January 2006

According to a World Bank survey, released in October 2005, Romania should register an annual economic growth of 8 percent in order to eliminate poverty by 2015, ACT Media news agency reports.

An annual economic growth of 8 percent would enable Romania to bridge the gap in relation to the development level of the ten new EU members, but the process may take up to 15 years, according to a statement made by the World Bank director for Central and Eastern Europe, Anand Seth.

He this percentage is realistic "with the access to the EU market, competitive and trained employees and foreign investments."

He explained that the advance of GDP needs to be acquired within a context of macro-economic stability.

The official of the World Bank considers that the private sector will need to have an important contribution to enhancing development, and the flexibility of labour market along with the cut in the inflation rate may be among the main tools to contribute to economic growth, critical for poverty alleviation.

The economic risks derived from a possible postponement of Romania's EU accession by one year are minimal, since reforms are already advanced, and foreign investors are aware of the fact that the country will receive the member state statute.

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BMW became the premium leader in the Romanian market delivering 1386 cars, while Audi registered 1300 units sold and Mercedes 1235 units, according to statistics of the Association of Car Producers and Importers, APIA.Last year, Mercedes ranked first with 1122 cars sold, followed by BMW with 992 units and Audi 925 units. According to a press release of Automobile Bavaria, the sales of BMW group grew in 2005 with 40.25% with 1474 units sold as against 1051 units in 2004. As for the structure of cars in the group portfolio, BMW cars registered a growth of 39.72%, Mini 47.46 with 87 units sold as against 59 units in 2004.

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Jonathan Scheele the head of the CE Delegation in Romania considers wine growing represents a big opportunity for Romania but quality and wine presentation should be improved. There is much to do in point of image, but I hope we will soon find European Quality for Romania but quality and quality and wine presentation should be used. ? He visited on Friday three objectives financed from European funds, Rompres informs. The first ibjective visited was Cramele Prahova, where the 1.2 million euro project ?modernization and upgrading of bottling capacities is carried out through Sapard Agency. The European Information Centre of Prahova County Council and the project :economic rehabilitation of Teleajen river? financed by EU with 2.7 million euros are the other two objectives visited by Scheele. Prahova county received from EU a financial assistance of 48 million euros as of 1997.

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One of the biggest airport builders in the world, Hochtief AirPort, is interested in building of the future international airport of Romania's capital, Bucharest, situated to the south of the city, Bucharest Mayor Adriean Videanu told a TV broadcast. Adriean Videanu said that on February 11 representatives of the above-mentioned company would come to Bucharest to talk about the project. They are also to meet Premier Calin Popescu-Tariceanu. Nevertheless the Mayor ruled out the possibility that the airport should be built during the current mandate (2004-2008). According to Adriean Videanu Henri Coanda International Airport at Otopeni will become a city airport as "nobody can stop Bucharest's development to the north."

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Poultry breeding sector in Romania would face bankruptcy, if no protection measures are adopted as soon as possible in favour of the local producers, including an increase in customs duties for poultry meat, President of the Union of Poultry Breeders in Romania (UCPR) Ilie Van told a press conference.This measure, of custom taxes increase, is currently debated with representatives of the European Union, and a decision in this sense will most likely be adopted till February 15 for a limited period of about six months.At the end of 2005, the imports accounted for a market share of 42 percent, the total imported quantity attaining 160,000 tonnes

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Smokers in Romania will have to pay 20 eurocents more for a pack of cigarettes in March, when the government approves the tax on vice. According to the health minister Eugen Nicolaescu, this tax is provided in the package of laws on reform in the health system and the money collected this way will go to the ministry budget. Nicolaescu declared that the tax on vice should be mistaken for an excise, since it is a consumer tax on products which seriously affect health.

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According to BMFMS , the most traded derivatives of last week on the Sibiu Monetary Financial and Commodities Exchange were those of SIF 5 Oltenia, the price fluctuations being a real surprise for speculators. Thus for the month of March the evolution was between 2,8001 ? 2,98 lei, expiration for options PUT sellers do not think it will go below 2,68 lei, 2,57 lei respectively while for June quota have fluctuated between 2,9805 and 3,125 lei.

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Romanian authorities will back up the actions for a rapid take-over of Banca Comerciala Romana (BCR) by Austrian ERSTE Bank, said Romanian Prime Minister Calin Popescu Tariceanu at a meeting in Vienna with ERSTE Bank General manager Andreas Treichl, ACT Media news agency reports.

During the meeting, Tariceanu and Treichl expressed confidence in the positive outcomes of the transaction.

The Romanian head of government said Romania's economy offers business opportunities to ERSTE Bank that include co-financing for projects carried out on European funds and support for Romanian business operators seeking regional expansion.

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KFW bank granted last week a EUR 10 million loan to leasing company Motoractive, as part of the assistance program for EU SMEs. The loan will be used for leasing projects and will benefit from EUR 1 million PHARE support. The credit line for Motoractive has been granted to facilitate SMEs? access to finance.

Daniel Stifter, general manager of the Eurobank Mutual Funds Management investment management firm, part of Eurobank Greek bank, the majority shareholder in Bancpost, says the development policy of the company he runs is primarily focused on the retail sector.

The business of the domestic unit of the German construction materials group HeidelbergCement surged by 22% in 2005, boosted by the rising demand for cement.

Tourism operator CMB Travel, one of the main players on the Romanian market, estimates turnover in excess of 7 million euros this year, up 28% on last year's figure. The company saw its business grow 12% in 2005, half the level estimated early in the year

Latvia has ratified Bulgaria and Romania's European Union (EU) Accession Treaty.

The accession treaty was ratified at a January 26 session of the Latvian Parliament. Of all 85 MPs a total of 79 MPs supported the ratification, five sustained and no one opposed the ratification.

Latvia's president is expected to sign the final ratification document in two weeks, Bulgaria's Foreign Ministry announced.

Bulgaria and Romania's EU Accession Treaty has been ratified by Greece, Estonia, Italy, Spain, Cyprus, Slovakia, Slovenia, Hungary, the Czech Republic and Malta.

The two Balkan countries are to join the bloc January 1, 2007.

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The value of the largest bank listed on the Bucharest Stock Exchange, BRD-SocGen has reached 3.3 billion euros, with the 58% stake held by the French at Societe Generale thus exceeding 1.9 billion euros, Ziarul Financiar writes.
"This figure almost entirely represents profit for the French, given that they have already recovered the larger part of their investments.

BRD's example proves once more that the state gained almost nothing from the privatization of the bank, a rule that stands for every single bank that was once held by the state, even though the Austrians at Erste will be paying 3.75 billion euros for the controlling interests in BCR, an amount most analysts deem as quite high compared with the actual value of the bank.
BRD paid 200 million dollars (the equivalent of 180 million ECUs back then, the precursor of the euro) at the end of 1998, for a 51% stake in Banca Romana pentru Dezvoltare which was taken over from the state. From this amount, the Romanian state got 138 million dollars, while 62 million dollars were contributed to the bank's capital.

The French at Societe Generale later got back part of the money paid during the privatization process by selling their Romanian branch to BRD. The value of the deal in 1999 stood at 25 million dollars (approximately 22 million euros).
Since the privatization of the bank, the French, in their position as majority shareholders, endorsed the granting of a significant part of their profits in the form of dividends, thus collecting around 100 million euros from their BRD investment.
They bought another 7.3% in BRD last autumn, for which they paid 43 million euros, half of the stock market price of the stake, as the sole bidders.
From 1998 onwards, the French thus paid approximately 224 million euros for their 58.3% stake and collected half of this amount from BRD.
On the other hand, the increase in the value of BRD was first of all due to the more efficient management and expertise introduced by the French, which coincided with the explosive development of the entire banking system over the last few years."

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In recent months there has been considerable debate about urban development in Bucharest, and the city?s drawbacks have come in for much criticism, including from the head of the European Commission Jonathan Scheele. Bucharest has many problems, but one of the most serious is traffic, which by the mayor?s own admission is likely to get worse before it gets better. One of the main reasons is the poor quality of public transport.

In a modern capital, car owners should find it more convenient to leave their vehicles at home when visiting the city centre. In Bucharest, this is a long way from happening. The metro system, developed under Ceausescu, is good, but limited, and no new lines have been built since 1989 apart from the short section from Basarab to 1 Mai. Recently, the town hall announced the construction of new routes to Henri Coanda Airport, and Drumul Taberei. This is a positive development, but it will be at least ten years before these schemes are completed.

More urgent action needs to be taken to improve the quality of public transport in the short term, and this should concentrate on radical steps to make surface transport civilised, so that it can become a genuinely attractive alternative to travel by car. Under Ceausescu, buses and trolleybuses were crammed with passengers literally squashed together, and sometimes people even used to hang outside from open doors. This practice was stopped in 1990, and the buses powered by canisters of methane gas fixed to the top of the vehicle were scrapped. New buses have been introduced in recent years on most routes. But the legacy of overcrowding as the norm remains, and while not quite as bad as under Ceausescu is still serious enough to mean that buses are almost exclusively used by citizens who do not own a car.

The solution is firstly to increase frequencies to at least double the current rate for most of the day, as well as to introduce bus lanes on major arteries to keep buses moving and act as a disincentive to cars. The transport authority would need to buy more vehicles, and train more drivers. If this proved impractical for the current operator, RATB, in a reasonably short period of time, then the city hall should consider putting routes out to tender to private operators who would sign a contract with the city hall. The integrity of ticketing and passes could be maintained, since the operator would be paid by the city hall rather than directly through ticket sales. This system has operated in London for around twenty years, where a number of private companies have franchises for certain routes. Perversely, Bucharest town hall recently banned privately operated minibuses ostensibly on the grounds that they cause congestion, when actually these provided a quite efficient and civilised way of transporting around twenty people in one vehicle, alleviating overcrowding on the RATB bus routes.

A long overdue reform is the introduction of coordinated ticketing for all city transport. At present there are no less than four separate types of ticket for city centre journeys, with different systems firstly for the metro, secondly for regular buses trams and trolleybuses, thirdly for express bus routes 781 and 784, and fourthly for the 783 bus to the airport. This should be simplified, with one type of ticket and pass being valid for all modes, as in Prague, and a separate tariff for out of centre journeys, such as to the airport. Taxis are more reliable than a few years ago, but action is still needed to eliminate the cowboys who monopolise strategic locations such as the railway station and the street outside Magazin Unirii. Budapest has largely solved the problem of unscrupulous taxi drivers by creating a legal maximum tariff, which is kept at a reasonable level. Bucharest should do the same, and since regular rates are around 1.2 to 1.4 RON per km, the maximum should be no more than 2 RON. At the same time, taxi use could be encouraged by allowing licensed cabs to use bus lanes. 

Bucharest is one of Europe?s most densely populated cities, since most of the population live in high rise blocks. It is consequently essential for radical steps to be taken to promote public transport use, to improve the quality of life of the capital?s citizens.

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Carrefour has revealed it?s Romanian sales shot up by 64 per cent last year following a consumer lending boom and extra income created through the new flat tax system.

According to reports in the Romanian press the massive increase in sales makes Carrefour Romania's second largest retailer, second to market leader German Metro Group.

The performance meant that Carrefour's Hyparlo hypermarkets achieved a total sales figure of ¤435million and took Metro's sales past the ¤1billion mark. Officials claim the growth will be maintained over the next few years.

The Bucharest Daily News reported Francois Oliver, Carrefour's Romania chief executive as saying: "We will open two more stores this year in Baneasa (northern Bucharest) and Constanta, and maintain at least the same pace for the next few years."

The company has defied all odds in its success on the Romanian market. At the time of entry consumers were deemed to have low buying power, something which has obviously seen a radical turnaround.

"Were we to rely on market surveys, we would never have come to Romania. When we came to Romania in 1999, we mainly relied on instincts," said Jean Michel Arlaud, general manager of Hyparlo, owner of the Carrefour franchise for Romania in the Bucharest Daily News.

Carrefour's hypermarkets have been present in Romania since 2001 when the first store opened in Western Bucharest and the company has invested over ¤140m, opening four more Hyparlo stores in Bucharest, Brasove and most recently in Ploiesti.

At the end of last year the group announced it would take control of its biggest franchise Hyparlo having acquired a large stake in the company earlier in the year.

Last month the retailer also announced plans to double its store numbers in Poland over the next five years by investing between PLZ250-300million (¤65-78m) on an annual basis.

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Glasswork manufacturer Stirom Bucuresti borrowed ¤10 mn from the European Bank for Reconstruction and Development (EBRD) for financing an investment project that requires ¤44 mn.

The rest of the money, up to ¤44 mn needed, will come from the company?s own funds.

Investments will target to increase the output capacity, improve the quality of products, modernization of an oven, decrease the cost by energy economies, and a better utilization of production capacity.

Moreover, the company will acquire a new oven and will consider a possible expansion on regional markets.

Stirom shareholders will decide if they will grant a first rank mortgage on company? s headquarter in favor of EBRD and security on assets within mortgaged buildings.

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UK investors acquired in December last year the largest volume of shares on the Romanian capital market, the total reaching 98,859 million RON, mainly in the sector of financial brokerage ( 61,558 million RON), according to data published by the National Commission of Stock Exchange, ACT Media news agency reports.

Ranking second were investors from Cyprus, with a volume of acquisition of over 24,135 million RON, out of which in the operation sector ? 10,735 million RON, and third come investors in Sweden, with a total volume of acquisition of 20,011 million RON, out of which in the domain of financial brokerage ? 16,17 million RON. Regarding the volume of share transactions, first are ranked investors in Luxembourg, with 29,644 million RON, the majority ( 22,33 million RON) in the domain of monetary transactions, followed by Greek investors, with 26m,607 million RON, the greatest part being in the domain of financial transactions and fund management ? 11,53 million RON ? and investors in the UK ? 11,03 million RON.

Over the analysed period, the largest volume of acquisitions on the capital market undertaken by foreign investors was registered in the domain of financial brokerage with over 116,99 million RON, second being hydrocarbons extractions, with over 44,11 million RON, operation sector ? 19,48 million RON, monetary handling ? 18,6 million RON and pharmaceutical production ? 12,6 million RON.

Regarding the sales undertaken by foreign investors, the first was the financial brokerage sector ? 79,58 million RON, followed by monetary intermediaries ? 36,99 million RON, hydrocarbons extraction ? 13,58 million RON, oil products ? 12,63 million RON and financial transactions brokerage and fund management ? 12,512 million RON.

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Selgros Cash & Carry Romania, owned by German wholesale company Fegro Markt/Selgros, will invest E30m in 2006 to expand its network by two new stores, according to Selgros Cash & Carry's spokesperson Antoneta Gales. The first store will be opened in Ploiesti, southern Romania, on 7 March 2006 and the second in summer-2006 at a location to be announced later, Gales said. The company will use the funds from the capital increase completed at the end of 2005 to finance the expansion.

Selgros Cash & Carry Romania plans to expand its network to a total of 20 outlets from the current 11 stores, three in Bucharest and the rest in the cities of Arad, Brasov, Targu Mures, Constanta, Timisoara, Oradea, Cluj-Napoca and Craiova. Fegro Markt/Selgros, a joint venture of Otto and Rewe, runs a network of 60 cash & carry stores in Germany, Poland and Romania.

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On January 24, the National Bank of Romania?s measure came into force, according to which the minimum compulsory reserves corresponding to foreign currency liabilities set up by banks increased from 30 to 35 percent. As a consequence, the reaction of the banks could be to render foreign currency credits more expensive, the reduction of the interest in foreign currency deposits or the assumption of supplementary costs without changing the product. During the last meeting in 2005, the BNR board analysed the most recent evolutions of macroeconomic indices and financial markets, as well as their perspective in the context of macroeconomic policy to be implementaed during the current year « The BNR board evaluated the total of economic conditions, both domestic and international, but at the same time the risks and incertitudes connected to them, and decided to strengthen the control of liquidities and to stop the evolution of credits.

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BNR estimates a level of financial intermediary of approximately 22 percent, for December, when, after the first ten months the non-governmental credit grew, on average, by 3,3 percent/month, according to the National Bank of Romania data. The structure leu- foreign currency of the non-governmental credit had, over the first three quarters of the year a level of 40 percent lei and 60 percent foreign currency. After the coming into force of the BNR norms of limiting the degree of concentration of foreign currency credit exposure, in October, the credit in lei knew a certain growth. Over the first ten months of the year, the lei component of the non-governmental credit grew more rapidly than the foreign currency one, due to the speeding up of household credits in national currency, as well as due to the dropping in interests for credits in lei.

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Plastor Oradea estimates a 10 percent increase in turnover in 2006, compared to EUR 16 million in 2005, according to general manager Ion Seres.

Henkel Bautechnik Romania foresees a 20 percent year-on-year turnover increase this year over 2005, Marius Ivan, general manager of Henkel?s local branch, said last week.

Automobile Bavaria, the importer of the BMW, Mini, Rolls Royce and MAN brands on the Romanian market, sold 1,474 vehicles last year, approximately 40% more than in 2004. "We consolidated our position on the premium segment," says Michael Schmidt, general manager of Automobile Bavaria.

The producer of the Julius Meinl coffee brand has bought a distribution firm in Targu Secuiesc and is preparing to develop a network of coffee shops in a franchise system. Austrian group Julius Meinl Industrie Holding GMBH, the producer of Julius Meinl coffee brand, last autumn acquired Novo SRL, a company headquartered in Targu Secuiesc, Covasna county.

Alba-Iulia-based Albalact, owner of the Fulga brand and one of the main players on the dairy market, saw turnover worth 16.5 million euros last year, about 50% higher than in 2004, in line with the company's preliminary figures presented to shareholders during a general meeting.

Mittal Sidex Galati steel mill, part of the Anglo-Indian Mittal Steel Group, the largest producer of steel in the world, witnessed a 16% decline in steel output compared with 2004, as a result of a change of strategy due to the lower demand in steel worldwide in the first three quarters of last year.

Carrefour hypermarket network made 435 million-euro sales last year, an increase of more than 64% on the previous year, thus becoming the second leading player on the retail market after German Metro Group, whose sales overshot the 1 billion-euro mark.

Mahindra & Mahindra's third attempt at acquiring a tractor company has hit a roadblock. While M&M's bid for Romanian tractor company, Tractorul Brasov, has been accepted by the Romanian government, the deal is stuck at the final stages of negotiations, hinging on the approval from the European Union Competition Council.

As part of the privatisation conditions, the outstanding debt and dues of Tractorul Brasov, amounting to over 180 million euros, were to be written off. However, according to the regulations of the European Union, any privatisation involving write off of bad debts requires a formal approval from the EU Competition Council.

M&M had bid for 80% stake in the partially functional Romanian tractor firm, which was being privatised by Authority for State Assets Recovery, a specialised body under Romanian government.

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 Office space is the most sought after investment in 2006. Estimates of ESOP real-estate company show some 200,000 square meters class A new office space will hit the renting market. While experts with CB Richard Ellis (CBRE) realtors say this is a 44% increase compared with 125,000 square meters built last year.

?This is not so impressive, given that other cities in the region, like Budapest or Warsaw, develop several large scale real-estate projects every year,? said analysts with CBRE.

Office space buildings to enter the rental market this year are at the North Gate Business Center, Buzesti Office Building, Millenium Business Center and Herastrau Office Space.

New projects will be developed in 2007-2008, at over 100,000 square meters each, in southern and eastern Bucharest, said the Esop study.

Bavaria Office Center is the first office building in southern Bucharest, on Metalurgiei Boulevard. Southern Bucharest is still an untapped resource, with cheaper land and less traffic, which is now showing its pluses to realtors, said Mihaela Dicu, senior official with Eurisko real-estate agency. She said Bavaria Office Center had a 5,600 square meters surface on seven floors, and 170 parking lots, providing internet and data storage services as well as housekeeping.

The City Tower building is located in the Bucharest north-east ward Pipera and totals 12,230 square meters on 12 levels. It will be completed in the first quarter of 2007, with 95 parking lots including, a bar, a restaurant and health care facilities.

In June 2007, Delenco Construct Company will spend eight million euros to complete construction to a 12,500 square meters building at the crossroad of Calea Calarasi, Delea Noua, and Matei Basarab boulevards. The building will have three distinct wings on each of the boulevards, seven, eight and ten flights up, respectively. Some 6,343 square meters will be open for rent, and 96 underground parking lots.

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Ukraine?s Transport Minister Victor Bondar and Romanian Ambassador Troyan Khristea discussed the possibilities of the joint construction Danube-Black Sea Channel. Particularly, Ukraine proposes Romania to promote the coastal infrastructure of the Channel.

The project is aimed at development of Reni and Izmail merchant ports in Odesa region. The expertise proved the profitability and ecological safety of the project.

Romanian Ambassador, in turns, stated the issue would be discussed during the UNESCO International Conference in Odesa. He also invited Ukrainian Transport Minister to take part in the 3^rd Pan-European Conference on Water Transport. It will be held in Budapest, September 13-14.

Transport Minister Bondar accepted the invitation and emphasized the importance of the bilateral agreement on the inland waters shipping between Romania and Ukraine.

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World Bank gave Romania a EUR 100 million loan to carry out judicial system reform, Rompres informs.
Today Romanian Finance Minister Sebastian Vladescu and World Bank Central and South Europe Director Anand Seth signed the credit contract.
Romanian Prime Minister Calin Popescu?Tariceanu and Justice Minister Monica Macovei were also present at the signing ceremony in Bucharest government building.

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 OMV has already recovered 34% of the sum paid to the Romanian state for the purchase of Petrom by a simple operation: the Romanian company bought the Austrians? gas stations in Romania, Bulgaria, Serbia and Montenegro. The operation, presented as a strategy of the Petrom privatization outside Romania, has one bad part as well: the newly purchased gas stations will still be under the OMV brand.

Petrom has to pay 234.4 million euros to the owner company, OMV, for the 178 gas stations that it has sold to the Romanian company. The gas stations are in Romania, Bulgaria, Serbia and Montenegro. The transactions? value is the same with the one of the KPMG evaluation, according to the Petrom public statement. The sum represents 15.6 % of the 1.5 billion euros that the Austrian group gave to have 51% of the Petrom shares. However, the situation changes if we take into account the actual sums cashed by the Romanian state. OMV paid 699 million euros for 33% of the Petrom shares. The rest to 1.5 billion euros is the sum brought by OMV to the joint stock in order to hold 51% of the shares and take over the control of the company. The sum paid by Petrom for the purchase of the OMV gas stations represents approximately a third of the money cashed by the Romanians after the privatization of the greatest Romanian oil company. According to the deputy manager of OMV, Werner Schinhan, the financing of the transaction will be made out of the 830 million euros offered by OMV for the increase in the Petrom joint stock, as well as from the private funds of the company.

THE RECOVERY

The net profit of Petrom in 2005 could reach 500 million euros, according to an estimation seen as realistic by Gheorghe Constantinescu, the general manager of Petrom, quoted by Medifax at the end of last year. If 50% of this profit goes to equities, OMV cashes another 125 million euros. This means the recovery rate for this year will get to 50%. The analysts said that the proportion of the equities in the profit could get higher as well as smaller. It all depends on the OMV strategy. On the other hand, OMV gets money from Petrom from its contracts with the other companies of the Austrian group. At the end of last year?s November, Werner Schinhan said that, according to the Petrom privatization contract, the value of the agreements with companies that take part in the OMV Group can get to maximum 25 million euros each year. This is added to the commercial margin for crude oil imports, which gets to 50 million euros, which are also intermediated by a company affiliated to OMV.

THE PROFIT AND THE SE

?The profit rate of Petrom is almost double than the average in the worldwide oil industry, which doesn?t go over 10%?, Razvan Pasol, president of Intercapital Invest brokerage company, stated for us. In the first nine months of last year, Petrom obtained a net profit of 389 million euros from a turnover of 2.17 billion euros, which means a profit rate of 17.9%. There is no wonder that, last year, OMV was the main winner of the FTSEurofirst 300 coefficient at the London SE, with an increase of 123.3%. In their turn, the Petrom shares have increased by 8% between the 16th and the 23rd of January, reaching 6,250 ROL.

GLORY AND PLOD

OMV says it wants to turn Petrom into a regional power in the field, but it has to be branded as OMV. ?OMV is a popular and well-positioned brand. It is synonymous with the idea of quality and comfort?, Gerhard Roiss, the deputy president of OMV, explains. Roiss stopped explaining when he should have said the reason for which Petrom cannot be the brand synonymous to the values invoked in the region. These are the terms of the situations, which is characterized by Ruttenstorfer, the OMV president, as a ?winning-wining one for the mother-company and for its subsidiary?.

THE FORCE OF THE RESOURCES

In the first nine months of last year, Petrom produced 3.973 million tons of crude oil (including gasoline) and 4.63 billion cubic meters of natural gas. ?The amount of the sales decreased by 6% for crude oil and by 12% for gasoline, while the sales for natural gas increased by approximately 3% because of the sales from the silos which reached approximately 385 million cubic meters?, the company report says. Through Petrom, OMV is one of the two owners of the Romanian natural gas, together with Romgaz. Each of them holds approximately 48% of the Romanian production. Therefore, Petrom responded to the Ministry of Economy and Commerce that requested them to supplement the production by pumping 6.4 million cubic meters per day, which includes the closing of the Doljchim plant, says a public statement of the company. The Romanian state cashes 3.5 to 13.5% of the market value of the products extracted by Petrom in the form of royalty fees.

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US-based company Emerson Electric bought an 11.5-hectare plot last week in the Cluj Tetarom industrial park for some EUR 230,000, the City Council announced. Emerson plans to set up production facilities and a research center in Cluj, part of a project valued at EUR 75 million.

Henkel Bautechnik Romania foresees a 20 percent year-on-year turnover increase this year over 2005, Marius Ivan, general manager of Henkel?s local branch, said last week. ?The adhesive market is growing a lot faster than the construction market, by 20 percent a year. In Romania adhesive usage is greater than in other Western countries, as the base on which adhesives are applied is not flat,? he said.

Kia Rom Auto, the importer of Korean brand KIA on the domestic market, last year sold almost 1,200 cars, 20% above estimates. "We had about eight-nine months at our disposal last year, since we started properly operating in March," says Ionut Gheorghe, the company's communications manager.

The voluntary dissolution or the liquidation of BCR is banned for three years after the bank's takeover by Erste Bank, without the AVAS and BNR approval, under the clauses in the privatization contract, posted on the AVAS website.Erste Bank has the obligation to maintain the bank's logo and name for three years.

The listing or the public offer of BCR shares will be initiated by Erste Bank within 36 months after the date of the finalisation of the privatization contract, on condition that Erste's stake does not decrease below 50% plus one share, during the listing or as result of this operation. By the contract signed with AVAS, Erste Bank guarantees that its funds do not come from illicit activities, in line with Law 656/2002 so as not to harm the BCR image.

The Austrian Erste Bank became in December 2005 the new majority shareholder of BCR, after it bought 61.8825 percent of the latter's shares, for 7.65 euros per share. The total price for the 490,399,321 BCR shares is 3,751,554,805 euros.According to the deal, Erste Bank takes over the 36.8825 percent stake held by the Romanian state and the 25 percent stake held by EBRD and IFC. Erste Bank President, Andreas Treichl, and Romanian Public Finance Minister, Sebastian Vladescu signed the BCR privatization contract on December 21, 2005.

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At a ceremony held on Wednesday night at Marriott Hotel , Coface and Finnmedia awarded prizes to safe companies. Among them there were Metro Cash and Carry, Romtelecom, Energomontaj, ALRO Slatina, Comnord, Avi Top, Bau Profil. Dan Pazara, on behalf of Romtelecom pointed out the progress of the company, which was bankrupt three years ago and got better under American management. The commercial manager of Metro Cash and Carry said that in Romania his company had a business figure of 1 billion euros last year and had over 6000 employees. Cristian Ionescu, Managing Director of Coface Romania explained that the top had been made based on the official economic-financial balance sheet registered in December 2004. On 31.12 2004 there were 429,363 active firms of which 125,077 had debts to the state budget, 166,208 had losses and 44,799 had both debts and losses.

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Romania will have an economic growth of 4.4%, an inflation rate of 7.1%, according to a Coface study. According to the French group, an economic growth of 4.6% an inflation of 8.8% and an unemployment rate of 6.5%were registered. Romania?s commercial balance will be in 2006 on the rise of 12.4 billion euros, the foreign debt will be 42.4% of GDP (estimates were 37.6% of GDP in 2004).

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The Czech based energy group CEZ will submit an offer for taking over the Romanian distributor Electrica Muntenia Sud until the deadline of January 31, according to Vladimir Schmalz, M&A manager, ACT Media news agency reports.

After having lost several tenders, CEZ intends to offer the best price and the most favourable terms, the Czech official underlining the change in the previous strategy which was not providing for the disbursement of high amounts on acquisition contracts.

Last year, CEZ took over 51 percent of Electrica Oltenia following a transaction worth 151 million euros.

With a budget of 3 billion euros, CEZ Group intends to grow in order to compete with the rival companies in Western Europe, being already the second important energy exporter on the continent.

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Romania's poultry farmers are urging the government to impose higher taxes on fowl imports or risk the industry collapsing as bird flu scares off consumers.

The Romanian Union of Fowl Breeders, which represents the east European country's 78 producers of meat such as chicken, turkey and duck, wants customs levies on imports to be increased to 70 percent from 45 percent for six months, Ilie Van, the head of the union, said at a press conference in Bucharest.

``Imports, which rose sixfold since 2000, coupled with the bird flu outbreaks threaten to make this industry go bankrupt in Romania,'' Van said today. ``Our sales have plunged.''

Romanian poultry sales slumped 40 percent in the two months after the first avian influenza outbreak was reported in the country's River Danube delta area in October. Authorities have since confirmed the virus found in domestic fowl in more than a dozen locations was the H5N1 strain capable of infecting humans, leading to the slaughter of tens of thousands of birds.

Poultry meat and egg producers piled losses of 123.5 million lei ($42 million) in two months due to lower consumption triggered by bird flu outbreaks, Van said. Production fell by 3,800 metric tons, or about 20 percent, Van said.

Romanians are required to meet all EU sanitary, feeding and packaging standards as the country prepares to join the group next year. They cannot compete with imports from countries where EU standards aren't required, Van said.

Imports amounted to 42 percent of total poultry meat consumption in Romania, according to data supplied by the fowl growers union. Of that total, 92,000 tons are imports from the U.S, and another more than 40,000 tons come from Brazil.

Non locally-produced poultry undercuts Romanian meat by as much as 40 percent, Van said.

Avian influenza has killed at least 83 people out of 152 infected, mostly in Asia. No deaths caused by bird flu were so far reported among humans in Romania.

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A recent mission of the International Atomic Energy Agency concluded that Romania made progress in the field of security of peaceful nuclear activities, protection of employees and environmental protection.
The head of the Commission to Control Nuclear Activities, Vilmos Zsombori, said that the 4, 000 units which use radioactive substances abide by the European regulations and standards.
He explained that the nuclear power plant in Cernavoda which was reopened recently also follows the EU standards.
The representative of the agency in Romania, Gustavo Caruso said that a report will be ready soon and it will be sent to the government.
A team of experts assessed the situation in the country, and according to Caruso, Romania is the only country checked by three teams of international experts in eight years.

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 The second nuclear reactor at the Cernavoda electric plant, in eastern Romania, will start operating in 2007. The managing company invested in 2005 over 255 million euros in the reactor, and works reached 86% completion. By April construction work will end and complex, integrated tests will start. So far, some 50% of its systems are ready for independent tests.

The Romanian National Company Nuclearelectrica sSNNt got help from major companies in Canada, Italy, the United States, and France. "The joint team is made of experts from the Atomic Energy of Canada Ltd. (AECL-Canada), Ansaldo Nucleare (Italy), and our own SNN," said Teodor Chirica, general manager of SNN.

When the second reactor at the nuclear plant in Cernavoda will start producing electricity, in 2007, Romania will have 18% of its electrical energy supplied from this source.
This will proportionally reduce the country?s dependency on imported sources of energy and the pollution resulted from the combustion of classical fuels.

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Amec NNC, the subsidiary company of AMEC Nuclear Holdings Ltd, has acquired 50.2 per cent of the Romanian nuclear company Stevenson & Associates SRL (S&A ?Ro).

The acquisition of the majority shareholding in the company, which has 10 employees and was established in Bucharest in 1993, further strengthens Amec NNC?s position within the Romanian nuclear industry.

The company provides project management services and specialist civil and mechanical engineering expertise primarily for the Cernavoda Unit 1 and Unit 2 CANDU ? 6 type nuclear power stations in the south east of Romania and in addition to providing the full range of services to the Romanian nuclear industry, they have completed projects for Slovakia, Hungary, China, the Netherlands, Belgium and the USA.

S&A - Ro has also recently won contracts to support the new Pebble-Bed modular design reactor currently under design in South Africa and for a seismic safety assessment for the Goesgen nuclear power station in Switzerland.

The Romanian government is continuing its policy of supporting nuclear industry as part of the sustainable development of the country.

Five identical 700MWe CANDU-6 units, designed by Atomic Energy of Canada (AECL) were originally planned at the Cernavoda site during the 1980s but work was slow.

In 1991 the programme was reviewed and, following recommendations from the International Atomic Energy Agency (IAEA), the project for Unit 1 was completed with commercial operation starting on December 1996. Commissioning of Unit 2 is well underway, with full operation currently scheduled for 2007. Technical and financial feasibility studies for the completion of Units 3 and 4 are now underway.

Amec NNC has been working in Eastern Europe since the early 1990?s and currently manages both an EBRD Decommissioning Project Management Unit and TACIS On-Site Assistance projects.

Amec employs 45, 000 people in more than 40 countries, generating annual revenues of around £5 billion.

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Finance minister Sebastian Vladescu announced that he head analysed granting large subsidies to the state company Termoelectrica as well as to other state companies in the mining and transport fields. The support coming from the state budget will mean clearing some debts ? one of the most criticized forms of state aid. Minister Vladescu hinted that state aid was absolutely necessary for Termoelectrica to remain in operation. ?If we want this company to exist, the historic debt has to disappear,? the minister said. Sebastian Vladescu says the debt clearance does not mean returning to the system of masked subsidies, which hindered reform in infrastructure in the 1990s. He did not say which would be the difference between the measures announced now and the ones used ten years ago. The government has already adopted similar measures for all mining companies. We are talking about 70 million euros for 12 companies. The National Coal Company gets about 110 million lei and the National Lignite Company of Targu Jiu gets 73 millions.The economy ministry says the government has already received the approval of the Competition Council as the clearing of debts is made by compensation because the state was in debt for subsidies in 2005.It is still not clear what subsidies were not paid as long as companies with losses should not have received any money from the budget last year.

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Romania promotes the development of the nuclear energy sector and the activities in the cycle of nuclear fuel for peaceful applications, as well as the observance of legal provisions and regulations in the domain of nuclear waste, the chairman of the National Commission for the Control of Nuclear Activity Vilmos Zsombori informed. ? The national and international context, where Romanian nuclear energy industry is developing is , at present, completely different from what existed in 1992-1996. In April 2006, it will be ten years since the first criticality of the reaction in Unit 1 of CN Cernavoda (U1) and in December 2006 it will be ten years since the CNPP Cernavoda was declared in commercial operation. At the moment of the first criticality of U1 in April 1996, the Convention for Nuclear Security was not in effect. In April 2005, Romania has already presented, at the headquarters of the International Atomic Agency in Vienna the third revision of the national report for the Convention. The integration process to the European Union imposed the speeding up of finding solutions to the accession requirements relevant to the nuclear sector, Chapter 14 ? Energy and Chapter 22 ? Environment Protection. In this process, Romania has gained important experience, which led to the necessary solution to all requirements on the part of European experts, regarding nuclear safety, radioprotection, radioactive waste management and nuclear guarantees? CNCAN chairman stated.

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The Minister of Economy and Trade Codrut Seres together with representatives of transport companies and natural gas distributors in the country have agreed on new measures to ensure the consumption for household users in the context of low temperatures, MEC informs. The measures include the reduction of the natural gas quantitites delivered to a series of industrial users and their delivery to household users, the reduction of the quantity of natural gas to CET Palas Constanta, Iernut Mures and Electrocentrale Galati, the meeting with Petrom representatives and industrial users supplied by Petrom together with Distrigaz Sud in order to agree on a reduction on deliveries to industrial users. These measures are meant to supplement the quantities delivered to household users as consumption went up during the cold period. Moreover, the minister of Economy and Trade announced that he had required the representatives of Wintershal, Gazexport and the Ministry of Economy in the Russian Federation to observe the deal regarding the quantity of import natural gas, as Isaccea reports a decrease in the delivered quantities. In this context, Distrigaz Nord announced reduction of the natural gas quatities delivered to a part of the industrial users and Distrigaz Sud announced a reduction of 30 percent to the natural gas delivered to industrial users. The System operator keeps under control the way in which natural gas is delivered and in collaboration with MEC will take the necessary measures to overcome the cold period in complete safety.

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Official data show that Romania will import almost 70 percent of the energy resources for 2010 ? 2012, as compared to almost 40 percent at present, a press release of the AOAR ( Association of Businesspeople in Romania) reports. The AOAR representatives state that the turning ?off or stand-by functioning of important industrial producers will affect the business environment and will lead to important losses for the state budget.Thus, political, military and economic evolutions at a global level have led to spectacular growth in the oil and natural gas price, beyond the reality of fossil fuel exhaustion. Moreover, AOAR mentions that energy resources imports for the first 10 months of 2005 cost Romania almost four billion euros, while the trade deficit is worth 7.5 billion euros. The association?s representatives list the assets Romania has as compared to the majority of European countries: oil production and stocks, natural gas production and stocks, energetic coal production and resources, hydro-power sources and potential to be valued, nuclear energy, agricultural potential as basis for the production of bio-diesel, solar energy not used. When the Romanian economy, now at the end of the restructuring process, needs less than 50 percent of energy resources used at the end of 1989, AOAR points to the necessity to establish a national strategy to ensure the reduction of Romania?s dependence of energy resources import.

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According to the Ministry of Public Finance, Romanian Government's main receipts collected in 2005 amount to 81.35 billion RON (22.5 million euros), that is an increase of 14.5 percent over 2004.

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The economic increase of Romania will be 4.5% in 2006, lower than the estimations made by authorities, who forecasted a GDP growth of 6%, according to the latest report regarding world economy issued by the United Nations Organisation (UN).


Regarding inflation, it is estimated at a level of 7%, up 2% from the target set by the authorities in Bucharest.

The inflation target planed by the National Bank this year is 5%, +/- 1%.

However, UN experts think that Romania will benefit, alongside Bulgaria and Croatia, from important flow of foreign capital, on the background of the increase of investors? and consumers? trust in the business environment.

Moreover, these countries will benefit from investments to extend and restructure production capacities oriented towards exportation.

Based on the report, the economic increase in the South-Eastern Europe continued to be rather high in 2005, following a very good evolution in 2004, reaching 6%.

The advancement in the region was supported especially by the evolution of the GDP in the three countries candidates for joining the European Union, namely Bulgaria, Croatia and Romania.

For 2006, the report estimates a slight slowing down of the increase, up to 5.9%.

The United Nations Organisation expects the global economy to register an increase of over 3% in 2006 and asks the world leaders to eliminate imbalances, such as the commercial deficit of the United States of America.

The advance predicted by UN is below the advance estimated by other public or private institutions, representing an appeal for a synchronised effort from the world leaders.

According to the report, the increase of world economy will be this year similar to the one reported in 2005, which is also to include the results of the year?s Q 4.

The Organisation considers that the economic activities will continue the decline as compared to the historic level of 4 per cent reached in 2004.

