo duct that will connect the Caspian Sea region with the Western Europe, passing through Turkey, Bulgaria, Romania, Hungary and Austria. From Austria, the gas could be directed to the already existing lines in France, Italy, Slovenia and Croatia.
The project is on the priority list of European institutions in the above mentioned countries and is included in the Trans-European Networks (TEN) program.
The recent disruption of the natural gas supply from Russia showed that alternative gas sources and transportation routes must be found.
Romania is interested in the gas pipeline as it would allow the connection of the Romanian transportation gas system to Hungarian and Bulgarian systems.
The former Minister of Economy, Codrut Seres, stated at the end of 2005 that Romania will invest about 800 million euros in the Nabucco project.
Transgaz - which represents Romania in the project - will pump approximately 40 million euros per year by 2010 when the pipeline is expected to be completed.
"For the entire project, we will inject 30% of our funds while 70% will come from loans. We are considering taking several loans on behalf of Transgaz, which will be state warranted," the former minister explained.
The Nabucco project was launched in 2002 through a cooperation agreement between natural gas transport companies Botas (Turkey), Bulgargaz (Bulgaria), Transgaz (Romania), MOL (Hungary) and OMV Gas (Austria). Each company controls 20% in the project.
The initial transportation capacity of 4.5 billion cubic meters of gas per year is projected to expand to 30 billion cubic meters.
Each participating country in the consortium will build the section that crosses through its territory. The pipeline crossing Romania will be 457 kilometers long. Romania and Hungary have already made the first step of their involvement in the Nabucco program by building the Szeged-Arad pipeline.
In April 2005 the Indian company Gail announced its intention of entering the Nabucco consortium formed for the development of the pipe line project.
The reserves rose by 471.5 million euros in January 2006, due to 912.9 million euros worth of revenues from the management of the international reserve, the modification of the minimum hard-currency reserves of commercial banks, other hard-currency sums going to the state reserve.
At the same time, the Central Bank paid 441.4 million euros in installments and interests to the direct foreign public debt guaranteed by the Public Finance Ministry.By end 2006, the Central Banks is due to make payments related to this debt totaling 1.201 billion euros.
The External Trade Department developed the project "Romanian Export 2006" meant to encourage export companies and develop country brands in the fields of furniture, textiles, IT and wine production, said Winkler.
The Government created 20 new jobs within the department, which will focus on southeastern Europe, European Union, Africa and America. The commercial deficit of 10.3 billion euros registered in 2005, which is 40 percent above the 2004 figures, must be carefully addressed in 2006, said the minister. Efficient actions can be done through Governmental actions backed by public-private partnerships.
"We are concerned by the measures taken by the Government and the National Bank meant to maintain the macroeconomical balance," he stressed.
As some 60 percent of Romanian exports are coming from Bucharest, the minister considers that the potential of main economic regions should be better capitalized.
Romania's exports in 2005 valued 22.3 billion euros, up 17.5 percent, above the expected figures. The most dynamic sectors were the technological, the chemical, and the electric equipments industry, reporting a 36 percent growth.
Most exports were directed towards Italy (19.2 percent) and Germany (14 percent). Exports to Turkey also witnessed a good evolution, the minister emphasized. The Romanian exports towards France dropped in 2005.
Imports exceeded exports with 10 billion euros, and advanced 23.9 percent. The minister appreciated as positive the import of intermediary goods and technology. Romania's main import partners are Italy, Germany, Russia and France. Some 64 percent of imports come from the European Union. Romania imports from Russia mainly energy.
The drinking water plants are located in the cities of Satu Mare, Brasov and Sibiu and will be co-financed by EU-funds. Currently, the population still suffers from insufficient water supply, both in terms of quantity and quality due to outdated treatment equipment.
Aqua Engineering will transform the facilities to state-of-the-art drinking water plants adding process units, automation and control systems, replacing the entire electrical and mechanical engineering without any interruption of operation. Upon project completion in two and a half years, best and pure drinking water complying with strict EU-regulation will be available for more than one million inhabitants.
Aqua Engineering GmbH forms part of Christ Water Technology Group with more than 25 years of know how in water and wastewater treatment as well as seawater desalination, for municipal customers in particular. Aqua Engineering focuses on fast growing regions in need of water treatment infrastructure having successfully com-pleted a large number of projects with subsidiaries in Hungary, the People?s Republic of China, the Arabic Emirates and South Africa.
To fulfill its vision of becoming a leading utility in southeast Europe, CEZ has submitted a second bid in the Romanian power market. This bid is for the fifth of eight distribution companies being privatized, and CEZ's willingness to spend over E300 million on Electrica Multenia Sud after its 2005 investment of E151 million on Electrica Oltenia highlights the importance of this burgeoning market.