Several banks estimate for the current year an economic increase of 3.5-4 per cent, although they warned that the advancement is hard to anticipate.

According to the estimations made by the International Monetary Fund (IMF), the world economy will increase 4.3% this year, yet the institution issued both for 2005 and 2004 estimations higher 1% as compared to the United Nations? estimations.

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Petrom has taken over all OMV gas stations in Romania, Bulgaria, Serbia and Montenegro, following a transaction worth EUR 234.4m. The company will get 178 OMV gas stations and will hold 99.9 percent of OMV Romania Mineraloel, OMV Bulgarien and OMV Jugoslavija.

The widest franchised network in Romania (450 stores) estimates that it will make 26 million euros in turnover this year, an increase of 50% on 2005. The pastry company Fornetti Romania, which owns a factory in Timisoara, intends to expand its franchised store network by 250 locations this year, to a total of 700 shops throughout the entire country.

The Cristim group, one of the top domestic charcuterie producers, plans to double its store network this year, by opening at least 7 new locations both in and outside Bucharest, with the hope of attaining turnover of 200 million euros.

The French-held company Union Investitii will invest 40 million euros in a mall in Galati. This will be the Euromall network's second commercial complex, after the one under construction in Pitesti.

The European economic growth rate was upheld by the results obtained by the countries members of the former Soviet bloc, show a U.N. report.

The United Nations estimate that Romania's economic growth rate could be 4.5 percent, lower than the government's predicted figure of six percent.
U.N. experts consider that investors' growing trust in the Romanian business environment will boost the foreign capital inflow into Romania, as well as into Bulgaria and Croatia. Moreover, the country could benefit from investments to expand and restructure production facilities, whose output is directed to international markets.
Romania will record a 4.4% economic growth rate this year, estimates the French rating agency Coface, while the inflation rate s expected to reach 7,1%.
The growth rate of the Romanian economy was 3.7 percent in 2005, well below the 5.5 percent estimates of the authorities, according to a report by Bank Austria Creditanstalt (BA-CA). In 2004 Romania's economy grew by 8.3 percent, mainly because of the accelerated investment rate and the excellent results in agriculture.
Initially the authorities had set the target growth rate for 2005 at six percent but later this was revised downwards to 5.7 percent eventually reaching 5.5 percent as the floods in the summer of 2005 caused great losses. 
According to the most recent information published by the National Statistics Institute (INS), the growth rate after nine months slowed to 3.6 percent, compared to 4.9 percent at the end of the first quarter.
State minister Gheorghe Pogea stated recently that economic advance was 4.2-4.5 percent last year, while vice governor of the National Bank of Romania, Cristian Popa, estimated a 4.5-5 percent growth rate.
The BA-CA report forecasts a rise in the consumer price index of seven percent for 2006, similar to that expected by the U.N., compared to nine percent in 2005. The Romanian authorities anticipate an inflation rate of five percent in 2006.
The economic growth rate in the South East Europe was high throughout 2005, mostly due to the performance of the three European Union candidates - Romania, Croatia and Bulgaria. The estimate for last year is six percent, while the U.N. expect a 5.9% growth rate for the current year in the region.

World economy could rise three percent

The U.N has called on world leaders to eliminate imbalances, such as the United States trade deficit, to ensure global growth of three percent. The forecast is based on the estimates of a number of public and private bodies.
The growth rate will be similar to that recorded last year, but it will have a descending trend compared with the historic level attained last year, when the economic growth rate was four percent of world Gross Domestic Product.
The International Monetary Fund expects the world's economy to increase by 4.3 percent, while several commercial banks anticipate a 3.5-4% rate.
Emerging markets should record a 5.6 percent growth rate, while transition economies, especially those of the former Soviet bloc, will grow by 5.9%. The United States economy should advance by 3.1 percent, Japan's by two percent, while the European growth rate is estimated at 2.1 percent.
"The pressures fueled by the expansion of the U.S. current account deficit and the surpluses present in other sectors cannot be dealt with by unilateral measures at a country level," advises the U.N. report. Moreover, the adjustment of exchange rates would not have a positive effect, the document adds, emphasizing the need for coordinated measures.
However, Jim O'Sullivan, chief economist at UBS, stated that the Federal Reserve of the United States does not consider the imbalances as a major issue, therefore it will not adopt direct measures to fight against it. The Federal Reserve could resolve the problem by indirect measures, designed to slow down the pace of the economic growth rate, which would also reduce imports, according to O'Sullivan.

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Spanish investments on the Romanian market are becoming increasingly significant, Bursa writes, mentioning that Spanish companies have made bids for major projects in the Romanian capital.
The Spanish ambassador in Bucharest, Pablo Garcia Berdoy Y Cerezo announced yesterday in a press conference organized by Media On that the Spanish government is interested in investing in Bucharest's urban development. Consequently, the Spanish authorities are financing a number of feasibility studies for improvements to the transportation infrastructure, street renovations, repairs to the gas network, improvement of street signs, the processing of waste water as well as other investments.    
Rosa Sanchez-Yebra  Alonso, the economic and commercial counselor at the Spanish embassy said the Spanish government will also finance the preliminary study on the elaboration of the master plan which the Ministry of Transportation, Constructions and Tourism will present to the European Commission with a view to negotiations on structural and cohesion funds. He said the Spanish side has agreed projects with the ministry of Transportations, Construction and Tourism and the Environment Ministry worth 60 million and 30 million euros respectively.  Mrs. Sanchez added that in the last year and a half, the Spanish government has signed cooperation projects with the Romanian authorities in various sectors, amounting to around 1.5 billion euros. In his turn, Gheorghe Udriste, the manager of the Transportation and Traffic Safety Department in the Bucharest City Hall, underlined that a series of Spanish companies have shown interest in participating in several important tenders. Included in these is the tender for the construction of the Bucharest overpass, for which over 20 companies have entered bids already (including Spanish consortiums), as well as that for the selection of a company to organize traffic management in Bucharest. Udriste said that the city hall has obtained a grant of 300,000 euros for the repair of 1,800 streets in the capital from the Spanish government.

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Hotel development is in full swing, with investments of more than one hundred million Euro being announced last week by three different groups.
Hotel Bucuresti will be modernized, after receiving a syndicated loan of 40 million Euro, Continental hotels will invest 65 million Euro in upgrading some of its operations and expanding its chain, while the Lebada complex, located outside the capital will be refurbished with an investment of 15 million Euro (see separate story on page 5).
Piraeus Bank Group is the initiator of the ten-year syndicated loan given to Hotel Bucuresti. BBW has learned the loan breakdown is Piraeus Romania (12 million Euro), Raiffeisen Zentralbank Osterreich (12 million), Emporiki Bank (four million), Egnatia Bank (four million), Bancpost (three million), BRD - Groupe Societe Generale (four million) and Volksbank Romania (one million).
The money will be used for the modernization of the Bucuresti Hotel complex. "This is the biggest syndicated loan ever given to a hotel in Romania," Yaron Ashkenazi, general manager of Centre Ville, told BBW.
The money will be used for the completion of modernization works that were launched two years ago. "Everything will be finalized in the first quarter of 2007, according to our estimations," Luc Ronsmans, representative of the hotel's sole administrator, told BBW. "By then, we will invest about 42 - 45 million Euro, while the total amount of money invested since the beginning of the operations will have reached 85 million Euro. We chose this way of financing the work because it is the most economic way from our point of view." He added that by then the hotel will have more than 400 rooms and 300 apartments. "Considering that we have apartments with two or three rooms, we will reach a total of about 1,000 beds," Ronsmans added.
Sofronis Strinopoulos, general manager & CEO Piraeus Bank, told BBW: "It's a transaction that involved a lot of work and cooperation among its members. But, I dare say, it was fun working. We should be proud we are financing a project that has this importance for Bucharest's infrastructure."
Rachel Lavine, president of Elscint, the company that owns the project, said: "This is our first project in Bucharest and also the biggest one in our chain. We've also decided we will build commercial centers here, maybe not in Bucharest."
In turn, the Continental Hotels announced plans to invest a total of 65 million Euro in the next three years in building six new hotels and modernizing five.
"We plan to build a four-star hotel in Sibiu, a two-star hotel in Bucharest, a four-star and a two-star hotel located in one complex in Timisoara and a three-star unit in Brasov. Also a new hotel will be constructed in Cluj-Napoca, ranked at three or four-stars," Radu Enache, president of Continental Hotels told BBW in an exclusive interview.
He said the company's hotel refurbishment program included hotels in Turnu Severin, Suceava, while its Targu Mures facility will probably be turned into an Ibis-brand hotel. "Our Sibiu unit will be turned into an Ibis hotel. The Continental hotel in Bucharest has already undergone renovation and will be upgraded to a five-star facility. My estimate for the entire value of our refurbishment program is of 22-24 million Euro, while the rest will finance construction works," Enache concluded.
In 2006 and 2007, the company expects to spend around 27.6 million Euro on building four new hotels and modernizing one. The figure does not include the cost of land, which has already been purchased.

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Coface France has increased Romania's country rating to A4, which will facilitate its access to the international capital market and improve the local companies' position compared with international partners. "It should lead to a development of trade relations especially with the member states of the European Union and boost the credibility of the business environment," said Coface Romania general manager, Cristian Ionescu. The rating is a risk indicator of the average payment behavior of the Romanian companies. The previous rating, B, showed an unstable economic and political environment, capable of further affecting a low payment history. The A4 rating shows that the country has an average payment history, which could deteriorate if the economic and political environments decay.
"Romania's rating has a positive trend compared with its neighbors and maintains a steady regional rating for Central Europe by compensating the negative evolution of Hungary," said Ionescu, adding that the latter's recoil lead to an overall decrease of the regional rating.
The analysis carried out by Coface International shows that the imminent accession to the European Union, the significant internal market, qualified labor force with a rather low cost, a reasonable external and public debt, high foreign direct investments' level and a high foreign currency reserve are Romania's strong points, which justify the rating. However, the rating agency believes that the deficiencies of the fiscal, monetary and wage policies, as well as significant macro-economic unbalances are the weak points. Moreover, the economic growth, the trust of the financial markets and the EU accession are conditioned by the continuation of reforms.
The Coface analysts consider that Romania still has some catching up to do; mainly concerning strengthening its civil services capacity and anti-corruption fight, and failure could trigger a one year delay of EU accession. Furthermore, the dissensions within the governing coalition affect the progress of the reform.
The Coface methodology stipulates that the country rating is based on seven types of indicators: the country's development vulnerability, political and institutional instability, frailty of the banking system, external liquidities, external debts, economic vulnerability to foreign capital and payment behavior of companies.
Coface has previously improved Romania's rating from B to B positive, last April, based on approval of EU accession and a stable economy.
Financial assessment agency Standard and Poor's improved Romania's rating by one grade last year, to BBB Minus, signaling a move towards low-risk category for credit.
The Japan Credit Rating (JCR) agency has also improved Romania's rating for long term foreign currency loans to "BBB minus", a low investment risk with stable perspective and to "BBB for local currency debts, according to a press release from the agency. The rating improvement reflects Romania's likely European Union accession in 2007, following the signature of the Accession Treaty on April 25, 2005, representing a guarantee of the continuation of reforms imposed by the EU, according to the company's representatives.
Currently, Romania is rated by Moody with "Ba1", just one step down from the investment grade rating. "The perspective is positive due to a number of advantages on both a micro and macro economic level, mostly because of its membership in an efficient and healthy economic region," said Moody's analyst Pierre Cailleteau.

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More than $500,000 awarded to cut emissions, help meet EU standards

Washington -- The U.S. Trade and Development Agency (USTDA) has awarded two grants to Romania, worth nearly $574,000, to help modernize the country?s power industry and meet European standards, the USTDA announced January 24.

The agency awarded a $271,054 grant to the SC Termoelectrica SA, the largest power-generation enterprise in Romania, to strengthen its environmental monitoring and control capabilities, USTDA said in news release.

The grant ?will help Termoelectrica to prepare for Romania?s accession to the European Union (EU) by funding a feasibility study to determine the best method for upgrading emissions monitoring and control systems at 21 of the company?s largest power plants,? the news release said.

As a condition of its proposed admission to the EU, Romania has agreed to limit the pollutant levels from its major industrial facilities. This, in turn, opens commercial opportunities for U.S. firms with expertise in emissions monitoring and control, the agency said.

The agency also awarded $302,940 to the city of Iasi in northeastern Romania to help increase the efficiency and reliability of municipal heat-and-power facilities while lowering overall costs and emissions.

The grant will fund a study analyzing the proposed conversion of a portion of the city?s Combined Heat and Power Plant 1 (CET 1) to a gas-turbine facility.  CET 1 is one of two plants that provide heat and hot water to Iasi.  The city recently completed the conversion of another plant from lignite to low-sulfur bituminous coal firing. The city also has secured European financing for modernizing its heat-distribution system.

The U.S. Trade and Development Agency funds various forms of technical assistance, feasibility studies, training, orientation visits and business workshops in developing and transition economies to promote development of a modern infrastructure and a fair and open trading environment.

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Romania over the past year was one of the world?s most improved economies on the 2006 Index of Economic Freedom released in January by the Heritage Foundation and the Wall Street Journal. (See related story.)

News releases for the Termoelectrica and the Iasi grants are posted on the USTDA Web site.

Alro privatization comes under more scrutiny as the government?s control body informed the Authority for State Assets Resolution (AVAS) that the main shareholder of Alro aluminium producer, Marco International, failed to meet the contractual obligations, as per the privatization contract signed back in 2001.


The new owner should have operated a portfolio investment of $16.6 Mn into another aluminium producer under the contract.

Alro purchased the majority stake in the other country?s aluminium producer Alprom for $4.2 Mn and funded environment-related investments of $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.

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The revenues of Radio-communications - Radiocom Co. rose 43 percent in 2005 vs. 2004, with broadcasting services revenues having jumped 61 percent in 2005 on 2004, said the company's President, Mircea Cazan, ACT Media news agency reports.


For 2005, it is estimated that Radiocom Co. will post some 69 million euros in turnover and 6.1 million euros in gross profit," said Cazan.

He expects the company's revenues to rise some 10 percent, at least, in 2006.

Last year, Radiocom Co. made 37.2 million euros worth of investment, most of which, 31.16 percent, in broadcasting, while 4.41 million euros went to the telecommunications and the remaining 1.59 million euros to the infrastructure, design, etc.

Radiocom Co. is one of the main radio-communications suppliers in Romania, fully owned by the Romanian state, providing transmission support for fixed telephony, mobile telephony, cable TV and for data transmission via the Internet.

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Parliament yesterday voted in favour of the ratification of the accession treaty between the European Union and the Republic of Bulgaria and Romania which are due to join the EU in January 2007.

?If the EU accepts Romania and Bulgaria as members, we will be working for a more united and integrated Europe,? said Foreign Affairs Minister Michael Frendo.

?It is extremely important that the criteria and standards needed to become EU members are not lowered to increase the number of EU member states.?

Dr Frendo pointed out that while new members are extremely important, it is equally important that they conform to the values needed to acquire membership.

?Membership cannot be closed off to others if we want peace in Europe,? said Dr Frendo.

?The European perspective is very important to peace and stability in many countries and it will be a huge political mistake for the EU to close its doors.?

Nationalist MP Michael Asciak pointed out that the Copenhagen guidelines had to be met by all the candidate countries to qualify for EU membership.

?The possibility of joining the EU helped Bulgaria and Romania improve their political and economic system.

?Although there is still a lot of work to be done, I think these two countries will be ready for membership in January 2007,? said Dr Asciak.

He added that their accession will be an interesting prelude to the possible accession of Turkey.

?Turkey will be a test case and it will be very positive if it manages to adopt the Copenhagen criteria and eventually be accepted in the EU,? he said.

Dr Asciak mentioned recent EU polls which showed that the Maltese are gaining confidence in the EU.

?They realise that the membership is a win-win situation in the long-term. To reach long-term gain the Maltese are accepting short-term pain.?

Labour spokesperson for European Affairs George Vella agreed with Dr Frendo and said ?the prospect of EU membership for Bulgaria and Romania has brought peace and stability not only to their countries but also to their neighbours?.

?We need to work together and put the past behind us,? he said. ?Countries such as Romania and Bulgaria are developing at an alarming rate and we are losing precious time bickering between us. The main debate should be assessing Malta?s situation and how it can be improved,? added Dr Vella.

?We have to compare ourselves with other member countries and compete for their tourists, investment and industry. We have to fight for what we want ? it will not fall in our lap,? he said.

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Porsche Romania plans to spend up to EUR 15 million on opening nine or ten new auto centers, following its investment last year. Currently the firm has 18 facilities, including a showroom and a service center.

Oil and gas producer Petrom will build its new centralized office in Straulesti, on a 200,000-sqm brown site, the company announced last week. The Petrom City complex will have 46,000 sqm of office space and an additional 30,000 sqm underground. Construction is expected to start this year. The construction firm has not yet been chosen, company officials announced.

Israeli company Elbit Medical Imaging is planning to develop a chain of commercial spaces under the Plaza Center brand nationwide, said the president of Plaza Centers, Rachel Levine, last week. The company has been on the local market for five years through another firm within the Israeli group, Elcint, the majority shareholder in the Bucharest hotel.

Avon Cosmetics Romania, the domestic branch of the US cosmetics giant, concluded the 2005 fiscal year with 128 million dollars (106m euros) in turnover, an increase of 18.5% on the previous year.

Connex Vodafone Co. reports an increase of 38 percent of its service revenue in the last quarter of 2005 as against the similar period in 2004, with a number of 600,000 new clients, the company informs. Total number of clients reached 6,131,839, representing a jump of 25 percent last year.On December 31, 2005, subscription service clients accounted for 36 percent of the total number of Connex Vodafone clients, compared to 34 percent in the same period of 2004. Average Revenue Per Unit (ARPU) surged by ten percent, attaining the value of 15.4 dollars, compared to 14 dollars in the same period of 2004. 3G clients number using Connex Vodafone network reached 97,322 on December 31, 2005. Connex Vodafone is a division of Vodafone Group Plc.Vodafone is the biggest mobile communications community in the world, with divisions in 27 countries and Partner Networks in other 27. With a complete range of voice and data mobile telecommunication services Vodafone offers its services to 179.3 million clients worldwide.

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BancPost targets a profit in excess of 20 million euros in 2006 following negative results last year, Ziarul financiar daily reads .Staff restructuring costs that reached the amount of 12.4 million euros mainly led to this unfavourable conclusion of year 2005, BancPost employing at present three thousand people.As for the bank's assets they will attain 2.2-2.3 billion euros at year-end, of which the credit portfolio is estimated at 1.5 billion euros. Main Bancpost shareholder is EFG Eurobank and the four financial investment companies (SIFs) hold part of the stock. Eurobank plans to take over the entire share package and it is less likely to list the bank on the Stock Exchange.BancPost shareholders decided in November last year to increase the share capital by 45.09 million lei, up to 201.85 million lei, through shareholders' cash contribution. SIF Moldova already exercised its subscription rights in the footsteps of the Eurobank and the European Bank for Reconstruction and Development (EBRD). Funds already cashed by the bank allowed it to recommence the hard currency credit activity.Greek group EFG Eurobank recently brought on the Romanian market the real estate division in charge with a project of rendering the real estate spaces held by Bancpost more efficient. As well, EFG will enter the life insurance market with an offer of financial products, banking, brokerage, leasing or mutual funds.

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Danish pump maker Grundfos has opened a sales representation in Romania, eyeing a business turnover of some 10.7 million euros in 2006, said a press release of the company.Grundfos says Romania is a highly interesting market for pumps, particularly for heating, mentioning that Eastern Europe has been one of the most important development areas for Grundfos and the economic and political climate has improved in Romania, where the purchasing power has also advanced. According to the company, the rise in the purchasing power translates in improved living standards and the needs of the population, whereas the forthcoming accession of Romania to the European Union will be a positive factor more.

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The association of ELPAS employees in Craiova (southern Romania) bought the presentation file of Electroputere SA and asked the Authority for State Assets Realization (AVAS) to extend the deadline for filing the takeover bids for the above-mentioned company till February 3, 2006, 12 hours (Bucharest time), reads an AVAS release. During the current privatisation process AVAS has also decided two times to extend the deadline for the same reasons.The 62.8259 percent stake of the SC Electroputere SA shares was put up for privatisation on November 21, 2005. Electroputere is a big company with a total share capital amounting to 12,416,795.4 new lei (1 euro trades at 3.6 new lei). According to the tender announcement, the structure of the shareholders and the stake put up for sale by AVAS will be finalized depending on the change of the share capital of SC Electroputere SA. Under these circumstances AVAS will sell the entire stake SC Electroputere SA will hold when the contract for selling and buying shares is signed.

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The Portuguese bank Millennium Banco Comercial Portuguese (BCP) examines the option of entering the Romanian market by establishing a new bank, according to a statement made by the bank?s CEO, Paulo Teixeira Pinto, cited by Jornal de Negocios. The Portuguese from Millennium participated in the privatisation competition for Romanian Commercial Bank (BCR) and lost in favour of the Austrians from Erste Bank. The Austrian credit institution paid 3.75 billion euros for 61.88 per cent of BCR stock. The intention to enter the Romanian bank of the Portuguese from BCP is not something new considering that the Portuguese have informed, shortly after the announcement on the BCR competition winner was made, that they intended to enter the Romanian banking system. While in Warsaw for presenting the official data of Millennium branch in Poland, Teixeira Pinto did not exclude the option of entering the Romanian market, showing that a final answer is available on January 24, a data when the group?s results for last year will be presented. At the same time, BCP CEO excluded the option for the Portuguese bank to participate in the privatisation of the last state run bank in Romanian - CEC, an option that he definitely regards as ?beyond any discussion?.

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Daewoo Automobile Craiova will have a new owner at the end of the first quarter of the year, Vice-President at Automobile Dacia Renault told on Monday.Stroe said that Ford and Renault-Nissan companies intend to take over the Craiova-based car manufacturer. "The company does not need much investment in order to produce competitive European products," said Stroe.The negotiations between the Ministry of Economy and Trade and the South Korean company Daewoo Motor Co. will be finalised in January. The Ministry of Economy owns 49 percent of Daewoo's shares. The Korean side said it has debts of 300 million euros.The Romanian side wants the car factory to continue production and the jobs to be preserved..

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Romania counted about 4.537 million employees in November 2005, the National Statistics Institute says.Most of them have been working in industry (1.67 million), trade (647,000), the building sector (356,000), agriculture (107,000).The average gross wages stood at round 1,017 RON (about 280 euros) while the net ones amounted to 774 RON (about 213 euros) in November, by 4.3 percent higher than in the previous month. The highest salaries were reported in industry, power supply and shipment (about 1,665 lei, namely round 460 euros).As many as 504,823 jobless, of whom 217,359 women, were registered countrywide last November, most of them in Bucharest (23,849), Iasi (2,085) and Brasov (21,040).

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KBC Bank continues to monitor the Romanian banking market in view of a later acquisition or even of a "greenfield" investment, Belgian bank spokesperson Viviane Huybrecht was quoted as saying by Bursa daily.Belgian bank management appreciates that the Romanian banking market represents a priority in KBC development strategy for the Central and Eastern Europe zone, as well as a natural choice in the bank's expanding process.Belgian officials were keen to underline at the same time that starting a greenfield business project in Romania does not exclude the possibility of a later acquisition and all interesting investment opportunities are examined.The enhanced interest for Romania comes from Belgians' conviction that it could become the most important banking market in Central and Eastern Europe due to a large population, its growth potential, as well as extended commercial relations.

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Eurocopter Company, sources of the Ministry of Economy and Trade told Rompres homologated the SM variant of the helicopter IAR Puma meant for the special forces of the United Arab Emirates on Tuesday. The prototype of this helicopter was finished last year in October and then was sent to the Marignan test centre in France, belonging to Eurocopter Company, with which the Romanian Aircraft Industry (IAR) in Brasov (central Romania) has a very good cooperation for the technical solutions. The test centre offered a homologation programme, which included 60 hours of flight and other tests on the ground.The total value of the contract, which will end in 2008, for the 25 helicopters that are to be delivered to the United Arab Emirates is 89 million dollars. The first helicopters will be delivered to the United Arab Emirates in late March 2006.

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The National Bank of Romania (BNR) will monitor and supervise the local non-banking financial institutions in accordance with a Government emergency decree to be considered this week that will regulate the activity of such institutions.The most important adjustments these companies would have to make relate to their changing legal format to a share company, as most of them are currently limited liabilities, as well as to increasing their share capital to the lei equivalent of at least 200,000 euros.The only companies to be exempted from these regulations would be the mutual funds and pawn companies.

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EFG Eurobank Leasing, a member of the financial Greek group EFG, entered Romania, instrumental being Bancpost and EFG Eurobank Ergasias, ACT Media news agency reports.

"We count in Romania on our main assets, on our regional experience and flexibility in development and in proposing new financial solutions related to a wide range of industrial investment,'' said General Manager of EFG Eurobank Leasing in Romania, Sorin Manolescu.

EFG offers financial leasing products such as financial and operational leasing, leaseback, leasing in the long term, fleet management, for products such as industrial equipment, buildings, means of transport, medical and building equipment, a.s.o.

The financial group EFG operates in Greece, Romania, Bulgaria, Serbia, Poland and Cyprus, and holds in Greece a current portfolio of over one billion euros.

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55,100 new imported cars were hire-purchased in 2005, a figure twice as high as that recorded in the previous year, according to data from the Car Producers and Importers Association (APIA). This evolution follows the trend of the whole Romanian market for new imported cars whose turnover improved by 75.5 percent to 102,043 units.
The share of hire-purchase diminished, however, compared to 2004 from 61 percent to 54 percent, suggesting that Romanians increasingly prefer to pay for their cars in cash or through a bank credit. "Banks adapted their offer to the needs of the market and the most important thing for customers is to be able to benefit from advantageous financial solutions" commented APIA president Brent Valmar.
The best-selling imported brand through hire-purchase was Skoda (8,548), followed by Renault (7,464 units), Volkswagen (6,470), Opel (2,348) and Peugeot (1,695). In the luxury car sector hire-purchase remained the preferred method of acquisition. Brands like Cadillac, Chevrolet, Chrysler, Hummer, Infiniti, Lexus, Lincoln were hire-purchased at a rate of 90 percent.
The market for local and imported new cars increased last year by 48.5 percent, to 215,532 units, despite an 11 percent correction in December, according to sources from the auto market quoting data from APIA. The demand for locally produced vehicles advanced 30.5 percent to 113,489 units while that of foreign cars improved by 75.5 percent to 102,043. Dacia sold 93,084 cars and Daewoo Automobile Craiova sold 20,380 automobiles.

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Galileo International, one of the world leaders in the distribution of tourism products, has entered the Romanian market together with its partner, the software company, RomSym Data.
The GDS system provides an electronic market through which airlines, hotels, rent-a-car companies or the shipping companies can sell their products and services through 50,000 tourism agencies.
Matthew Jones, the regional director of Galileo International, stated that the Romanian market is very important for Galileo especially because of the 12% increase in on-line tourism services sales.

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The Romanian market for automobiles and spare parts reached about 3 - 3.5 billion euros in 2005, some 2 billion of which was contributed by the domestic automobile and spare parts manufacturers, Brent Valmar, Chairman of the Automobile Producers and Importers Association (APIA), ACT Media news agency reports.


Constantin Stroe, vice-president of Dacia carmaker, said that the domestic car market amounted to some 2 billion euros in 2005 and it is expected to rise to about 6 billion euros by 2008. The local car market has thus grown into the second-largest in the region, after Poland and ahead of Hungary, with a rate of 1 car sold for every 100 inhabitants.

Producers' representatives said that because of low production costs, the Romanian market will attract increasingly more suppliers and producers of car spares. "In 2006, the market for Complete, Knocked Down kits for Dacia Logan will stand at about 0.5 billion euros, whereas the exports of Romanian spares suppliers will also reach 0.5 billion euros," said Stroe.

Collecting elements of the Logan model, the CKD kits will be shipped as sets of spares to the manufacturing centres in Moscow (Russia), Casablanca (Morocco) and Envigado (Colombia), and later on to Iran and India. According to data with APIA, sales of new cars increased by over 41 percent in 2005 and the number of cars rose 48.5 percent, reaching an aggregate of 256,000 cars. Carmaker Dacia ranks first with over 93,000 traded units and accounting for 43.2 percent of the total trade, followed by Renault, which last year succeeded in overtaking Daewoo with 21,829 sold units and accounting for some 10 percent of total trade.

With 20,380 sold units, Daewoo ranks third, accounting for 9.5 percent of the total.

Of the total market - cars and vans included - Dacia controls 44 percent.

The market is further dominated by domestic make cars, which scored an increase of about 30 percent. The increase in imported cars is 75 percent. With 93,000 sold units Dacia remains the heaviest traded make. Renault comes in second, marking a significant change by Daewoo's replacement in this position. In 2005, Dacia Logan was the most traded domestic make car, with over 88,000 sold units.

Daewoo Matiz ranked second with 13,000 units, followed by Daewoo Cielo with 6,300 units. In the imported cars category, Renault tops the list, followed by Skoda and Volkswagen.

The best traded import model is Renault Clio, with 12,287 sold cars, followed by Renault Megane, with 8,154 units, and Skoda Octavia, with more than 5,000 units marketed in 2005.

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Shareholders of the three listed banks on Bucharest Stock Exchange (BVB) gained in the first 20 days of the year more money than the holders of an one-year bank deposit, ACT Media news agency reports.


The Romanian Bank for Development (BRD) shares increased by 13.38 percent (from 14.20 RON/share to 16.10 RON/share) since year-start, more precisely from January 3, 2006.

Transilvania Bank shares increased greatly, by 9.16 percent, from 1.31 RON/share to 1.43 RON/share, as well.

Banca Comerciala Carpatica (Carpatica Commercial Bank) shares paid less, they went up to 5.17 percent alone, from 0.58 RON/share to 0.61 RON/share.

Those who deposited money with the three BVB listed banks could draw an annual interest rate of maximum 7%.

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Foreign direct investments (FDI) in Romania in the first 11 months of last year amounted to EUR 4.436 bln, accounting for a 105.6 per cent increase compared to the corresponding period of the previous year, the Romanian Agency for Foreign Investments (ARIS) announced.

Foreign direct investments in the corresponding period of 2004 totalled, according to un-audited data, EUR 2.158 bln.

BNR also released the final revised data, based on the statistic research for 2004. According to the Central Bank, the value of foreign investments in January - November 2004 was EUR 4.749 bln.

The figure - compared to the provisional data for 2005 (EUR 4.436 bln)- indicates a 6.6 per cent drop in foreign investments in the fist 11 months of 2005, but the difference is not relevant, considering that provisional data for 2005 are contrasted with final revised data for 2004.

Centralised Trade Registry data also indicate an increase in the share capital of companies with foreign contribution to capital by 43.6 per cent in the first 11 months of 2005 compared to the corresponding period of 2004 (EUR 2.003 bln, as opposed to EUR 1.395 bln).

Romania?s attractiveness as a destination for foreign investments is also reflected in the number of trade companies with foreign contribution to capital registered in the first 11 months of 2005, namely 10,748 companies, accounting for a 16 per cent rise since the previous year.

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Jonathan Scheele urged Romanians to get more informed about the EU.

The head of the European Commission's Delegation in Bucharest, Jonathan Scheele, yesterday said Romanians' declining confidence in EU institutions is normal.
"The European Union is not a cure-all medicine, it will not eliminate poverty, corruption, drugs or terrorists," Scheele said, adding that it is essential for Romania's expectations about the EU to be optimistic.
Scheele was attending the presentation of a new poll measuring Romanians' trust in the European Union, their level of knowledge about the EU, as well as the institutions they have confidence in.
Scheele said he was glad to announce that Romanians' trust in the EU has declined since last spring. Unrealistic expectations and an ill prepared accession would be the main factors which might lead to great disappointment, Scheele explained.
"I want Romanians to trust EU institutions, but I do not want them to have a blind trust in them," he said, adding that it is very normal for the level of Romanians' confidence in the EU to decrease. This way their attitude after accession will not be extremely negative when they see that they are not getting what they expected.
"The clock in University Square tells us we have 340 days until accession to the EU. We hope that after these 340 days Romania will join the EU," the EU official said.
Although too early to say for sure if Romania will accede, it is not too early to find out how Romanians perceive the European Union and what their expectations are, Scheele added.
The new barometer, EB 64, shows that Romanians continue to be the European nation with the strongest positive social response to the EU. However, their level of trust is steadily declining.
There was a decline in the number who expressed confidence in the EU from 74 percent in autumn 2004, to 68 percent in spring 2005 and then down to 64 percent in autumn 2005.
The most significant loss of confidence in the EU took place in rural areas and among the population with a low level of education.
Thus over less than half a year, in rural areas there was a seven percent decline in the number of those who have confidence in the EU, as against a two percent decline in urban areas.
The high level of confidence in the EU is strongly determined by the population's education pattern, the survey says.
Thus Romanians with a low level of education have relatively little confidence in EU, registering 44 percent.
The study shows that Romanians have limited knowledge, but a high demand for information about the European Union.
The relatively low level of knowledge about the EU is accompanied by a sentiment of badly needing more information about the Union. The number of those who consider that they really need more information on issues related to the EU is 32 percent, a percentage much higher than in new or old member states of the European Union, Sandu explained.
Moreover, the need for additional information is higher among those who have a good knowledge about the EU than among those who do not know much about the Union. Thus 40 percent of the Romanians who gave at least two correct answers to the EU knowledge test say that they need much more information, while only 27 percent of those less informed say that they need more information about the EU's institutions.
Romanians' confidence in domestic institutions has decreased, the poll shows.
The most significant decline was recorded in their confidence in political institutions- government, parliament and political parties.
University teacher Dumitru Sandu, who analyzed the information, said that confidence in the justice system is no longer following the upward trend recorded in the previous period between Autumn 2004 and Spring 2005 showing a fall from 35 percent to 31 percent.
"This comparison with other countries in the EU shows that in Romania the instability of confidence in institutions is much higher. The high variation of confidence is a sign of instability," Sandu said.
Turning to the worries and problems Romanians face, the survey shows that agriculture, higher taxes and growing drug addiction are the three concerns which Romanians express in connection with the process of European accession. Over the past year these concerns have continued to be the most serious and they have slightly increased.
Independently from the process of European integration, Romanians perceive the economic situation, rising prices and unemployment as the main problems of the country.
The survey also shows that Romania belongs to the group of countries with a European-national orientation, as 44% of Romanians say they are equally proud to be Romanians and Europeans. They are joined by another nine percent for whom pride in being Europeans is greater than pride in being Romanians.
The data for the report was collected by survey company TNS CSOP in collaboration with the Gallup organization. The questionnaire was applied to a random sample of 1,000 people between October 13 and 31, 2005.

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American company Smithfield Foods is planning further investment in Romania as pork consumption continues to grow 10 per cent year on year.

Romania's councillor for agriculture, Achim Irimescu believes this move will help meet the growing demand for pork in the country. 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 grow because as wages increase meat consumption does the same.

The world's largest hog producer and pork processor plans to invest RON2.5billion (¤703million) in developing its activities in Romania over the next five years.

Smithfield plans to develop a chain of farms for breeding pigs located in three counties in western Romania; Arad, Timis and Bihor.

The company executive vice-president Richard J.M. Poulson met with Romanian Prime Minister Cakin Popescu Tariceanu earlier this week to discuss the company's investment plans in the country.

The food company has reported that it expects its investments there to reach RON820m by the end of the year. And Polson announced that it will reinvest all the profits obtained there over the next ten 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 RON98m for Comtim and invested RON596m in developing Agrotovis.

The meat processor also has a 50 per cent share in food company Agroalim Distribution.

Smithfield also owns subsidiaries in France, Poland and the United Kingdom and operates joint ventures in Mexico, China and Spain.

The company's annual sales worldwide exceed $11bn, and the company has made 32 acquisitions since 1981.

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Greek bank Piraeus has established a real estate investment fund, Trieris Real Estate Fund, with a capital amounting to EUR 50 M, which would address South-East European markets."Trieris purpose is to attract profits by means of real estate projects with high return rates as well as investments in real estate development", according to a press release issued by Piraeus bank. The Greek bank has been active in the Romanian market since 2000, its total assets being EUR 235 M worth at the end of 2004. Other Greek funds addressing real estate investments as well as general aims, active in Romania, are Danube Fund, SEAF Trans Balkan Fund, with smaller investments, and Global Finance, a larger entity, which, in July 2005, completed, through Global Emerging Property Fund, attracting EUR 125 M to be invested in Romania, Bulgaria and Serbia.

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Many of the mobile phone games Americans and Japanese are running have been produced in Romania.Officials of Gameloft, the main producer of such games say the turnover in this segment stood in 2005 at more than 40 million euros, the double of that in 2004.Gameloft employs 450 people and 99 percent of the production goes abroad, with Americans ranking first among buyers. The increase in the number of clients of mobile phone companies and the diversification in the range of terminals having entertainment options will lead to a rise in productivity, officials in the field say.The number of users is expected to stand at one billion in the segment of mobile phones, many of which have Java support for games.

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The Romanian market for automobiles and spare parts reached about 3 - 3.5 billion euros in 2005, some 2 billion of which was contributed by the domestic automobile and spare parts manufacturers, Brent Valmar, Chairman of the Automobile Producers and Importers Association (APIA) told a press conference on Monday. Constantin Stroe, vice-president of Dacia carmaker, said that the domestic car market amounted to some 2 billion euros in 2005 and it is expected to rise to about 6 billion euros by 2008. The local car market has thus grown into the second-largest in the region, after Poland and ahead of Hungary, with a rate of 1 car sold for every 100 inhabitants. Producers' representatives said that because of low production costs, the Romanian market will attract increasingly more suppliers and producers of car spares.

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Romania's agri-food trade balance deficit in January through November 2005 exceeded 1.18 billion euros, up 16 percent from the similar period of the year before, show data released by the Romanian Ministry of Agriculture, Forestry and Rural Development (MAPDR). Agri-food imports, worth 1.803 billion euros, could not be balanced by Romania's exports of the same products, which are said to be still uncompetitive internationally, although they advanced 16 percent year on year to just 616.8 million euros. According to data with MAPDR, 32.4 percent of Romanian food imports, or 696.7 million euros, were made up of hog meat, tobacco and cigarettes, poultry meat and sugar. Hog meat topped the list of imports, with 167,200 tonnes and a value of 269.3 million euros in the first 11 months of 2005, up from 123,000 tonnes and 158.5 million euros one year before. The rise in hog meat imports is ascribed to a rise in domestic demand for this commodity, as well as to the non-existence of competitive local pig farms that could meet domestic demand.

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Foreign direct investment in Romania, January to November 2005, stood at 4.436 billion euros, up 105.6 percent from the similar period of 2004, reads a release issued on Monday by the Romanian Foreign Investment Agency (ARIS).According to data with the National Bank of Romania (BNR), foreign direct investment January to November 2004 touched 4.749 billion euros. Compared with the 2005 provisional data, this seems to indicate a fall of 6.6 percent in investment in the first eleven months of 2005, but the difference is not relevant as provisional data are compared with the 2004 revised, final figures.The 2005 revised, final figures to be released by BNR in 2006 are expected to tell that foreign direct investment drawn in 2005 in Romania reached a record level, far better than the 2004 figures and even than the most optimistic predictions. According to data with the National Trade Registry Office (ONRC), the share capital of companies running on foreign contributions advanced 43.6 percent in the first eleven months of 2005, from 1.395 billion euros to 2.003 billion euros.

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Alpha Bank Romania will implement a plan of fast organic growth 2006 ? 2008, by opening 120 branches and agencies all over the country, officials in the bank reported. The Bank intends to get a top position on the Romanian market by offering intelligent and flexible products and services through their network and other distribution networks. For 2006 the bank will open 40 new branches, most of them being outside Bucharest. Expension in Romania is the spearhead of the Alpha Bank Group strategy in south-Eastern Europe, where the group intends to play a major role. The development of branches in Serbia, Bulgaria, Albania and FYROM will complete this regional approach, demonstrating the determination regarding expansion on these markets with high potential, according to a press release of the bank.

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Public Finance Ministry has drawn up the draft law regarding the approval of the government's ordinance on the regulation of fiscal-financial measures, reads a release of the Public Finance Ministry.The draft ordinance stipulates the contraction of a foreign loan ensuring financial resources necessary for the partial payment of advance tranches, totally worth 8.142 million euros (the equivalent of contractual sums denominated in dollars) which are to be paid by the Romanian National Air Transport Company (CNTAR) to the company Airbus SAS France for the acquisition of four Airbus A318 planes.

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The Romanian state could pay almost 50 million euors to buy back the Peles, Pelisor and Bran castles from their former owners who are to get into their possession. The estimation belongs to the Minister of Culture Adrian Iorgulescu who made it clear that the Romanian authorities could not fight in court the recovery pleas formulated by the Royal House of Romania and the Habsburg family. The Minister of Culture hopes to persuade the Royal House to accept the acquisition by the state of Peles and Pelisor castles after their recovery, for the sum of 30 million euros.

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The local councils will receive state budget funds for projects meant to link the villages to the county and national roads as well as for water supply, sewerage and cleansing, the Romanian government decided at its Thursday meeting.The executive approved the Programme for the Rural Infrastructure Development by which it assigns one billion new lei (nearly 275 million euros) for 2006-2008 for such projects."The gap between the rural and urban areas is obvious and it should be closed, but without significant financial effort we shall not be able to narrow it. This is the reason why we decided to start this national project based on massive investments," Prime Minister Calin Popescu-Tariceanu said.

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The five large five-star hotels in Bucharest account for an aggregate 95 percent of the Bucharest hotel market, which totals 1,607 rooms, daily Ziarul Financiar reports .The Romanian capital has seven hotels rated five stars, of which Persepolis is temporarily closed and Capsa has a lower accommodation capacity.For years now, JW Marriott (402 rooms) has been the largest player on the market, reporting in 2005 a turnover of 42 million euros. By the number of rooms, Marriott accounts for 25 percent of Bucharest's five-star hotel market. According to the latest information, an independent assessment company has reportedly assessed Marriott at about 150 million euros. On a market less mobile than that of three- or four-star hotels, there is still room for large players, so that international hotel chains are exploring Bucharest in order to build or take over the management of five-star hotels

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The Romanian based CDMA operator, Zapp Mobile has launched a "fixed line" service that offers a conventional landline style handset, while relying on the company's CDMA network for connectivity. The service is available with the Z1110 phone, the first fixed wireless terminal from Zapp. Z1110 has a built-in high-speed modem (153.6 kbps) and can be connected to a computer via a USB cable for Internet access, browsing and data transfers.

Zapp FixTel subscribers who also have a mobile phone from Zapp get a single bill for all Zapp services. Also, depending on their time within the Zapp networks, subscribers benefit from loyalty bonuses. Zapp FixTel is operational immediately after the signing of the contract and involves no installation costs.

Zapp operates a CDMA450 network and its largest investor in Qualcomm. The Mobile World notes that the company had 348,000 subscribers at the end of Q3 last year - representing just under 3% of the market.

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Smithfield will invest $850 million in Romania over the next five years. ?The company intends to develop a pig farm network in three western Romanian districts,? the executive vice-president of Smithfield Foods, Richard JM Poulson, said.

Bechtel Highway could get EUR 500 million of the EUR 2 billion the Romanian government will receive for its 36 percent stake in BCR, state officials announced last week. ?The government is soon going to decide whether the highway will benefit from the BCR funds or not,? said Finance Minister Sebastian Vladescu. ?There is no decision on that yet, but it is a fact that this project will go ahead. The Ministry of Finance must find the necessary financing sources.?

Although the local auto market will slow down this year, Dacia will boost its production to support the external demand.

Romanian production of auto vehicles and subunits could reach six billion euros in 2008, three times more than the level recorded last year.
"The effects of the factors that have sustained last year's increase in the market will diminish," advised the president of the Association of Producers and Importers of Automobiles (APIA), Brent Valmar. The official believes that the market will increase by an average of five to ten percent in 2006, mainly because of improved access to credit. Auto sales rose by approximately 50 percent last year, but analysts expect 2007 to a better year despite the slowdown expected for this year.
Moreover, APIA representatives believe that investments in the subunits industry will record a significant increase, as a series of large producers have invested in the recent past or are about to develop facilities in Romania. "Romania is an El Dorado for component producers in Europe and we expect a significant migration of West European producers," said Constantin Stroe, the vice president of the local carmaker Automobile Dacia.
Dacia's production boom anticipated for this year and the possible re-privatization of Daewoo Automobile Romania should support the development of the auto market over the year. Stroe stated that most production will be directed to external markets. Privatized in 1999 and taken over by French carmaker Renault, Dacia became a success story last year after it launched the Dacia Logan model. Sales of the make skyrocketed, even on the Western European market, where it attracted customers through its accessible price. A full-option Logan, including air-conditioning, ABS, dual air-bags, power steering and windows, can be bought for 8-9,000 euros.

Second-hand imports to be restricted

APIA has announced that one of its main priorities is to prevent the massive import of second-hand vehicles once Romania joins the European Union. According to the association's representatives, the cars would be a burden for the economy and would most likely present a high risk of accidents. "We will identify together with the Romanian Auto Register a series of parameters to select the cars depending on their technical condition and degree of pollution they produce," stated Valmar.
The average age of cars in West European countries is 3.5 years, while in Romania it is 12 years. Another difference between the local market and the European one is the pollution standard. Thus, Western Europe has a Euro V standard, while Romania applies the Euro III norm.

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Considered complicated and incomplete by foreign investors, Romania's legislation issues need to be solved.  Some foreign investors have chosen to postpone investments in the Romanian market, said the president of the Romanian-Swiss Chamber of Commerce and Industry, Adrian Nicolau.
"Any large company that wants to enter the Romanian market is working with important law firms which do not have a good impression after they have seen of market conditions," said Nicolau.
"The laws in Romania are incomplete and complicated and besides that there is a cult for violating the law," advised Nicolau, pointing out that the large companies do not need businesses in a difficult environment. "You cannot ask a company with a turnover of hundreds of million of euros to accept such terms," said Nicolau.
Businesspersons presented a series of proposals that could eliminate the mentioned difficulties yesterday to the National Authority for the Settlement and Monitoring of the Public Acquisitions (ANRMAP).
They believe that the "serious" companies have renounced participation in public tenders held in Romania because of the corruption, the bureaucracy and the exaggerate selection criteria. Instead, many large companies focused their attention on signing contracts in other countries.
"They have had enough of tipping, failing and lack of justice," stated the general secretary of the National Association of the Exporters and Importers (ANEIR), Mihai Ionescu. He requested authorities to modify the legislation for public tenders and acquisitions to stimulate the large companies, whose value represents 21% of the Gross Domestic Product (GDP).
George Sorin Nicolescu, vice-president of the National Association of the Tourism Agencies (ANAT), said that public tenders are won by small companies and the selection criterion is aberrant.
Many businesspersons believe that the financial guarantees requested from companies to participate at the tender represent an impediment that is seriously affecting the Romanian companies. "All these elements have convinced the companies to invest in other countries," added the ANEIR representative.

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The insurance company AIG Romania ended 2005 with a volume of subscribed premiums totaling 21.6 million euros, up 18% comparing with December 2004.
The fire and natural hazards insurance policies had a 77.3% contribution to the company's total revenues. The Insurance Surveillance Commission (CSA) showed that AIG Romania reported subscriptions totaling 17.8 million euros, from life insurance contracts in 2004.  AIG Romania is part of the American International Group. The company began its activity in 1994 and has a nominal capital of 2.3 million euros.

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The National Romanian Union of Employers (UNPR) intends to buy the majority package of CEC Savings Bank and is ready to make an offer in this respect to the Romanian Government, ACT Media news agency reports.

The members of the UNPD steering board made a unanimous decision.

More than 40 participants in the UNPR meeting decided that a price offer be made and an investment plan proposed, including the rehabilitation of all the CEC branches and the system's computerization.

Through successive privatizations made to the benefit of small groups of people, the Romanian capital in economy has become almost non-existent.

UNPR wants domestic capital to be kept in the Romanian banking system, and CEC is the last chance of Romania to do that.

The UNPR members have the financial force and the organizational capacity to support an investment plan comparable with that of any international consortium.

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The balance of payments' current account registered a deficit of 6.023 billion euros in the first 11 months of 2005, gapping 42.3 percent against the similar period of 2004, according to data released by the National Bank of Romania, ACT Media news agency reports.

Romania's foreign debt on the medium and long term increased 29.1 percent against December 2004, totalling 23.617 billion euros. At the end of November, the public and publicly secured foreign debt was 11.278 billion euros, accounting for 47.7 percent of Romania's debt on the medium and long term (compared with 54.9 percent on December 31, 2004).

On November 30, 2005, the publicly non-secured foreign debt was 11.407 billion euros, 45 percent higher than at the end of 2004. Between January - November 2005, the service rate for the foreign debt on the medium and long term was 16.8 percent, compared to 18.4 percent in 2004.

The coverage degree increased from 5.2 months of imports at the end of 2004 to 6.4 months of imports at the end of November 2005.

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Ambient Sibiu, a construction materials distributor, estimates turnover worth 105 million euros for this year, up 35% on 2005. "This year, we will open four commercial centres in Targu-Mures, Baia Mare, Ramnicu-Valcea and Gheorgheni, and these will boost our sales," says Cristina Giurca, the commercial manager of Ambient Sibiu.

Saint-Gobain Glass Romania opened a warehouse for its glass float factory near Calarasi last week, following an investment of EUR 100 million. The 22,800-sqm warehouse, which can store up to 16,000 tonnes of glass, became operational in December last year, with some 8,000 tonnes of glass to arrive at the warehouse by March.

At the end of 2005, Romsys sold their shares in the Electronic Research Institute (ICE), Aferro and Romquartz, according to the company's president Marius Cojocaru. Cristina D'Agostino, Italian citizen, bought the shares with EUR 1.61 million, EUR 1.2 million of which were paid for the ICE shares. She also bought the fourth floor of the Romsys building, fur EUR 187,000. The company used to own 96.55 percent of ICE, 99.97 of Aferro and 77.22 of Romquartz. In 2005, Romsys, owned in 99 percent by Marius Cojocaru, saw some EUR 31.6 million in turnover, a 24 percent increase compared to 2004.

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This year, electronics will build a residential park with 30 houses. The investment is estimated to some EUR 2.5 million. The surface of each house will be of 180-207 sqm, and the prices will range from EUR 69,000 to EUR 98,000. Each house will have a yard, sewage system, electricity, and gas and surveillance system as well. A three floor commercial complex is included in the plans as well, where the park's administration offices will be located.

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Ibis Hotel saw EUR 1.53 million in turnover in 2005 and now they plan to exceed EUR 2.1 million. In 2005, the hotel used 53.5 percent if its capacity, 55 percent of the guests being foreign. The hotel was opened last year and the management does not plan big investments for this year, apart of some small details like opening a terrace and renting part of the beach. Ibis is owned by Continental Hotels and it was built with an investment of EUR 10 million.

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The Romanian government has no intention to write off the historical debts of certain State-owned companies that are operational and can recover their claims; however, the authorities are considering this measure and even the initiation of insolvency procedures for the highly indebted companies, Minister of Public Finance Sebastian Vladescu told a televised broadcast on Tuesday. ?For economic reasons, we have two possibilities that in the end have the same meaning. We intend no tax amnesty in Romania, we have no intention to write off the debts of currently operational companies,? specified the FinMin, who concretely referred to the example of Termoelectrica. Since Termoelectrica?s arrears total 1.2 bn euros, Vladescu said that the company might be declared insolvent so that the State be able to recover at least a part of the debts. ?If we were to correctly enforce the law, Termoelectrica should be closed down and the insolvency procedure should be initiated for the State to collect whatever is possible from the recovered amounts. Termoelectrica?s power plants are currently worth an aggregate of some 100 million euros,? said Vladescu.

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Romania does not need a VAT increase in order to accomplish its budget targets, Minister of Public Finance Sebastian Vladescu told a televised broadcast on Tuesday. ?Contrary to what we have calculated in April-May, when I and my colleagues were advocating a VAT increase, the outcomes registered as regards the attainment of the planned budget revenues and budget spending have proven that this measure is no longer necessary,? said the Minister.Sebastian Vladescu specified that the proposed VAT increase has been one of the reasons of disagreement between the Romanian government and the IMF, contributing to the derailment of the stand-by agreement. ?We considered that we can fulfill our targets without a tax raise and the year-end budget execution has proven we were right and I believe that in 2006 we will further be able to prove that our judgment was correct,? said Vladescu.

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The international company DGE Brussels will complete its financing system for SMSEs by yet another two financial instruments: factoring and forfaiting, the company informs. Factoring is a fast method of releasing the working capital locked in the supplying credit and also provides a low-risk alternative to the standard credit. The financial mechanism of forfaiting is similar to that of factoring, but requires a relation between an exporter and an importer. Since every country has a program for the support of exports, forfaiting can prove a cheap, immediately accessible and advantageous solution. DGE Brussels offers Romanian entrepreneurs complex solutions for debt refinancing, credits for the current activities and access to development-destined funding from European or national sources.

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The Bucharest Municipality has been informed about the publication on Friday in the Official Journal of the European Communities (OJEC) of the call for international tender for the building project of the Basarab overpass, head of the Transport and Traffic Safety Directorate of Bucharest Municipality Gheorghe Udriste reported on Friday. Udriste also said the tae task book for the tender, worth 26 million ROL (1 euro=approx. 36,000 ROL) was made available today for sale, on paper and CD support. The call for tender will also be published with the Romanian Official Journal. Bucharest General Mayor Adriean Videanu unveiled in 2005 a detailed technical drawing for the Basarab overpass, which is to be constructed on funds raised last summer in a Euro-bond issue released on international capital markets. The building of the overpass received an eco-compliance certificate on January 10, 2006. The project was up for public discussions in December2005, when Mayor Videanu voiced readiness to compromise over some divergences regarding the endeavour. The overpass is estimated to take three years to complete.

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The balance of payments' current account registered a deficit of 6.023 billion euros in the first 11 months of 2005, gapping 42.3 percent against the similar period of 2004, the National Bank of Romania reports.

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Lithuanian company Europa Group bought four locations in Bucharest to develop their projects with the investment's value to reach ¤140 million.

If new opportunities come along, it can reach ¤200 million.

Serghei Cicala, executive manager for Romania, announced that they will restore one of their purchases, an old building in the capital's historical center, transforming it into a four-star hotel.

The investment will be of ¤16-18 million.

City Center Residence, a luxury apartments' complex will be built in the Carol Park area.

The construction works already started and the final costs will be of ¤18 million.

The biggest project will be a complex which includes an office building, stores and apartments.

The investments for this project will be ¤80 million.

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OTP Bank Romania announces the launching on Romanian market of a new product, the Savings Account, a savings product targeting individuals.

The new savings account is characterized by progressive interest rates according to the amount deposited. At the same time, the valid period for the savings account is unlimited and it can be done in various currencies, RON, EUR, USD and HUF. The interest rate is calculated on a daily basis and is paid monthly. The savings account can be credited any time through cash deposits or intra/inter-banking transfers. Cash withdrawals from the savings account are allowed without restrictions related to the amount that should be withdrawn or the number of transactions, and without penalties for interest. The transfers from the saving account can be done only to the own current accounts opened with OTP Bank Romania. Automatic reimbursement of the loan instalments can be performed from the savings account.

The advantages of the new OTP Bank Savings Account are, mainly, the superior level of the interest rate compared to the current account and a flexible access to your money, beside an optimal management of the additional income of individuals.

For opening or closing a saving account, OTP Bank Romania doesn?t charge any commission.

For 2006, OTP Bank Romania intends to launch new retail products such as debit and credit cards, refinancing and construction loans.

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Raiffeisen launched on Thursady a completely new type of products on the Romanian market-structured deposits with options on FX rates. They are a combination of a deposit and an embedded derivative. ?It?s time people started thinking about new ways of investing their money?, says Cristian Sporis, executive director in Raiffeisen Treasury Division. These six products ( Diamond Switch, Diamond One Reach, Diamond One Limit, Diamond Double Reach, Diamond Double Limit, Diamond Area) offer investments possibilities with superior yield as compared to classical deposits, but they also present a higher risk. Structured deposits can be made in RON, USD or EUR, with a minimum value of EUR 50,000 ( or its equivalent in RON or USD).

The target clients for these products are natural persons with a high income, who are risk-oriented, mutual funds and insurance companies.

Similar products have been launched by Raiffeisen in other Central and Eastern European countries, with considerable success.

In the near future Raiffeisen intends to launch a new type of structured deposits on the Romanian market: structured deposits with options on the interest rates, announces James Stewart, Vice-President in the Treasury Division.

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Piraeus Bank intermedieted the signing of a EUR 40mln sindicated loan to rehabilitate Bucharest Hotel and Apart Hotel, also in Bucharest. Sindicalization was possible due to a colaboration between several financial institutions: Piraeus Bank Romania ( as agent), Raiffeisen Zentralbank Osterreich AG, Banca Emporiki S.A. din Grecia, Egnatia Bank S.A., Bancpost S.A., BRD Group Societe Generale S.A. and Volsbank Romania S.A.

Also, Piraeus announces growth plans, with EUR 40mln worth of investments in expandinng its network, its IT system, and to develop alternative distribution channels. The bank?s target is to reach an 8% market share in terms of assets in the next 3-4 years. ?We will build new headquarters, we will add 30 units to our network and if we also include invesments concerning the IT system, we are likely to exceed EUR 40mln?, says Sofronis Strinopoulos, general manager Piraeus Bank Romania. To finance these invesments the bank operated two share capital increases last year, together totalling about EUR 27.5mln.

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Shareholders of nine companies that are based in Arad decided to merge under the Arconserv brand, as they would become more efficient and better organized namely the nine companies are: Frigorifer, Arconserv, Edil Invest, Moneasa, Mara Com Mixt, Societatea de Servicii Informatice - Ramses, Gradina Verde, Parc Industrial Nord and International Transport, Bursa reports.

In the beginning, the share capital of Arconserv will be of 2.5 million RON and will be gradually increased up to some 7.9 million RON by new bond issues.

All the assets of the companies that merge will be transferred to Arconserv, thus taking its overall balance to some 140 million RON.

Arconserv will take over and continue the activities of all the companies it absorbed, including cattle breeding, real estate lease, hotel businesses, development of IT solutions and retail activities.

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The Romanian government approved the Rural Infrastructure Development Programme, which stipulates that RON 1 bln will be allotted in 2006-2008 for projects submitted by rural communities.

Under the Programme, local councils can obtain funds from the State Budget for the implementation of projects related to the communal, county and national road networks, to ensuring population access to water supply, sewage and wastewater treatment networks.

The minimum value of one project will be RON 40,000, and the maximum one - RON 4 M.

Prime Minister Tariceanu said that the gap between the rural and urban areas must be reduced and without substantial and sustained financial effort, this cannot be achieved.

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In 2005, the five Financial Investment Companies (SIFs) recorded significant market price appreciations, on the background of discussions regarding the increase of the maximum holding in the share capital from 0.1% to 1%, but also due to the privatization of BCR commercial bank, which was completed at the end of last year.


Thus, the SIFs ended the year with price increases between 101.92% (SIF Transilvania) and 210.34% (SIF Moldova), being among the performers of the Bucharest Stock Exchange.

The companies also recorded important profits, exceeding the budgeted levels by 7.38% in the case of SIF Banat-Crisana, or 38.37% regarding SIF Moldova, which, the same as SIF Oltenia, reoriented its investment policy towards companies listed at the BSE.

Earnings per share were between RON 0.0648 per share for SIF Muntenia and RON 0.0996 per share, registered by SIF Oltenia.

During the first week of this year, the SIFs recorded significant price increases, reaching new all-time highs.

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GECAD ePayment, eCommerce solutions integrator, announces its merger with GECAD Cvantage, international call center and sister-company of GECAD Group. The new company will retain the GECAD ePayment name after merger.

(OPENPRESS) January 21, 2006 -- As a result of this move, the online payment and eCommerce solutions offered by GECAD ePayment will be enhanced by the add-on of round the clock customer support for both online vendors and buyers. Cvantage clients will continue to be fully supported by the merged company.

"This decision was made based on the development strategies of both businesses: ePayment aimed to include call center support in its offer package, while Cvantage was set to target the IT and banking sectors. The synergy between the two teams lead naturally to their merger.? Radu Georgescu, President of the Group, explains.

Carmen Sebe, CEO of Cvantage, will become CEO of the enlarged company and Cristian Badea, CEO of ePayment at the time of the merge, will become CIO of the new enterprise.

Carmen Sebe takes over a company with a strong market position: ?We estimate that ePayment exceeded a 70% share of the Romanian online payment market. Our technical solution is exceptional; the aim now is to offer our clients complete services, with added value, and to consolidate this market share. Expanding on the international market is also a strategic objective. 24 hour customer support is essential for the industry that we work in and the fact that the merger is with a company that has valuable experience in projects which span many countries will undoubtedly contribute to the success of ePayment under the new scheme?, Sebe declared.

GECAD ePayment targets the international market with integrated eCommerce solutions under the Avangate brand, tailored specifically for software producers and including online payments tools as well as consultancy on how to increase sales via the world wide web.

About Avangate:
Avangate is a brand of GECAD ePayment International. Avangate is an effective online software sales solution created for the worldwide market. It addresses mainly software authors and software publishers. Avangate offers a secure system for online payments and services for increasing sales and marketing products over the Internet.

About GECAD Group:
GECAD was founded in 1992. After 12 years of continuous development and after the selling of its antivirus division to Microsoft in 2003, GECAD transformed itself into a high-tech group with accent on innovative technologies and services. GECAD Group currently focuses on several IT domains like mail servers, eCommerce solutions, IT security services. The Group is also financing high-tech businesses and actively developing new software technologies.

For more details, please contact:
GECAD ePayment International
http://www.avangate.com

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Wipro has decided to invest up to $250mn for setting up a near-shoring facility in Romania. The company also has plans to expand to Asia-Pacific (APAC) region, which would be undertaken through its APAC IT arm, Wipro Infotech.

K Kurien, BPO chief, Wipro, said, ?We are setting up a 250-seat call centre at Bucharest, Romania, and intend to offer technical engineering, accounting and financial services. The centre will start by the end of first quarter and will also act as a gateway to Europe, mainly eastern European nations.?

The centre will be set up by Wipro BPO which was formed after the acquisition of Spectramind. Wipro had acquired Spectramind in 2003 for $93mn.

Wipro is also in talks with at least six firms, including Fortune 1000 companies, that would be provided services out of Romania. ?Our smallest customer has posted $2bn in revenues in the previous financial year,? said Kurien.

The company has a presence in Australia and plans to expand to other countries in the region. It is mainly concentrating on Malaysia. The company plans to provide information technology services to Malaysian financial, telecommunication, oil and gas, and automotive industries.

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Construction work on the first border inspection post started at Halmeu (northern Romania) on Thursday.President of the Medical and Veterinary National Authority for Food Safety Ion Agaftei together with county prefect Radu Bud laid the foundation for the first pillar of the future building, which is situated on the border between Romania and Ukraine. The post will be built in two stages: infrastructure and the flow for imports of animals and produce and then the construction of modules mounted on a platform that should allow the access of animals and produce. Eight such posts will be built on the northern and eastern border of Romania, which are necessary for the control of the quality of the produce coming from the neighbouring countries after Romania's accession to the EU. In the next few days they will start work at Albita and Sculeni (eastern Romania) on the border with the Republic of Moldova. The post at Halmeu will cover an area of 4,000 sq m and is made up of two buildings: one for the control of food and offices and another one for the reception of live animals. The work is planned to be finished within 6 months.

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BCR is contemplating resorting to the international capital market to raise a syndicated loan, Ziarul Financiar reports on Thursday. According to BCR Executive Vice-President and CFO Dan Bunea, the loan will be in euros, somewhere in the region of between 221 and 400 million euros. In connection with the destination of the funds raised by BCR, the paper informs that the Anglo-Romanian Bank, a member of the BCR Holding, has recently been the arranger of a loan worth $115 million, the biggest syndicated loan raised in Romania by a private company. BCR contributed $100 million to the loan, with the remaining amount being provided by the Anglo-Romanian Bank. The loan applicant was the Oil Service Group for acquiring six sea oil-drilling platforms.

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Bank employees got top salaries in Romania last year. They earned averagely 2,660 RON (1 euro sells.3.6 RON) a month, the National Statistics Institute says. Air transport staff rank second, with 1,824 RON monthly, followed by people working in the tobacco industry - 1,674 RON, oil - 1,462 RON, insurance and pensions - 1,414 RON, radio and TV broadcasting - 1,296 RON, and electricity - 1,242 RON. Miners earned 1,218 RON a month on average, in 2005, in Romania, natural gas workers - 1,207 RON a month, and postmen 1,193 RON a month.

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Banco Comercial Portugues may launch a bank from scratch in Romania after last month failing to winning the bidding for a majority stake in the country's biggest bank, Banca Comerciala Romana, Paulo Teixeira Pinto, BCP chairman, was quoted by Jornal de Negocios as saying.

Questioned about the possibility, Teixeira Pinto said he did not rule it out and will give a fuller response after the group's full-year results on Jan 24, the business daily reported.

The chairman said, however, that there is no possibility BCP will bid in this month's auction of Romania savings bank CEC. It is 'out of the question', he said.

Teixeira Pinto was speaking at the presentation of full year results from BCP's Polish unit Bank Millennium.

Net profit at 50-pct owned Millennium surged 109 pct to a record 140.7 mln eur last year from 67.3 mln in 2004, BCP announced.

The Polish bank will pay a dividend of 0.14 eur per share, totalling 118.8 mln eur, giving a dividend yield of 10.3 pct, BCP said.

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The privatisation of the House of Savings CEC, one of the Government's major engagements towards the European Union and the IMF, could be postponed for two years, ACT Media news agency reports.

Although seven investors have begun the procedures related to privatisation, the Romanian authorities are hesitant about CEC's privatisation.

Sources with the Ministry of Finance said that the privatisation commission would assemble next week and discuss CEC's strategy for the next two years, without taking into consideration a privatisation.

Minister of Public Finance Sebastian Vladescu, president of the privatisation commission, said he is not satisfied with the privatisation offers and that he is still analysing the best variant for CEC.

He added that January is not anymore the deadline for submitting privatisation offers.

After Erste Bank took over BCR, the banks interested in CEC are National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.

CEC ended last year with 2 million euros in profit and a 4.3 percent market share, said CEC President Eugen Radulescu.

The bank estimates a 10-15 million euro profit this year.

Radulescu said that some offices will be relocated, but the number of 1,400 will remain constant.

He said that up to 1,000 employees could be made redundant this year as part of the restructuring process.

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The Romanian banks begin to correlate the interests with the inflation rate, ACT Media news agency reports.

Banca Romana pentru Dezvoltare (BRD) rose interests with 2 percent, offering now 5 percent interest for deposits or advances to houses or cars.

Alfa Bank offers higher interests (7.25 percent) to yearly deposits, while ING doubled their interests, reaching 5 percent.

Banca Comerciala Romana (BCR) and House of Savings - CEC offer 7.5 percent interests for yearly deposits, the same as Romanian National Bank (BNR).

The banking interests will exceed the inflation out of fear that Romanians will make placements in other instruments.

As BNR estimates that the inflation will not exceed 6 percent, banks try to attract many resources from the population.

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Greek Piraeus Bank announced the creation of an international company, whose main object will be real estate investments in Southeastern Europe, Bulgaria and Romania being prioritized.

The trade name of the company will be Trieris Real Estate Fund.

The share capital of the investment company will amount to EUR 50 M, and will mainly come from investors of the Bank. The funds for investment will be managed by an international subsidiary company of Piraeus Bank Group.

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If Romanian authorities decide to delay the privatization of the Romanian Savings Bank (CEC), in one or two years the CEC could turn out to be less interesting then now, stated James Stewart, vice president of Raiffeisen Bank, in a statement for Bucharest Daily News.
The CEC privatization commission's suggestion to interrupt the privatization process after the completion of the first phase of the tender, does not create a stable environment and investors are being scared off by the inconsistency of the authorities, said the Raiffeisen official. "Now we ask ourselves what comes next," he added.
CEC is interesting now for investors which want to avoid developing their own infrastructure, but if the acquisition of CEC is no longer an option they will focus on other projects and will create their own infrastructure, Stewart argued. Consequently, two years from now, CEC will be a much less interesting objective, with a lower market share than it has at present and the market's conditions will be different, he advised. What does the government intend to do with the so called development of CEC before privatization, asked the representative of the Austrian bank. "Compete with the private banking environment on the market? The state is not known to have been the best option for the administration of a bank," he said.
Asked by Bucharest Daily News if he thought the two-year postponement proposal was actually a subtle hint for bidders to improve their offer, Stewart said the information which had circulated in the press that the highest offers were around 300 million euros was simply not true. In any case, commented the Raiffeisen representative, what did they expect? "Serious players never show their best cards at the first round" said Stewart who refused to provide any hint about the financial offer.

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The Romanian economy registered 4.5-5% growth in 2005 and managed to recover some of the losses produced by the floods which affected agricultural production, said the vice-governor of the National Romanian Bank (BNR), quoted by Reuters.
The growth figure quoted by Popa is higher than the 4.2-4.5% level announced by the state minister Gheorghe Pogea.
The increase in Gross Domestic Product (GDP) was 5.5-5.7%, which was below the bank's estimates.
The main cause of the negative result was the bad weather which affected some infrastructure programs. BNR believes that Romania's economic advance in 2006 will be between 5 and 6%, based on the country's long-term economic potential.
Popa added that basic inflation, excluding administered prices, as well as fuel and food prices, had maintained a descending trend.
"What is very important is that, in spite of the fact that we have missed the inflation target, the whole process [of controlling inflation] was used not only to clarify the difficult decisions BNR faces but also to meet the public's expectations," said Popa. The evolution is reflected in the increase of public sector salaries, a trend that BNR wants to continue, according to Popa.
The official said that BNR's activities were affected in 2005 by price increases for energy and utilities, by the floods which affected food prices, by price increases for fuel on the international market and the increased opening of the Romanian market to the foreign investors.
Popa believes that the rise in consumption and wage increases contributed to inflationary pressures.

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Romania's Ministry of Environment and Water Management (MMGA) will invest 635 million euros in flood defence works and increasing dam safety, Environment Minister Sulfina Barbu reported .Minister Barbu said the Finance Ministry was mandated to raise a loan of 1.441 billion euros to be earmarked for 10 environmental protection projects. "This will be the biggest environmental investment programme in Romania, and all the projects included belong to the series of plans for honouring Romania's EU accession pledges. I expect the Finance Ministry to sign the loan agreement by March this year," Barbu explained.She added that Romania has made significant progress in adjusting the environmental legislation to that of the EU and did the same also as far as institutional adjustments are concerned.

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Some 300 million euros will be allocated over 2006-2008 for the modernization of educational institutions, Minister for the coordination of economic activities Gheorghe Pogea announced on Wednesday in a press conference. He mentioned that 60 buses will be bought for the pupils and teaching staff of rural areas and some 30,000 computers will equip other schools in 2006.He said that 230 million euros would be allocated for the restoration of motorways and bridges, following the damages produced by the 2005 floods. Works for the construction of 19 city beltways will be started in 2006.

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Investment fund Reconstruction Capital II, having a capitalisation worth 25 million euros and being managed by New Europe Capital, is the first investment fund targeting Romania that is also listed on the London Stock Exchange, the Ziarul Financiar daily writes on Wednesday. "Roughly 70 percent of the funds are assigned to Romania", Ion Florescu, the chairman of the company managing the new fund, told the daily. He added that Reconstruction Capital II plans to invest half the money in listed companies, while the remaining funds will be invested in private companies. "We are interested in all economic sectors, from consumer goods, industrial and financial services through light infrastructure and the news media", Florescu says. Romania and Bulgaria have made huge progress in the past years and now they are among the fastest-growing economies in Europe, the chairman stresses. "We are glad to have set up a listed structure that should profit from the significant opportunities of investing in these markets", he said.

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Romania continues to be the second market in Central and Eastern Europe, after Poland, in terms of the interest for investors, with a friendly and stable business climate, the executive president of the Romanian Commercial Bank (BCR) said in the Austrian capital on Wednesday. Nicolae Danila stressed Romania continues to offer opportunities backed by a constantly dropping inflation, a strong corporate sector, a deregulated capital market, a solid banking system and an economy having a current account deficit that is easy to finance. The BCR executive chaired a seminar on Doing Business in Romania also attended by Competition Council chairman Mihai Berinde, the president of the Romanian Agency for Foreign Investments (ARIS) Ana Maria Cristina, vice-governor of the National Bank of Romania Cristian Popa and chairman of the Romanian Businessmen's Association Florin Pogonaru.

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The inflation target for Romania in 2006 remains 5 percent +/- 1 percent, Vice-Governor of the Romanian National Bank (BNR) Cristian Popa said.The BNR board will soon assemble to discuss the inflation target on 2007. Besides interests and exchange rate, focus will be laid on a prudent monetary policy by directly influencing the growth speed of the non-governmental credit.

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Banks concentration in Romania remains low, leaving sufficient room for the system's further development, president of the Romanian Banks Association (ARB) Gratian Ghetea told a round-table hosted by Finansbank Romania, in Vienna.

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The main taxes will remain unchanged, so VAT will continue to stand at 19 percent, the income tax at 16 percent, while the social security tax will go down 2 percent, Vice Prime Minister Gheorghe Pogea told a news conference on Wednesday.

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Premier Calin Popescu-Tariceanu and vice-premier Gheorghe Pogea yesterday admitted that the main macroeconomic targets set for 2005 were not met. "The economic growth was of only 4.2%-4.5%, the current account deficit reached 9% of GDP and inflation slightly exceeded the National Bank's target, reaching 8.6%," the vice-premier for economic affairs Gheorghe Pogea said.

Warburg Pincus, the GED Private Equity Group and private investors Andrew Stear and Teodor Pop have joined forces in a new company which is initially going to invest some EUR 50 million in Romanian real estate, Stear told Business Review last week.

The Austrian Minister of Trade Martin Bartenstein whose country ensures the presidency of the European Union spoke on Tuesday evening in favour of the setup of stocks of natural gas to be used in case of supply shortages, AFP reports. ? We need stocks to face two-month interruptions in the natural gas supply? the Austrian official stated with the occasion of a debate on the security of energy supply to the European Union. Martin Bartenstein?s spokesperson mentioned the stocks should be setup at national level.The recent crisis between Russian and Ukraine on the issue of natural gas disturbed, at the beginning of January, the supply to several EU member states, relaunching the debate on the setup of strategic stocks for the 25 member states.

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The Czech drug maker Zentiva only managed to buy just under half of the 49% stake which it did not hold in Sicomed, during its tender offer run on the Bucharest Stock Exchange, the results of which were revealed on Tuesday. The Czechs will therefore be unable to delist Sicomed.

The vehicle division of the group of companies held by businessman Ion Tiriac posted 470 million-euro turnover last year, given that sales of cars went up by 50%.

RCHI representatives chose not to comment upon the size of the losses registered, as the company is listed on the RASDAQ. In line with the latest available data, during the first half of last year RCHI reported losses standing at 1.1 million euros, a value close to those registered during the whole of 2004, namely a total 1.2 million euros.

Israeli insurance companies are continuing look outside the local market for new growth engines. After Direct Insurance - Financial Investments (TASE: DIFI) began operating in Poland, Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), which previously acquired British insurance syndicate Broadgate, announced today that it had signed a contract to found a company under its control in Romania.

Under the contract, Clal Insurance will own 67% of the new company. TRS, owned by Shimon Sheves, Tal Zilberstein, and Romanian businessmen, will own 33%.

Last September, Clal Insurance began a feasibility study for elementary insurance activity in Romania. Zohar Morgan, former marketing manager at Carmel Mizrachi Wineries and an ex-employee of Direct-IDI Insurance Company Ltd. (TASE: IDI), conducted the study, and will manage the project. Clal Insurance deputy CEO and overseas business development manager Shai Fogel, a former CEO of Direct-IDI, did the staff work for the new venture.

Clal Insurance will provide the new company with $4 million in initial capital. A request for a license will be submitted to Romanian regulatory authorities next week, and activity is expected to get underway in the middle of the second quarter or in the third quarter at the earliest. ?Initially, Clal Insurance will operate in Romania in non-life insurance: individual and commercial,? Fogel said. ?Later, entering the pension and life insurance field, which is new in Romania, will be considered.? Fogel said that the Romanian pension market, which had been government-run up until now, would be opened in mid-2006.

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The ten investors interested in taking over Electrica Muntenia Sud, the electricity utility which services the capital city and counties Giurgiu and Ilfov, will submit by Jan 31, 2006 their binding tenders and the participation guarantee amounting to ¤8 M, as stipulated by a governmental resolution.

The normative act, which modifies and completes the Electrica Muntenia Sud privatisation strategy, stipulates that, after receipt of binding tenders, the negotiation commission is to check the tenders for compliance with the instructions communicated to prospective investors, and draws up the list of bidders which have placed binding tenders in conformity with the instructions and accompanied by all documents stipulated in HG 577/2002, including the participation guarantee.

The list of investors who want to acquire the major stake in Electrica Muntenia Sud includes AES Corporation - USA, CEZ - the Czech Republic, Enel - Italy, EnBW Energie - Germany, E.ON Energie - Germany, EVN - Austria, Gaz de France, Iberdrola - Spain, RWE Energy - Germany and Union Fenosa International - Spain.

Italy?s Enel, the major stockholder in Electrica Banat and Electrica Dobrogea plans to consolidate its presence in Romania and strengthen investments here by taking over Electrica Muntenia Sud.

The executive manager of the company Fulvio Conti said that the company intend to increase the volume of their investments in Romania and, under the legislation, they have a right to take over up to 20 per cent of the electricity distribution market.

Last year, Enel took over Electrica Banat and Electrica Dobrogea, in a transaction of approx. ¤112 mn, including the stock price and capital increase.

The State is selling 67.5 per cent of the company shares, using a method also applied in previous privatisation procedures.

Interested investors will be able to purchase up to 60 per cent of the stock, and is to allot funds to a capital increase which will raise its stake to 67.5 per cent.

Electrica Muntenia Sud has a share capital of RON 191.3 M and over one million customers.

For 2004, the company reported over RON 1.11 bln in turnover.

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Deputy Prime Minister Gheorghe Pogea stated that a delegation of the International Monetary Fund will come to Romania at the end of January but the Romanian officials will not tackle a new standby agreement.
"We are ready. The government will make all the data referring to the economic evolution in 2005 available. So, we are no longer discussing about a standby agreement," added the deputy prime minister. According to Pogea, if Romania enters EU, it will no longer need a standby agreement.
The IMF representatives will meet between 25 January and 7 February with the representatives of the unions, industry, banks, parliamentarians and other politicians, stated the IMF representative to Bucharest, Graeme Justice. The IMF delegation will come to make an evaluation of the macroeconomic situation in Romania.
The visit of the IMF delegation is part of the periodical consultations of the Fund with each member state for the purpose of evaluating the macroeconomic situation.
At the end of October 2005 the negotiations for continuing the IMF agreement failed after the Bucharest authorities rejected the requests of the financial institution.
The main issues underlined by IMF as problematic were the unrealistic drafting of the budget project for 2006, budgetary deficit target, macroeconomic unbalances and the lack of structural reforms.
After that, the IMF representative to Bucharest said that the agreement could continue if IMF will appreciate the macroeconomic evolution as positive.