The Romanian state power utility, RENEL, has been unbundled into separate companies responsible for generation, transmission and distribution. Today seven major thermal producers, one hydro and one nuclear company represent the generation companies.
There is only one transmission system company, Transelectrica, whereas eight different regional companies control the distribution system. During the last two years four of these distribution companies have been privatized. Italian Enel bought 51% of Electrica Banat and Electrica Dobrogea, whereas E.ON and CEZ bought 51% of Electrica Moldova and Electrica Oltenia respectively. Through the CEZ Electrica Oltenia acquisition the group brought a further 1.4 million end customers to bring their total to 6.6 million.
Along with RWE, GDF, Austria's EVN, Iberdrola, Union Fenosa and Enel, CEZ has now submitted its binding bid for 67.5% of the sixth Romanian distribution company, Electrica Muntenia Sud. The company is valued by the Romanian government at half a billion euros, far exceeding the other privatized distribution companies.
In the Romanian case, privatization has started among the distribution companies, rather than initially with foreign investment in the generation sector. Today 85% of the power demand comes from the residential customers, a segment that will be fully liberalized in 2007. It is also attractive to foreign investors, considering the annual increase in power demand with an average rate of around 2%.
There are still three distribution companies that remain under control of the government: Electrica; Transilvania Nord and Sud; as well as Electrica Muntenia Nord. For a company like CEZ, controlling parts of the Romanian distribution system is an important step in fulfilling its vision to become a leader on the southeast European energy market. This investment will clearly allow it to grow, however in the future it should look to invest in the generation companies to ensure it can then protect its distribution business.
A deep freeze in Romania has warmed the hearts of the owners of
an ice hotel in the Transylvanian Mountains that opened its doors on
The hotel, called the Lake Balea (Balea Lac) Hotel, was built in the snow at an altitude of over 2,000 meters (6,000 feet). The man behind the ice creation, Aurelian Nica, promises to give guests a warm welcome although the temperature inside will be minus 3 Celsius (27 F).
Beds, tables, night stands, and even glasses are made of ice for a price of 69 lei (23 dollars, 19 euros) per person per night for singles, or 134 lei (45 dollars, 37 euros) for a double.
The eight-room hotel which resembles a large star-shaped igloo, features a fully equipped bar in each room where guests can warm up with a glass of traditional Romanian plum brandy
Nica, a 37-year-old mountain rescuer who worked for three years planning the hotel, calls it "a dream come true." He started construction in mid-December, and knows the hotel will melt down in May or June.
"We worked at -24 degrees Celsius ( -11 F) and at times in 150-kilometer (93 miles) per hour gales," he added, recounting an incident when the wind flung him six meters (yards).
Nica said a recent Siberian-cold spell that swept Romania was good for his business. Last year he tried to build an ice hotel at a lower altitude, but could not complete it because the temperatures were too warm.
The hotel can be reached only from a highway linking the cities of Brasov and Sibiu to the Balea Lake resort, where tourists can board a cable car leading to a cabin and the ice hotel.
Nica and his partners invested over 20,000 lei (,6,600 dollars, 5,500 euros) in building the hotel, which is expected to melt in May or June, depending on weather conditions.
"When outside temperatures rise above 3 degrees Celsius (37.4 Fahrenheit), the hotel can't be visited anymore."
Viktor Yushchenko and Traian Basescu discussed energy security and cooperation on oil and natural gas production on 12,000 sq km of the Black Sea shelf.
A Ukrainian-Romanian commission, which was set up after the talks between the president, might consider the issue.source
The General Mayor of the Capital city announced that all the city's 359
streets will be completely upgraded in the next two years.
"It will be rather difficult to drive in Bucharest," warned Adriean Videanu, the general mayor. The first project to begin is the construction of the Basarab overpass, and the deadline to submit offers is March 15.
The construction of the 178 million euros Basarab overpass will start this spring and last three years at most. One of the selection criteria for the contractors is the duration of the work, according to Videanu.
The Basarab overpass project has been vehemently contested and modified twice while its costs have more than doubled. The initial plan, proposed by Traian Basescu when he was mayor of Bucharest, was almost one kilometer shorter and 100 million euros cheaper.
The population that lives in the Titulescu area, where the overpass will be built is strongly opposed to the project. They claim the overpass is harmful and does not comply with environmental standards. People also fear it will reduce the market value of real estate in the area considerably.
The construction of two parking lots, located in Revolutiei Square and near the North Station, will also be put out to tender soon. Preparation of 20 other such projects will be finalized within the next month.
Adriean Videanu said in an exclusive interview with Bucharest Daily News in December that the European Commission Delegation to Romania might be used to publicize the city hall's projects. The statement came after a dispute with the EC Delegation head, who said Bucharest does not deserve to be a European capital. Videanu and Scheele met last Friday to try and find solutions to improve Bucharest's situation.
Videanu admitted Bucharest has major problems, such as the chaotic traffic, inefficient public administration and bad public transport. However, the mayor said he has solutions for each of these issues.
Videanu warned the citizens of Bucharest that modernizing the city involves sacrifices, so they should not be surprised if things get worse next year because of the work that will block traffic and make the city look like a building site.
Historic Center renovation, to be put out to tender soon
The renovation of Bucharest's Historic Center will affect more than 160
families living in the area and the City Hall is presently examining its
options to evacuate them, including the acquisition of new apartments.
The project is estimated at approximately 200 million euros, to which the municipality will contribute 34 to 54 million euros. The remainder should be provided by Romanian or foreign investments.
However, before any work begins, the authorities must resolve the issues of the Historic Center area, including by restoring the property rights of the owners abusively dispossessed by the communist regime.
"The restoration of Bucharest's Historic Center must be a national priority, which should unite public authorities, private investors and society," concluded Videanu.
50 million euros, the bill for politicians' ideas
Initiatives by Bucharest officials which have never been carried out have
cost 50 million euros, accounting for installments, interest and commissions
linked to credits contracted by the city halls for 2005 and 2006 for
infrastructure or development projects. Named "opportunity costs," the
millions of euros are just credit costs for missing the timing on projects
such as the Basarab overpass, the renovation of the historic center and
Thus, in 2005, Bucharest City Hall contracted external credits from EIB, EBRD or the World Bank which totaled 405.1 million euros. In addition, the City Hall issued bonds worth 500 million euros. Together, the two sources amount to more than double the budget of the City Hall. Out of these funds, the Capital City should have modern streets, water and sewage systems, modern transportation, upgraded schools and parking lots, overpasses and other facilities.
In the past two years, out of the 905.1 million euros borrowed by the City Hall for various projects, the authorities have spent a little over 30 million euros. The difference is still sitting in banks, waiting to be spent. In the past 15 years, the authorities have spent 131 million euros on upgrading the streets of Romania's largest city.
Sulfina Barbu, the minister of the Environment, stated that the so called "visible tax," which represents the cost for the recycling of all electronic equipment, will be displayed in stores.
The measure is designed to inform buyers of the cost of the product and its recycling cost.
Refrigerators will have the largest recycling cost (16-17 euros), followed by computers (10-12 euros) and TVs (6-7 euros).
The producers of electronics and home appliances, depending on the share they hold on the Romanian market, will cover the cost for the collection, treatment and elimination of the waste.
Zsolt Bogos, the state secretary at the Ministry of Economy and Commerce (MEC), stated that Romania can only partially recycle this type of waste.
Bogos believes that Romania can recycle the metallic parts of this equipment, but can only partially recycle plastic and glass components.
Romania does not have the proper facilities for the elimination of materials such as fluorescent dust, which is found in TV tubes.
"We can look at the glass as half empty or half full. These rules create a new business opportunity on the Romanian market for anyone interested and with the means to invest in recycling facilities for such products," stated Bogos.
The official believes that it is better to pay the visible tax when the product is purchased, rather than paying the waste developers.
All producers and importers of electronic equipment are required to register with the National Agency for Environmental Protection (ANPM) by the end of April, in compliance with the settlement regarding waste coming from these sectors.
According to a statement made in January by the Ministry of Environment and Waters Management, each producer will get a registration number that will be given to the stores where their equipment is sold.
Without this serial number these producer are forbidden from selling their products.
The Environment guard and ANPM will give fines between 2,700 and 5,400 euros to the companies that do not comply with these requirements.
Producers that do not register will be excluded from the market, while those who comply will pay for the management of the waste with the money coming from sales of the electronic equipment.
Depending on the market share owned, each producer will start paying these taxes by the end of 2006.
For the management of waste, producers can join organizations or they can act individually.
Presently, only two groups have stated their intention to create such organizations: one being a home appliances and TV set producer the other being a group active in the IT sector.
Producers can form several types of organizations so that the waste management process is not overly expensive.
The individual management of waste is more expensive because the waste volume is smaller and the recycling costs are larger.
Inflows totalled 912.9 million euros, coming mainly from reserve management revenues, changes of the minimum reserve requirement on hard currency liabilities for commercial banks and other inflows, the BNR said in a statement.
External debt payments, fees and commissions accounted for most of the total outflows of 441.4 million euros.