Taxes remain constant throughout 2006

The minister also said that this year will not bring larger taxes and no other taxes will be introduced. Pogea announced that the Value Added Tax (VAT) will maintain its 19% value, the same as the 16% revenue and profit tax. Moreover, the public health insurance contributions will decrease by two percent in 2006, according to the government official.
Regarding the economy's evolution over last year, Pogea stated that the growth rate amounted to 4.2-4.5% of the GDP, representing approximately half of 2004's growth rhythm, when the economic advance was of 8.3% of the GDP.
Pogea showed that the 5.7% GDP increase rhythm was greatly under the level estimated by the authorities, the main cause being floods which severely damaged a part of the country's infrastructure.
The National Statistics Institute (INS) announced that the economic increase over the first nine months of 2005 was of 3.6%, compared to 4.9% registered after the first semester.
Pogea said the preliminary data showed a current account deficit of approximately 9% of the GDP and a budgetary deficit of approximately 0.8% of the GDP for 2005.
The government's objective for 2005 was to keep the current account deficit around the 7.5-8% GDP limit.
The inflation rate slightly surpassed the 6.5-8.5% scheduled limit last year. According to Pogea, once the inflation rate decreased to less than 10% the disinflation process is less visible.

The minister said the disinflation process was fueled by the evolution of the prices to natural gas and electric energy which determined upper prices in the services sector.
The objective for the reduction of the inflation to 5% this year is ambitious and the National Bank of Romania (BNR) will use all its necessary resources to reach it, stated the vice-governor of the central bank, Cristian Popa, as quoted by Reuters.
The Bucharest authorities established the initial objective for the increase of prices in 2005 at 7%. The objective was modified to 7.5%, with a variation of plus or minus one percent, depending on the pressure of prices set by the government. Popa said that BNR will use a mix of economic policies in order to overcome this monetary pressure.
The main instruments will be interest rates, exchange rate, operations for attracting large liquidity amounts from the market and limiting credits.
The vice-governor said that, although a significant increase of the interest rate is risky, such a decision may be adopted.
"It is the prerogative of BNR's administration council to decide if an increase of the interest rate is adequate or not," said Popa.

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Sicomed pharmaceutical company in Bucharest will access 30 million dollars worth of credit from Citibank, ACT Media news agency reports.

The company will access a credit of 20 million dollars from Citibank Prague and 10 million dollars from Citibank Romania.

The company's General Assembly of Shareholders decided in favour of a change in the structure of the Board of Administration, resulting in the appointment of three new members, one of whom is Kevin Smith - representing the U.S. investment fund QVT and who formerly was General Manager of the Turkish branch of the Icelandic pharmaceutical company Actavis.

The QVT Fund holds 12.4 percent of Sicomed's shares.

Actavis generics maker has opened in the past few years production facilities in Bulgaria, Malta, Turkey, the United States, Iceland and Serbia.

Czech medicine maker Zentiva bought in September last year 51 percent of the shares of Sicomed.

It subsequently launched a public offer for the remaining 49 percent.

SIF Oltenia and SIF Multenia have subscribed so far.

Sicomed Co. posted in the first three quarters of 2004 some nine million euros in net profit, with sales of almost 43 million euros.

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OMV, Central Europe's leading oil and gas group, has announced that it is transferring its business in Romania, Bulgaria, and Serbia and Montenegro to its subsidiary Petrom S.A.

From OMV Refining & Marketing GmbH, Petrom is acquiring 99.9% of the three companies OMV Romania Mineraloel s.r.l., OMV Bulgarien EOOD and OMV Jugoslavija d.o.o. Petrom will receive 178 OMV filling stations in Romania, Bulgaria, and Serbia and Montenegro, as well as the corresponding wholesale business.

?This transaction is a significant step that further strengthens the position of Petrom. We want to develop Petrom from a leading oil and gas producer into a fully integrated oil and gas company in Southeastern Europe and in this way establish a firm base for Petrom's sustainable growth," OMV CEO Wolfgang Ruttenstorfer said.

?This is a win-win situation for the parent company and its subsidiary, since with the three companies Petrom will be gaining significant know-how and will be able to serve as a competence center of the OMV group in Southeastern Europe. For the OMV companies the new arrangement will make supply management easier by providing direct access to the refineries in Romania", Ruttenstorfer added.

In 2004, the three companies had sales of EUR 425 million and KPMG assessed the enterprise value (equity value and assumed debts) of the three companies at EUR 234.4 million.

OMV Romania Mineraloel currently operates 73 filling stations in Romania. In Bulgaria there are 74 service stations. OMV Jugoslavija presently runs 31 filling stations.

OMV said about 300 filling stations in Bulgaria, Romania, and Serbia and Montenegro will be operational under the OMV brand by 2010, most significantly in Bulgaria and Serbia and Montenegro.

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For the past years, one of Grundfos? main areas of growth has been Eastern Europe. With growth rates around 20 per cent ? between 40 and 50 per cent in Russia ? and a total turnover of approx. DKK 2 billion, Grundfos invests unabatedly in this region, now by opening a sales company in Romania.

Executive Vice President Søren Ø. Sørensen, responsible for the Eastern European region, says: ?Over a five-year period, Eastern Europe will become one of the Grundfos Group?s most significant sales regions, in terms of both turnover and earnings. Naturally, this requires a number of investments. With the Group?s latest addition in Romania, we are well on the way to realising our strategic objective for the region, and the development certainly does not end here. Kazakhstan and Bulgary, for instance, are among the countries destined for upcoming company establishments.?

Currently, the Group has 1,500 employees in Eastern Europe, and the coming years will see a further development of Grundfos? growth strategy for the region. In addition to the existing sales companies in Poland, Russia, the Czech Republic, Hungary and the Ukraine, a number of new companies will be set up in the coming years to make up the core of the Group?s sales and marketing strategies.

The new company in Romania is expected to reach a 2006 turnover of approx. DKK 80 million, as well as to double this amount in four to five years. Romanian Catalin Soldan will be Managing Director.

During the past years, Romania has improved its economic as well as political stability, and, consequently, increased its purchasing power. This has resulted in higher living standards as well as increased household needs. Furthermore, the country is expected to improve its connection with the EU in the near future.

These relations, along with an acknowledged need for renovating the Romanian supply sector, represent a huge potential for the sale of pumps for heating, water supply and waste water purposes. Thus, Romania is an especially interesting market for pumps ? especially in the district heating sector ? and with this establishment, Grundfos expects to attain a considerable share of future infrastructural investments in the country.

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KOVOSTROJ SRL, a daughter company of Kovostroj Dob¨ina, Slovakia's biggest producer of galvanised strips and thin-steel profiles used in plastic-frame windows, has begun operating in Romania. Strip, the company that owns Kovostroj, has so far invested some Sk8 million (¤214,000) in its new production facilities in the Balkans, creating the first 10 new jobs.

"Until now, we've been exporting profiles to Romania. Now we are going to produce them there," chairman of the Kovostroj Board Darko Karlovsky told the TASR news wire on January 17.

The company's exports to Romania have until now represented 18 percent of its total exports, the second largest after the Czech Republic, which accounts for one quarter of Kovostroj's exports.

According to Karlovsky, the company wants to become the leader on the central-European market in this field, which is why it is continually investing in new engineering facilities.

Kovostroj originally belonged to the group of firms linked to VSZ Ko¨ice. Ko¨ice-based company Strip became its new owner in 2003. Around 140 people are currently working in its plant in Dobsina (Ko¨ice region), with an additional one hundred people working on a seasonal basis.

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Craiova car plant will be focused in 2006 on the development of engine production and is to introduce five new Daewoo engine types into production that is set for export. "Given the increased demand on the foreign markets, we are going to diversify the engine range and will start manufacturing five new Daewoo engine types", Public Relations Director of Daewoo Automobile Romania Valeriu Girlea told Rompres. The new engines have a cylindrical capacity of 1.5 litres. Four of them are part of the two-axis with cams engine family and four valves per cylinder and are to be delivered to Uzbekistan, and the other engine is one-axis with cams and two valves per cylinder to be delivered to Ukraine, Girlea said. "Our clients are up to now members of a small family - the former plants of Daewoo Motor that now work with GM Daewoo. We received orders for engines and gear-boxes spanning up to 2008", stressed the representative of Daewoo Automobile Romania.

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The adhesive producer Henkel Bautechnik Romania estimates for 2006 a 32 million euro turnover, up 20 percent as against 2005, daily Ziarul Financiar informs .General manager Marius Ivan said that the adhesive market grows faster than the construction market, some 20 percent annually. The company reported a 27 million euro turnover in 2005, some 55 percent more than the previous year, following the inauguration of the third Ceresit factory in Romania and the increase in total output to 200,000 tonnes a year.Due to the higher demand on the market, the company wants to double production in 2007.Henkel Bautechnik entered Romania in 1999 and invested 10 million euros so far. The company constructed in 2000 and 2004 two factories in Pantelimon locality, 25 km away of Bucharest. The local adhesive market amounts to 60 million euros, the officials said, Henkel producing both for Romania as well as for Serbia, Moldova and Bulgaria.The company holds 45 percent of sales of ceramic plate adhesives and 20 percent of the sealants market.

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American company Emerson Electric plans to buy a plot of land of 11.5 ha in the industrial fleet Tetarom II in Cluj county, in order to unfold an investment worth 125 million euros. The American investment will be carried out in several stages and each stage entails the construction of five plants. In a first stage, Americans want to build in Cluj-Napoca (north-west of Bucharest) a research center where as many as 250 experts will work, a hall for the production of small-dimension electrical engines and one for gas regulators. Subsequently other three production facilities will be built. The whole investment will employ about 2,000 people.

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The State Assets Realization Agency (AVAS) has selected Hungary's Nitrogenmuvek Rt for the takeover of chemical plant S.C Nitramonia S.A. based in the central Fagaras town. The five Nitramonia spin-offs - fertilizers and nitrous products manufacturer Nitrofertilizer, explosives producer Nitroexplosives, waste waters processing and treatment company Nitrocontrol, performer of special construction works Nitroservice and railway freight company Nitrotrans - were for the second time put up for privatisation in late September 2005, after an initial privatisation deal closed in 2003, with American company S@T Oil Equipment and Machinery Ltd. In February 2005 Nitramonia was transferred back to the property of AVAS, following disagreements with the American buyer.

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The management of IAR Brasov (161 km north of Bucharest) will sign on 24 January, in France, the type approval documents for the prototype of IAR PUMA SM helicopter, commissioned by the special forces of the United Arab Emirates, in the presence of Eurocopter officials and beneficiary from United Arab Emirates. According to the general manager of IAR Brasov, Ioan Georgescu, the prototype was finalized in October 2005 and then sent to Eurocopter's Trials Centre MARIGNAN in France, with which IAR Brasov has a very good collaboration for technical solutions. Ioan Georgescu says that the prototype underwent there a type approval programme that included 60 flight hours and other tests on the ground. On 24 January, the final documents will be signed, and then the helicopter will return to Romania. IAR Brasov will train the technicians of pilots of the Arabian client. "We hope that this variant of helicopter, which is extremely performing, will generate the interest of other PUMA helicopter users for such an upgrade," added Georgescu. The total value of the contract for the 25 helicopters is 89 million dollar. The first helicopters will be delivered to the United Arab Emirates in end-March.

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Romania attracted in 2005 direct investment with significant impact in economy (higher than one million dollars) totaling 1.8 billion dollars, up 47 percent from 2004. More than five billion dollars were invested for 445 projects, from October 2001, when a law on heavy direct investment came into force, up to the end of 2005. Foreign companies invested some 3.6 million dollars, or more than 70 percent. First come the telecommunications, which attracted, for 50 projects, 1.16 billion dollars, or 22.5 percent of the total. The industry of wood, pulp and paper attracted, for 20 projects, 652 million dollars, or 12.6 percent of the total, the services 613 million dollars (11.90 percent) for 57 projects, and trade 476 million dollars (9.24 percent), for 76 projects. Since the law was enforced, only six investment projects exceeded 100 million dollars. Among foreign investors with projects higher than one million dollars, the Netherlands ranks 1st, with over 1.1 billion dollars, followed by Austria, 668 million dollars, and France, 404 million dollars.

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The Stock Exchange entered its third trading week of the year with a growth that reminded the euphoria registered at the start of 2005.Since year-start, BET Index jumped by 16 percent, an even bigger increase compared to the same period last year, when it made a 14 percent leap. As well, BET-FI Index increased this year by 14 percent, slightly below last year's level. All shares considered most liquid on the market increased on Monday, with the exception of Rompetrol Rafinare stock that lost 0.9 percent.As for the correction moment the opinions are divided. Some brokers say it would happen "after the first half of next month", others - earlier.

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Part of the state's 45.99% stake in fixed-line operator Romtelecom will be floated on the Bucharest Stock Exchange. Experts believe the event will occur most likely in September-October, says telecom analyst Nicolae Oaca.The relaunch of mobile phone operator Cosmote will increase the market value of Romtelecom. Negotiations are currently held with Credit Suisse First Boston, which will offer financial assistance for the sale of the state's stake in Romtelecom.

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Omniasig, Astra, Allianz-Tiriac insurance companies and the Romanian Commercial Bank (BCR) Insurance submitted bids for the insurance of TAROM Airlines fleet, according to an announcement of the Romanian air operator.

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The reform of the Romanian healthcare system will ground on three pillars: the correct management of public money, the start of national investment projects in the healthcare system and enhanced responsibility and motivation of the medical staff, Premier Calin Popescu-Tariceanu announced on Tuesday, during the presentation of the legal package on the reform of the healthcare system.

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Today in the Romanian capital, Infineon Technologies AG celebrated the official opening of its newest development center. The initial staff of approximately 60 developers is concentrating on power semiconductors with analog and digital functions (power mixed signals), which are being used increasingly in automotive and industrial applications, and on security controllers for chip cards. The activities in Bucharest are being managed by the regional company for Romania, "Infineon Technologies Romania SRL" which was founded last April as a subsidiary of Infineon Technologies Austria AG.

"Our newest development center reflects the increasing demand for intelligent power semiconductors for automotive and industrial applications, and here we are developing security controllers for chip cards, particularly for the areas of mobile communication, banking and identification,? said Infineon CEO Dr. Wolfgang Ziebart during the speech he held for approximately 100 invited guests. "The center in Bucharest will provide additional support for our success with power mixed signal products for automobiles and industry, and it will soon play a significant role."

The new development center strengthens the research alliance in the area of intelligent power semiconductors. This alliance currently includes the facilities in Villach (Austria), Padua (Italy), Munich (Germany), and Graz (Austria). These locations will be concentrating even more closely on cooperating with the most important manufacturers of automotive electronics and will be driving product innovations forward.

The developmental activities being performed in Bucharest for the area of security controllers for chip cards are integrated into the research alliance with the established centers in Munich and Graz. Chip design, software development, and verification of these high-tech products represent the main focal points of the development efforts in Bucharest.

Together with the University Politehnica of Bucharest, master-level programs of study are being developed in order to form the educational structures needed to meet future R&D requirements in the semiconductor industry at an early stage. During the course of this year, about 60 additional developers are to be hired in Bucharest.

In April 2005, Thomas Simonis assumed the management responsibility for the local company in Romania and for the development center. From 2002 to 2005, Simonis, who was born in Germany and has been working for Infineon since 1998, enjoyed great success in establishing the software development center in Bangalore/India for Infineon.

This news release is available online at http://www.infineon.com/news/

About Infineon

Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for automotive, industrial and multimarket sectors, for applications in communication, as well as memory products. With a global presence, Infineon operates through its subsidiaries in the US from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In fiscal year 2005 (ending September), the company achieved sales of Euro 6.76 billion with about 36,400 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Further information is available at http://www.infineon.com

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Swiss outdoor company APG Affichage took over the third largest player on the local market, Churchill Group. The value of the transaction was not disclosed but Madeleine Linter, chief of corporate development with Affichage Holding, said it amounted to a ?few million euros.?

German convenience wholesaler Lekkerland has recently acquired the local Macromex Convenience business unit, in a transaction valued between EUR 5 million and EUR 10 million, Roland Pardey, the new managing director of Lekkerland Convenience in Romania, told Business Review. The German company plans to make a multi-million euro investment in the newly acquired business over the next two years, he added.

Emerson, a global leader in the electrical engines industry, yesterday was scheduled to sign a contract for the purchase of a plot of land of 11.5 hectares in the Tetarom II industrial park, where it will make investments worth 125 million euros, the largest investment in Cluj county.

The representatives of wine producer Cramele Recas, of Timis county, have announced investments standing at around 2 million euros for this year, to be directed towards technological flow modernisation and the establishment of a new 65-hectare plantation.

Hidroconstructia, one of the largest construction companies on the local market, made 156 million-euro turnover last year, an increase of 8% from its initial targets, the company officials say. "This growth is due to the large number of contracts we signed last year, mainly in the sector of public constructions and infrastructure," Emil Timofti, general manager of Hidroconstructia told Ziarul Financiar.

After taking a beating over the last few months, pharma major Ranbaxy Laboratories is out to radically alter its image.

After the Atrovastin case loss against Pfizer, it?s now on the prowl again.

It is learnt that Ranbaxy Laboratories is likely to acquire two European companies ? one is based in Germany and the other in Romania.

The valuation of the German firm is in excess of $500 million while that of the Romanian firm is between $110 and $150 million, say sources.

When contacted, a senior official of Ranbaxy Laboratories said that they were bound by confidentiality agreements and as such were not in a position to comment on the issue. Sources say that the acquisition is expected to be funded through a combination of cash and equity swapping.

Sources close to the developments say that Ranbaxy has shown keen interest in a Germany-based pharma firm Betapharm.

The company is currently owned by 3i, the leading European venture capitalist which backed a euro 300 million management buyout of Betapharm in March 2004.

Germany has one of the highest levels of use for patent-free drugs in Europe, and this is scheduled to grow by 10 per cent over the next five years.

Earlier, Ranbaxy had bid for the US-based generic pharma firm Alpharma and Ivax Corporation. Ranbaxy had also bid for Viatris GmbH & Co but lost out to a Swedish firm recently.

Ranbaxy plans to achieve significant business in proprietary prescription products by 2012 with a strong presence in developed markets.

It also aspires to be among the top five generic players with sales of $5 billion by 2012. In order to achieve these objectives, the company is actively looking at inorganic growth, experts feel.

In Romania, the company has shown interest for two pharma companies Terapia SA and Sindan.

Terapia is a manufacturer of generics drugs in Romania, which clocked sales of $65 million in 2004 and EBIDTA of $20 million. A leading private equity firm ? Advent International ? which owns 91 per cent of Terapia, has appointed Merrill Lynch as the advisor to the deal.

When contacted, the company spokesperson said that as a policy ?we do not to comment on speculation. But we are certainly looking for inorganic growth in Europe and the US.?

Analysts feel that the acquisition in the European market would give generic penetration in Romania.

The company received a major setback in the recent past when it lost cases in the US and UK.

In fact, Ranbaxy has not won a patent challenge since August 2001 when it received approval from a United States? court for its version of GlaxoSmithKline Plc?s Ceftin antibiotic.

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The Competition Council is investigating the auto market to check possible infringement of competition legislation by distributors of vehicles, spare parts and services for the Opel and Chevrolet brands.
The investigation was started as the Competition Council received requests for the preliminary certification of the non-intervention of the institution in the contracts to be signed between General Motors Southeast Europe Ltd and 16 distributors.
The regulatory institution is analyzing the possible infringement of legal provisions forbidding pricing agreements, decisions and practices that restrict or prevent the development of a competitive environment.
The Competition Law bans the direct of indirect establishment of prices by agreement, the limitation and control of production, the share of markets of supply resources, the elimination of competitors, and the imposition of unfair conditions on competitors.
The investigation will also aim to establish whether the conditions for the request for non-intervention are fulfilled by the contracts for the sale of cars, spare parts and services under the two General Motors brands. The law requires the prevalence of positive effects of contracts over the negative ones and of the existence of advantages for consumers or beneficiaries. Opel has 22 dealers on the Romanian market while Chevrolet has 21.

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The main targets of the new Connex chief executive, Liliana Solomon, 41, are reduction in costs and an increase in revenues, she told Ziarul Financiar.
"As the market matures, we need to make sure that costs don't go up faster than revenues," she said in her first interview since taking over the company at the end of last year. "Cost-cutting needs to be a goal for any corporate leader." Solomon, who became one of the most powerful women in the Romanian business world when she was appointed to run Connex, will also aim to secure an improvement in the average revenue per user, an essential indicator in the mobile telephone business. At the same time, she has set out to restore this mobile telephone operator back to its leading position on the market. Connex Vodafone is slightly at a disadvantage compared with its archrival Orange Romania, both in terms of service revenues and numbers of clients, according to the latest data revealed by the two operators. Connex concluded September 2005 with 5.52 million customers, while Orange registered 6.2 million customers at that time.
"The main goal I have as head of Connex Vodafone is to become the market leader in Romania again," Liliana Solomon said. The offensive will be sustained by the launch of new offers for 3G service customers, as well as by the expansion of the territorial coverage from 14 cities at the moment to at least 20 cities by yearend, she said.
This summer will see the launch of the Vodafone Live! 3G services, a service package Vodafone is selling on most developed markets where it is present.
"Live! is an infotainment product. It will be launched this summer and will provide a richer content than the current 3G offer from Connex Vodafone, mainly because we will benefit from Vodafone's global contracts." "Once Live! is launched we will be competing with the iPod," Solomon said, meaning that the 3G services are largely built around multimedia and entertainment, "an industry that will develop tremendously."
Mobile telephone operator Connex Vodafone is the sixth branch in the Vodafone Group in terms of number of clients, after Germany, Italy, UK, Japan and Spain, according to Solomon."

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The Minister delegate for Trade, Iuliu Winkler, stated on Monday that he intends to develop an integrated program for Romanian exports in 2006. Winkler believes that the future program, probably called "The Romanian Export Program", will contribute to increasing the number of Romanian trade representatives abroad.
"We want to increase the number of representatives especially in South-East Europe and also in EU countries," said Winkler.
The minister also intends to create new trade centers to promote Romanian exports in China and India.
Winkler said that only 11 export promotion centers are active in Romania. "The network must increase to ensure that one such center will exist in each of Romania's counties," stated Winkler.
The minister delegate for Trade proposed enhancing branding activities, as they are presently active only in four sectors: IT, wine, furniture and some sectors of industry. 
Winkler emphasized that imports continued to exceed exports in 2005 and the trade deficit reported after the first 11 months of 2005 was nine billion euros. Last year, the most dynamic categories of exports remained mineral products, vehicles and accessories and iron and steel products. The official expects the same trend to continue over this year, mainly due to the major foreign investments which require imports of technology and equipment.

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Wolfgang Roth, the vice president of the European Investment Bank, agreed to President Traian Basescu?s request to grant a 30 billion euros loan for Romania?s development.

The vice president of the European Investment Bank (EIB), Wolfgang Roth, has agreed to President Traian Basescu's appeal for a 30 billion euros credit to be added to non-reimbursable funds due from the European Union.
"The chief of state has approached the need for massive funding for the years 2007 - 2013, to be used for the rapid development of the transportation infrastructure (highways, upgrading existing railways), for rural development and for environmental projects," states a press release from the presidency.
Basescu supported his financing request to the EIB by pointing out Romania's low foreign debt level, which allows it to contract long term credits. The president added that Romania could pick up the pace for infrastructure improvements and rural development if the money from the European Union were to double. Currently, Romania's mid and long term external debt is 24 billion euros. According to the Pre-Accession Economic Program (PEP), this is expected to increase to an average 28 percent of Gross Domestic Product from 2006 to 2008, lower than the maximum level set by international standards.
In his turn, Roth emphasized that Romania needs to develop the absorption structure quickly for the funds expected from the EU after its accession, and pointed out that the EIB is willing to support the task by granting credits for 20-30 years with a grace period of up to seven years. Basescu assured the European official that the government will set up the necessary structure and addressed a request to the Executive office to analyze the possibility of contracting 30 billion euros in credits in the 2007-2013 period.
The government intends to create a new system to manage European funds, which should enhance the absorption rate, said Prime Minister Calin Popescu Tariceanu.
"God gives to us but He does not arrange everything for us," stated Tariceanu. The PM underlined the need to learn how to manage these funds much better, and especially to prepare future engineers and economists, so that Romania will avoid a shortage of these professions in future.
The authorities are currently examining two options to set up Project Management Units (UMP), either by allocating a unit to each ministry or by creating a single structure which will manage the projects of various ministries.
The staff employed in these units would be remunerated per day in accordance with the projects they have managed. A day's work could be paid with 100 euros, according to the Prime Minister.
To prepare the local administration for the management of the European funds, the EU will finance Romania with 1.9 million euros through a Phare project developed together with the European Commission Delegation. The project should last approximately 15 months and the sums should be used to prepare the management of structural resources which should be available after EU accession.
The head of the European Delegation Commission to Bucharest, Jonathan Scheele, stated that this is an important project to ensure Romania's success in the accession process.
"There is the need for good and well prepared projects. A communication strategy is a very important element in order to succeed," stated Scheele.

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The company Kolal, controlled by Israeli investors, aims to acquire Eurom Bank entirely and announced an offer price of $2 mn for 2,7% shares - through a public offering on the capital market in the period January the 19th - February the 8th.

Kolal owns 89,58% in the bank and plans to act together with the National Unionist Block (BNS), the holder of 4% in Eurom Bank, and Eliahu Shahar - that owns 3.72 per cent.

The shareholder who will agree with the public offer will receive ROL 0,747 / share, minus the tax on the capital gain / profit and any other costs and commissions in connection with the trading of the stocks and with the payment of the price.

Eurom bank is listed on the Rasdaq market, the last trading having been closed on Friday at an average price of RON 0.500 / share.

In order to buy the 10,7 M shares, accounting for 2,7% of the social capital of the bank, the initiators of the offer will pay RON 6,1 M ($2m).

To finance this operation, Kolal will have a credit line of maximum $994,000 opened with Bank Leumi from Israel.

The rest of the money needed will be produced from own sources.

At the end of October 2005, Bank Leumi and Kolal BV signed an agreement under which the bank was to buy over 377.2 mn shares from the Dutch company - 95% of the social capital of Eutrom Bank.

Leumi will pay $41,6 mn for them.

On Sept 30 2005, Eurom Bank will have total assets worth RON 466.1 M.

In the 9-mo of 2005 the bank reported losses of RON 2,8 M, and RON 5.4 M profit from January until September 2004.

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Exports will be maintained on a rising trend in 2006 as well, the growth proposed being of 15 percent, said the delegate minister of trade Iuliu Winkler, ACT Media news agency reports.

Along with the exports growth, there will a decrease of trade deficit.

Taking into consideration that 2006 is estimated to have a growth of foreign investments, large imports of technology and equipment will be undertaken.

Iuliu Winkler added that the trade deficit will be influenced by the growth of domestic consumption but by import of energy products as well, especially natural gas and oil. In 2005, there was a record regarding the value of Romanian export.

For the first 11 months, exports amounted to 20.4 billion euros, up by 17,4 percent against 2004.

Imports were, for the first 11 months of 2005, worth 29.4 billion euros, up by 24.2 percent against 2004.

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Societe Generale Asset Management (SGAM) - BRD SAI launched the open average-risk investment fund named "Concerto," with a diversified portfolio, including monetary tools, bonds and stocks listed with the Bucharest Stock Exchange.
According to the administrator, the new investment fund allows for increased returns while involving an average risk rate.

The recommended period for investment in this fund is around at least three years.

The repository and distributor of the fund is BRD - Groupe Societe Generale.

Individual and corporate investors may underwrite minimum 10 fund units, and subsequent underwriting is possible at any time, through purchase of at least one fund unit.

The initial face value of one Concerto fund unit is RON 100 (ROL 1 M).

Redemption of fund units requires payment of a three per cent fee if the redemption request filed within two years since underwriting and is free of charge after this period.

Fund units can be purchased in any BRD - Groupe Societe Generale unit in Romania.

Concerto is the second investment fund launched by SGAM - BRD SAI, after Simfonia 1, a low-risk investment fund focused on investments in financial tools.

Simfonia 1 held assets totalling RON 87.4 M in late 2005 and reported over 4,200 investors, with a 27.4 per cent market share.

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American federal authorities allowed the American car maker Cross Lander USA Inc (the majority shareholder at ARO) to sell an ARO variant without airbags until May 2008 in the US. The National Highway Traffic Safety Administration made an exception for Cross Lander USA Inc, because otherwise the firm would have gone bankrupt. NHTSA estimated that Cross Lander USA would sell about 9000 cars in the US. The model Cross Lander 244X is assembled by the Romanian firm ARO which has been faced with big financial difficulties. Cross Lander USA announced that in 2004 it registered losses of 5 million dollars. The firm intends to sell Cross Lander 244X at the price of 20,000 dollars, six times less than a Hummer H1, manufactured by General Motors. Cross Lander cars observe the standards established by the federal agency for environment protection.

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According to experts from the Eurisko estate company, the Prahova Valley (center of Romania, some 130 km far from Bucharest), will become profitable indeed in terms of estate in a few years' time, when infrastructure projects will be finished and investment in tourism will lead to the resorts' development, viewing ski slopes and cable transport, in particular. Eurisko Manager, Oana Bogdanovici, told Rompres that construction opportunities make of the estate market of the Prahova Valley an area that continues to be attractive. The offer in Prahova Valley resorts meets all tastes, the houses range from small ones, of 100 sq m, to big ones, of 150 sq m or even of more than 200 sq m. The resorts of Sinaia (140 km north of Bucharest), Busteni (130 km north of Bucharest), Azuga (132 km north of Bucharest) and Predeal (138 km north of Bucharest) are preferred for building or buying houses. Investment has been made in the Prahova Valley in the past few years notably in upgrading the infrastructure and the slopes. In Azuga, currently are two ski slopes and one is being made, whereas Busteni has the most modern slope with cable transport in the area.

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The Health Ministry College approved the minister?s order on health programs in 2006, to be financed by the Health Ministry in collaboration with the National health Insurance House.The ministry college approved four national programs: the public health community program; the prevention and control program for non communicable diseases; the health program for children and family; the reform, health policies and health administration program. The four programs include 25 sub programs. The overall budget of 2006 programs is 458,124,000 lei as against 330,766,000 lei allocated last year, that is a 40% increase. An anti-epidemic reserve will be built at the level of every county public health department. They will receive funds for the purchase of protection equipment, syringes, health materials, etc. Health minister Eugen Nicolaescu warned that the programs would not be financed if those who coordinate them cannot justify their management.

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Romania's Ministry of Environment and Water Management (MMGA) will invest 635 million euros in flood defence works and increasing dam safety, Environment Minister Sulfina Barbu reported on last Friday. Minister Barbu said the Finance Ministry was mandated to raise a loan of 1.441 billion euros to be earmarked for 10 environmental protection projects. "This will be the biggest environmental investment programme in Romania, and all the projects included belong to the series of plans for honouring Romania's EU accession pledges. I expect the Finance Ministry to sign the loan agreement by March this year," Barbu explained. She added that Romania has made significant progress in adjusting the environmental legislation to that of the EU and did the same also as far as institutional adjustments are concerned.

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The priorities of the Romanian Government as regards the road infrastructure in 2006 are: the Pan-European Corridor IV between Nadlac (western Romania), Sibiu (central Romania), Pitesti (southern Romania), Bucharest and Constanta (south-eastern Romania), Transilvania Motorway between Bors (western Romania) and Brasov (central Romania) and Bucharest-Brasov Motorway, said Prime Minister Calin Popescu-Tariceanu after the Government working meeting that dealt with "Romanian Economy and Development Projects over 2006-2008.""The essential priority is Corridor IV, both the road and the railway ones, but we also intend to finalize Bechtel Motorway and Bucharest-Brasov Motorway," said Premier Tariceanu.Referring to Corridor IV, the Prime Minister made it clear that this year they would finalize the stretches between Drajna and Fetesti and between Fetesti and Cernavoda (south-eastern Romania), a stretch which they will try to make operational both ways.

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Following the requests dated December 28, 2005 and January 5, 200, the privatization commission of the Romanian Commercial Bank (BCR) has obtained the buyer's approval to publish the privatization contract, starting January 26, on AVAS' (State Assets Resolution Authority) web site. It is about the completion of the Erste road-show, except for personal data and annexes (business plan), the Ministry for Public Finace informs.Erste bank has become the new shareholder of BCR after the purchase of a 61.88 percent stake at a price of 7.65 euros per share. The overall price for the 490,399,321 sold shares is of over 3.75 billion euros. Under the sell/buy contract, Erste Bank will take over the 38.88 percent stake minus two shares held by the state, plus the 25 percent package plus two shares of the European Bank for Reconstruction and Development (EBRD) and of International Finance Corporation (IFC). The stakes held by financial investment companies which own together 30.12 percent of the shares will remain unchanged as well as the 8-percent stake held by BCR employees. Erste Bank is to pay the sum within 90 days since the date of signing of the contract. Out of the 3.75 billion euros, 2.25 billion euros will enter the account of the Romanian state.

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Exports will be maintained on a rising trend in 2006 as well, the growth proposed being of 15 percent, the delegate minister of trade Iuliu Winkler stated on Monday in Deva. In parallel to the exports growth there will a decrease of trade deficit. Taking into consideration that 2006 is estimated to have a growth of foreign investments, large imports of technology and equipment will be undertaken, the minister added. Iuliu Winkler added that the trade deficit will be influenced by the growth of domestic consumption but by import of energy products as well, especially natural gas and oil According to the delegate minister of trade, in 2005, there was a record as regards the value of Romanian export. For the first 11 months, exports amounted to 20.4 billion euros, up by 17,4 percent against 2004. Imports were, for the first 11 months of 2005, worth 29.4 billion euros, up by 24.2 percent against 2004.

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The budget deficit stood at 0.8 percent of GDP in 2005, according to provisional data, says a release of the Ministry of Public Finance.In 2005, the revenues of the general consolidated budget accounted for 29.7 percent of GDP, the same as in 2004, and the expenditures represented 30.5 percent.

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Praktiker AG, the German home- improvement company that sold shares in November, said revenue climbed 6.8 percent in the fourth quarter as the company cut prices in its home market and expanded in countries such as Romania and Bulgaria.

Sales advanced to 717 million euros ($870 billion), the company said today in a statement on the OTS news wire. Sales outside Germany gained 15 percent. Excluding newly opened stores, revenue increased 3.7 percent in Germany.

Metro AG, the world's third-largest retailer, in November sold Praktiker in the first initial public offering of a German retailer in more than four years. The company has said it will use the money that was raised to open outlets in eastern European markets such as Bulgaria and Romania, where growth is faster.

Praktiker, which is based in the German town of Kirkel- Neuhaeusel, drew customers to its 275 stores in its home market with advertising campaigns for lower prices. Discounts on goods ranging from shower heads to garden furniture helped it return to profit last year.

Praktiker's shares were down 8 cents to 18.38 euros at 9:22 a.m. in Frankfurt. The company's 21 percent advance this year is the third best on 17-member Bloomberg European German IPO Index, which tracks companies during their first year of trading.

Praktiker is Europe's fourth-biggest do-it-yourself retailer behind the U.K.'s Kingfisher Plc, France's Leroy Merlin and Germany's OBI, owned by retailer Tengelmann Group. Praktiker returned to profit in 2004, aided by advertisements for discount goods ranging from shower heads to garden furniture.

Sales in 2005 as a whole rose 3.4 percent to 3.03 billion euros, the company said today.

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Swiss operator Swisscom will invest a few million euros in 2006 in a project for supplying wireless Internet services in Bucharest, ACT Media news agency reports.

It involves the development of Swisscom's own network as well as partnerships with other suppliers or even the buying of some of the so-called district networks, said an official of Air Bites, a company fully controlled by the Swiss operator.

Air Bites has been operating in the Bucharest market for one and a half month and currently numbers a few hundreds users, whom it offers mobile access to the Internet (through radio waves - Wi-Fi).

Subscription costs 15 euros monthly and the installation, maintenance and servicing are free of charge.

The wireless Internet services Air Bites offers mainly target home users and small companies.

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The European Investment Bank (EIB) will grant Romania a loan worth 850 million euros, Romanian PM Calin Popescu-Tariceanu announced upon the meeting with EIB vice-president Wolfgang Roth stating that the three projects will be earmarked 1.65 billion euros and the Romanian contribution will stand at approximately 800 million euros, ACT Media news agency reports.

According to the PM's statements, EIB will contribute 250 million euros for the construction of the Cernavoda-Constanta highway section (south-eastern Romania), part of the pan-European Corridor IV and the Romanian side will allot 104 million euros.

The project entails the construction of 52 km of highway (two lanes each way). The European Investment Bank will also finance the construction of the Curtici-Simeria motorway (western Romania) with 300 million euros and the Romanian side will earmark 529 million euros.

The railway section will have 185 km and will allow high speed trains to travel with a speed of up to 160 km/h PM Tariceanu said the sums allotted by the EIB to this project will be paid back from the pre-accession funds. The third project financed by the European Investment Bank worth 300 million euros refers to the removal of the effects of floods and the measures to prevent flooding.

The Romanian government's contribution will be of 101 million euros.

The EIB loan has to be paid back in 25 years and has grace period of 6 years.

PM Tariceanu said that the Romanian government would deploy efforts to shorten procedural requirements for EIB's agreements. EIBs vice-president Wolfgang Roth for his part said that the body he represents is interested to endorse, in the future, investment projects under public-private partnership in Romania.

Roth pointed out that the president Wolfgang Roth brands the realization of infrastructure projects as important for Romania and, for this reason, he would support their implementation. Wolfgang Roth stressed that ''Romania, as Bulgaria, concurrently with the accession process would have to manage, in the ensuing period, the cohesion funds which will be allotted by the European Union and in this respect the European Investment Bank can help it to learn how to get and manage these funds.

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Total overdue loans accumulated by individuals up until the end of December amounted to 47 million euros, 3.6 times more than in the previous year, in line with data released by the Credit Bureau.

The growth witnessed by Auto Italia, the representative of the Italian group Fiat, goes beyond initial estimations and is superior to the overall rate of growth seen by the new car market.

Raiffeisen sees the year 2006 as an opportunity for furthering its growth, given that the biggest bank on the market, BCR (Romanian Commercial Bank) will focus on its internal issues, linked to reorganisation and restructuring after privatisation, and the new contender, UniCredit/HVB/Tiriac will also become more involved in the integration and consolidation of its operations, Steven van Groningen, chairman of Raiffeisen, told Ziarul Financiar.

Construction supplies manufacturer Holcim has revised its investment plan for 2006-2008, an operation that will see the amounts allocated increase by 52%. The local branch of the Swiss Holcim Group announced that the investments it is set to make until 2008 will exceed 160 million euros, compared with the initial estimate of 105 million euros.

The market value of BRD-SocGen, the second-largest bank on the market, yesterday exceeded 3bn euros, writes today's Ziarul Financiar.