Note that the BNR no longer gives details of the exact amounts of hard currency it may be buying from the interbank market to rein in the leu currency.
CEZ said in a statement that total costs would rise to 166.5 million euros.
"Oltenia's results are much better than expected in a business plan," CEZ Romania's head Jan Veskrna was quoted as saying by the statement in explaining why the price was raised.
Oltenia posted a net profit of 46 million euros in 2004 after a new loss of 58 million in 2003.
?Romania?s participation for co-financing of the projects, between 2007 ? 2013, is of almost one billion euros, to the four allocated by the European Union? Korodi said.
At present, the money allocated by ISPA funds is of 1,381.5 million euros. For preparation projects, for the period of 2005 ? 2006, eight ISPA projects were sent to the European Commission, worth 222 million euros, regarding investment in ?Water? sector ? 4 projects, ?Waste Management ? ? 3 projects and one project for technical assistance for applications to the Cohesion Fund. Out of the eight projects, five have already been approved and have covered the funds given to Romania for 2006, namely 160 million euros.
The positive expectations towards EU accession increased significantly over the past three years in rural areas, varying with age and education, informs the rural Eurobarometer. The pro-accession option advanced 3 percent, reaching 72 percent in December 2005. The number of those knowing little about the Union is still high, while 19 percent (compared to previous 25 pc) affirm they know nothing about it.
Expressed in FOB/CIF prices, last year's trade deficit was 7.8 billion euros, up 46.6 percent against the 5.32 billion euros registered in 2004. FOB exports totalled 22.25 billion euros, exceeding by 17.5 percent the amount registered in 2004. CIF imports totalled 32.56 billion euros, up 23.9 percent against 2004.
According to the data from the National Bank of Romania, the national currency's exchange rate at the end of December 2005 was 3.6771 RON for 1 euro (by 7.3 percent less than at the end of 2004) and 3.1078 RON for 1 US dollar (up 6.9 percent from the end of 2004).
The figure accounts for 14.3 percent of the Gross Domestic Product, which was 281.2 billion RON in 2005. Aggregate budget revenues were 81.35 billion RON and exports of goods and services topped 25 billion euros in 2005.
The foreign debt directly committed by the State accounts for about 59 percent of the public governmental debt, whereas the public State-secured debt represents 40.5 percent. The debt engaged with official creditors (loans from the International Monetary Fund included) stands at 47.9 percent, whereas private creditors, commercial banks, securities and other sources account for the rest of 52.1 percent.
By debtors, the debt's structure is as follows: the governmental debt represents 75 percent, the debt of trading companies - 22 percent and 2.2 percent is the debt of the National Bank of Romania (which totals 248.1 million euros). Credits with a maturity higher than ten years account for the most substantial share (53.2 percent of the total), followed by those with maturities between five and ten years (31.1 percent) and by credits with maturities between one and five years (15 percent).
Siveco Romania, the most important integrator of software applications in the country, reported a turnover of USD 37.6 million last year and estimated a turnover 20% higher for 2006. Its strategy for the current year is to attract more than 120 new clients on the domestic market and to expand to the neighboring countries.
A new customs law will come into force in Romania effective February 3, 2006, according to a press release by SD PETOSEVIC.
Customs applications filed prior to February 3, 2006 must be supplemented with a declaration that conforms to the requirements of the new law.
Under the new law, customs applications will be free of charge. In addition, the right holder will no longer be required to pay a fee to guarantee that the goods seized by customs are infringing goods. However, the rights holder is still responsible for covering all costs incurred in keeping the goods under customs' control, including the seizure and destruction of infringing goods.
Applicants will be required to declare that they accept liability for false or erroneous statements in their applications, including any subsequent finding that the goods in question do not infringe the rights holder's intellectual property.
The new law also provides that, under certain circumstances, infringing goods maybe destroyed without initiating any legal action.
The statement was made after Pogea met with the head of the International Monetary Fund (IMF), Emanuel van Mensbrugghe, and with the resident representative of the institution to Bucharest, Graeme Justice.
The government has said that it will maintain a strict salary policy to control the inflation rate, already affected by 2006 wage increases in the public sector. The average salary increase in the state sector will be approximately 6.6% this year, according to a government statement.
Salary increases in the public sector will be made in a single installment and will be correlated with an inflation level expressed in single digits and labor productivity improvements starting in 2007, in accordance with EU practices.
Another measure which aims to keep inflation in check will be control of utilities prices' increases. This step will help the National Bank of Romania (BNR) to reduce inflation and enhance the predictability of the business environment.
Several new sources of taxation revenue will also be identified to boost budget revenue.
The measures are necessary as part of the preparations for EU accession and to ensure that the necessary resources for the absorption of European funds are secured.
Discussions with IMF representatives for the annual macroeconomic evaluation started last Wednesday and the IMF delegation will end its visit on February 6.
Gigi Becali sells plot of land for 16 million eurosOne of the most important Romanian landowners, Gigi Becali has recently sold a plot of land for approximately 15 million euros, writes today's Ziarul Financiar.
The buyer was the Greek investment fund Global Emerging Property Fund, which intends to develop an extensive commercial project in several stages.
When contacted by ZIARUL FINANCIAR, the owner of the Steaua Bucharest football team, Gigi Becali, said the transaction amounted to 16 million euros and that it covered a five-hectare plot of land in the Baneasa-Pipera area.
The prices of land used for commercial developments, located in the northern area of the capital, range between 200-300 euros per square meter, according to the latest market surveys. Prices have been going up for years, driven by the dwindling supply.
The representatives of the Global Emerging Property Fund (GEPF) did not care to comment on the subject.
Gigi Becali has a number of properties in Bucharest and has recently acquired defence industry assets from the state, namely Uzina Mecanica Dragasani (Dragasani Mechanical Plant).
He holds a stake in Michele Trading Company, European Imobilar Developers, Melody Bar and Avicola Iasi, according to the information available on the market. Becali has also gone into politics, forming his own party, the New Generation Party.
Global Finance, one of the biggest fund managers in the Balkans, tapped into the real estate business with its own investment fund, whose capitalisation stands at 125 million euros. GEPF announced it planned to invest 450 million euros on the markets in the region, and about 270 million euros of this sum in Romania.
GEPF's investors include international financial institutions such as the European Bank for Reconstruction and Development and the Austrian investment fund Immoeast, part of Immofinanz.
The fund's lifespan should stand at ten years, with a yearly profitability rate of 20%.
The list of GEPF's projects includes class A office space, mall-type commercial developments, big-box retail (separate stores covering large surface areas) and industrial space.
ABplus plans to tackle the Bucharest exhibition market in 2006. The operation will be carried out under its most representative brand, Camex. Last year, Camex organized 13 events in 11 cities throughout the country and had over 1,700 clients. ABplus recorded a turnover of 1.4 million euros in 2005 and a net profit of 120,000 euros. After its entry on to the Bucharest market, the group's financial targets will become more ambitious, said Mindirigiu. The group will follow two strategic development directions. The first is the internationalization, through the organization of two events (on civil and industrial construction) with external participation in Bucharest in September 2006. The other aim is expansion on the Bulgarian, Polish and Hungarian markets in 2007.
More than 75000 Teletech TV sets were sold last year, with an absolute record of more than 1000 units per day in December. The company?s representatives say that, in the future, they will concentrate on the flat-screen tv?s segement and on expanding this brand to plasma tv?s, LCD, home-cinema, DVD recorders
But until then, Altex is preparing the launching of Credex Finantari, a new consumer-credit company, which will be initially available only in Media Galaxy stores.
The minimal reserve for the resources attracted in foreign currency advanced last week from 30 to 35 percent, for that reason the banks tuned to lei crediting.
Raiffeisen Bank lowered interests with 1-2 percent and increased the crediting period with five years.
The credit limit was dropped for credits guaranteed with real estate, yet they must not exceed 40 percent of the client's net revenue.
Alpha Bank offers better crediting conditions for personal needs.
Thus, the interests asked for credits in lei up to 10,000-euro sums were reduced with 2 percent, currently standing at 12-13 percent depending on the period and sum.
HVB offers now credits to persons above 20 years old, taking into consideration the family's revenues also.
All credits offered by the bank to natural persons are also available in foreign currency.
The new owner should have operated a portfolio investment of USD 16.6 Mn into another aluminium producer under the contract.
Alro purchased the majority stake in the other country?s aluminium producer Alprom for USD 4.2 Mn and funded environment-related investments of USD 10.4 Mn in the plant.
However, the government?s control body does not consider the EUR 10.4 Mn investment as ?portfolio investment? as stipulated in the privatization contract.
According to the company's estimates, more than 400,000 units were sold since HAT entered the market, in 2003.
For the beginning of this year, the company plans to launch 14 new Samsung models on the Romanian market.
HAT Group Romania was founded in 1999 and it is owned by Milomor Trade&Communications Ltd (Israel).
The parties shared views on the state of the bilateral economic cooperation and discussed problems of further mutual benefit ties expanding in the context of the Kazakhstan ?Romanian intergovernmental session ahead, Kazakhstan MFA?s press service reports.