This situation is due to its strong growth on the Bucharest Stock Exchange, a trend followed by many of the listed shares.
Shares in BRD ended the day at 16.1 RON/share, an increase of 3.9% from the previous day, after having gone up to a maximum of 16.2 RON/share.
The total capitalization of the Stock Exchange exceeded 18bn euros yesterday, an increase of nearly 2.5bn euros since the beginning of the year.
The BRD shares' trend confirms the 6bn euro value of BCR, the largest bank in the system, resulting from the takeover of a 61.8% stake in the bank by the Austrians at Erste.
In the middle of last year, BRD accounted for 14.1% of the market, which is more than half of BCR's market share, which stood at 25.1% in terms of assets at the time. The value this bank has reached on the Stock Exchange is huge, compared with the price at which the state sold the majority shareholders, Societe Generale, a 7.3% stake in BRD in November 2004. The deal was worth 43m euros, thus valuing the bank at 590m euros. BRD was worth 1.1bn euros on the Bucharest Stock Exchange at that moment. The controlling interests in BRD of 51%, had been sold by the state in 1998 for $200m.
"The increase in the BRD shares is in line with the general trend on the market. Created by the optimistic expectations about EU integration and financial results. BCR was bought for six times its accounting value, despite being an as yet unrestructured bank, and it is only natural for the value of listed banks to come close to this mark," says Rares Nilas, BT Securities' general manager. BRD's market value is approximately 5.3 times its accounting value last year.
BRD shares had been lagging behind the growth of the market over the last few months, and especially that of Banca Transilvania, which went through several months of strong growth due to its profits and market share. Brokers say the increase of BRD's shares over the last few days is due to the entry of new funds on to the market which focus on buying Stock Exchange blue chips. 

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CEZ (Czech electricity producer) could issue this year bonds totaling 500 million euros, according to Reuters.
The funds will be used for new acquisitions in Central and Eastern Europe which will include Romania.
Petr Voboril, the company's financial director, said that the issue will have a payment term of minimum five years.
The company is the main producer and supplier of electricity in the Czech Republic.
CEZ expressed its intensions of taking over three electricity plants in Craiova, Turceni and Rovinari.
Presently CEZ controls 51% of the Electrica Oltenia shares.

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Ranbaxy Laboratories and Lupin Laboratories have entered the last lap to acquire the Bucharest, Romania-based Sindan Pharmaceut Co, an acquisition that would cost upwards of $150 million.

Also in the race are two pharma majors from Europe, according to sources. The deal is expected to be signed in the next two months.

Ranbaxy is already the fifth largest generics firm in Romania. It is said to have made a bid for another Romanian firm, Terapia, which is the third-largest pharma firm in that country.

A Ranbaxy spokesperson said, ?We don?t comment on speculation. As a matter of strategy, we are looking at growth abroad.?

The two companies are said to have signed non-binding contracts for the deal.

Lupin is also said to be an aggressive bidder. The company already has a warchest of $100 million, raised through a foreign currency convertible bond last month. The oncology portolio is a high-margin product in any country. Also, Romania is one of the fast opening pharmaceutical markets in the world.

Analysts said in terms of valuations, companies such as Sindan and Terapia are not as expensive as say a European or US entity. ?Most of them are fairly valued today,? he said.

The upgradation of the production facilities of the company was completed last year.

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The Association of Businesspersons from Romania (AOAR) suggested the government to ensure stable and coherent fiscal and monetary policies.

Developing a national infrastructure program, maintaining internal production, reducing dependency on energy imports as well as stable and coherent fiscal and monetary policies should be Romania's main priorities as identified by businesspersons.

The Association of Businesspersons from Romania (AOAR) has called on the authorities to focus on eight priorities for the country's development. One of the proposals involves development of the transportation infrastructure and suggests the government should construct more than 2,000 kilometers of highway during the next 3-5 years.
"The present situation is unacceptable," says a press release from the AOAR, as heavy rain can cutoff links between the main areas of Romania. "The roads and communications infrastructure directly influences the volume of private investment and Romania's attractiveness for capital inflows," adds the press release.
Another priority as identified by business leaders is support for domestic production, especially in industry, and the development of a strategy to reduce the country's dependency on energy imports. Similar programs are at an advanced phase in countries with developed economies and have become a European priority, according to the businesspersons' representatives.
Moreover, the business groups say that three major privatizations currently being prepared by the government (Romgaz, the Romanian Savings House and the National Lottery) should be postponed, and should only take place after objective and professional evaluations. At the same time, the businesspersons have called on the government to make a list of major projects which could be developed as public-private partnerships and thus stimulate large international investors to enter the local market.
Financial and monetary policies must be well developed to ensure economic stability and predictability, states the businesspersons' press release, proposing that the Fiscal Code should be valid for at least three years and that an improved Labor Code be prepared, to allow more flexibility on the labor force market.
"The priorities for 2006 and for the years to come are characteristic of the modernization process Romania is undergoing," states the businesspersons' press release, emphasizing that economic development should prompt the government to abandon the economic policies specific for the transition period. Thus, government policies must focus on stimulating the business environment, especially that with high added value, to ensure a fast pace for the economic growth rate.
Prime Minister Calin Popescu Tariceanu stated last week that the government's priorities for 2006-2008 include investment in infrastructure, agriculture, health and education.
"The main priority of the government is to jump start public investment in all sectors," said Tariceanu, as the Romanian economy is strong enough to support ambitious projects related to EU accession, infrastructure, agriculture and in other areas. The government intends to invest approximately one billion euros in 2006 even if this could increase the budget deficit to one percent of Gross Domestic Product, he said.
The Pan European Corridor IV, the Brasov - Bors highway, the Bucharest - Brasov highway and city rings around the largest Romanian cities represent the government's main infrastructure projects.

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World Travel Awards, one of the world's most comprehensive travel trade polls of its kind, has given Athenee Palace Hilton Bucharest the award of "Romania's Leading Hotel" in 2005. 
The voting process took place in more than 140 countries worldwide, between May and September 2005. 80 winners were voted for the "World's Leading Travel" category. The winners were divided into eight geographical categories: Africa, Asia, Caribbean, Central & Latin America, Europe, Middle East, North America and South America.
The World Travel Awards were established in 1993 to acknowledge, reward and celebrate achievements in all sectors of the global travel industry. For the 12th edition, more than 156,000 travel agencies and professionals worldwide have been asked to vote for their leading travel destinations, airlines, hotels and companies around the world. The award ceremony took place in London's Royal Opera House.
"We are proud and honored to receive such an award, which places us in a leading position on the Romanian market." says Friedrich W. Niemann, General Manager of the Athenee Palace Hilton Bucharest. "This will strongly support our goal of maintaining and increasing the fame of the Athenee Palace Hilton as "pride of the Balkans" and it is a great reward for the continuous efforts of our professional team."
Athenee Palace Hilton is one of four Hilton hotels in Europe to win this international award (Hilton Sofia, Hilton Strand Helsinki, and Le Palace Hilton Geneva). "For us it is a very strong proof of our efforts for quality and perfection here in South Eastern Europe to see that also Hilton Sofia has been awarded 'Bulgaria's Leading Hotel' in 2005, which gives me personal pride too, as I managed this hotel in the last few years', said Friedrich W. Niemann.

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The German company Lidl (discount retailer) prepares to enter the Romanian retail market and has already established regional centers in Bucharest, Brasov and Iasi.
The company's next targets for new stores are Cluj-Napoca, Craiova and Bucharest where Lidl is coordinating the terrain acquisitions and renting operations.
Lidl is selling through its store chain a range of approximately 1,200 products, mostly food, but it also offers home appliances and other products.
The main marketing strategy of the company is the selling of its products in order to maintain a low price level.
The retailer is part of the Lidl & Schwarz group was created in Germany in 1930 and had the distribution of goods as an initial trade object. The German group divided its activities and created Lidl for retail sales while Kaufland and Handelshof took the whole sale distribution.
The group is already present in Romania through Kaufland.
The first Kaufland store was opened in October 2005 in Bucharest and the group intends to open 40 new stores of which approximately 10 are in Bucharest.
The expansion plans refers to the opening of 15-20 stores a year, one unit necessitating approximately 10 million euros investments.
The surface of a store varies between 3-4,000 square meters.
The retail sector in Romania is increasing after several such companies made their expansion plans public.
MiniMax Discount announced that wants to open 75 stores and it is ready to invest 75 million euros in this sector.
Plus Discount wants to open between 120 and 150 stores in 2006 and wants to invest 200 million euros.
The first company that promoted this type of trade was XXL Mega Discount, part of the German group Rewe.

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Eurobank Mutual Funds Management Romania, the investment management arm of Greek bank Eurobank, will launch two mutual funds. Eurobank is the majority shareholder of Bancpost. The manager has already received authorisation from CNVM (National Securities Commission) for the two funds.

Based on a survey conducted by the European Commission, which is currently under discussions with representative entrepreneurs? associations at European level, there is a proposal addressing the adoption of a new taxation policy, which will enable SMEs in the EU to calculate the profit made in the company according to the taxation rules enforced in the mother country or in the country where their headquarters is.


The National Union of Romanian Entrepreneurs (UNPR) warned that if Romania is unable to develop in 2006 a tax system based on predictable tax and duties and on active SME support measures, competitive with the systems enforced in the EU, then over 80% of small and medium-sized entrepreneurs will close their gates.

The measure may result in disastrous outcomes for the Romanian SMEs.

They will be unable to cope with the competition made by EU SMEs, which will benefit from the taxation terms and facilities they are granted in the country of origin?, according to Petre Mihai Milut, UNPR president.

According to the initiators, the system ?Taxing in the mother - country? should be on a volunteer basis for both member countries and should rely on a 5-year pilot programme.

The concept to be taxed in the country of origin, present by EC, relies on the idea of volunteer acknowledgement of taxation rules by members states.

The draft also proposes that the definition of an SME should be common in all the member states - companies with less than 250 employees, with a turnover equal to EUR 50 M and / or a result of the balance sheet equal or lower than EUR 43 M.

Hungary and Poland experiences have shown that the SMEs mostly affected were those active in the food and agricultural sectors, the EU standards leading to bankruptcy especially among small companies.

Peter Milford, coordinator of PHARE project on SME assistance, affirmed that despite important opportunities, SMEs are in great danger.

The change pace has increased in the new EU members, since competition has tightened after accession and several SMEs were unable to handle this.

Ovidiu Nicolescu, chairman of National Council of Private SMEs in Romania, stated that the environment within which SMEs apply for European integration, is an unpredictable one considering the excessive taxation, under-capitalisation, low competitiveness and productivity, as well as the difficulty to access funding.

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The representatives of the European Bank for Reconstruction and Development (EBRD) and the company Electrificare CFR signed a loan agreement worth 22.5 million euros for the modernization of the railway power network, ACT Media news agency reports.

The project aims at buying some equipment and at installing the equipment for four electrification centres, at buying eight maintenance motor vehicles as well as consulting services for supervising the setting up of equipment.

The loan will cover one hundred percent the eligible costs of the project and Romania's Government is to allocate 4.2 million euros. The loan granted by the RBRD will be paid back from the state budget through the agency of the budget of the Ministry of Transports, Civil Engineering and Tourism within 12 years, of which four years make up the grace period. Minister of Public Finance Sebastian Vladescu and managing director of Electrificare CFR Ioan Gavrila signed the loan act on behalf of Romania.

The EBRD was represented by Hildegard Gacek, resident representative of the European Bank for Reconstruction and Development in Romania. About one third of the railway network of Romania, 10,700 kilometres, is electrified, most equipment dates back to the 70s, a fact that leads to high costs for the maintenance of this equipment.

Hildegard Gacek said that this loan would improve the speed of the railway transport in Romania by modernizing the railway network, a fact that will be to the benefit of those who resort to the services of the national railway network. The EBRD is the biggest investor in Romania, running more than 2.8 billion euros in more than 150 projects.

This latest loan is part of the EBRD strategy set to contribute to the development of the transport infrastructure in Romania and adds to another loan agreement worth 145 million euros, which was signed with the Romanian authorities early this month for building a ring road and removing the effects of floods.

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Dexia Kommunalkredit Bank, a member of the Belgian Dexia Group, announced the grant of 4.35 million euros (about 16 million RON) in a credit to the Mures County Council that will finance the revamping of the county infrastructure ? informs a bank communiqué. Spread over 21 years and having a one-year period of grace, the credit will finance the rehabilitation of about one quarter (some 200 km) of the total length of the county roads, under the project ?Current & periodical maintenance and traffic safety on county roads.? ?This is the first direct financing to a local public Romanian authority gained by Dexia Kommunalkredit Bank by a public bid. The credit reflects the institution?s policy as a specialized bank, of developing long-term partnerships with the public local Romanian authorities and offer them a flexible structure of transactions by solutions adapted to their local needs,? declared Roxana Lazar, CEO Dexia Kommunalkredit Romania.

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Because of the poor preliminary offers received for the Savings Bank ? CEC, the authorities are seriously considering the suspension of the process. According to banking sources, none of the preliminary bids submitted on October 21 topped 300 million euros, although, according to market assessments, the figure should have easily attained 650 million euros. According to the request for offers, the Ministry of Finance, which represents the State as unique CEC shareholder, reserves itself the right to stop the process whenever it deems necessary. Although they are rather confused by the rumors about the possible postponement of the deadline for the submission of the final binding financial bids, the bidders put a brave face to the situation. ?We are further preparing for the next stage in CEC?s privatization. We participate in a well-defined process and I don?t believe we should make further comments; we will analyze the situation as we get supplementary information,? president of Raiffeisen Bank Romania Steven Groningen said.

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Erste Bank der Oesterreichischen Sparkassen AG launched this Wednesday the most substantial equity sale in the history of the Vienna Stock Exchange: 58.95 million new shares that will rise Erste?s share capital by 24.2%, from the current 486,367,200 euros. Taking into account that at the end of the previous trade session Erste was traded for 46,60 euros and that the dividend for 2005 was 0.55 euros per share, Erste estimates that it will raise from the capital market approximately 2.75 bn euros that will finance the acquisition of the Romanian Commercial Bank (BCR). ?The shareholders reacted positively to the announcement that Erste had won the bid for BCR, thus proving the confidence enjoyed by Erste Bank on capital markets since 1997, when it entered the bourse ring,? declared Erste Bank president Andreas Treichl. He added that after the takeover of BCR, Erste envisages only minor acquisitions. The capital increase will be performed by the sale, at the market price, of stock with preemption rights to existing shareholders who will get 4 new shares for each set of 15 old shares. The maximum quote per share and the upper price will not exceed 55 euros.

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The Austrian-owned companies that are already present in Romania are planning new investments on the Romanian market. Austrian investments in Romania will attract other investments, so that the interest for this area will remain high, Christian Zeileissen, Austria's ambassador to Romania, declared on Thursday. "Austria has a wide array of interests in Romania. Existing investments attract further investments. The interest did not disappear but on the contrary, Austrian investors are constantly interested in Romania," said Zeileissen, who will act in the coming six months as representative in Romania of the European Union's presidency, after Austria's taking over the rotating presidency of the European bloc. The largest Austrian investment is the takeover by Erste Bank of the Romanian Commercial Bank (BCR). Asked whether this takeover will boost investments, the ambassador answered that although he cannot provide a list of investment targets, they surely exist and that wood processing is for certain in the attention of Austrian investors. After the acquisition of BCR by Erste, Austria visibly changed its tone to Romania. Ambassador Zeileissen also referred to the extensive Nabucco project that has returned to the limelight following the gas crisis between the Russian Federation and Ukraine. The project envisages the construction of a pipeline for the transport of natural gas from the Caspian Sea to the West and which should also transit Romania. The project, which is part of the Trans European Networks Program, should follow the route Turkey - Bulgaria - Romania - Hungary - Austria and should become operational in 2011. However, ambassador Zeileissen said that the works would be sped up.

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The Romanian Ministry of Environment and Water Management signed on Friday a memorandum with the U.S. Army Engineer Research and Development Centre with a view to preventing floods and prepare against natural disasters. The cooperation document on environmental management will find new solutions for the protection of lives and households in Romania, said the U.S. ambassador in Bucharest Nicholas Taubman. The Romanian Minister of Environment and Water Management Sulfina Barbu said that the memorandum will contribute to the drawing up of the work plan for flood prevention. The Romanian State Secretary Lucia Ana Varga and U.S. official James Houston signed the document. The document stipulates that the two sides will cooperate on environment management, water resources, management of the coastal area, restoration of wet areas as well as preparations against natural disasters. A team of Romanian experts will pay a visit in the United States in March as part of the agreement. The United States contributed with 5 million dollars in restoring the areas affected by the floods in Romania last year. The engineer corps visited in May the affected areas and offered their support for the prevention of such calamities.

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The European Investment Bank (EIB) expects Romanian to enter the European Union on January 1, 2007, EIB's vice-president Wolfgang Roth on Friday said upon the meeting with PM Calin Popescu-Tariceanu at Victoria Palace, the Romanian government's headquarters. ''When the exact data of accession will be known, most likely at the European summit in June, from that moment we'll consider Romania as any other partner, as a full-fledged member of the European Union,'' said Roth. The EIB's vice-president explained that starting from the moment when the European bank will consider Romania as a full-fledged member of the European Union, it would change its policy when it comes to the loans' interest rates. ''The interest rates which the accession countries pay are higher, not very high, but higher, and we will change this policy not after accession, but when the exact data of accession will be decided,'' said Wolfgang Roth. At the same time, EIB's vice-president said that, following a survey, he realized that out of the ten countries of the latest wave of accession and the two countries due to join the EU, Romania has the lowest foreign debt. ''So watching statistical figures about Romania does not send me cold shiver down my spine,'' said Roth. He said that the European Investment Bank would like to finance in the future projects based on the public-private partnership, adding that they will be done under better conditions than the ones of the International Monetary Fund. Since 1990 Romania has been allotted from the EIB loans worth 6.26 billion euros. The funds were mainly used for infrastructure projects, health and education. The European Investment Bank is the European Union's financing institution.

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Four hundred and forty-five investment projects were registered with Regional Development Agencies over October 1, 2001 - December 30, 2005, in Romania, and investors were offered incentives in line with a law in 2001 on direct investment with significant impact in the economy, the Romanian Agency for Foreign Investment says in a release.

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The negotiations for the takeover of the share package owned by the South Korean party in Daewoo Automobile Romania by the Romanian state will be resumed next week in Prague or in South Korea, according to the minister of Economy and Commerce, Codrut Seres.
"The price was agreed on several months ago but other conditions of the contract must be discussed," said Seres.
The minister said that the price of the transaction will be announced after the contract is signed.
Seres believes that it would be much easier for the negotiations to be held in Prague as that is closer to Romania.
The Romanian authorities plan to resell the participation in Automobile Craiova to a strategic investor as soon as the factory returns to the state's possession.
Ford and Renault Nissan are allegedly some of the investors potentially interested in acquiring the plant.
The government authorized the Office for State Participations and Industry Privatization (OPSPI) to hire a local law firm and an international consultant for the completion of the transaction.
The Korean based company holds 51% of the Romanian company located in Craiova.
The rest belongs to Automobile Craiova in which the Romanian state is the main shareholder.
Daewoo Motors Craiova was founded in 1994 as a joint venture between Automobile Craiova and South Korean industrial group Daewoo.
The company signed an agreement with General Motors Daewoo Auto and Technology, which took over a part of the Daewoo Motor Co. assets in September 2002.

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Bucharest Stock Exchange general director Stere Farmache welcomed the Executive?s intention to have 5% of each the Romanian Lottery and the National Printing House listed on the bourse, as a highly transparent method for the sale of these shares, ACT Media news agency reports.

?The public bid is open to everyone, so the sales cannot be directed whatsoever,? Farmache said.

The Stock Exchange official expects the bourse liquidity and capitalization to rise significantly after the start of trades with the Property Fund, which pools stakes in over 100 companies as well as 20% of the Lottery and the National Printing House.

At the end of 2005, the government approved the strategy for the privatization of the Romanian Lottery and the National Printing House, under an emergency ordinance that provides that 68% of the capital of both companies will remain under State control, whereas the rest of 32% will be distributed as follows:

20% to the Property Fund, 5% to be sold on the Stock Exchange and 7% to be sold by direct negotiation to the companies? employees, Board members and retired staff.

Stere Farmache?s intervention is a reaction to rumors that the stakes to be sold on the bourse and by direct negotiation will be directed towards some key-characters who also helped devise the privatization strategy.

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Prime Minister Calin Popescu Tariceanu stated that the new president of AVAS, Razvan Orasanu (far right) must accelerate the rhythm of the privatizations and redesign the institution?s personnel scheme.

Preventing corruption, the acceleration of the privatization processes and the improvement of the human resources policy are the top priorities of the new chief of the Authority for the Recovery of State Assets.
"There was a misconception of the privatization authority which supported the maximizing of profits. The profit must not be always the priority," said Prime Minister Calin Popescu Tariceanu. The privatization process must be sped up, considers the PM, as the situation of the already troubled companies worsens as time passes.
The Prime Minister requested the new president of the privatization authority (AVAS) to speed up the pace of privatizations. "What we have today in the portfolio must be urgently privatized," advised Tariceanu, pointing out December 2007 as a deadline for most of the privatizations to be completed. Moreover, the companies which register losses and present no interest must be liquidated. A company is not a place for social protection, added Tariceanu.
"In 2006 we will accelerate the privatization process, especially through liquidation," said Laszlo Gyerki, the vice president of the institution. According to the official, the liquidation procedures regard the sale of a company's functional modules, which could keep their activity.
The chief of the Executive office criticized the institution for some of the privatization processes, including that of the local locomotive producer Electroputere. The optimum solution of the company would have been splitting it into four separate entities and separate sales for each part. At the beginning of the year, AVAS extended the term of offers for the second time.
Another problem identified by Tariceanu resides at a judiciary level, where the processes are delayed, as is the case of the Rafo Onesti refinery.  The refinery is involved in a scandal regarding its privatization, as investigations found that the buyer of the company failed to carry out investments as specified in the contract. Another irregularity over the refinery's privatization is a re-evaluation of the company inheritance which did not calculate the final price of the shares. Moreover, a series of obligations assumed by the Rafo buyer were modified in favor of the investor.
The prosecutors have also filed official charges against nine people in the Rafo case, accused of causing over 30.5 million euros losses to the state budget through illegal transactions with the refinery.
On the other hand, Tariceanu expressed confidence that the privatization of the local company Tractorul Brasov will be successfully concluded. The privatization commission has selected the Indian company Mahindra&Mahindra to takeover Tractorul.
Tariceanu underlined the positive results recorded by the privatization authority for debt recovery, but he considers that work is still to be done as the sums already recuperated represent a minor share of the portfolio.
"The privatization process, from AVAS's point of view, is in its final phase," states a release of the authority. AVAS still holds a residual portfolio, most of the companies being in a very difficult economic situation, according to the authority.

BCR, an example of transparency

The new president of the institution, Razvan Orasanu, stated that the AVAS records some delays in the Programmatic Adjustment Loan (PAL) program closed with the World Bank and a sustained effort is needed to fulfill its obligations by the end of February. Moreover, Orasanu also considers that the personnel policy of the institution must be redesigned, an idea supported by the Prime Minister, while public communication must be improved to ensure more transparency. The sale of the Romanian Commercial Bank (BCR) was an example of transparency, said Orasanu, while the PM requested that all privatization processes should be carried out by its model.
Tariceanu also suggested that AVAS and the Department of State's Participation and Privatization in Industry (OPSPI), currently subordinated to the Ministry of Economy, should merge. "Such a duality is unjustified," said Tariceanu, adding that the political ambitions of the 2000-2004 periods (when the Social Democrat Party was in power) generated the situation.
Regarding the personnel policy, Tariceanu considers that the present portfolio does not justify the large number of employees. According to data of AVAS, the portfolio contains 627 companies, without the special statute companies. Orasanu announced that he will conduct an analysis over the next two months to determine the authority's priorities. The results will be made public, said Orasanu.

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The vice president of the European Investment Bank, Wolfgang Roth, stated that the bank will not finance the Brasov ? Bors highway, contracted by the American company Bechtel without tender.

The Romanian authorities are to begin several environmental and infrastructure projects to fight pollution, upgrade facilities to European standards and develop transportation routes.
The Minister of Finance has been delegated by the government to identify new sources of financing amounting to approximately 1.6 billion euros by end of March to be used in environmental projects between 2006 and 2009. The programs are Romania's largest ever for the environment and include the upgrade of sewage systems, shutting down mining areas in Copsa Mica and Zlatna, the modernization of flood barriers and reductions in pollution. "The problems with the sewage systems of Bucharest and Arad must be solved by yearend, by the time of accession to the European Union," stated Sulfina Barbu, the Minister of Environment.
Other projects involve renovation of sea defenses on the coast line, the development of the Danube Delta Biosphere Reservation, and waste management programs,
The authorities will spend 11 million euros to finance the development of projects, strengthen the institutional capacity at a regional level and improve the management and absorption rate of the structural funds.
"There have not been a lot of investments in the area up to now," said Barbu. 
Half the necessary funds will be provided by the European Investment Bank (EIB), according to Prime Minister Calin Popescu Tariceanu. The premier met the vice-president of the EIB, Wolfgang Roth, on Friday.
However, the EIB vice president stated that the bank is maintaining its previous decision to refuse any credits for the Brasov - Bors (Transylvania) highway as the project was granted without a tender. "The contract was unacceptable from the start," said Roth. "We were not invited to participate in the project and we would have refused even if we had been," added Roth.
The 2.2 billion euros highway project was granted to the American company Bechtel by the former Social Democrat government. The Tariceanu government contested the plan and renegotiated with the company's officials to remove several provisions considered illegal.
Among the projects financed by the EIB is the Cernavoda - Constanta highway section, part of the Pan European Corridor IV, with a total length of 52 kilometers, which the bank will support with 250 million euros. The government will grant 104 million euros for this project
An upgrade of the railway route from Curtici to Simeria, passing through Arad and Deva, also part of the Pan European Corridor IV, will be financed by the European bank with 300 million euros, with 529 million euros coming from the state budget. The maximum speed could be of up to 160 kilometers per hour on the 185 kilometers long section of line.
The EIB credits will be refunded from the funds received by Romanian from the EU after its accession.
A third project financed by the EIB with 300 million euros involves measures to prevent meteorological catastrophes and the elimination of the negative effects of last year's floods. The loan will be granted for a period of 25 years.
Tariceanu emphasized that the Executive Office has decided to separate the infrastructure funds from the budget and thus avoid affecting the level of the budget deficit. The separation was one the requests formulated by the International Monetary Fund.
The total level of loans granted by the EIB to Romania since 1990 amounts to 6.26 billion euros, which have mainly been directed to transportation infrastructure, education and health projects. Roth stated during his meeting with Tariceanu that Romania will have the same conditions for credits as any other European country, with lower interest rates and longer maturity periods, once the European Council announces the exact date of EU accession.
The Ministry of Economy and Trade will also borrow more than 500 million euros in the first half of the year to finance the upgrade of infrastructure from several mining cities and to solve environmental issues related to the mining and energy industry. The Ministry of Finance has already begun to contact banks and the projects could be initiated by June.
The environmental programs are an essential part of the EU accession process, and the government aims to speed up their implementation by cutting red tape.

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Recent high profile media focus on Romania?s real estate sector has led to unprecedented levels of investor attention in this emerging Eastern European hotspot, according to www.Amberlamb.com property investment specialists.

Nicosia, Cyprus (PRWEB) January 15, 2006 -? Property investors seeking the highest returning emerging real estate markets are targeting Romania as it tops the poll for profitable prospects for the next decade.

Following on from a recent television documentary and various related media reports in the UK about which countries in Europe offer the real estate investor the best potential for profit over the next ten years, Romania ? which topped the profit poll ? has become the centre of attention for intense investment activity.

www.Amberlamb.com, the property investment specialists who provide free and unbiased information about the prospects and realities of property investment in many emerging property markets worldwide, have been inundated with requests for Romanian property buyer?s guides and economic analysis from those keen to learn more about the realities of the Romanian real estate sector before they commit to it.

Because Romania is in line for EU accession by at least 2008 with more optimistic predictions for its entry dated at less than twelve months away, the feeling is that the country which is already receiving more foreign direct investment than any of its neighbors will immediately attract substantial and sustained investment and its economy will be boosted resulting in a property market that will boom.

As property prices in Romania are currently some of the most affordable in the entire expanded European zone, the prospects for a boom seem tangible. And because the market is accessible for all levels of investor this is already boosting its appeal greatly. Those keen to establish high returning investments who are starting with a low investment base can consider the Romanian property market as can those with substantial funds ready to lay down. The latter group can potentially make massive inroads into the Romanian real estate sector where both residential and commercial opportunities abound.

But Amberlamb believe it is equally important to discuss some of the less attractive aspects of property investment in Romania if an investor is to enter the market place with his eyes wide open and his ambitions for the market being realistic and achievable. Those who faithfully follow media advice and fall into the first investment opportunity they find may have a rude awakening when they discover the limitations of Romanian property law and also the lack of transparency in the whole buying process.

The potential available in Romania is definitely undeniable with economic assessment from property investment industry experts suggesting property price increases in the region of 400% achievable within ten years; but the real estate sector in Romania is currently immature and underdeveloped and any investor considering opportunities available should ensure they know the whole truth about property investment in Romania before they proceed.

For property investment guides and information about Romania and other emerging real estate markets globally visit http://www.Amberlamb.com

About AmberLamb:

www.Amberlamb.com are online publishers of impartial and independent overseas investment property news, information and guides.

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General Mayor Adriean Videanu said that the new tax for downtown Bucharest he had announced last week will not be introduced at this time.
However, other measures will be taken for the improvement of traffic such as forcing drivers outside Bucharest to leave their cars at the city's entrance when coming to the capital.
"We will build parking spaces at the city's entrances for those who transit Bucharest. These people will be able to leave their cars in safety in these parking lots and they will be able to use means of public transport to get around the city," the mayor explained.
Another solution would be to move the public transport depots from to the city's margins, Videanu said.
"We all feel the problems of traffic in Bucharest. But as soon as we find a solution, it is immediately criticized," Videanu said about the negative reactions the downtown tax raised.
Videanu said this tax will be introduced in a few years, but at the moment it is not the best measure to be taken.
The tax for drivers was announced last Wednesday by Videanu, who said the project is based on a similar project passed some time ago and still in effect, which requires all drivers to pay a tax to the National Road Administration.
"The tax (...) is not something new. It works with success in other capitals and it is, on one hand, a measure to relieve traffic and on the other hand, a measure to reduce the level of pollution," according to the head of the city's Transport and Traffic Safety Department, Gheorghe Udriste.
The announcement raised critical reactions from many drivers and from the Social Democratic Party, whose representatives said the situation in Bucharest is not the same as in the other European capitals where the tax was introduced.

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Romania will borrow euro850 million (US$1 billion) from the European Investment Bank in 2006 to fund infrastructure improvements and flood-prevention projects, Prime Minister Calin Popescu Tariceanu said Friday.

Tariceanu said Romania would spend euro800 million (US$960 million) to co-finance the projects, which included building a new highway, modernizing railways and rehabilitating flood-damaged areas.

"These projects are essential for Romania," Tariceanu said after meeting with the bank's vice president, Wolfgang Roth. "A modern infrastructure means connecting Romania to Europe's economy and will also develop of local communities and create jobs."

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The Union of Romanian Poultry Breeders (UCPR) and the state authorities are currently negotiating solutions meant to support the Romanian fowl breeding sector afflicted by the bird flu, and the rise, by up to 70 percent, in the customs duties for fowl meat, for a limited time span could be one of the solutions, Agriculture Minister Gheorghe Flutur said. The fowl breeders require the authorities to curb fowl meat imports with the view to capitalizing and keeping the home production at the level previous to the bird flu crisis, but also efficient tariffs, UCPR chairman Ilie Van told Rompres. Such steps must be urgently taken, within the international agreements Romania signed, but that play the role of protecting the whole fowl breeding sector and structure, Van stressed. Governmental officials and a delegation of officials from ministries such as the EU Integration, Trade and Agriculture have already discussed the step to increase the customs fees for chicken meat, in Brussels on Monday, Minister Flutur pointed out.

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Elerom Roman announced its financial figures by the third quarter of 2005 reporting a turnover of RON 4.4 million, which exceeds by 7% the forecast, the revenues amounted to RON 4.9 million (18% over the budget, while expenses ranged at RON 4.7 million (13% over the budget), Bursa reports.

Additionally, the company reported RON 263,000 gross profit, which is 511% higher than expected.

Elerom is listed on the Rasdaq market under ELER.

Its core business is construction and engineering works.

The equity capital is a little over RON three million and its face value is RON 13 per share.

The main shareholder is "Electo-Center", owner of 22.2% of the equity capital.

"SIF Moldova" also holds 8.93% of the shares.

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GHCL Ltd has acquired a majority equity stake of 64 per cent in S C Bega Upsom S A-- a leading soda ash company in Romania--for a consideration of USD 19.50 million.

Announcing this to BSE, the company said it has acquired the controlling stake in the Romanian Soda Ash company in early December, 2005, with a requirement to make a public offer to purchase the balance 36 per cent by the local Romanian regulations.

Commenting on the turnaround strategy, GHCL Chairman Sanjay Dalmia said, ''GHCL is India's lowest cost producer of Synthetic Soda Ash and with strength our endeavor is to leverage and replicate our Indian experience to make this plant the lowest cost producer of soda ash in Europe, given its strategic location to tap East and Central European Markets having substantial reserves of natural resources required for production of Soda Ash.'' The company is on its way to becoming a dominant player in the Global Soda Ash Industry; upon completion of expansions underway in India and Romania. Its Global capacity would be 18,00,000 MTPA.

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DaimlerChrysler has won an order from the bus operator RATB in Bucharest, Romania to supply 400 Mercedes-Benz brand Citaro city buses in 2006.

The company is expected to deliver an additional 100 units by mid-2007.

Societe Generale, the fifth largest European bank based on its value, plans to open 200 agencies in Romania in 2006 and to assign ¤2 billion in the following years for purchases abroad.

Societe Generale spent ¤2 billion in the past five years to finance their expansion and might assign the same amount in the next five years.

Societe Generale is present in Romania through BRD.

At the end of September of 2005, BRD had ¤5.2 billion in assets, more than 1.7 million customers and had more than 290 units.

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The global outdoor giant JC Decaux has entered Romania by buying domestic outdoor advertising company Churchill View. The acquisition was made by Affichage Holding, the leader of the outdoor market in Switzerland, in which JC Decaux owns the controlling interests. The value of the deal was not revealed, but it is unofficially estimated at several million euros.

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Volksbank plans to attain profits of more than 7 million euros in 2006, three times the level posted last year. To this end, the bank will double its unit network and also rely on the development of alternative sales channels, such as mobile bankers.

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The Romanian-American Enterprise Fund (RAEF) is negotiating a sale of its package of interests in Domenia Credit, Motoractive and Estima Finance, in a deal estimated at 100 - 120 million euros, market sources told Ziarul Financiar.

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More than half of Romanian employees prefer stressful but well paid jobs, reveals a survey of Neogen. Some 54 percent say they prefer stressful but well paid jobs, while 26 percent said they would accept a drop of 15 percent in salary for a peaceful life. Some 10 percent of the persons working in the law system would accept a much lower salary for a less demanding job, while most employees in trade/retail (62 percent) and marketing (59 percent) want a better salary even on more stressful terms. Statistics reveal that Cluj locals are the least stressed, 21 percent of them considering their job not so demanding. Workers in Constanta and Oradea said they would give 15 percent of the salary for less stress, while people in Arad, Iasi and Brasov would accept more stress for better wages.

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The gross index of industrial production advanced 1.3 percent over the first 11 months of 2005 as against the similar period of 2004, the National Statistics Institute informs. The gross index of processing industry stood at 102.2 percent, while productivity advanced 4.2 percent. The total turnover of companies operating in industry registered a 3.6 percent increase in real terms over the analyzed period. The main resources of primary energy totalized 37.2 million tonnes equivalent crude oil, of which 22.5 million tonnes represent domestic production. The total turnover of companies operating in retail (excepting cars and motorcycles) moved up 16 percent as against the previous similar period. Significant increases were also reported for food sales, drinks and tobacco (17.5 percent) and other categories. Services also posted a higher turnover, some 17.6 percent more over January-November 2005.

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Romania has some of the lowest production costs in the world, according to a survey of the Italian Association of Foreign Chambers of Commerce (Assocamerestero). The analysis takes into account a collection of factors that influence production costs such as the cost of labor, electricity, fuel, water, communications and rent, and was carried out in the first six months of last year.
In Romania, the wage of a qualified worker is of approximately 250 euros, while in Bulgaria it is 350 euros, and in Italy a comparably qualified worker would have to be paid 2,150 euros, with 3,375 euros in Germany topping the list.
A mid-level executive would be paid 375 euros in Bulgaria, 600 euros in Romania and 443 euros in China. At the same time a mid-level executive would earn 3,618 euros in France and 4,200 euros in Italy.

Another important factor for investors is electricity which varies in Eastern Europe between 0.015 euro/kW/hour in Romania, 0.027 euro/kW/hour in Bulgaria and 0.09 euro/kW/hour in Slovakia. Similar tariffs are charged in Spain and the Netherlands while the largest tariffs are charged in the Great Britain and Germany, 0.17 euro/kW/hour and 0.12 euro/kW/hour respectively.

Rent for industrial space is lower in Romania, with approximately 0.7 euro/square meter/month, the Czech Republic with 0.47 euro/square meter/month and China with 1.69 euro/square meter/month.
Fuels are cheaper in the producing countries such as Russia and Venezuela while water is extremely cheap in the United States (0.5 euros/cubic meter) and very expensive in Canada (five euros/cubic meter).

As for the cost of communication, fixed line telephone calls are the lowest on the highly competitive markets. For instance, a call from Switzerland to Italy costs 0.08 euros/minute while the call from Spain to the same destination will cost 0.18 euros/minute.
The study concludes that the regions that allow investors to save money are Eastern Europe, the Northern Africa and China. In Western Europe the lowest production costs are found in Spain and the highest in Germany and Great Britain.

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The biggest domestic car importer anticipates sales will rise this year to 35,000 units, despite some players' predictions that the market will fall. Porsche Romania, the domestic importer of Audi, Porsche, Seat, Skoda and Volskwagen, last year sold 32,450 cars, more than 84% higher than in the previous year. The growth pace is almost double that witnessed by the car market during the same period.

Paint and varnish manufacturer Dufa Romania budgeted a 20% growth in turnover for this year. "Last year saw investments in marketing, distribution and new products. In 2006, we will take investments in these sectors further, but we will also earmark 4 million euros for the company's production and logistic capacities," Bruno Negoita, the general manager of Dufa Romania, told Ziarul Financiar.

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Yoram Israeli, the chairman of Tnuva Romania, the newest player on the domestic dairy market, says the decision to invest 55 million euros was made amid extremely low consumption levels. Israeli wants to turn the Romanian branch of Israel's biggest food producer into a top player on the fresh dairy products market.

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Slovenian home appliances manufacturer Gorenje estimates that sales will increase by 15%, to 16.5m euros, in Romania this year.

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The Ministry of Economy and Trade (MEC) wants more import sources for natural gas and more storage facilities, a release of the ministry informs. The Romanian Government approved in November 2005 the Nabucco Project Memorandum, initialised by MEC, concerning the construction of natural gas transport pipeline from Caspian Sea region and Middle East towards Western Europe. Turkey, Bulgaria, Hungary and Austria are Romania's partners in the project. The pipeline will be 3,282 km long, of which 450 km will cross the Romanian territory. Romania will participate in the project with the National Gas Transport Company Transgaz- SA Medias. Transgaz has already constructed 37 km of pipeline, meant to interconnect the Romanian and Hungarian gas systems. Romgaz and MOL are currently negotiating the investment project. The total amount of underground stored gas was 3,084 million cubic metres at the end of 2005. Romgaz has invested so far 52 million lei in gas underground storage facilities. Romania will increase its underground storage capacity to 6 billion cm by 2007. Petrom Group OMV also has feasibility projects for storage facilities in amount of 640 million cm worth of 80 million dollars in Piscolt and Boldesti, to be carried out on a 3 and 5-year period. Romgaz will allocate 28 million euros for the development of natural gas storage facilities in 2006.

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Romania was ranked in 2005 at least 15 percent under the level of greenhouse gases emissions allocated by the Kyoto Protocol, a report of the Terra Millenium III Foundation reports. Taking into account the so-called ? surplus of carbon credit? Romania is estimated to have a significant participation in the international trade with emissions. Until now, the Romanian government signed eight bilateral agreements regarding this kind of trade. Romania will get over 12 million euro/emission reduction unit/ over the period 2008-2012. The report was drawn up in the project ? Air quality and climatic changes? financed by the programme EU ? PHARE ACCESS, project implemented in partnership with non-governmental organizations Terra Millenium III and Polish Ecological Club. Romania?s accession to the EU, scheduled for January 1, 2007, will have limited effects on the development of Projects JI ( joint implementation) due to the transit periods allocated to Romania for some of the most relevant directives connected to the environment. Thus, restrictions referring to technologies and legislative additionality for JI will be relatively reduced. Acccording to the Kyoto Protocol, Romania agreed to reduce greenhouse gas emissions by 8 percent as compared to 1989 levels ( reference year) for the first part of agreement, 2008-2012. The reference year for HFC, PFC, SF6 has not been established yet.

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Romania must develop its energy production capacities so that, in the future, eventual evolutions and crises affect Romania as little as possible , Premier Calin Popescu-Tariceanu stated on Wednesday at Victoria Palace (Romanian Government headquarters). "Recently, when the gas crisis erupted, Romania did not suffer, but this was also due to a pretty broad range of production capacities", explained the Prime Minister at the end of the working meeting at the Government having as the main topic of discussion "The Romanian economy and development projects over 2006-2008".As well, according to the Premier, an important element the Ministry of Economy and Trade (MEC) should pay attention to is linked to the programme of rendering the energy production more efficient and the upgrading of thermal power stations that supply towns with heat and electricity. "This programme is based on the construction of cogeneration or CHP (combined heat and power) plants with very high efficiency rates and reduced costs", Calin Popescu-Tariceanu highlighted.

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Romanian-Czech economic exchanges have constantly improved over the past years because Romania, due to its economic potential, the market's dimensions and the traditional relations, represents for the Czech Republic one of the most interesting partners of South-Eastern Europe, said Karel Zdenovec, the head of the Czech commercial agency in Bucharest in an interview for Top Business magazine. The proof is the permanent growth of the exchanges of goods, as well as the increase of turnover fourfold over the past four years. The positive trend continued in 2004 and 2005, as well as new important increase in mutual commercial exchanges and the interannual increase stood at about 44 percent. At present, for example, Romania ranks first among the Czech Republic's partners from South-Eastern Europe, as regards commercial exchanges and exports alike. In 2004 the volume of commercial exchanges reached 600 million euros. Although Romanian exports expressed in percentage points, has raised significantly over the past years, in absolute figures, the balance is developing in favour of the Czech export (the balance exceeded 264 million euros in favour of the Czech Republic), said the Czech diplomat.

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The inflation rate stood at 8.6 percent in 2005, higher than the target, but down from the 9.3 percent in 2004, the National Statistics Institute says on Wednesday. The initial target, set by the Romanian Government and the Central Bank, initially was of 7 percent, but was next revised to 7.5 percent. Estimates made in late 2005 put inflation at 8.3 percent.

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Italian Enel utility company, the owner of Electrica Dobrogea and Electrica Banat Romanian electricity distribution companies plans to invest over 65 million euros in 2006, ACT Media news agency reports.

Enel will also set up two distinct services providers, one each for the two main categories of customers - 100,000 industrial customers and over 1.3 million individual consumers.

The Italian giant said after the signing of the privatistaion contract for Electrica Banat and Electrica Dobrogea that it will carry out an investment project of approximately 1 billion euro in the following 15 years, 300 million of which to be invested in the following five years.

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Barely a month after soda ash producer GHCL Ltd acquired a 65 per cent stake in a Romanian company, S.C. Bega Upsom S.A., it has ramped up production at the Romanian facility.

GHCL has started implementing cost reduction measures aimed at pruning input costs of raw materials and utilities, a company statement said. The current production rate is already up 34 per cent at 650 tonne per day, as compared to last year's average of 486 tonnes (January to November 2005).

Commenting on the strategy, Sanjay Dalmia, Chairman, GHCL, said, "GHCL is India's lowest cost producer of synthetic soda ash and with this strength, our endeavour is to leverage and replicate our Indian experience to make this plant the lowest cost producer of soda ash in Europe."

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Mid Europa Partners, a company which manages investment funds, could invest more than 160 million euros in Romania through its second investment fund intended for Central and Eastern Europe. The fund has a total capitalization of 650 million euros.
Thierry Baudon, a managing partner with Mid Europa Partners, stated that Romania is a very important market for the company and 20-25% of the sums attracted by the fund will be invested in the Romanian market if the right opportunities are found.

The most attractive sectors in Romania are considered to be telecommunications, energy, industry, transportations and the mass media.

Baudon believes that the size of the fund reflects an acknowledgement of the investment opportunities which exist in Central Europe, which will grow further as the country integrates into the European Union. 
The fund has announced that it will invest between 25 and 100 million euros in companies which have good profitability rates and a value of maximum one billion euros.

The company recently announced the closing of Emerging Europe Convergence Fund 2, another European investment fund launched in May 2005.
The fund had an initial capitalization target of 500 million euros.

ABN-Amro, AIG Global Investment Group, AXA, MetLife and Citigroup were among the investors in the fund.
Mid Europa Partners owned a share package in MobiFon, the former manager of the local mobile phone operator Connex, and sold it in March 2005.

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Local oil company Petrom will supplement the volume of natural gas delivered to the Romanian consumers by 3.4 million cubic meters per day.
The measure will apply only in January and November and was adopted because of the low temperatures registered in the last period.
The oil company delivers 14.15 million cubic meters of natural gas per day compared to the total consumption of 70 million cubic meters of natural gas per day used in Romania.
The supplementary quantities will come from the company's supplies made during the summer.

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The number of Internet users in Romania increased by 52% in December 2005 comparing with the similar month of 2004.
The Internet traffic registered a new record regarding the accessing of the Romanian sites both by Romanian and foreign users.
NetBridge company, the owner of the audience measurement system Traffic.ro, stated that in December the Romanian sites were visited by 4.3 million Romanian users and 13.05 million foreign Internet users.
This is a new audience record for the Internet in Romania, the highest number of users being reached in November when 14.6 million users navigated on the Romanian sites.

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National Natural Gas Company Romgaz Medias (SNGN) initiated in 2005 a 63 million euro investment program in the Mures county, with the investment program expected to be completed in the third quarter of 2006, Bursa reports.

SNGN Romgaz Medias recently completed an investment in the Mures-based locality Botorca, where the company established the largest processing unit for natural gas in Transylvania.

The unit has a processing capacity of up to 2.5 million of cubic meters per day and the investment is estimated at some 15 million RON.

SNGN Romgaz Medias is also on the way with a project for Targu Mures based Aquaserv Public Company, project that is estimated at some 28 million euro.

The project is financed by one of the ISPA programs.

The project concerns rehabilitation works to the wastewater treatment station in Targu Mures, the rehabilitation of the drinkable water treatment station and the expansion of the sewerage network.

The ISPA program for Targu Mures is one of the largest in the country, earmarked for improving the local infrastructure and the upgrading and rehabilitation of water, sewerage and treatment plants in the city.

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The 2005 consolidated budget deficit stands at approximately 0.7% of the GDP, according to preliminary data released by the Finance Ministry (MFP), which indicates that the deficit is close to what the International Monetary Fund (IMF) requested.


The main reason for the derailing of the stand-by arrangement between Romania and the IMF in October 2005 related to the problems surrounding the drawing up of the 2006 Budget, economic disequilibria as well as wage policy slippages.

IMF experts are expected in Bucharest in the last week of January to assess the 2005 macroeconomics indicators and to discuss the 2006-2008 macroeconomic outlook.

The deficit close to 0.7% of the GDP is aligned with the IMF requests, and IMF experts expressed satisfaction with the prospect of the deficit not to exceed 1% of the GDP in 2005.

However, the deficit figures might change, but preliminary Government receipts so far represents 29.7% of the GDP and outlays totalled 30.4% of the GDP.

The deficit figures might change as more information regarding the 2005 receipts and spending gets in, as was the case last week, when the deficit was upwardly adjusted from 0.5% of the GDP to 0.7%.

Data released last week by the MFP about receipts indicated unified revenues of RON 81.3 bln., that is 29% of the GDP estimated by the National Commission for Economic Projections at RON 281.2 bln.

The Budget results in the 11-mo of 2005 indicated a surplus of 1% of the GDP, which means the 0.7%-of-the-GDP deficit recorded in late 2005 reflects December 2005 spending of almost 4.4% of the GDP, that is RON 12.36 bln (EUR 3.4 bln.)

Average monthly spending stood at 2.5 per cent of the GDP.

The unified Budget recorded a surplus of 1.2% of the GDP in 2005, whereas the 2006 Budget is built on a projection of total spending exceeding receipts by only 0.5% of the GDP.

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Quinton Quayle

The British Ambassador to Bucharest, Quinton Quayle, yesterday said he is puzzled that although Romanian politicians are not corrupt, their relatives get rich so quickly. He also said that his time in Romania has been the most pleasant period in his nearly 30 years of diplomacy.
Quayle said the mass media has an essential role in investigating politicians' wealth and gave the example of a central newspaper's article on this issue, without giving details about the politicians' names. Media sources recently speculated that many politicians had obtained assets in a dubious manner and used inheritances from obscure relatives to justify them.
"The media makes a valuable effort. (...) How is it possible for the politicians not to be corrupt, but for their relatives to get rich with no explanation?" Quayle wondered.
When asked if he was referring to a particular case, the ambassador did not give a specific response, but did give a presentation as to how he perceived the evolution of the anticorruption fight since November 2002, when he was appointed ambassador to Bucharest.
According to Quayle, when he came to Romania corruption was mainly debated in relation to small scale graft and there were very few cases presented in the media. Quayle underlined the special effort made by former U.S. Ambassador Michael Guest, who should be thanked for having opened the debate on the corruption issue. The ambassador also talked about the Social Democratic government's attempt to fight corruption, but said that the results had been below expectations.
In Quayle's opinion, the key-event was the government change, in 2004, when corruption became the main theme of the electoral campaign led by the current president.
However, Quayle said he does not have the feeling that the anticorruption campaign is the result of a national effort, adding that he does not agree with those who say the fight against corruption is close to an end. Nevertheless, the ambassador praised the efforts made by Justice Minister Monica Macovei, saying she was doing "a remarkable job." He also mentioned Interior Minister Vasile Blaga as having made a positive contribution to diminishing corruption. Quayle said the establishment of the National Anticorruption Department had been an important step in the fight against corruption.
However, the ambassador said the level of "daily" corruption had not changed radically and the results of the fight against high level corruption are still awaited, despite the government's promises.
Quayle said he is so persistent when it comes to corruption because Romania will receive funds of about 31 billion euros from European tax payers for the 2007-2013 period.
"(...) We are offering a lot of money. We are making a huge investment in Romania's future because we believe Romania will develop positively (...) If corruption remains unsolved, how can we believe our money will be used in the right way?" Quayle said.

Romania, best experience in British ambassador's career

"The most unpleasant moment for me will be leaving Romania. Honestly, it was an unforgettable experience," said Quayle, adding that his time in Romania has been the most pleasant period in his nearly 30 years of diplomacy.
In an interview with Mediafax news agency, Quayle underlined that his presence in Romania had covered a critical period in the country's history and expressed his wish to return when the country actually joins the European Union, in 2007.
Quayle's term as ambassador ends in May this year. "This was the first time I have been an ambassador and it is a privilege for me. Romania is a country that deserves better appreciation from Europeans and, I think, from Romanians as well," he said.
The ambassador added that his work in his last few months in office will focus on helping Romania obtain positive appreciations in the European Commission's country report, due in May.
"This is a long road, which was initiated by (British Prime Minister) Tony Blair in 1999. We are on the last lap and we need more intense efforts so that Romania makes it to the finish line in good conditions," underlined Quayle.
Personally, the ambassador said he wishes to come back to Romania and go to Iasi, where he learned Romanian. He also said he wanted to maintain the friendships he has developed here.
Quayle also saluted the progress Romania has made in recent years and expressed his confidence in the country's economic policies, as Romania has carried out difficult reforms, unlike the European Union, Quayle said.
"Europe needs economic reform. Romania has carried out difficult reforms. The EU hasn't really succeeded," he said.
The ambassador also praised Romanians' enthusiasm over EU accession, but criticized the fact that people know too little about the advantages and disadvantages of European integration.
He said the British Embassy had launched three contests to promote a wider debate on EU accession, which were welcomed with enthusiasm, as more than 400 entries had been recorded in the competitions. The British Embassy gave awards for best media reports and best projects about the implications of EU accession last year.
Quayle is to visit Mehedinti and Craiova, to meet one of the winners in the competitions, a high-school student.
However, a lot more needs to be done, because the knowledge is "rather shallow" and there is less than a year left until accession, he said.

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Greek dairy company Kri Kri announced that it targets to enter and further expand on the Bulgarian, Romanian and Serbian markets, "Dnevnik a.m." reports.

Kri Kri already exports yoghurt products to Bulgaria and looks for partnerships in order to start shipping ice cream to the country.

The company will not invest in production units abroad, opting instead to concentrate production at native facilities.

The Kri Kri business plan envisages 10 mln euro investments in '05-'08, aimed at increasing ice cream production and storage capacity, expansion of the store network and the development and rollout of new products.

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The Romanian merger & acquisition market (M&A) was worth $3.4 billion in 2005, with 100 complete transactions, twice more than in 2004, while M&A volume worldwide rose by 19% in 2005, compared to 2004, whereas this increase was 96% in Romania, the Romanian market reaching the highest level in the past seven years, both in terms of value and number of transactions, ACT Media news agency reports.


Note that the survey does not include BCR - Erste Bank and Connex - Vodafone transactions, contracts signed in 2005, as they will be finalised this year.

Yet, Romania is behind Turkey, which registered $14.4 billion, last year in M&A, Poland ($9.4 bln.), the Czech Republic ($8.9 bln.), Slovakia ($4.5 bln.) and even Bulgaria, which registered transactions worth $3.6 billion.

But if only the two important deals signed this year are added, BCR - Erste Bank (EUR 3.75 bln. or $4.46 bln.) and Connex - Vodafone ($2.5 bln.), then the total value exceeds $10 billion. Based on the same survey, the Central and East European M&A market registered a boom last year, by 146 per cent in value terms and by 35 per cent in terms of complete transactions.

The growth came about from the telecommunications, financial services and utilities. For 2006, one should expect that telecommunications, financial services and utilities continue to remain stars for M&A. "This year, I expect acquisitions in the retail field (FMCG and others), considering that for some players from the EU market, at the moment, it is more convenient to buy a company active in this field, with a chain of stores and a well developed distribution system rather than starting from scratch", Markus Piuk, coordinator lawyer with Schoenherr & Asociatii, a law firm with expertise in M&A said.

Piuk also expects other field may be appealing in 2006 for acquisitions, such as the services industry (particularly the regulated ones such as public utilities).

In case of strategic investors, either they are from Romania or somewhere else, they will attempt to integrate what they have already bought and to extend in order to avoid being absorbed in their turn.

"Should a financial investor buy a Romanian company, then he also considers an exit strategy, which particularly in case of a private equity fund, may not come earlier than five years since the acquisition time.

Then the business development plan will be a short term or a medium term one, using also financial engineering techniques in order to make the more attractive", Piuk said.

"2006 will equally be the year of confirmation for the control take-over on the shareholders in at least two of the five SIFs, a slow but steady process, led over the past five years either by regional investment funds (SIF 1 and SIF 3) or by local businessmen (SIF 2 and SIF 5)", said coordinator partner lawyer with the Popovici si Asociatii Florian Nitu. Regarding the real estate field, Nitu thinks one could easily gain this in the market, close to 2 billion EUR, particularly by means of ongoing or future projects.

"It could that more than half of this amount may be mobilised by seven - eight funds, the balance being distributed among several companies," Nitu added. In IT, the best software, expected to be appealing for an increasing number of investors.

"After the conclusion of the Siveco - Intel - EI partnership, one should expect both Softwin and Romsys become flexible to such partnerships or mergers/acquisitions."

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Mittal Steel Holdings bought almost half of the 10-percent stake of the capital of the harbour operator Romportmet, for which it paid 7.5 million (1 euro = 3.68 lei). The above-mentioned company bought 1.1 million shares, that is, 4.5 percent of the capital of Romportmet. The owner of the iron-and-steel works based in Galati (eastern Romania) intended to buy 2.5 million shares at a unitary price of 6.65 lei per share, but gave up the transaction. At present Mittal Steel Holdings holds 21.05 million shares accounting for 82.9 percent of the Romportmet capital, but works in a concerted way with Sidex Trading company, which holds 11.5 percent. Thus, Mittal Steel controls 94.4 percent of the harbour operator capital. Mention should be made again of the fact that in September 2005 Mittal Steel took over Romportmet from the investment fund Broadhurst and paid for the majority stake the sum of 47 million dollars.

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The State Assets Realization Authority (AVAS) put on sale 62.8 percent (78,009,632 shares) of Electroputere Craiova's social capital, according to a release . Following the announcement, one foreign and three Romanian companies showed interest in the purchase. One of these companies asked for a further deadline in order to prepare its offer, for which reason AVAS set the final date to January 20. The negotiation is open to Romanian or foreign bidders who haven't directly or indirectly prejudiced the economic and financial situation of a company previously privatized, by not fulfilling the engagements assumed in the privatization contract. Electroputere Craiova produces engines, generators and electrical transformers, having a social capital of 12,416,795 lei. (1 euro = 3.6 lei)

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Forever Living Products, a company that sells cosmetics and nutrition products, registered a 20.5 million euros turnover in 2005, which is double compared to the 2004 figures, daily Ziarul Financiar reports. General manager Gabor Szocs considers that the good evolution is due to the increase in distributor network (from 105,000 to 150,000 in 2005) and a better positioning of the brand on the market. Forever Living Products has seven warehouses in Romania and wants to open new locations in Republic of Moldova and Craiova. The company presents 50 products on the Romanian market, all imported from the United States. The main competitors for the company are Amway, Avon, Oriflame and Zepter. The market of direct sales grew over the last years, due to the increase in buying power and the expected EU accession, say the players in the field. Forever Living Products is the branch of the U.S company with offices in 120 countries.\

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One of the biggest players in the milling and bakery market in Romania, Loulis Co., will take this year a first step to expand its store chain and will focus on increasing profitability. The Family store chain, re-named Balforno Fresh, already includes 28 stores, which, in 2005, underwent a process of re-branding, worth 150,000 euros. Communication in stores and mailing were central to the re-branding campaign. The Belforno store chain covers a range of products specific to milling and bakery, including frozen patisserie dough. The Belforno Fresh concept supposes the use of stoves directly in stores, so that baking can take place on the spot. According to data from Loulis, the company has a market share of 22 percent fresh bread and 42 percent toast. In 2005, Loulis posted 50.2 million euros in turnover, up 25 percent from 2004.

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Agricola Bacau, the largest poultry producer on the Romanian domestic market, announced that it would reconsider its investments plan worth 20 million euros announced for 2006. At mid-2005, the company based in the eastern Bacau city had announced it would start, in 2006, an investments program worth over 20 million euros, for the restructuring of the pork sector. However, because of the 2005 floods that affected the country's northeastern region of Moldova and the bird flu outbreak, the group will now re-discuss the investments plan. Agricola Bacau, which is also Romania's largest poultry exporter, cut in early October 2005 all supplies to foreign partners, causing stockpiling and financial losses. Despite that, the company succeeded in ending 2005 with a turnover higher than the year before and with no loss. Due to sales over the first three quarters of 2005, the turnover topped 300 million lei (82 million euros). Initial estimations stood at 335 million lei (94 million euros), up 10 percent against 2004. Total investments so far exceed 53 million dollars (4 million euros). Agricola Bacau runs nine production units, to which count a concentrated fodder plant, a poultry slaughterhouse and a milk-processing unit. Agricola produces daily 100 tons of meat and meat products and over 300,000 eggs.

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The world's second-largest insurance broker AON fully acquired in late 2005 Romanian insurance broker KaRo Insurance Services. KaRo ranks second in Romania after Marsh Romania firm. Last year it brokered contracts worth 12.5 million euros, up 50 percent against 2004. The company closed the year 2004 with a net profit of about 306,000 euros and a market share of almost five percent. AON has no intention to operate changes in KaRo management after the takeover, but counts on the experience of the local management, the more so as the two companies have been collaborating since 1996. KaRo has 30 employees and five offices throughout the country, two of them located in Bucharest. AON reported in 2004 a turnover of 10.2 billion dollars. Other major players on the Romanian market of general insurance brokerage are Marsh, Porsche, EOS Risq and Gras Savoye.

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Romania will reach an all-time record of foreign capital attracted to its economy this year at more than 5.5 billion euros, officials of the Romanian Agency for Foreign Investment (ARIS) said on Tuesday. "The rises in the foreign capital underwritten in 2005 show Romania is an increasingly attractive destination for the foreign investors by its forthcoming accession to the European Union. This trend looks set to maintain in 2006 as well, when we forecast Romania will draw a new all-time record of the direct foreign capital, at more than 5.5 billion euros," ARIS counsellor Iustina Lutan said.She explained that the improvement of the business climate coupled with the effects of the introduction of the flat tax as well as the foreign partners' positive attitude towards Romania resulted in drawing foreign direct investment (FDI) worth roughly 3.483 billion euros in the first ten months of 2005. The most important FDI components in Romania were capital shareholdings at 1.244 billion euros, accounting for 35.7 percent of the overall FDI; the loans extended by the parent company to its Romanian-affiliated structures that were worth 1.239 billion euros accounting for 35.6 percent of FDI; and the reinvested profit that was worth one billion euros or 28.7 percent of FDI.

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The value of transactions on the Romanian Commodity Exchange (BRM) stood at some 590 million dollars in 2005, informs BRM. BRM and its terminals in the territory organized last year 2,240 transactions, and the total value of the favourable price differences for the contracting authorities stood at over 56 million dollars, representing an average price improvement of 8.79% for each procedure organized. The most important trading values were recorded for CFR Freight - over 170 million dollars, CFR Passengers - over 82 million dollars, and CNCF CFR - almost 39 million dollars.

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Erste Bank der Oesterreichischen Sparkassen AG launches on Wednesday 11 January the largest issue of shares in the history of Vienna stock exchange ? 58.95 million new shares to finance the BCR purchase and to consolidate its capital, the bank informs.The shares existing at present represent 486,367,200 euros, the launch of shares having in view to generate a 24.2% capital increase. The price of a share was 46.60 euros per share, the level of dividends per share in 2005 being 0.55 euros per share, which means the launch will generate an accumulation of capital of 2.75 billion euors in Austrian stock markets.

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Commenting on the upcoming meeting with the representatives of the International Monetary Fund, Prime Minister Calin Popescu-Tariceanu said on Tuesday that "unfortunately, there are sometimes certain contradictions between Romania's current needs considered in the light of its European Union accession and other economic constraints supported by the IMF." The Premier said that so far, the Government has proven its economic capacity to "reach the optimum decisions" according to the established priorities.

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RomTelecom's complete turnover to private hands is part of the list of the most important privatisations the Romanian state is set to carry out, as from the sale in two stages of a stake of 54.01% in RomTelecom to the Greek telecommunications operator OTE so far, the Romanian state cashed close to $950 million, ACT Media news agency reports.


The selling operation of the remainder state-owned stake in RomTelecom -45.99 percent of the total - is going to be the biggest transaction for Bucharest Stock Exchange this year.

The Ministry of Communications and Information Technology hired the international investment bank Credit Suisse First Boston (CSFB) - the one that mediated Petrom's sale to OMV, as well - to mediate this operation.

CSFB's commission is 1.4 percent of the total value of transaction. Taking into account the restructuring made at RomTelecom in recent years and the improvement of its financial indicators, the company could be evaluated, at the moment of its BVB listing, at more than 2.3 billion euros.

According to IEBA Trust Director, Marius Plugaru, the listing could happen in the second half of the year. In the first nine months of 2005, RomTelecom's profit increased by 280 percent, up to 212.9 million euros, under conditions in which the operational revenues increased in the same period by 11.7 percent, up to 690.7 million dollars. One of the main reasons why these results are so good, is the elimination from the financial balance account of the negative ones generated by the former cell telephony division of RomTelecom - Cosmorom - and its aggregate debts.

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Transavia Alba Iulia, one of the top chicken producers in Romania, owned by businessman Ioan Popa, will invest 10 million euros this year to expand its production and processing capacities.

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The annual yields derived by real estate investors on the Romanian market range between 15 and 35%, but are set to drop by 10% this year, according to the real estate company Regatta. "Given the deeper instability of business domains, of constitutive elements and the rising prices of land and construction materials, the profit developers derive from the real estate market stands at 15-35%.

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Starting March, after the merger between HVB and Banca Tiriac is expected to have largely been completed, integration with UniCredit will also begin, Rasvan Radu, chairman of UniCredit Romania and the future chief executive of the bank that is to emerge, told Ziarul Financiar.

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JW Marriott Hotel, the largest five-star hotel in Bucharest, was appraised at some 150m euros by an independent evaluator. The evaluation of the hotel was ordered by the Societatea Companiilor Hoteliere Grand (GHES), which manages the Marriott Hotel, upon the request of the syndicate of Austrian banks to which the hotel still owes 80 million euros, sources close to the business say.

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The European Union will give Romania grants of euro274 (US$330) million to help the country's rebuilding efforts after devastating floods last year, Prime Minister Calin Popescu Tariceanu said Tuesday.

Tariceanu said euro50 million (US$60 million) of these funds would come from the EU's solidarity fund, with the rest to be allocated from pre-accession funds for eligible projects.

Romania, which is scheduled to join the EU in 2007 or 2008, was hit by widespread flooding seven times over the summer. The floods left 74 people dead and caused more than euro1.5 billion (US$1.8 billion) in damage.

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Greek Kloukinas Lappas, a franchisee of British maternity, baby and children's clothes store chain Mothercare for Greece and southeastern Europe, aims to raise up to 20 its Mothercare stores abroad in 2006.


The company plans to open more than three new Mothercare stores in Bulgaria and Romania and up to 15 stores in Croatia, Slovenia, Hungary and Serbia.

Until now, Kloukinas Lappas operates five Mothercare stores in Fyrom, Bulgaria and Romania.

Its Mothercare Romanian stores reported profits in their first year of operations.

Its sales reached 53.2 mln euro in 2005, while its profit for the same period is expected to range between 10 mln and 11 mln euro.

The company plans to pay a dividend of 0.36 euro per share in 2005, almost flat year-on-year.

Kloukinas Lappas shareholders approved a two-to-one share issue through the capitalisation of 4.1 mln euro of its reserves.

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The prices on the Romanian real estate market are expected to stabilize in 2006 which will be equivalent to the market having reached maturity as prices have already surged on some segments of this market so any further percentage would be unbearable for customers, ACT Media news agency reports.


The local real estate market has already witnessed price surges of 300 percent, making profitable investment impossible. Other segments of the same market are expected to remain attractive in 2006 as well.

The most dynamic sectors, according to specialists, will be land acquisition and residential developments. Significant price rises will only be possible for land and buildings on highly sought after locations.

The residential market is expected to switch from small projects to medium and large developments carried out by experienced companies.

Prices for new block apartments are predicted to go up by 10 percent at the most, to sell for between 900 and 1,200 euros per square metre, according to location and equipping.

Prices for flats in old blocks are predicted to level off at between 60,000 and 140,000 euros, depending on new construction projects, and the acquisition costs for them will reduce significantly.

The rent on commercial spaces in high demand might go up by 20 percent at the most.

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Romania's Finance Minister Sebastian Vladescu finds it possible that the privatization of CEC may be put off, financial paper Ziarul Financial reported also saying that the state might even decide to hold on to its stake in the country's fourth-largest bank.

According to Romanian banking sources, bids for CEC were far behind the expected EUR 650 million expectation, given that none of the offers exceeded even EUR 300 million.

In October, a total of seven EU banks filed non-binding bids for CEC, namely Austria's Erste, Hungary's OTP, French-Belgian bank Dexia, Greek banks National Bank of Greece and EFG Eurobank, Austrian Raiffeisen and Italy's BMPS.

At the end of November, government sources and analysts said the deadline for filing binding bids in the sale of CEC might be extended until a winner is found in sell-off of BCR bank.

Putting up a majority stake for sale in BCR has created completely different pricing conditions in the Romanian banking sector than before. Apparently, Romanian officials and bidders CEC falls into a whole other quality category than BCR, but the price differential is still mesmerising.

After the privatisation of BCR, we believe that a 75% stake in CEC would need to attract bids in the vicinity of EUR 500 million by anybody who wants to have a chance in the race for the bank.

There is no indication yet as to how long we would have to wait for the sale of CEC. The state seems unable to cope with bank's shrinking market share, but this may be kept so apparent only to give bidders the willies. CEC is not a very good bank and the state knows that. Its only real value is that it has a considerable market share in the retail segment.

Even if OTP fails to acquire CEC it is left with enough banks to buy in the region, but it will definitely have to say goodbye to massive presence in Romania for some time.

OTP has already set foot in Romania via Robank, which has a size of marginal importance. OTP has larger subsidiaries only in Hungary and Bulgaria, while it holds a medium-sized bank in Croatia and small fries in Romania, Serbia and Slovakia.

OTP is trying to secure buys in Serbia, Ukraine and Croatia, with Panonska and Vojvodjanska in its cross-hair in Serbia. Some private banks are also for sale. Splitska in Croatia could be the next big deal for OTP, if the country's central bank gives a chance to OTP. In Ukraine, UkrSotsbank is on OTP's the acquisition list.

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Although with the sale of the Romanian Commercial Bank (BCR), acquired last year by Erste Bank, and with the Petrom national corporation taken over by OMV Group, the Romanian State concluded a series of large-scale privatisation procedures.


However, a number of other large state-owned companies will be transferred to private investors this year and in years to come.

Thus, the Romanian State prepares the sale procedures for the National Savings Bank, the national natural gas corporation - Romgaz, CFR Marfa, the Romanian Post Corporation, Radiocomunicatii, Oltchim, Electrica Muntenia Sud and several large thermal power plants, which according to unofficial estimates could bring a total EUR 1.7 bln to the State Budget.

Apart from the aforementioned companies, the State also intends to sell the last companies in the portfolio of the Authority for State Asset Resolution (AVAS), the largest of which are Electroputere Craiova, Tractorul and Rulmentul Brasov, as well as the minor stakes held in the 100 companies in the Property Fund.

The highest revenues are expected to come from the sale of companies in the energy sector.

The Electrica Muntenia Sud branch, which provides electricity to the capital city, is put at some EUR 500 M, which means the new owner should pay around EUR 335 M for the stake accounting for 67.5 per cent of the capital.

The last two Electrica branches, namely Muntenia Nord and Transilvania Nord, are put at approximately ¤200 mn, and ¤180 mn, respectively.

The State will also put up in the market the three power complexes of Turceni, Craiova and Rovinari, estimated at a total ¤170 mn.

Also, sale of the Romgaz natural gas producer scheduled this year is expected to bring some EUR 335 M to the budget.

A consortium made up of Credit Suisse First Boston, Linklaters and FRAI has recently won the bid for provision of consulting services in the privatisation.

In the banking sector, CEC is still to be privatised.

An estimated price for the bank is ¤500 mn.

The State can get solid revenues from the sale of the Romanian Post, which according to unofficial data achieved in 2005 much better financial results than in 2004, and whose market value amounts to approximately ¤50 mn, but also from the sale of the National Radio-communications Corporation, which also made profits last year and is put at some ¤70 mn.

Other interesting transactions should include the sale of the Oltchim Ramnicu Valcea chemical works (put at around ¤12 mn) or CFR Marfa, estimated at ¤40 mn.

Attention should also be paid to the Daewoo Craiova deal as the State is to take over the major stake in the company from the Korean party, and to subsequently put the company up for sale again.

Negotiations with the Koreans continued in the very first days of this year, and are to be resumed by the end of the month.

As for the companies in the AVAS portfolio, in December 2005 there were 1,097 such companies.

AVAS however holds the major stake only in 93 companies, of which 28 large size, 26 medium-sized and 39 small companies.

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A surge in on-line trade took place in 2005, with sales of millions of euros being reported in December alone, ACT Media news agency reports.

Card payments are still in their infancy in Romania, with most of the on-line trade being paid for cash on delivery.

On-line eMag.ro shop closed the year on a business turnover of $11-12 million, having reported December sales of $1.8 million.

eMag.ro PR Manager Liviu Taloi said almost 25 percent of the sales mainly included notebooks, LCD video displays and digital photo cameras.

Fotoshop.ro virtual shop reported monthly sales increases of 20 percent in 2005 and a peak of 400 million ROL in December 2005. e-commerce smartbuy.ro portal reported average traffic of 40,000 unique users a month, and it expects the number to go up to 150,000 such users.

Vodanet company manager Vlad Stan, the owner of the portal, said products worth 1.4 million euros were traded through this portal in 2005, estimating the amount to reach 10 million euros in 2006.

Specialists placed 2005 on-line commerce at $25 million, expecting it to double in 2006.

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Economic analysts said that the major challenges Romania has to face in 2006 are inflation, the growth of productivity and the monetary policies, ACT Media news agency reports.


According to Matei Paun, BAC Investment Bank partner, the economic environment should focus on maintaining and increasing productivity, as these are the most important aspects.

"To this aim, both Romania's fiscal and budget policies as well as the country's priorities need to be reconsidered," asserted Paun.

The management of the current account balance and of the exchange balance, keeping economy away from consumerism that is not self-sustainable and directing it towards productivity are some of the challenges in 2006, Paun said.

Florin Catu, BAC Investment Romania director, argued that inflation is the most important challenge in the short run, whereas the current account deficit and productivity are the major concerns in the medium and long term.

Unless the macroeconomic policy correctly identifies the necessary drives for the economic environment's boosting productivity, economic growth will be affected, he stressed. Daniel Daianu, economy professor and a former Finance Minister in the 1990s, considered that macroeconomic balances are the major challenge this year.

"I am referring especially to the risk that disinflation stops due to a potentially inadequate control of aggregate demand, as well as to the impact of certain shocks.

The slippage of inflation against the target is not surprising because, under the given circumstances, the instruments used by the Government and the National Bank of Romania have a limited efficiency.

Now, with a liberalized capital account and a dual monetary system (where half of the money supply is in foreign currency and thus escapes its control), the Central Bank has serious difficulties in applying a tight monetary policy.

If the monetary policy does not work consistently with the budget execution and if the wages rise too much, there is the danger that the disinflation process blocks," said Daianu. "Another challenge refers to the capacity of domestic companies to increase their efficiency, so as to counteract the leu's appreciation and the energy tariff hike.

Not in the last place, we should substantially increase our capacity of absorbing European funding.

If we fail, the supporters of the idea that the absorption capacity of countries like Romania is lacking would have good reason to insist that structural and cohesion funds in the EU budget be cut back," the economy professor added. In his turn, professor Liviu Voinea said that "the great challenge will be the successful completion of the forced restructuring process undergone by our processing industry, that implies the fast adaptation to EU standards, the re-directing towards new products or markets, the assimilation of fixed costs increases and maintaining competitiveness in adverse contingencies.

Of course, all these aspects underlie the main challenge, the certitude of Romania's EU accession.

An undesired postponement thereof would turn all the other challenges in lost bets," said Voinea.

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The law on European and national health insurance card to come into effect this year enables the issue of the two cards certifying that a person owns a health insurance. The European health insurance card allows the Romanians travelling to a European Union member country to benefit from health care the same as any EU citizens. Thus, several EU norms are going to be implemented. Apart from the European card, a national insurance card will be issued, to become the single instrument certifying that a person owns a health insurance in Romania.

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Prices on the Romanian real estate market will level off in 2006 and this will be equivalent to the market having reached maturity. Prices have already surged on some segments of this market so any further percentage would be unbearable for customers. Real estate management professor with the International Francophone University of Brussels Artur Silvestri is quoted as mentioning the local real estate market has already witnessed price surges of 300 percent, making profitable investment impossible. Other segments of the same market are expected to remain attractive in 2006 as well. The most dynamic sectors, according to specialists, will be land acquisition and residential developments. Significant price rises will only be possible for land and buildings on highly sought after locations. The residential market is expected to switch from small projects to medium and large developments carried out by experienced companies.

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The agricultural producers sold fodder wheat instead of bakery wheat because of the poor harvest, bad weather and inadequate technologies, and they must prepare themselves for the EU competition in 2006, President of the Rompan Bakery Employers' Association Aurel Popescu told daily Curierul National. The bad weather made sowing late and on reduced areas, with negative effects on the 2006 harvest. Popescu believes that a cut in VAT for bread would lead to higher returns to budget and that the problems of the economic agents in the field must be solved by December 31 2006, when the EU norms come into force. An evaluation made by the National Authority for Animal Health and Food Safety (ANSVSA) revealed that 80 percent of the economic agents do not observe the EU norms, which will lead to a stop in their activity as of January 2007. After the accession moment, the EU products will enter Romania without taxes, so domestic agents must be efficient in order to cope with the foreign competition.

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2006 promises to be an important year for infrastructure as commercial companies to manage short-distance passenger traffic will be set up on the existing eight railway regional management companies. Train names will also be adjusted to their European counterparts. Thus, the existing stopping trains will become regional trains, whereas the fast and express trains will become inter-regional trains. Upgrading works will start in 2006 on the Bucharest-Constanta, Campina-Predeal, and Curtici-Simeria railway portions to allow train speeds of 160 km/h. Twenty sleeping wagons will be added to the existing fleet, whereas upgrading works on the existing railway coaches will continue and talks will start for the acquisition of motor trains electrically fed. The Bucharest metro will receive 84 new cars and 36 will follow in 2007, all of which might bring the frequency of runs to three minutes. In the naval field, Romania will become in 2006 the second country, after Austria, to set up an electronic traffic monitoring system for the Danube River. The Henri Coanda International Airport of Bucharest will undergo modernisation for the third time to meet rising demand for its services. The remaking of the runway at the Mihail Kogalniceanu airport will end in 2006 and rehabilitation works will start on the Aurel Vlaicu runway of the Baneasa Airport.

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The Property Fund, set up by the Romanian state in order to pay sums of money to the owners of buildings the state abusively seized before 1989, has become the biggest company in Romania, with an initial share capital of 3.8 billion euros (or 14.2 billion new lei) and 120,000 shareholders, the Ziarul Financiar newspaper reports on Monday. The nominal capital of that company is composed of the shares the state holds in over 100 companies, Transgaz, National Lottery, National Printing House, CEC Savings Bank among them. The state must also fetch to the fund the equivalent of assets and shares of other companies, or money. So, the cash equivalent of four percent of the shares of the Romanian Commercial Bank will enter the fund, as well as 20 percent of the shares of the Romtelecom fixed telephony operator and 10 percent (some 780 million euros) of the shares of the national oil company Petrom. Analysts believe the Property Fund will be the biggest business in Romania in the coming decade, considering both the cash that will enter it - more than one billion euros - and the shares to be taken over, the daily says.