Kazakhstan diplomat informed of the main provisions of the President?s speeches delivered at the swearing-in ceremony and joint session of the Parliament?s Houses, of priority tasks of the new Cabinet aimed at economic modernization, its express development and realization of modern social programme.
Pogea noted Romania?s interest in expansion of economic partnership with Kazakhstan in various spheres, including, energy, oil business, etc.
Pogea congratulated Nursultan Nazarbayev and the people of Kazakhstan on successful administration of the President?s elections underlining great role of the Head of the State in ensuring gradual socio-economic and political development.
Shares in BRD recorded the highest quote rise on the Bucharest Stock Exchange on Monday, closing the day at 17.1 RON a piece, up 3.6 percent from the previous session.
BRD reported a net profit of 124 million euros for the first nine months of 2005, more than double the figures of the first nine months of 2004, and the value of its assets exceeded 5 billion euros at the end of Q3, 2005.
The first 2005 figures unveiled by the bank indicate a 60% increase in the value of loans, to 3 billion euros, granted throughout the year, compared with the year before.
Most of the stocks listed with the BVB closed the Monday session on high, with securities traded by the SIF financial investment companies and the BRD shares being the heaviest traded.
Investors said the rise in BRD shares has reflected in improved performance of the SIFs, which own stakes of some 5-percent in BRD each.
The BET index of the most liquid stocks traded on BVB exceeded the 8,000-point mark, a new historic high.
The company?s turnover increased up to ¤398 mn, by 17.4% in euro terms.
On the upside, this is the second year in a row with profits for the plant that ended the previous years in the red mainly because of the high financial costs prompted by its leverage.
The main causes of the profit margin declining in 2005 were oil prices high increase and a slight increase in company?s outputs? prices, according to Oltchim? management.
For the current year, Oltchim expects RON 1.7 bn (¤470 mn) sales and RON 44 Mn (¤12 Mn) in profits.
On 20 January 2006, the National Regulatory Authority in Natural Gas Sector issued an ordinance for all the Romanian chemical fertilizers producers to cease their activity due to the low pressure of the natural gas given the low temperature recorded in Russia.
The ordinance was received, also, by Azomures, that closed down the two ammonia producing units on January 23, 2006 for a week.
The employees of the above mention units will be technically in unemployment.
The offering launched by Alro targeted the takeover of 32% of Alum.
SIF Banat-Crisana sold its 24.09% stake during the offering, cashing in about ¤2.4 Mn.
Alro took over the majority stake in September 2005 (almost 68% of Alum Tulcea) following a transaction worth about ¤7 mn performed at Rasdaq Electronic Stock Market.
Alro offered a price of RON 5.6 per share.
The findings showed that Romanian commercial company managers expect processing industry output to advance by 10%, exports of finished goods to go up 9% and the competitiveness of Romanian products traded on the European Union to slightly improve by 9%.
As far as employment is concerned, the managers expect labour to decrease 10%, particularly as a result of an expected fall of 18% in the staff of the companies employing between 250 and 499 people.
Prices for industrial products are also expected to rise by 25%. The company managers estimate retail trade sales to increase by 30%. As far as the economic situation of Romania is concerned, 45% of the respondents expect this to be better, 33% expect it to be the same, and 22% expect it to worsen.
Service company managers expect the demand for services to advance 8%, in continuation of a 31% rise in the previous three months.
The trend study was conducted on a representative sample made up of 1,547 processing companies, 1,054 construction companies, 1,438 retail traders and 1,093 service providers.
Calsonic wants to build a ¤100 million car parts within Ploiesti industrial park, Egger has scheduled investments of ¤210 million in a plant for wood processing in Suceava, while Moser Baer intends to assign ¤300 million in a CD-producing plant in Giurgiu County .
There is no Eastern European country where Austrian companies invested more than in Romania.
The second destination would be the Czech Republic by about ¤5 billion.
Hungary comes third by over ¤4 billion.
Austria is the largest investor in several other countries of the area: Bulgaria, Croatia, Slovenia, Bosnia and Serbia.
Austrian companies invested in Bulgaria about ¤3 billlion, in Croatia about ¤3 billion, in Slovenia about ¤2, in Serbia Montenegro about ¤1 billion, and in Bosnia about ¤700 million.
Romania needs to register annual rates of economic growth of 7 percent over the next 25 ? 30 years to reach the level of Europen Union regarding development, as long as EU member states will reach development rates of 2 percent/year, said the MEC representative.
The top of economic growth is taken by China with 8-9 percent, followed by India, 6 ? 7 percent, Russia and Brazil 5?6 percent.
The United States by 3 percent, and the EU an average of 2 percent, while the global economy has grown by 3.6 percent in 2005.