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The foreign exchange reserve of the National Bank of Romania (BNR) in 2005 grew by six billion euros up to 16.8 billion euros, after having expanded more than four billion euros in 2004. The central bank's foreign exchange reserve is mainly denominated in euros, with the single currency accounting for nearly 60 percent. The U.S. dollar accounts for some 30 percent, while the British pound covers five percent. The largest part of the foreign exchange reserves is invested in strong government bonds, with the BNR policy pursuing three major goals: safety, liquidity and the achievement of returns. According to this investment strategy, the BNR only purchased bonds issued by the United States government, the U.S. governmental agencies or U.S. government-sponsored agencies.

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Romania is set to increase the Romanian enterprises' productivity by 5.5 percent annually, so that in 2015 it could attain the level of 55 percent of the EU average, according to the National Development Plan (PND). In the aim to reduce the gaps as against the average productivity in the EU, PND outlines policies as regards the increase the share of small and medium-sized enterprises (SMEs) in the Gross Domestic Product (GDP) by up to 20 percent till 2015, as well as the increase of the overall expenditure's value of up to three percent of GDP. The number of Internet users enterprises are expected to increase from 19 percent in 2003 to 55 percent in 2015 and the energetic primary intensity to be reduced till 40 percent, up to 2015.

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Over 40,000 futures and options contracts were concluded in the first week of 2006 on the Sibiu market on term. The number of open positions followed an upward trend, rising from 80,000 in the first day of trades to over 111,000 on Friday, whereas the amount of liquidity reached more than 18 million euros, informs a press release of the Sibiu Monetary-Financial and Commodity Exchange (BMFMS). "If the daily average of 10,000 contracts keeps up, the Sibiu Commodity Exchange could attain as early as January the total amount of trades concluded in the first nine months of the previous year," says the spokesman for the Sibiu-based institution Decebal Todorita.

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As of January 9, foreigners may participate in the tenders with state securities. The access is rather a formal one, since foreign investors have found other modalities, until so far, to invest their money in such financial instruments. The liberalisation of tenders with state securities is the penultimate step (we shall witness the liberalisation of operations with derivative financial instruments as of this autumn) prior to the EU accession, a time when liberalisation of the whole capital operations becomes a must.

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The Monetary Financial and Commodities Exchange in Sibiu (BMFMS) estimates for 2006 a three fold increase of the traded volumes, informs a stock exchange release . "New year's start visibly laid down the premises of a development to maximum parameters of the Sibiu derivative products market.

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Trading value of transactions at the Romanian Commodities Exchange /BRM/ and its Representative Offices in the territory amounted to almost 590 million dollars in 2005, BRM reports. Last year, BRM and its representative offices in the territory performed 2,240 purchase and sale procedures whose total price improvement exceeded 56 million dollars, representing an average price improvement of 8.79 percent for each procedure.

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CCC Blue Telecom (the former ConySat), Romania's third-largest cable operator, with a market share of 6%, will float its stock on the Bucharest Stock Exchange through an initial public offering (IPO).

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Porsche Leasing's general manager, Bogdan Apahidean, estimates that funding in leasing for second-hand cars will increase faster than for new cars this year. "The leasing market in 2006 will register a 10-15% growth pace, with the second-hand leasing segment progressing faster, by some 20%," says Bogdan Apahidean, Porsche Leasing general manager.

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General Motors has pulled out of the race to buy an ex-Daewoo car factory in Romania and is talking to Ford Motor and the Renault/Nissan alliance about buying engines built at the plant.

Nick Reilly, chief executive of GM Daewoo, the US carmaker's South Korean division, said the company did not need to buy the Craiova factory, which has 3,600 staff. But his division needed the 60,000-70,000 engines it currently buys from the plant, and wanted to increase this to 100,000 a year.

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The Bucharest Stock Exchange witnessed new strong growth due to heavy pressure on buying, with the most liquid stocks going up as much as 3% or 4%, writes today's Ziarul Financiar.

Yesterday's growth took the main indices gauging the performance of the companies listed on the capital market in Romania to new all time highs.
The BET and BET-FI indices have gained 10-12% since the beginning of the year, a yield that is almost equal to the interest on a banking deposit for two years.
The progress of the market was driven by Petrom and SIF shares, which leaped by 3%-5%, as they were the most traded on the market. Big increases were also registered for pharmaceutical companies, which gained 4% (Biofarm) and 10% (Antibiotice).
Brokers say that whereas acquisitions by Romanian investors prevailed in the first two days of last week, the last few days have seen substantial and numerous orders coming from non-residents.
"Both foreign and Romanian investors are interested in buying now," said Dana Ionescu, the chairperson and general manager of the brokerage firm Raiffeisen Capital & Investment (RCI).
The spectacular start of the year for the stock market practically verifies the trend on the developed markets, as both US and European companies witnessed significant growth over the last week, brokers say.
"There is a correlation between the trend on our Stock Exchange and what is happening on the developed markets, where statements from Fed officials suggested that benchmark rate increases will occur more rarely, inducing a state of optimism among investors on the capital market. This is because some investment funds are known to direct money to other markets under such circumstances, and especially to emerging markets," stated Liviu Giugumica, manager of brokerage company BRD Securities.
"Investors' vision changes with time. As long as Romanian companies can provide better yields than other similar companies on other markets, they can be seen as attractive, even though they are quoted at prices that can be deemed as high" Giugumica considers.

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President Traian Basescu said yesterday there special interest groups influencing the actions taken by the Ministry of Economy, which is proved by the high price paid by Romania for natural gas.
Basescu made this statement at the meeting aimed at evaluating the activity of the Romanian Police in 2005, where he said he asked the police to get involved in fighting central and local corruption for keeping the administration clean.
"I reminded that, last summer, I was talking about interest groups around the Ministry of Industry (he referred to the Ministry of Economy) and now we see that we have the highest price for natural gas," Basescu said.
The president did not insist on this subject, but added that police should keep fighting corruption inside institutions and power structures, to maintain a clean administration and business environment.
When asked what the police should have done about the special interest groups around the Ministry of Economy, Interior Minister Vasile Blaga said there was nothing police could have done without an analysis of specialists.
The gas crisis between Russia and Ukraine revealed the differences of prices the Russian Gazprom has for export. During the crisis both the local and the foreign media reported about Romania paying the highest price for natural gas from Russia of about 280 dollars for 1,000 squares, while the medium price is of 230 dollars.
Although Economy Minister Codrut Seres initially rejected this idea, soon he changed his statement.
"I want to find out each step of the natural gas importation route; from when it leaves the Russians and reaches the border," Seres said.
Last August Basescu warned Prime Minister Calin Popescu Tariceanu about the possibility for several special interest groups to exist close to the government. The president urged the government to eliminate these groups, as they might interfere with its actions.
"A difference has to be made between groups that take transparent action. But I am an enemy of the ones who are not transparent, which change the political decision without explanations," Basescu said back then.

Gas prices calculated by European formula

The Ministry of Economy forwarded President Basescu a document which explains the system through which the price for natural gas is calculated. According to the MEC document, the import price was set in accordance with a formula applied by all the European countries.
Thus, the gas import prices depend mainly on the international quotations for diesel and fuel oil but also on a discount applied in accordance with the duration of the contract and the quantities to be acquired.
The import price was last year of approximately 218 dollars for 1,000 cubic meters, the same as Italy and Hungary, while Germany paid 220 dollars. For 2006, the Romanian authorities estimate that the price will increase to 270-276 dollars per 1,000 cubic meters of natural gas.
"MEC is not the owner of an import contract for natural gas," said Seres, adding that the operations are carried out by local companies with suppliers authorized by Gazprom, Wintershall Erdgas and IMEX Oil. Besides the commercial contract for natural gas imports, Romania also receives 180 million cubic meters of gas for transit services offered to Transgaz. The latter can cover the national consumption for two days in winter if needed.

Romania searches for alternative fuel solutions

Codrut Seres, the Minister of Economy and Commerce, stated yesterday that Romania does not have the capacity of becoming 100% independent of natural gas imports and that is why it is searching for alternative energy solutions.
Seres believes that it is natural for Romania to search for alternative energy sources because the prices of natural gas and oil are increasing and these fuels are becoming limited.
"All the countries have policies of identifying alternative energy sources. Romania made the first important steps in the introduction of alternative energy sources like wind or solar energy," stated Seres.
The minister said that Romania will continue the construction of supplementary sources for the production of electricity based on nuclear power.
Seres believes that the continuing of investments in Romania's hydrographic system is necessary because this represents a resource less used.
Referring to the price of natural gas, the minister said that Romania is paying at the moment the same price paid by other countries for the gas imported from Russia.
"Romania does not have a contract for the import of natural gas. There are companies that supply gas and companies that import gas," said Seres.
The minister stated that the price for this fuel depends on the international listings for the diesel oil and of the fuel oil and it is changed every six to nine months.
Seres denied the fact that Romania suffered a natural gas crisis because of the tensions between Russia and Ukraine.

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The Union Bank of Switzerland (UBS) is appealing the result of the tender held by the Ministry of Communications to choose the financial consultant who will sell the last share package owned by the Romanian state in national land line operator RomTelecom, according to "Ziarul Financiar" newspaper.
The brokerage commission requested by UBS was 0.95% of the total value of the transaction while Credit Suisse First Boston (CSFB), the winner of the tender, had requested 1.4%. The value of the transaction could be more than one billion euros, bringing the difference in commission between the offers made by the two companies to several million euros.
A UBS spokesman said that the decision taken by the Ministry of Communications is surprising because of the 50% lower commission price requested by UBS compared with CSFB and the international experience the bank has in such operations.
"It's very surprising. The costs for Romania's budget are very important," the spokesman said.
UBS formed a consortium with ING, the largest broker on the Romanian market for the value of the transactions made on the stock exchange.
UBS is the largest bank in Switzerland and one of the largest in Europe.
Zsolt Nagy, the minister of Communications, stated that the selection of the consultant was made by mainly taking into account the financial requests, international experience and the stock exchange listings for which it offered consultancy.
"Credit Suisse First Boston was chosen by following several criteria, the requested commission being important but not exclusive. We were looking for somebody with experience who can offer the necessary consultancy services," stated Nagy.
The Ministry of Communications is selling the 45.9% share package which the state owns in RomTelecom.

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Looking for business opportunities in Romania could prove lucrative as realty investments could provide an efficiency rate higher then in the rest of Europe.

Estimated profits over the next ten years for real estate investments in Romania are the highest compared with 19 other European states.

European Union accession is the main factor boosting the economic perspective for real estate investments in Romania, according to British TV station Channel 4, quoting a study carried out by PriceWaterhouseCoopers (PWC). Thus, the efficiency rate for realty investments over the next ten years is estimated by PWC at 414 percent. According to the analysts, a house in the countryside bought for 24,700 euros could be sold in ten years, after investments of 145,000 euros, for approximately 750,000 euros. The estimate is based on the accelerated price increase of real estate properties recorded in the countries which have become EU members.
Moreover, the high level of infrastructure investments expected to be carried out to upgrade the country to European standards will also contributes to the price hike.
Second place in the classification was taken by Poland, which is expected to offer a 393 percent efficiency rate. The ranking is justified by the presence of international companies and the high volume of European funds which will be invested in the country, according to PWC.
Portugal came third, while Estonia, Lithuania and Latvia shared fourth place. Wage increases, higher rents and a lower level of taxes are among the main factors responsible for the rise in value of real estate.
Other countries featured in the PWC classification include Sweden, Belgium, Finland, Hungary, Ireland, Austria, Italy, France and Spain.

Romania offers high returns for low risks

The realty investments market is on course to change as foreign investors are showing a growing interest in Romanian business opportunities. Investments in the Romanian real estate market provide significant earnings for relatively low risk margins, according to Alexandru Nitescu, Investments Director at the Regatta real estate agency. Thus, the investments sector in Romania has proved to be a dynamic one in terms of the number of transactions, as corroborated by the positive trend over the past four years. Due both to regulations and new standards, the local market is now under assault by investors, believes Nitescu.
Most investors present in Romania are highly active, trying to accumulate as much real estate as possible to develop projects. The main stimulus is the stable growth rate recorded in the sector, which could ensure a profit rate of 15 to 35 percent for developers. Larger profits could be obtained by developing large residential and retail projects, as noted in the past two years, when Romania has seen rapid expansion in these sectors.
Although the supply on the Romanian market is not of the best quality, Nitescu believes that international investors are still attracted by the local potential, adapting their strategy to fit each particular project, either by teaming up with large developers, financing projects or setting their own terms in the contracts. Such investors could hope for a profit rate of up to 15 percent, in the projects located outside Bucharest, or between eight and ten percent in the capital.
As the market develops, Nitescu expects the rates to drop, estimating a ten percent profit margin for this year. However, even though the profit margin is falling, it remains higher than the levels recorded on Western European and North American markets.
EU accession, scheduled for January 1, 2007, remains the main driving force behind investors' interest, while the increasing stability and the absorption capability of the local market have turned the country into one of the most interesting regions to invest in, considers the Regatta director. For the next two to three years, Nitescu believes that most major investments will be in the retail and industrial sectors, eventually forcing investors to direct their businesses to niche markets, with higher risk and profit rates.

Valea Prahovei profits will show soon

The Valea Prahovei area will show its true realty potential in the next few years once infrastructure projects are completed and investments in tourism will connect the resorts with ski slopes and skilifts, according to the local real estate agency Eurisko. Currently, the area is in continuous development and investors are acquiring real estate properties to set up various projects.
The tourism infrastructure has improved over the past few years, with several slopes being constructed or upgraded and transport systems being put in place to serve tourists.

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2005 was the year when an important part of the assets from the state banking system switched to private ownership, which has urged banking competition at European level while according to forecasts, 2006 will be the year when the banking system is practically out of the state influence, once the privatisation of the National Savings House (CEC) is complete.


Mergers and acquisitions, denomination and capital account liberalisation were the main challenges of 2005 in the Romanian banking system, yet BCR privatisation remains by far ?the success story of the year.?

The privatisation of the two important banks, BCR due to its market share of 26%, which makes it a market leader, and CEC, due to its large territorial network, have made international financial institutions in Europe focus on Romania.

The reason is that the Romanian banking system provides stability and the chance of other acquisitions or mergers by acquiring a significant market share, considering the competition within EU.

The interest shown by the international financial institution for BCR was practically proved by the price paid: EUR 3.75 bln.

BCR sale to the Austrians from Erste Bank is considered to be the most significant take-over transaction ever conducted in Romania.

Erste Bank taking over BCR, in exchange of EUR 3.75 bln., gave Austria the statute of the most important foreign investor in Romania over a long time onward, due to an overall investment value of EUR 7 bln.

The statute of the largest investor in Romania has also been secured by Austrians following OMV taking Petrom over, but the take-over by the Austrians of the leader of the banking system in Romania practically links our country to the important international transactions.

BCR privatisation streamlines Romania?s path to the EU, considering that EU holds the presidency of EU during the first half of next year, a time when a decision is made as to whether Romania joins the EU in 2007 or in 2008.

Thus, with support from Austria?s representatives, membership on January 1, 2007 is closer than it seems six months ago.

The Romanian State will acquire from BCR sale close to EUR 2.25 bln., and the balance of EUR 1.5 bln will be equally transferred to EBRD and IFC which, together, own 25 per cent of the bank?s stock.

The proceeds received by the Romanian State from BCR privatisation will be used in infrastructure projects.

BCR take-over enabled the Austrians from Erste Bank to revise upwardly their targets related to medium term financial outputs.

According to the agreement addressing the take-over of the major participation, BCR shares will be listed at Bucharest Stock Exchange (BVB) within the next three years.

The investors in the stock exchange interested in these shares will have the option to buy them, but Erste Bank has informed that it would not sell the shares it owned, the scenario with the highest likelihood being the one when an investment related to minor shareholders is considered.

BCR name will be kept over at least three years, and the logo can be modified to show membership to the Austrian group.

The change of the owner in the two banks should trigger new financial resources for the new shareholder, its know-how for product development, new management principles and, not lastly, a new name put next to the old one which brings fame at European level.

The area that the new owners of BCR, as well as those competing for CEC, show interest to is related to retail banking, where they can succeed in having growth rates over those reached in Western Europe.

Yet, investors remain interested in providing loans to SMEs and to Municipalities.

The globalisation trend within the banking system, seen in all the markets of Europe, particularly further to HVB being taken over by UniCredito, was also noted in the Romanian banking system in the merger of HVB Romania with Tiriac Bank.

The partnership of the three institutions in the Romanian market has led to the establishment of a bank that ranks fourth in Romania in terms of assets owned.

Regarding acquisitions, one can speak about the Lebanese bank Blom, which has increased its participation within the Romanian - Egyptian bank MISR Romania, up to 96.78 per cent, following the acquisition of a participation accounting for 84.24 per cent of the stock against $98 mn.

The new owner of Eurom Bank is the Israeli bank Leumi. Its shareholders bought the 89 per cent participation, paying $42 mn for this transaction.

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The biggest chicken producer on the domestic market has said it will reconsider the 20m-euro investment plan announced for 2006. "We are reconsidering the investment plan announced for this year, since 2005 was a very bad year for us. We must recalculate the investment budgets and subsequently reorganise our entire business," says Gheorghe Antochi, general manager of Agricola Bacau.

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Totalgaz Iasi, a manufacturer of industrial measurement, regulation and control equipment, last year registered turnover worth 35.5 million RON (9.8 million euros), down 21% from the previous year. Totalgaz Iasi, a manufacturer of industrial measurement, regulation and control equipment, last year registered turnover worth 35.5 million RON (9.8 million euros), down 21% from the previous year.

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The company, part of the Montero group, which operates in the pharmaceutical industry, also has several commercial and residential projects. Metropola Imobiliar will complete an office project with an area of around 8,000 square metres in Bucharest, in the first half of this year. The project is called Preciziei Business Center.

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The shares of financial and oil companies will dominate the domestic stock exchange in 2006, due to the absence of some new liquid issuers, at least for the first half of 2006, said operation director with brokerage firm Prime Transaction, Alin Brendea, ACT Media news agency reports.

The president of the financial investment services firm Intercapital Invest, Razvan Pasol, recommended the shares of Petrom, SIF, BRD and brokerage firm SSIF Broker.

Brokers stated that the financial sector brought investors the biggest satisfaction in 2005.

This sector recorded growth above the one of BET-C index, so above the market's growth.

It is worth mentioning that the index of SIF shares rose 175% (putting aside the distributed dividends).

The evolution of these shares was clearly influenced by the increase in the ownership level of SIF shares to 1% and the BCR privatization.

In general, all blue-chips shares recorded positive evolutions, said Alin Brendea.

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HVB Bank Romania increased its paid-up capital by 16.7 million euros in November 2005 in view of an upcoming merger with Banca Tiriac, ACT Media news agency reports.

HVB Chairman Dan Pascariu said the bank does not actually need this increase, but it is good for the merger, to come to parity with Banca Tiriac.

Bank Austria Creditanstalt, HVB's main shareholder paid, 248 million euros for 50 percent plus one of the shares in Banca Tiriac in order to perform the merger established with Ion Tiriac (a former principal shareholder in Banca Tiriac) mid-last year.

Officially, Banca Tiriac is the one to take over the local subsidiary of HVB, this being considered the best formula for the merger, out of financial-fiscal reasons.

The acquisition of shares was over on Sept 1, 2005, both by acquisition and share swap between the two parties.

The two banks are currently operating independently one of another, although there already exists tight cooperation at the management level.

The new bank will be named HVB-Tiriac, although this merger will represent only an intermediary stage in the process of integration with UniCredit Romania, the local body of the Italian group that took over HVB last year.

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Italy intends to increase its economic involvement in the south and west of Romania and later to get involved in the north and east, stated the Ministry of Economy and Trade, ACT Media news agency reports.

The delegate minister for trade, Iuliu Winkler declared that there is a tendency to change the structure of the presence of Italian firms in Romania as the presence of small and medium companies became dominating, of late the interest of big Italian companies and banks to be present in the privatization of important industrial and energy objectives.

In the last 9 years, Italy has held a share of 17.16% of Romania?s foreign trade, the volume of bilateral commercial exchange on 30 December 2005 being 8,560.71 million euros, of which export was 3,967.96 million euros and imports 4,592.78 million euros.

The values registered indicate an increase of 9.44% of commercial exchanges between Romania and Italy in 2005 as against 2004.

Currently, there are 18,528 Romanian-Italian joint ventures in Romania with an invested capital of 757.73 million euros, Italy ranking fifth in the top of foreign investors in point of invested capital and first according to the number of companies registered.

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Romgaz natural gas company and Muntenia Sud electricity company are Romania's most important energy companies expected to be sold in 2006, ACT Media news agency reports.

Romgaz owns half of the gas production of Romania, whereas Electrica Muntenia Sud is the most important electricity distribution company.

In addition, the energy compound works of Turceni, Rovinari and Islanita will also be up for sale.

With an annual output of 6.5-7 billion cubic metres, Romgaz has reported big profits of 6,000 billion ROL (1 US dollar = app. 30,000 ROL) for the 10-mo period of 2005.

These profits are expected to double as a result of the gas prices going up from $110 per 1000 cubic metres to $300 per 1,000 cubic metres on January 1, 2007.

The privatisation of Electrica Muntenia Sud, expected to draw over 500 million euros, is the second biggest such project of the year.

About this privatisation, Economy Minister Codrut Seres said, "We are trying to do our best to make a good deal on Muntenia Sud.

That is why we prolonged the deadline for the submission of bids to January 31.

Among the bidders are AES Corporation of the US, CEZ of the Czech Republic, Enel of Italy, EnBW Energie of Germany, EVN of Austria, Gaz de France, Iberdrola of Spain, RWE Energy of Germany and Union Fenosa International of Spain.

The privatisation of the energy compound works of Rovinari, Turceni and Isalnita is still waiting for the final consultancy report of Deloitte Touche.

In order to increase the attractiveness of these companies, the authorities have decided to attach some hydro power plants.

The three works reported a total profit of 60 million euros in 2005.

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After becoming the biggest investor in Romania, with taking over the Romanian Commercial Bank (BCR), Austria looks forward to the privatisation of the Savings Bank (CEC), according to Austrian officials in Romania, ACT Media news agency reports.


Through BCR's privatisation, Austria is by far the most significant foreign investor in Romania and through already announced investments made by the companies Schweighofer and Egger, in excess of 500 million euros, Austria is set to further consolidate its top investor position, said Commercial Attache of Austria's Embassy to Romania, Johannes Becker adding that on the short term, they wait with interest CEC's privatisation, Raiffeisen Bank being placed at the forefront. The total value of the subscribed capital by Austrian companies in Romania is in excess of 4 billion euros, including BCR's privatisation and a value according to which Austria ranks first in the hierarchy of foreign investors in Romania.

It was expressed that Romania should support into a greater extent the initiatives in the field of small and medium-sized companies (SMEs).

Analysts said that SMEs have big chances in Romania, enabling it to deal with the competition inside the European Union.

In Austria, SMEs represent the spine of the economy and we predict the same evolution is going to happen in Romania, as well, affirmed Johannes Becker.

In addition, he said that, through Romania's EU accession, the last commercial barriers would be eliminated which could be an advantage for both sides and through the observance of EU standards, the Romanian economy was due to consolidate and reach maturity in the long run.

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 The increase in the production of domestic gas at Petrom and Romgaz is one of the solutions announced by Romanian economy and trade minister Ioan Codrut Seres for overcoming possible crisis situation at international level, ACT Media news agency reports.

''Allowing for the winter period ahead of us we requested the representatives of Petrom and Romgaz to specify, within 48 hours, what additional quantity might produce for the winter period for the next three months,'' Seres said at the meeting he had with the main manufacturers and distributors of natural gas.

Seres plans to curb Romania's dependence on Russian gas by supporting the project of import of natural gas from the North Sea by interconnection with Hungary.

The economy minister announced that for the completion of the pipeline, under a commercial agreement, a protocol between distributors, namely Romgaz and the Hungarian company MOL - will be signed.

Another project taken into account at the meeting between Seres and the main players of the market of natural gas was the storage of the entire quantity of natural gas extracted from the Black Sea on Petrom's platforms and the finding of consumers in the Dobrogea area (south-eastern Romania), the operation area of Distrigaz Sud.

The goal of all these solutions is the permanent natural gas supply with the quantities necessary to Romanian consumers.

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The experts of International Monetary Fund (IMF) will return to Bucharest during the last part of January, in order to start an evaluation of the macro-economic indicators registered in 2005, as well as the economic policy considered for 2006 - 2008, said Romanian PM Calin Popescu Tariceanu.


He specified that the Romanian part would present both the developments in 2005 related to inflation, economic growth, arrears and outcomes of the flat tax quota, along with policies in the field of salaries to be applied over this year.

?This will be a proper opportunity to evaluate macro-economic parameters together with IMF as well as to have more in-depth discussions on the macro-economic prospect for 2006 - 2008?, Tariceanu affirmed.

The IMF experts are expected to visit Bucharest on January 24 or 25.

IMF surveys the evolution of the Romanian economy on periodical basis, on the basis of Article IV provided by the institution?s statute.

At the end of October, negotiations on continuing the agreement with IMF failed following that Bucharest authorities having rejected the requirements of the financial institution, which regard the arrangement as ?off the rails?.

The main aspects underlined by IMF as presenting difficulties were the unrealistic drafting of the budget for 2006, and the budgetary deficit target, along with macro-economic imbalances (inflation, current account deficit) as well as the skidding in the field of salaries and lack of structural reforms.

Romania?s agreement with IMF expires in July 2006.

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The European Commission approved the PHARE CBC (Cross Border Cooperation) 2005 programmes for Romania following the assent of the PHARE Management Committee, informed the European Integration Ministry informs, ACT Media news agency reports.

Under the PHARE CBC programmes, Romania received 34 million euros divided for each of the 5 borders as follows:

8 million euros for the border with Bulgaria, 5 million euros for the border with Ukraine and 5 million euros for that with Serbia-Montenegro.

Romania will be the European Union's second longest external border.

Through these programme, cooperation is promoted among the regions, communities and authorities situated on both sides of Romania's borders to solve common issues.

Their goal is to develop the local communities, as well as to promote good neighbourliness and social stability.

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The international rating agency Moody?s Investors Service announced that it decided to review for possible downgrade the A1 senior unsecured and B- financial strength ratings of Erste Bank der Oesterreichischen Sparkassen AG, after the Austrian bank was declared the winner in the bid for the acquisition of 61.9% of Romania?s largest bank, Banca Comerciala Romana SA.

Moody?s analysts asserted that the acquisition will significantly modify the structure of Erste Bank?s gains and capital investments, further to changes on the markets where the institution is present.

Although Romania?s loans in foreign currency are currently rated Ba2 with positive outlooks, Moody?s says that the risks are higher than in other states where Erste has invested.

Erste Bank announced plans to launch in the coming days the most substantial equity sale in the history of the Vienna Stock Exchange, with a view to increasing its share capital to 2.4 bn euros and thus getting the necessary 3.75 billion euros due for the BCR stake.

The rest of 1.3 bn euros should be paid from the bank?s own resources.

Erste reached a historical bourse peak of 47.85 euros per share and bank president Andreas Treichl said he would take advantage of this opportunity to complete the equity increase this month.

However, after Moody?s announcement, Erste slid to 46.96 euros per share.

Although the decrease is minor, the success of the planned public bid greatly depends on the investors? perception of the risk taken by Erste Bank?s acquiring BCR.

The main reason of concern is the high price of the takeover which is by one third higher than the aggregate amount paid by Erste for all its other acquisitions in Eastern Europe: 2.5 bn euros disbursed for deals in the Czech Republic, Slovakia, Croatia, Hungary and Serbia.

BCR, its biggest purchase ever, boosted Erste?s position as the second-largest bank in the former communist bloc.

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The Ministry of Public Finance intends to raise this year an aggregate of 4,150 million lei (1.15 bn euros), by the release of government stock exclusively on the domestic market ? informs a Ministry communiqué. By maturity types, the issues will include treasury certificates with maturities of 6 and 12 months, as well as benchmark-type government stock with maturities of 3, 5 and 10 years. The value of treasury certificates will be 450 million lei per maturity type and issue (total amount of some 900 million lei); the release will be on the third Monday of the current month and settlements will be made on Wednesdays. Benchmark-type government bonds will be issued every month, starting the second quarter of the year, in a total amount of some 3,250 million lei. The issues will be organized in the first week of the current month, with bids scheduled on Thursdays and the settlements on Mondays. Bond issues with a three-year maturity will amount to some 1,250 million lei, whereas the issues with maturities of 5 and 10 years will amount to about 1 bn lei each.

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The Ministry of Finance settled the contestations regarding the selection of the attorneys-at-law who will represent the Romanian State at the International Arbitration Court in Washington. The first qualified is the consortium made up of Tuca & Partners and White & Case LLP. The next two in decreasing order of the scores are the consortium made up of Nestor Nestor Diculescu Kingston Petersen and Freshfields Bruckhaus Deringer, respectively Lalive & Associes Etude d?avocats Geneva, Leaua & Cadar Attorneys-at-Law and the Individual Lawyer?s Office Victor Tanasescu. Musat & Partners ranks fourth, followed by Hayhurst Robinson in consortium with Morgan Lewis. Baker McKenzie and Bostina & Partners occupy the last two positions in consortium with Beyrne Maynard & Parsons LLP. FinMin sources told the press that the contracts with all attorneys-at-law offices were signed in late 2005, so that the ministries that have a litigation and need representation can choose one of the qualified firms, according to the latter?s experience and the specific type of the litigation. Scores differentiated the bids.

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?Tariff hikes for energy and utilities, the increase of excises and the write-off of the losses of un-restructured State-owned units will be a source of inflation in 2006. Moreover, this will be a year of pressure for wage rises, which ? in my opinion ? are completely unjustified in certain sectors which only reward the bulk of idle activity. In an optimistic assessment, I believe inflation will be 7% this year,? Bogdan Baltazar, president of the financial consultancy firm BB & P SAID. This year?s official inflation target is quite ambitious: 5%, but with little chance to be attained, given the planned increase of regulated tariffs (natural gas, heating energy and power). More concessive, the president of the Romanian Banks Association Radu Gratian Ghetea says that with a difference of ±1%, the inflation target could be observed; ?in my opinion, inflation will be about 6%, but we must keep on the watch, because other indicators, such as credits in foreign currency, were sacrificed to the objective of attaining the inflation target. This could have effects in the near future, so that all the other economic indicators need to be carefully monitored,? declared Ghetea .

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Bank Austria Creditanstalt (BA-CA) expects the growth rate of Romanian economy to stand at just 3.7% at the end of 2005, far below the government?s official forecasts of about 5.5% - reads a recent BA-CA report. The floods that affected Romania in 2005 forced the authorities to revise the initial economic growth target from 6% to 5.7% and then to 5.5%. According to the latest information given to publicity by the National Institute for Statistics, the economic growth rate slowed down over the first nine months of 2005 to 3.6%, from the 4.9% registered at mid-year. The BA-CA economists see Romania?s consumer price index at 7% in 2006, as to 9% in 2005, both figures exceeding the authorities? forecasts of 5% and respectively 8 ? 8.3%. The Austrian experts expect the budget deficit to keep at 1% of the GDP in 2006 (whereas the official target is 0.5%) and are also skeptical of the authorities? capacity to reduce the current account deficit to 8.1% of the GDP; they see it at 8.6% in 2005 and 9.5% in 2006.

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The mutual fund market will continue to grow in 2006, driven by the declining yields in the banking sector, and by the entry of new players on the market, Ziarul Financiar daily reads . This positive trend is favoured by the reduction of the banking performance, as well as by the emergence of new operators and of new investment products. The mutual fund assets went up by more than 65 percent in 2005, exceeding 80 million euros; on the other hand, Romania is lagging far behind the neighbouring countries in terms of collective placement bodies, which creates the premises for this positive development to consolidate. The market structure will keep changing so as to accommodate more equity funds, which will be gaining ground on the funds that invest in fixed-income instruments.

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According to Romanian economic analyst Daniel Daianu, whom the Romania Libera newspaper quotes, among the EU member and candidate countries, Romania and Bulgaria reported the highest growth rates and profit margins. But Danianu believes Romania is much more attractive than Bulgaria, as its economy is much more complex and bigger in size and industrialization is higher over here. "Our institutions work much better at least in fighting crime," adds Daianu. Daianu believes the conclusions of the study are correct, with Italy having made much investment in Romania and bilateral trade standing at high values.

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In the last three months of 2005, the Romanian poultry sector registered losses of over 1,235.4 bn lei because of the bird flu outbreak ? president of the Romanian Fowl Breeders Union Ilie Van told the press..

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The sale of participation shares in Romanian Lottery and in National Printing House represents only a partial privatisation, the State preserving full control, as it remains the major shareholder, according to the Ministry of Public Finances (MFP).


Based on the ordinance draft related to the approval of the privatisation strategy for the two corporations, participation shares standing for 32% of the equities owned by National Printing House and by Romanian Lottery will not be state ownership any more.

Some 20% of each institution?s equities will become ownership of Proprietatea Fund, and stakes accounting for 5% of the capital will be sold by conducting public secondary calls.

The balance of 7% of these stocks will be assigned by direct negotiation to employees, without selection of offers, as well as to the members of the boards in action and to retired persons having their last job in the two national corporations, through the association to be set up by them for this purpose.

The ordinance draft sets that the two entities will become joint stock companies where the State retains a major participation, 68%.

Some 32% of the companies? stocks may trigger the presence of representatives within the administration board.

Thus, the state may not make any decisions in the absence of private shareholders? agreement, in the sense of allotting profit toward various destinations or for working out the development strategy unless they are clearly specified by the law.

?It is absolutely fair for the two institutions to cease performing charity unless they have the agreement of the private shareholders.

And I do not think that they may have any interest in such measures, but only in profit.

In addition, any legal regulation addressing the use of the profit would prevent the shares from being traded?, according to Vice PM Gheorghe Pogea.

Currently, the law is the one that provides the guiding principles for the profit.

At the same time, the Ministry of Finances analyses the introduction of a provision by means of which the profit of National Lottery may double, and this refers to granting the company the statute of absolute monopoly by means of which the competition represented by large companies active in the fix quota bet market to be eliminated, such as Stanleybet and Wettpunkt.

Thus, the owners of 32% of the shares would have a larger profit share.

The nominal value of one Lottery share will be RON 5, whereas one share of the Printing House will cost RON 10.

Currently, the equity capital of the Romanian Lottery amounts to RON 42.6 mln, standing for 8.5 million shares, and the equity capital of the National Printing House amounts to over RON 561 mln.

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The Gara de Nord - Bulevardul Ion Mihalache- Otopeni subway line will provide a quick underground connection between the airport and the largest train station in Bucharest. The subway will follow a route that is both underground and above the ground, and the entire distance will be covered in approximately 25 minutes.
"Bucharest City Hall can realize this project - especially because the subway will be managed by the City Hall very soon - before the Metropolitan Transportation Authority will be created. The city is developing by following its necessities and a rapid connection between the largest train station and the international airport is vital," said Gheorghe Udriste, the director of the Transportations and Circulation Safety Department in Bucharest City Hall.
Udriste said that the municipality already started discussions with the Japanese government for contracting the credit.
"The yen credit is at the moment the cheapest government credit. Both the Romanian PM and Bucharest's City Hall mayor sent letters of intent to the Japanese government for starting credit negotiations," said Udriste.
Bucharest City Hall will issue a task book for the feasibility study necessary in the construction of the Gara de Nord - Otopeni subway line. The tender will be held in February. The study will be paid from the Bucharest City Hall funds, the project being financed through a yen credit.
The price of a task book will be of 13 euros and it will be available for purchase starting January 10.
The deadline for offers is February 21; the companies that will participate at the tender being announced the same day.
The participation guarantee is of 81.000 euros.

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The company Termoelectrica (thermal energy and electricity distributor) has asked Bucharest City Hall to allow a price increase for heat delivery of 56%.
The measure would force the Capital's City Hall to allocate heating subsidies totaling 176 million euros, half the budget for 2006.
Bucharest's officials said that if Termoelectrica's request is approved, the heating costs of the population would double as the institution cannot grant subsidies for the new tariffs.
Adriean Videanu, Bucharest's general mayor, accused Termoelectrica of adopting this measure to cover its losses and salary increases. Videanu said that Bucharest City Hall has no intention of "paying the high salaries" of the Termoelectrica employees.
"The company is imposing a price without justifying it and this doesn't seem normal to me. The City Hall will not cover their losses and will not grant them the necessary funds for the 20% salary increase," said Videanu.
Bucharest's general mayor called on Termoelectrica representatives to use common sense for this situation, at the meeting scheduled for next week.
Videanu believes that, in spite of the price increase for oil and natural gas, this measure is not justified. "I will use all the political levers I possess to fight against this measure," stated Videanu.
The mayor said that Termoelectrica is taking advantage of the fact that Bucharest depends 90% on this company for heating.
Irina Duica, Termoelectrica's representative in the negotiations, said that the new measure is justified. "We request the increase of tariffs to match the 47% increase in fuel prices, which has taken place between 1 April 2005 and 1 January 2006," said Duica.

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Constantza, Romania -- Acting as the general contractor, the Siemens Industrial Solutions and Services Group (I&S) is to build two turnkey wastewater treatment plants in the Romanian seaport of Constantza. The customer is the state-owned port authority, Maritime Ports Administration S.A. Constantza (MPAC).

For a waste-dump leakage treatment plant and a sewage treatment plant, Siemens is to supply and install all the systems, machinery and electrical equipment and will also be responsible for all the construction work. The order is valued at around 6.5 million euros and the new plants are scheduled to start operating at the end of 2006.

In the Romanian Black Sea port of Constantza, around 40 million tonnes of goods were transshipped in 2004. The amount of freight is growing by eight percent every year. To modernize the port, the operator, MPAC, has initiated the "Romania - Constantza Port Environment and Infrastructure Project", which is being supported by the European Investment Bank (EIB). In this context, Siemens is to build a new waste-dump leakage plant for treating 7,300 cubic meters of water per year and a sewage-treatment plant with a capacity of 815,000 cubic meters per year.

Siemens is supplying and installing all the systems, machinery and electrical equipment for the two wastewater treatment plants. This also includes containers, tanks and pipelines as well as pumps, compressors and metering systems. The biological wastewater treatment system of the plants includes a light-materials separator as well as sand and active-carbon filters and works according to the activated-sludge method with deep aeration. Water will be removed from the sludge by a chamber filter press.

Siemens is also installing the complete process instrumentation as well as measuring systems for the pH value, flow rate, pressure and temperature. The measured data will serve as the basis for fully automatic control of the plants via a central control system. The measured values and process data will be displayed with the help of a visualization system.

The wastewater treatment plants have been designed in such a way that the COD (chemical oxygen demand) of the wastewater will be reduced by around 80 percent. The cleaned wastewater will then comply with the emission limits for emptying into the sea. Siemens will guarantee the agreed cleaning performance as well as maximum consumption quantities of the chemicals used.

Siemens is also responsible for carrying out all the construction work. This includes, for example, construction of the foundations, the reinforced concrete basins and the operations buildings. Also included are infrastructure facilities such as the cable carrying system, the lighting and the low-voltage supply.

Further information under: http://www.siemens.com/water

The Siemens Industrial Solutions and Services Group (I&S) is the integrator of systems and solutions for industrial and infrastructure facilities and global service provider for the plant and projects business covering planning, installation, operation and the entire life cycle.

I&S uses the electrical and technical products of other Siemens Groups in order to enhance productivity and improve competitiveness of companies in the sectors of metallurgy, water treatment, pulp and paper, oil and gas, marine engineering, open-cast mining, intelligent traffic systems and industrial services. In fiscal 2004 (to September 30) I&S employed a total of 30,000 people worldwide and achieved total sales of EUR 4.290 billion.