In Central and Eastern Europe, the economic growth was 3- 4 percent/year.
In Romania, the economic growth for 2005 was 4,2- 4,5 percent of GDP, over half of the level reached in 2004, when the economic growth was 8, 3, according to the preliminary data presented by the State Minister Gheorghe Pogea.
He showed that the growth rhythm of GDP was below the estimations made by the authorities, of 5,5-5,7 percent, the main cause being the unfavourable weather which prevented the achievement of infrastructure projects.
The National Statistics Institute announced for the first nine months of last year a rhythm of economic growh of 3,6 percent, as compared to 4,9 percent after the first quarter and over eight percent for the January-September period in 2004.
?We can easily observe that the top of the most economically developed countries is made up of those who paid more attention to productivity, intellectual, social and industrial?, the president of the National Productivity Organisation of United Kingdom /NPOUK/ Amrik Singh mentioned.
In 2007, Bulgaria and Romania are scheduled to join 25 other countries as member states of the European Union (EU). Before doing so, however, Bulgaria and Romania must implement wide-ranging political, economic, and legal reforms, including modernization of their health care and pharmaceutical industries. Eight other Eastern and Central European nations underwent the same process before their accession to the EU in 2004, but both Bulgaria and Romania face their own specific challenges.
In this report, we provide an overview of the health care system, pharmaceutical market, intellectual property protection, drug registration, pricing and reimbursement and other cost-containment methods, and pharmaceutical distribution in both Bulgaria and Romania. We conclude with a brief assessment of the implications for the pharmaceutical industry.
-- In January 2007, Bulgaria and Romania are scheduled to become the newest members of the European Union (EU). The two nations rank among the poorest in Europe, but their economies--and their pharmaceutical markets--are growing fast. In both countries, foreign drugs account for less than one-third of prescriptions but have a market share of at least two-thirds in monetary terms. Consumers reportedly have a high opinion of imported medicines and frequently favor these products if they can afford them. Sales of imported medicines have grown steadily in recent years, and this trend is likely to accelerate as the Bulgarian and Romanian economies continue to grow.
-- Strong intellectual property protection is a relatively recent innovation in Bulgaria and Romania, and further progress will be needed to meet EU standards. In 2003, the Bulgarian government introduced a Roche-Bolar provision to enable generics manufacturers to begin developing generic versions of a drug two years before its patent expires. The Romanian government did not introduce data exclusivity for regulatory dossiers until April 2004. The research-based industry has criticized the fact that data exclusivity in Romania begins when a drug gains its first marketing authorization in any EU member state, not when it is approved in Romania. Furthermore, the Romanian government curtails data exclusivity when a product's patent expires.
-- Fears that EU enlargement will open the floodgates to parallel trade appear to be unfounded. Like the eight Central and Eastern European countries that joined the EU in 2004, Bulgaria and Romania will be subject to the "specific mechanism" that severely restricts parallel exportation to established member states. This mechanism will operate on a case-by-case basis as long as differences in intellectual property protection remain between these accession countries and older EU member states. A further obstacle to parallel trade is the fact that some international pharmaceutical brands are more expensive in Bulgaria and Romania than in Western European countries.
-- In December 2003, the Bulgarian government introduced a new positive list--a catalogue of drugs that may be eligible for reimbursement but are not automatically covered. Research-based companies complain that this measure creates additional bureaucracy, requires the submission of a huge amount of largely unnecessary data, seriously delays market access, is subjective (even to the extent that it had a pro-generics bias), and offers no right of appeal. Foreign companies may lose sales of BGN 50 million ($31.7 million) per year from the exclusion of their products from the positive list.
-- The Romanian government has angered the research-based pharmaceutical industry by introducing different reimbursement rates for patent-protected branded medicines and generics (50% and 65%, respectively). The recent imposition of reference pricing has intensified manufacturers' criticisms and reinforced the belief that the government discriminates against imported medicines.
Iberdrola and Fenosa are competing with six other international companies, including Enel SpA and RWE Energy AG.
In Madrid, an Iberdrola spokeswoman declined to provide any comment on the announcement, noting that the Basque utility does not normally comment on its participation in any privatisations until the final result is known.
Noone at Fenosa was immediately available for comment.
Economy Minister Codrut Seres said there will be five finalists in the privatisation contest, adding that the winner will have the option to increase its stake in Electrica Muntenia Sud to 67.5 pct.
According to analysts, the Rumanian government has valued the company at some 500 mln eur.
Earlier this year, Enel paid a combined 112 mln eur for 51 pct stakes in two other Romanian electric companies, Electrica Dobrogea and Electrica Banat.
Interagro, led by businessman Ioan Niculae, was designated at the end of 2000 as the winner of the tender for the privatization of SNTR, held by the ministry of Agriculture.
The company offered 40 million dollars for the entire share package belonging to SNTR and paid a 10 million dollars advance.
The difference should have been pain 90 days after the contract was signed.
The result of the tender was appealed by another bidder, the Greek company Leaf Tobacco A Michailides and the payment was postponed.
The court canceled the tender and established that the Romanian state must return the 10 million dollars to Interagro. Only 4.2 million dollars were paid back.
In 2001 Interagro closed a contract with the Ministry of Agriculture.
The object of the contract was the payment by the Ministry of Agriculture of a 5.8 million euros debt towards Interagro. Instead of the money, Interagro received the main share package in SNTR.
After that, the former Authority for Privatization and Management of the State Shares (APAPS) became the main SNTR shareholder.
At the beginning of 2004 APAPS closed a sales contract for 56.4% of SNTR's shares with the Tobacco 2003/EU consortium formed of the Galaxy Energy International BVI, registered in the Virgin Islands, and the Italian company CTS.
Interagro S.A. is a privately owned Romanian-English company founded in 1994, mainly involved in cereals, technical plants development and foreign trade, especially the export of fertilizers for agriculture.
The institution will analyze all possibilities for Rulmentul to continue its activity over the next few weeks.
AVAS considered that the final offer made by the consortium formed by Industrial GP SRL Bucharest and Uzuc SA Ploiesti did not comply with the price requirements.
AVAS previously rejected the consortium's offer in November 2005.
The privatization commission of Rulmentul Brasov rejected the offer by Rulmenti Barlad in the same month, because the company did not comply with the criteria imposed by AVAS.
Some of the conditions required are that the companies must have a minimum five years experience in selling bearings and assume the obligations signed in former privatization contracts with other companies.
Last year sales of expensive F Class automobiles progressed by 35 percent to 253 units. In Bucharest, 136 of them were sold.
The best selling luxury car was BMW's 7 Series model with a market share of 36 percent and 91 units sold, of which 43 were purchased Bucharest.
Second place in sales was Mercedes' S Class with 75 units sold, of which 40 were sold in the capitol.
Of the 57 units of Audi A8 ordered in 2005, 32 were acquired in Bucharest.
Volkswagen sold 14 Phaeton models in Bucharest and eight in the rest of the country.
Nine Maseratis Quattroporte, six Jaguars XJ and one Rolls Royce Phantom were also bought in Bucharest.
New cars sales increased last year on the local market by 48.5 percent to 215.532 units, despite an 11 percent correction in December. On the imported car segment, the trend was even more impressive with a 75.5 percent growth to 102,043 units. The demand of locally produced vehicles advanced 30.5 percent to 113,489 units.
The first 30 places in the league are dominated by European capitals, which held 20 positions. However, the only capital from Central and Eastern Europe which entered the top 30 is Moscow, ranked 29th.
The EIU analysts consider that the positioning of Western European cities in the first few places is not surprising.
According to the latest study, Bucharest went up 14 places, to 95th. Romania's capital has become more expensive than Sofia, now placed 110th after ranking 104th last year. However, living costs continue to remain lower than in Budapest, which ranks 77th, and Warsaw-63rd.
The analysts consider that emerging economies have seen increases in the cost of living, partly encouraged by EU accession or negotiations to enter the EU.
Belgrade, Prague and Istanbul reported a 5% increase in the cost of living compared with 2005, the same applying for Bucharest and Warsaw.
Major changes were reported at the top of the league in which Oslo surpassed Tokyo, which has held first place for the past 14 years. Oslo was placed third in 2005.
Osaka ranks third, while Paris is placed fourth, followed by Copenhagen, Zurich, London, Geneva and Helsinki.
Other Asian cities in the survey are Seoul, ranked 13th, and Hong-Kong - 14th.
In North America and Canada, of the 16 capitals included in the league the highest places are held by New York-27th, Chicago-35th, San Francisco-40th, while Montreal and Vancouver share 43rd position.
High consumption and inflation determined an increase of the cost of living in many Latin American capitals.
The highest increases in costs were reported by Rio de Janeiro and Sao Paolo which share 87th place.
Asuncion, Paraguay is the cheapest of the Latin America capitals, where the price index shows living costs are a maximum 45% of those in New York.
Some African cities reported costs increases because of the high inflation level.
Lagos-(63rd place), Lusaka (91st) and Nairobi (93rd) have two-digit inflation.
At the opposite end are cities in the Middle East which have low inflation and in this area only Dubai and Cairo reported higher living costs than last year.
The cheapest city remains Teheran in which the costs represent a third of those in New York.