Further information and downloads under:
http://www.industry.siemens.com

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2005 was the year when an important part of the assets from the state banking system switched to private ownership, which has urged banking competition at European level while according to forecasts, 2006 will be the year when the banking system is practically out of the state influence, once the privatisation of the National Savings House (CEC) is complete. Mergers and acquisitions, denomination and capital account liberalisation were the main challenges of 2005 in the Romanian banking system, yet BCR privatisation remains by far ?the success story of the year.? The privatisation of the two important banks, BCR due to its market share of 26%, which makes it a market leader, and CEC, due to its large territorial network, have made international financial institutions in Europe focus on Romania. The reason is that the Romanian banking system provides stability and the chance of other acquisitions or mergers by acquiring a significant market share, considering the competition within EU. The interest shown by the international financial institution for BCR was practically proved by the price paid: EUR 3.75 bln. BCR sale to the Austrians from Erste Bank is considered to be the most significant take-over transaction ever conducted in Romania. Erste Bank taking over BCR, in exchange of EUR 3.75 bln., gave Austria the statute of the most important foreign investor in Romania over a long time onward, due to an overall investment value of EUR 7 bln. The statute of the largest investor in Romania has also been secured by Austrians following OMV taking Petrom over, but the take-over by the Austrians of the leader of the banking system in Romania practically links our country to the important international transactions. BCR privatisation streamlines Romania?s path to the EU, considering that EU holds the presidency of EU during the first half of next year, a time when a decision is made as to whether Romania joins the EU in 2007 or in 2008. Thus, with support from Austria?s representatives, membership on January 1, 2007 is closer than it seems six months ago. The Romanian State will acquire from BCR sale close to EUR 2.25 bln., and the balance of EUR 1.5 bln will be equally transferred to EBRD and IFC which, together, own 25 per cent of the bank?s stock. The proceeds received by the Romanian State from BCR privatisation will be used in infrastructure projects. BCR take-over enabled the Austrians from Erste Bank to revise upwardly their targets related to medium term financial outputs. According to the agreement addressing the take-over of the major participation, BCR shares will be listed at Bucharest Stock Exchange (BVB) within the next three years. The investors in the stock exchange interested in these shares will have the option to buy them, but Erste Bank has informed that it would not sell the shares it owned, the scenario with the highest likelihood being the one when an investment related to minor shareholders is considered. BCR name will be kept over at least three years, and the logo can be modified to show membership to the Austrian group. The change of the owner in the two banks should trigger new financial resources for the new shareholder, its know-how for product development, new management principles and, not lastly, a new name put next to the old one which brings fame at European level. The area that the new owners of BCR, as well as those competing for CEC, show interest to is related to retail banking, where they can succeed in having growth rates over those reached in Western Europe. Yet, investors remain interested in providing loans to SMEs and to Municipalities. The globalisation trend within the banking system, seen in all the markets of Europe, particularly further to HVB being taken over by UniCredito, was also noted in the Romanian banking system in the merger of HVB Romania with Tiriac Bank. The partnership of the three institutions in the Romanian market has led to the establishment of a bank that ranks fourth in Romania in terms of assets owned. Regarding acquisitions, one can speak about the Lebanese bank Blom, which has increased its participation within the Romanian - Egyptian bank MISR Romania, up to 96.78 per cent, following the acquisition of a participation accounting for 84.24 per cent of the stock against $98 mn. The new owner of Eurom Bank is the Israeli bank Leumi. Its shareholders bought the 89 per cent participation, paying $42 mn for this transaction. source

CEC's privatization is no longer urgent for the Government, as the preliminary bids have been deemed too low, Ziarul Financiar writes in today's issue.
Banking sources say a current of opinion is now gaining ground that says it would not hurt the state if it retained a significant stake in the banking system, as was the case on other markets in Central Europe.
"Having seen the indicative bids, I am not really satisfied. I cannot tell you today what is best for CEC. The Committee is currently analyzing the best option for CEC," Finance Minister Sebastian Vladescu, the head of CEC's privatization committee, stated.
He says January is no longer a firm goal for the submission of the final binding bids for CEC.
The quoted banking sources add that the authorities have not decided whether to go ahead and complete the privatization process or not and are wondering if it would not be best to feed some money into the bank to consolidate its position that has weakened over the last two years.
According to the document requesting bids for privatization, sent to the interested investors, the Ministry of Public Finance in its position as representative of the state and sole shareholder of CEC, reserves the right to halt the privatization process at any time it sees fit.
The seven bidders in the race for CEC (Romanian Savings Bank) had initially been invited to submit binding bids by November 28, 2005.
The deadline was extended indefinitely, however, while waiting for the BCR (Romanian Commercial Bank) to be privatized. Erste Bank, the winner in the bid for the largest bank on the market for which it paid 3.75bn euros, was also on the list of potential investors for CEC, along with the National Bank of Greece, Monte dei Paschi di Siena, Dexia Bank, EFG Eurobank, OTP Bank and Raiffeisen.
After the preliminary bids were submitted on October 21, banking sources on the market said they did not exceed 300 million euros, despite valuations of some 650 million euros on the market.
CEC's assets amount to some 1.43bn euros, which account for about 5% of the banking system.

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Automobile Dacia (Romanian car producer) increased its sales in 2005 by 70%, up to 163,172 cars.
The main factor of this ascending trend was the producing of the Logan model that reported 167,700 units' sales since it was launched in September 2004.

Dacia's main shareholder, Renault, showed that the sales increased by 41.4% in Romania and showed significant hikes on the Central and Eastern Europe markets, especially in Turkey and Maghreb.
On the Romanian market Dacia sold 113,100 cars of which 23,991 were Renault. This offers to Renault a 54.5% share of the Romanian vehicles market. On the European markets, Dacia sold 30,425 units. The increase on the markets outside Europe was of 45.2%.

Automobile Dacia estimates for this year a 34.3% production increase, to 20,000 units of which at least half will be destined to the external markets.
Jean Michel Sicre, Dacia's commercial director, stated that the company's results will depend on the Romanian market evolution for the car segment, expected to be inferior to the evolution reported in 2005.
"We estimate that the volume of sales on the Romanian market will be in the most fortunate case the same with the one registered in 2005," stated Sicre.

Another Dacia objective is the introduction of diesel motors on all the 50 markets where the company will be present.
Renault recently stated that this year's sales will increase because of the Clio 3 model and the high demand for the Logan model.
The "Ambition" version of the Logan diesel model, following to be launched in approximately two weeks, will be provided with ABS.
The same equipment will be made available for the 1.4 liter gas Logan version, named Ambition Plus.
Presently, the only standard version equipped with ABS was the 1.6 liter Ambition model.

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The shares listed on the Bucharest Stock Exchange began the year in full gear with an average growth of nearly 4%. The stars of the first trading day were the SIFs, which rose by 6.2%, Ziarul Financiar writes.
The Stock Exchange therefore verified the rule that says the first day of trading yields significant profits for investors, for the eighth year in a row. The total value of the listed companies increased by no less than 380 million euros yesterday, reaching 15.7bn euros.
Despite years when growth would be even higher on the first day of trading, this year was the first when one could make the banking interest for a whole year in just the first day.
Stocks like SIF Transilvania or SIF Muntenia yielded over 6.5% yesterday alone, with investors continuing to think of how valuable the stakes the SIFs hold in Banca Comerciala Romana are. The BET-FI index overshot the 50,000-point mark for the first time yesterday, reaching a new all time high.
The top performers were banks like Banca Transilvania (5.6% growth) and BRD (3.7%), along with petroleum companies, such as Petromidia, up nearly 5% and Petrom, up over 2%.
Stocks becoming more expensive in January is a rule that applies on foreign stock exchanges quite often, as well. This phenomenon is known as "the January effect". Among the factors thought to cause this growth are the optimism at the beginning of the year, in addition to higher sales at the end of the previous year, either for fiscal reasons or ordered by the fund managers who are trying to rearrange the portfolio structure to make it look better in the full-year report.
"I think the progress of shares is mainly due to investors' expectations for growth in January, in line with the rule of previous years. Nothing happened during the (winter) holiday break to justify such growth," says Laurentiu Floroiu, trading manager with Capital Securities, the brokerage firm of Greek Eurobank. He added the market would most likely go up over the next few days, though the trend in the first few days of the year did not offer any indication as to where the market is going this year.

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Convergys Corporation (NYSE:CVG), a global leader in customer care, human resources, and billing services, and ROMTELECOM (Romania) announced today that ROMTELECOM has gone live with Convergys' Infinys(tm) software. ROMTELECOM serves more than 4.3 million customers throughout Romania offering a wide range of advanced communications services including fixed and mobile telephony, data transmission, and Internet.

As a result of the implementation of Convergys' Infinys Rating and Billing Software, ROMTELECOM is realizing new growth opportunities, enhanced customer service, and reduction in operational support system costs while quickly bringing new products and services to market.

Convergys served as the prime contractor providing professional services including customizations, configuration support, and migration software in order to upload data from multiple legacy systems to Infinys as part of ROMTELECOM's overall IT renewal infrastructure program.

"ROMTELECOM is determined to strengthen its position as the premier telecommunications product and services provider in Romania by modernizing its billing systems to stay ahead of emerging competitors as the market opens to competition," said Jim Hubley, Chief Executive Officer, ROMTELECOM. "Convergys' Infinys software helps us reach this goal because it provides us with the ability to introduce new products and services to the market much more quickly and cost efficiently than we could in the past."

"As ROMTELECOM faces new operational challenges because of an increasing competitive landscape, Convergys' Infinys software will further strengthen its leadership position in the Romanian marketplace by providing operational differentiators to distance ROMTELECOM from the competition," said Convergys' Jean-Herve Jenn, President, International. "ROMTELECOM is already benefiting from Infinys' flexibility and industry-leading functionality demonstrated by its recent launch of a number of new bundled services."

With more than 20 years of experience in billing and customer care, Convergys combines its broad portfolio of professional and consulting services, deep technical and operational expertise, and award-winning Infinys software to solve its clients' complex BSS and CRM business problems. Convergys is outthinking and outdoing(tm) on behalf of its clients every day.

About ROMTELECOM

ROMTELECOM owns 4.326 million telephone lines, which represents an increase of 3.1 percent over the number owned in the previous year. The company has nearly 14,000 employees and has operational revenue around EUR 797.5 million.

About Convergys

Convergys Corporation (NYSE:CVG) is a global leader in providing customer care, human resources, and billing services. Convergys combines specialized knowledge and expertise with solid execution to deliver outsourced solutions, consulting services, and software support. Clients in more than 60 countries speaking nearly 30 languages depend on Convergys to manage the increasing complexity and cost of caring for customers and employees. Convergys serves the world's leading companies in many industries including communications, financial services, technology, and consumer products.

Convergys is a member of the S&P 500 and a Fortune Most Admired Company. Headquartered in Cincinnati, Ohio, Convergys has more than 62,000 employees in 68 customer contact centers, three data centers, and other facilities in the United States, Canada, Latin America, Europe, the Middle East, and Asia. For more information visit www.convergys.com

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The launching of the shares offer belonging to the communications operator RomTelecom will be made by the end of the 2006 first semester, stated yesterday the minister of Communications and Technology Information, Zsolt Nagy.

The Ministry of Communications and Technology Information (MCTI) selected the Credit Suisse First Boston (CSFB) financial consultant for the stock exchange yesterday, listing of the 44.99 percent share package owned by the state in RomTelecom.

"We hope to sign the services contract very soon with the international investments bank CSFB so by the half of the year we can launch the initial public offer," stated Nagy.
MCTI intends to list the first RomTelecom share package both in the Bucharest Stock Exchange and on the international listings market, stated Zsolt Nagy.

The ministry stated that the process will very much depend on the market conditions at the time of the transaction.
Nagy declined to say what the size of the first share package listed would be and that this decision will be considered together with CSFB.
Sources quoted by Reuters stated that the phone operator will be evaluated at approximately two billion dollars, when it will be listed.

The same sources suggested that the Romanian authorities intend to issue Global Depository Receipts (GDR- certificates that prove the share ownership), on the London stock exchange.
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 consultancy on the sale process of the government's shares in Romtelecom.

The ministry received offers from ABN AMRO, BNP Paribas, a consortium of Deutsche Bank and BRD Securities, CA IB, Citibank, Credit Suisse First Boston, a consortium of HSBC and BCR, JP Morgan, Lazard and Co, Merrill Lynch, Morgan Stanley, and the consortium formed of UBS, ING and CET by the deadline on Thursday.

After evaluating the letters of intent, the candidates were notified of the results for 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.
MCTI will pay the commission for the consultant from the privatization revenues.

In December 2005 RomTelecom announced that will invest in the Next Generation Network (NGN) if the company will create the proper environment to recover the investments.
James Hubley, the company's general director, stated that RomTelecom's Administration Council discussed the NGN project and postponed the investments.

"In exchange, RomTelecom signed contracts with Ericsson and Alcatel for the acquisition of equipment," stated Hubley.
NGN provides high speed internet services and new audio and video applications.
The Minister of Communications, Zsolt Nagy, stated that the value of the project will surpass 450 million euros over the next three years.

"The introduction of the NGN was decided by RomTelecom's Administration Council," stated Nagy.
RomTelecom's decision of postponing the investments in the NGN network is the effect of the reduction of call tariffs of other phone operators activating in Romania by the National Authority for Communications Settlement (ANRC).
The first tariff reduction phase will start in January 1, 2006 and the second will start in January 1, 2007.
According to the ANRC decision, tariffs for local calls should drop by 16 percent, while tariffs for regional calls will decrease by 51.5 percent and the national tariffs by 55.8 percent.

The largest reduction will be made to the national call tariffs which will be a 69.8 percent reduction applying to the calls made at high traffic hours.
ANRC's president, Dan Georgescu, explained that the tariffs were established by taking into account the costs reported by RomTelecom to develop the network and the present market conditions.
At the end of September the company reported a net profit of 213 million euros.
RomTelecom launched eight options for voice services in October and reduced tariffs for some types of phone calls in exchange for a monthly subscription.

The company's executive commercial director, Pieter Bakker, stated that the new invoice system allows the company to give a quick response to the customer's needs. "Over the next few months several such offers should be launched and RomTelecom clients will have the chance to make their own tariff plan by choosing some of the options," added Bakker.

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Toreador Resources Corporation (Nasdaq:TRGL):

-- $80 million budget approved for exploration and development capital spending;

-- Production in 2006 estimated to be in excess of one million barrels of oil equivalent;

-- 2007 production estimated to more than double 2006 levels

-- Romanian re-entry program exceeds expectations

Toreador Resources Corporation (Nasdaq:TRGL) announced today the approval of its 2006 capital spending and operating budgets. In the 2006 capital budget, approximately $80 million was approved for exploration and development projects. The 2006 operating budget projects significant production increases over 2005 levels as Toreador continues to define and develop its portfolio of exploration and development prospects in Turkey, Romania, Hungary and France. The company also provided an update on current operational activities.

Total production in 2006 is estimated to increase to over one million barrels of oil equivalent (MMBOE), based on new production from previously announced discoveries and continued development activities in Turkey, Romania, Hungary and France. The goal of the company's five-year strategic plan is to approximately double production each year through 2010, and the company estimates that production in 2007 of 2.5 MMBOE will more than double estimated production for 2006.

"We have many attractive opportunities in our current portfolio of international projects," said Toreador President and Chief Executive Officer G. Thomas Graves III, "and have just begun to tap the potential of our extensive acreage positions. In 2006, we will begin to realize accelerated production growth from our recent discoveries and our active exploration program this year should add significantly to our development opportunities in 2007."

"Our strategy of exploration and development in under-explored hydrocarbon-bearing regions located in net oil and gas importing countries in the Mediterranean Basin is beginning to bear fruit. With just the prospects we have currently identified, we expect significant production and reserve additions over the next two years. As we continue to develop our prospects, many of which lie in frontier areas, we fully expect to define additional opportunities for growth."

2006 CAPITAL BUDGET

Exploration and development spending is set to increase significantly in 2006. The table below summarizes Toreador's $80 million capital budget by country.

                 Table: 2006 Capital Budget by Country

                                    Production     Total  
                                     Infra-       Capital     % of
($millions) Exploration Development  structure    Budget      Total
----------------------------------------------------------------------
Turkey      $        7  $       19  $       11  $       37       46.3%
Romania             13           3           1          17       21.3%
Hungary              6           5           1          12       15.0%
France               7           4           -          11       13.8%
Misc.                -           3           -           3        3.8%
----------------------------------------------------------------------
Total       $       33  $       34  $       13  $       80      100.0%

In Turkey, the majority of the $37 million capital budget is dedicated to development in the South Akcakoca Sub-basin in the Black Sea. During 2006, five development wells are planned for the Ayazli and Akkaya structures. These will be drilled by the "Prometheus" and "Saturn" jack-up rigs, which will then be used to set production structures and tie-in the five development wells in addition to other wells drilled in 2005. A sub-sea pipeline to the onshore production facility will be built this spring and summer; the onshore pipeline tying the future production facility to the national grid is now nearing completion. During the second quarter, the "Southern Cross" semi-submersible rig is scheduled to begin drilling two wells with an optional third well in the deeper waters of the South Akcakoca Sub-basin. If successful, these wells will be brought on production using a separate sub-sea pipeline. Development drilling is budgeted at approximately $19 million and infrastructure spending is budgeted at approximately $11 million.

Other activities planned in Turkey during 2006 include at least one exploratory well with two optional exploration wells to be drilled (with TPAO as operator) on acreage to the east of the South Akcakoca Sub-basin during 2006. The three-well exploration package was agreed to by the joint venture partners as disclosed in Toreador's news release of November 29, 2005. Toreador also expects to conduct a seismic survey during 2006 in its Thrace Black Sea permit area. The first $1.5 million will be funded by HEMA, a Turkish industrial conglomerate, as its obligation to earn an option on a 50% working interest in the permit area. Total exploration spending is budgeted at approximately $7 million.

In Romania, Toreador will conduct a second six-well re-entry program in its Fauresti Field rehabilitation project, following up on the successful completion of its first six-well re-entry program which is detailed later in this release. Approximately $4 million of the total $17 million Romanian capital budget is will be spent on the re-entry program and infrastructure. During 2006, the company expects to spend approximately $9 million conducting seismic surveys over its Viperesti and Moinesti exploration permits as well as the Fauresti Field. The company's intention is to drill its initial Romanian exploration well late in 2006 or early 2007.

In Hungary, Toreador is completing its initial geological and geophysical analysis and is anticipating a 2006 drilling program of up to four wells. A production facility and tie-in is planned so the company may begin production from existing wells in the Szolnok block.

In France, up to six exploration wells are planned on three different permits in addition to continued development drilling in the company's existing Neocomian Field. A potential development well, subject to agreement with joint venture partners, on the recent Nemours discovery may also be drilled in 2006.

"We have identified numerous exploration and development opportunities throughout our portfolio," commented Graves, "and have the financial strength to take advantage of them, because we started the year with cash on hand in excess of $90 million. The next few years will be a very dynamic period for Toreador and should allow us to create significant value for the company's shareholders."

OPERATIONS UPDATE

Turkey

Development drilling in the South Akcakoca Sub-basin offshore Turkey in the Black Sea is continuing on schedule for delivery of first gas production in the second half of 2006. Late last month, the Ayazli-2A replacement well was successfully drilled to a bottom-hole location within 80 meters of the original well and encountered the same net pay and gas producing sands. Currently, the "Prometheus" jack-up rig is drilling the Ayazli-3A development well, which replaces the Ayazli-3 well. Toreador has received notification that all insurable losses have been approved for reimbursement from the insurance company. The "Saturn" jack-up rig arrived in the Black Sea at the end of December and at the present time is drilling a well on the Akkaya structure.

A high-resolution 2D seismic survey is currently being conducted over approximately 100,000 acres in the coastal waters over the Alapli and Eregli sub-basins to the east of the approximately 50,000 acres of the South Akcakoca Sub-basin area. These three sub-basins represent approximately 16% of the approximately 962,000 total acreage of the Western Black Sea permits held by Toreador and its partners. The seismic data will be used to determine drilling locations for up to three exploration wells.

France

In the Neocomian Field complex, Toreador has finished drilling the third well in a four-well development program. The first three wells were logged with indications of oil, and will be tested along with the remaining well once the drilling program is completed later this month. The wells are approximately 700 meters deep. These wells have every indication of increasing the areal extent of this four-field complex which has produced approximately 30 million barrels of oil to date.

In the Charmottes Field, the Charmottes-111H horizontal development well has been drilled and will be tested along with the Charmottes-6D well later this month. As previously reported, the Charmottes-6D well was drilled to the Donnemarie formation. Logs and cores indicate the presence of oil over approximately 12 meters of net pay. In the Nemours permit, the La Tonnelle-1 exploration well has been put on production and is being tested for the remainder of this month.

Romania

Toreador has completed its 2005 six-well re-entry program in the Fauresti rehabilitation permit, with results that exceeded expectations. Four out of the six wells were successful, and actual combined test results from the four producing wells totaled approximately 7 million cubic feet of gas per day (MMCFD) with associated production of approximately 50 barrels of condensate and 50 barrels of water per day. Subsequently, an acid treatment program which improved production in one of the wells from approximately 1.4 MMCFD to approximately 2.2 MMCFD is being conducted on the other three successful re-entry wells. A production facility for the four producing wells will be completed by the end of January, and final permit approvals to begin gas and hydrocarbon liquids sales are expected to be received in the first quarter.

About Toreador

Toreador Resources Corporation is an independent international energy company engaged in the acquisition, development, exploration and production of natural gas, crude oil and other income-producing minerals. The company holds interests in developed and undeveloped oil and gas properties in France, Turkey, Romania and Hungary. In the United States, Toreador primarily owns working interests in five states. More information about Toreador may be found at the company's web site, www.toreador.net.

Safe-Harbor Statement -- Except for the historical information contained herein, the matters set forth in this news release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Toreador intends that all such statements be subject to the "safe-harbor" provisions of those Acts. Many important risks, factors and conditions may cause Toreador's actual results to differ materially from those discussed in any such forward-looking statement. These risks include, but are not limited to, estimates of reserves, estimates of production, future commodity prices, exchange rates, interest rates, geological and political risks, drilling risks, product demand, transportation restrictions, the ability of Toreador to obtain additional capital, and other risks and uncertainties described in the company's filings with the Securities and Exchange Commission. The historical results achieved by Toreador are not necessarily indicative of its future prospects. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Federal regulators gave a Miami automaker Cross Lander the go-ahead Tuesday to sell a bare-bones, Romanian off-road vehicle in the U.S. without air bags until May 2008. The National Highway Traffic Safety Administration allowed the exemption for Cross Lander USA Inc. after finding the company could go out of business without it. The company will be required to put a warning sticker in the vehicle alerting buyers that there are no air bags.
Watchdog group Public Citizen had campaigned against the waiver because it had argued the vehicles would be dangerous without air bags.

The "decision is a serious detriment to the agency's obligation to maintain safety standards," said Laura MacCleery, Public Citizen's counsel for auto safety. "A warning label does not take the place of an air bag."
Cross Lander officials did not return a phone message seeking comment Tuesday. The traffic safety administration estimated that a maximum of 9,000 vehicles would be sold during the exemption. Those sales would generate enough money to allow the company to equip vehicles with air bags when the exemption expires, the agency said.

U.S. safety rules require air bags for the driver and front passenger in vehicles that weigh less than 2,475 kilograms, unless a company can prove it faces "substantial economic hardship" and tried to meet the safety standards.
The boxy vehicles resemble a 1980s-era Land Rover and the company has said it planned to sell them for about 16.842 euros, about a sixth of the cost of General Motors Corp.'s Hummer H1.
The federal agency estimated that a maximum of 9,000 vehicles would be sold during the exemption. Those sales would generate enough money to allow the company to equip vehicles with air bags when the exemption expires, the agency said.

The Cross Lander has met Environmental Protection Agency standards.
The off-road vehicle is made by Romanian automaker Aro S.A., which has struggled financially over the past decade. Cross Lander USA said it lost more than $5 million in 2004.
Cross Lander USA, a joint venture of Brazilian Samambaia and American company Lacaro Auto Distributors, took over Romanian off-road vehicles manufacturer Aro in September 2003. Cross Lander, which owns 68.7 percent of Aro's shares, was due to pay 13 million euros for the stock and another 9.4 million euros for debts and commercial credits contracted by the company.
John Perez (photo), general manager of Cross Lander USA, first tried to bring the vehicles to the U.S. in the early 1990s, as an investor of East European Imports. Those attempts failed because of production problems and disputes with the Romanian government and workers. Previous efforts by other investors failed for similar reasons.

Since the privatization, the American partner and the Romanian authorities have issued several contradictory statements about the vehicle manufacturer's situation. The Authority for the Recovery of State Assets (AVAS) has demanded the cancellation of the privatization contract, accusing Cross Lander of not respecting investment obligations. The company claims it invested over nine million euros.

An AP transcript was also used for this report.

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Renault reports that its worldwide group sales of cars and light utility vehicles grew by 1.7 percent in 2005, mainly due to sales outside Europe, and forecast a further growth in 2006.

Renault reported total sales of 2.532-million vehicles, with sales of Renault brand vehicles down 2.6 percent to 2.248-million.

Sales of Romanian brand Dacia rose 70 percent to 163 723 units and South Korean Samsung vehicles 40 percent to 119 047.

The company said it saw further international gains, with the introduction of the Clio III contributing to increased vehicle sales in 2006.

Sales of Romanian brand Dacia rose 70 percent to 163 723 units.

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Federal regulators gave a Miami automaker the go-ahead Tuesday to sell a bare-bones, Romanian off-road vehicle in the U.S. without air bags until May 2008.

The National Highway Traffic Safety Administration allowed the exemption for Cross Lander USA Inc. after finding the company could go out of business without it. The company will be required to put a warning sticker in the vehicle alerting buyers that there are no air bags.

Watchdog group Public Citizen had campaigned against the waiver because it argued the vehicles would be dangerous without air bags.

The "decision is a serious detriment to the agency's obligation to maintain safety standards," said Laura MacCleery, Public Citizen's counsel for auto safety. "A warning label does not take the place of an air bag."

Cross Lander officials did not return a phone message seeking comment Tuesday. The traffic safety administration estimated that a maximum of 9,000 vehicles would be sold during the exemption. Those sales would generate enough money to allow the company to equip vehicles with air bags when the exemption expires, the agency said.

U.S. safety rules require air bags for the driver and front passenger in vehicles that weigh less than 5,500 pounds, unless a company can prove it faces "substantial economic hardship" and tried to meet the safety standards.

The Cross Lander 244X is made by Romanian automaker Aro S.A., which has struggled financially over the past decade. Cross Lander USA said it lost more than $5 million in 2004.

The boxy vehicles resemble a 1980s-era Land Rover and the company has said it planned to sell them for about $20,000, about a sixth of the cost of General Motors Corp.'s Hummer H1.

The Cross Lander has met Environmental Protection Agency standards.

ON THE NET http://www.crosslander4x4.com/index.php

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The business environment seems to be doing well, as, in 2005, the market for mergers and acquisitions reached its highest level in the last seven years, financial weekly Capital writes.
"The fact that we are the last in Europe in certain sectors can be an advantage. To many foreign companies, Romania is an important stake, because there is enough room for development here. This is why 2005 ended with a number of transactions completed on the local market which is two times higher than the figure reported in 2004.
On a world level, the number of mergers and acquisitions grew by 19 percent in 2005 compared to 2004, while, in Romania, growth reached 96 percent, according to a KPMG study. More exactly, a total of 100 transactions worth 3.4 billion dollars were completed in Romania.

"A motivating factor for this wave of mergers and acquisitions is Romania's EU integration and investors' interest in entering the market at the appropriate moment, which is the pre-accession period," explained Anda Todor, an associate lawyer specializing in acquisitions and mergers working for the Salans international law firm.
Several Romanian companies, with 100 percent local capital and many created by only one entrepreneur, reached a level of development requiring a broader corporatist organization, which can only be acquired with foreign know-how.
"Furthermore, many of these successful firms no longer have the financial capacity to continue financing their own development. For companies that currently make acquisitions in Romania, local targets are to be taken over at rather low prices compared to the prices in European Union member states," believes Markus Piuk, a coordinating lawyer for Schoenherr & Associates.

However, we are way behind Poland, which reported mergers and acquisitions last year worth 9.4 billion dollars, the Czech Republic (8.9 billion dollars), Slovakia (4.5 billion) and even Bulgaria, which reported transactions worth 3.6 billion dollars. But, if we add the two great deals signed this year, BCR - Erste Bank (4.46 billion dollars) and Connex-Vodafone (2.5 billion dollars), we would reach a total amount exceeding ten billion dollars."

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The trade deficit advanced by ¤1.26 bln in November 2005, exceeding ¤9 bln over the first 11 months, according to the National Institute of Statistics (INS).

Imports advanced by 25.6% in November compared to the same month of 2004, up to ¤3.3 bln., amounting to ¤29.44 bln over January - November, going up by 24.2% as against the same time interval of the previous year.

Exports advanced by 22.2% in November, up to ¤2.03 bln.

Over the first 11 months, total exports' volume amounted to ¤20.43 bln., up by 17.4% compared to the same time interval of 2004.

Nearly one quarter of the imports (23.2%) was accounted for, over January - November, by mechanical machines and devices, electrical machinery and equipment, sound and image recording or reproducing equipment.

Their value went up by 22% compared to one year ago, amounting to ¤6.83 bln.

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The number of mobile telephony users increased in 2005 by 23 percent compared to 2004, thus the mobile telephony penetration rate reached 62 percent, compared to 47 percent last year while the growth tendency of the penetration rate of mobile usage indicated a substantial increase potential, especially when compared to a 83 percent rate in the European Union for 2004, Bursa news agency reports.

The main mobile telephony operators, Vodafone, Orange, Zapp and Cosmote, compete on a ¤5 bn market and for 13.1 million users.

By the end of '05, Orange covered 80 percent in the Romanian territory and 97 percent in the population.

The clients number increased by 42 percent during 2005 and reached some 6.6 million people.

Vodafone, which is the main competitor for Orange this year posted a territorial coverage of 75 percent and 95 percent of the population.

The company has 5.9 million clients.

Zapp has 300,000 clients, a territorial coverage of 65 percent and 67 percent of the population.

Cosmorom used to have a 39 percent territorial coverage and 61 percent of the population.

Following the take over by Greek group Cosmote, the network expanded and is now able to cover 80 percent of the population.

The expertise the Greek operator brings and the plans to launch 3G services could make Cosmote a serious competitor on the local communications market.

According to the estimates of experts in telecommunications, in 2006 the increase of the mobile telephony market would post a more moderated increase because the penetration rate is high.

According to experts, the new challenge will be the use of new technologies.

Following the re-branding of two mobile operators and the launch of two more 3G licenses, next year will be marked by a dynamic competition on the third generation telephony services.

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Over the next few days, Erste Bank starts the increase of the equity capital by ¤2.4 bln., an operation required for funding the acquisition of Romanian Commercial Bank (BCR), by means of the most significant share issuance in the history of the Vienna Stock Exchange.

Based on banking sources cited by Handelsblatt, Erste Bank CEO, Andreas Treichl, intends to take good advantage of the market status in order to complete the capital rise this month.

The issuance of new shares, worth ¤2.4 bln., is a new record for Vienna Stock Exchange.

The funds will be the input for paying the price of EUR 3.75 bln. due for the participation of 62% of BCR stock.

The market is favourable, since the quotation of the Austrian bank shares is up to the historic high of EUR 48. The value of the stock advanced by 10% after December 20, when Erste was selected the being the best bidder in the race for BCR, and the market expects new returns.

The analysts regard the price paid for BCR as being rather high, as it is six times the accounting value of the shares.

On the other side, BCR was the last large bank privatised in Eastern Europe, and Erste Bank has increased, following one move, the number of clients by 4.5 million, up to 17 million.

Erste Bank has paid in the past prices regarded as being high for various acquisitions, but all these have been profitable, according to Stefan Maxian, analyst for Raiffeisen Centralbank.

Also, BCR take over will result in enhanced estimations regarding the average growth rate of profit from 15% to 20% until 2009.

Dividends are expected to advance by at least 10%.

Romania is considered to be a market of "future," where one quarter of the people owns a bank account and lending is only in its early stages.

The international financial evaluation agency Moody's Investors Service has put under surveillance, with negative prospects, the "A1" rating assigned to the Austrian bank Erste for lending that do not bear any guarantees and this also took place for the indicator that evaluates the financial strength of the institution, which is currently "B1 minus" rated.

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The evolution of interest rates is one of the main challenges in 2006, said bank analysts as for the first part of 2006, some analysts forecasted a slight increase in deposit interest rates and a stagnation of the credit ones, ACT Media news agency reports.


For this interval, it is estimated that the savings process could register a slight rise, on the account of the deposit interest rates' increase.

The need to reinforce the savings process is supported by the analysts as well as by the bankers.

Although only some of them believe the deposit interest rates will increase, while others say they are going to be maintained at the current level.

Petre Bunescu, Vice-president of the Romanian Banking Association (RBA), said that the interest rates policy could generate further problems under conditions in which the reduction of inflation rate is set to continue in 2006, as well.

"We will assist, probably, to a stabilization of the interest rates policy.

I believe that the frequent modification of the interest rates will not take place.

It is not impossible to assist to an easy readjustment on an upward trend of the interest rates at this year-start, especially at deposits that, in their great majority are real negative at present.

The savings spirit must be maintained," he added.

Analyst Dragos Cabat anticipates that, in the first three-six months of the year, both the passive interest rates are set to increase (by 1 percent or even 2 percent) and the active ones (by 1.5 percent - 2.5 percent, according to the credit's maturity).

In the second part of the year, when the analysts predict that the inflation rate will decrease, a downward trend in interest rates could appear, first of the passive ones and subsequently the active ones and, at the end of 2006, they might reach a similar level to the one in December 2005, or even with 0.5 percent - 1 percent smaller, Cabat stressed.

There are also voices that no pertinent changes are going to occur at interest rates level.

Bogdan Baltazar, Chairman of "Baltazar, Bloom & Parvulescu" consultancy, thinks that in case Romania's National Bank (BNR) is serious in targeting inflation, then the interest rates would not drop further in 2006.

He said that they will be maintained at pretty the same level as those at the end of 2005.

In analyst Florian Libocor's opinion, in the first part of the year they will assist to the maintenance and even consolidation of the results registered in 2005 as for the interest rates.

In contrast, some modifications in the second part of the year are not excluded so that, at 2006 year-end, BNR's monetary policy interest rate could drop by a percentage point compared to the current level of 7.5 percent, Libocor estimated.

In addition, he stated that it is possible to see a reduction by one, maximum two percentage points of the difference between the average interest rates for credits and the deposit ones.

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The number of postal services providers increased from 5 in 1999 (the year the market liberalized) to 172 in December 2005, according to a survey on the postal services market made by the National Regulation Authority for Communications (ANRC), Bursa news agency reports.

According to the survey, the enforcement of an efficient regulation framework led to the improvement of services and cut in tariffs, thus stimulating productivity and enhancing the economic growth.

Of the 172 companies that operate on this market, 166 are authorized to provide value added services.

Of the 166, only 5 companies exclusively deal with value added services, while the rest targets other segments in the market.

According to statistics, 85 percent of these companies exclusively use their own distribution network, 4 percent work both through their distribution network and other companies, while 11 percent use other companies for distribution.

According to ANRC, the Posta Romana National Company is the only one providing universal postal services and has the most extensive distribution network in Romania.

According to statistics, the highest competition is in the domestic and international parcel services market, advertising and international deliveries.

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The Romanian investment rate was about 22 percent of the GDP in 2005, announced the National Commission for Prognosis with the investment rate in the first ten months was 27.3 percent, up from 26.1 percent in the same period of 2004, ACT Media news agency reports.

Foreign direct investment stood at 4 billion euros in 2005, down from 5 billion euros in 2004.

More than 8,700 joint ventures were set up in 2005, i.e. up 20 percent on the previous year.

The main investor in Romania was Austria, pushed to the top place by the privatisation of the Romanian Commercial Bank (BCR) in a transaction worth 3.75 billion euros.

The overall Austrian investments amounted to more than four billion euros.

Austria is followed by the Netherlands with two billion euros worth of investments, Germany with nearly one billion euros, Greece, Italy and Turkey.

Romania is the main country in Central and Eastern Europe to have attracted the highest investment volume in 2005, namely 80 percent, with the main sectors being banking and infrastructure.

European officials believe investment will be re-directed to the Western Balkans in the years to come and the main areas will be the fight against corruption and bureaucracy.

The OECD officials, however, said the level of investments in the region is still insufficient and they argue that more greenfield projects for the small and medium-sized enterprises should be promoted, since the Central and East European states have a strong competitor, China.

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EFG Eurobank Leasing, a member of the financial Greek group EFG, entered Romania, instrumental being Bancpost and EFG Eurobank Ergasias, ACT Media news agency reports.

"We count in Romania on our main assets, on our regional experience and flexibility in development and in proposing new financial solutions related to a wide range of industrial investment,'' said General Manager of EFG Eurobank Leasing in Romania, Sorin Manolescu.

EFG offers financial leasing products such as financial and operational leasing, leaseback, leasing in the long term, fleet management, for products such as industrial equipment, buildings, means of transport, medical and building equipment, a.s.o.

The financial group EFG operates in Greece, Romania, Bulgaria, Serbia, Poland and Cyprus, and holds in Greece a current portfolio of over one billion euros.

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The revenues of Orange Romania mobile phone operator are expected to reach $1 billion at end-2005, up almost 25% from 2004, said Orange Romania Executive Manager Richard Moat, ACT Media news agency reports.


In terms of the customer base size, Orange Romania is a local market leader with 6.22 million customers.

"In 2006, both the number of customers and the revenues will record smaller rises because the penetration rate will be high," said Moat.

Orange has so far invested $1.230 billion in Romania.

According to Moat, Orange investment in Romania will be channeled in 2006 in expanding Orange Romania's EDGE network nationwide, releasing 3G services, expanding the network of its own shops and launching new products and services.

Moat said that the growth pace of Romania's communications market in 2006 will be slower because of the existing high penetration rate.

2006 is also expected to witness increased competition as a result of the re-brandinbg of two operators and the issuing of two more 3G licences.

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The growth rate of the Romanian economy was 3.7 percent in 2005, drastically under the 5.5 percent estimations of the authorities, according to a report of Bank Austria Creditanstalt (BA-CA). In 2004 Romania's economy grew by 8.3 percent, mainly because of the accelerated investment rate and the excellent results in agriculture.

Initially the authorities had set the target for 2005 to a six percent growth rate but later it was revised downwards to 5.7 percent reaching eventually 5.5 percent as the floods in the summer of 2005 caused great losses.
According to the most recent information published by the national statistics Institute (INS), the growth rate after nine months slowed down to 3.6 percent, over 4.9 percent at the end of the first quarter.
The BA-CA report forecasts for 2006 a level of the consumer price index of seven percent over a level of nine percent in 2005. Both values are superior to the estimations of the Romanian authorities who hoped for 5 percent and 8-8.3 percent respectively.

In the opinion of the Austrian analysts, Romania also failed to attain its objective of reducing the current account deficit to 7.5 percent of the gross domestic product (GDP). The value more likely to have been reached is closer to 8.7 percent in 2005 and 9.5 percent in 2006.

BA-CA estimations for the budget deficit this year suggest the same value as in 2005, namely one percent of the GDP, a level double than the Romanian authorities' target of 0.5 percent of the GDP.
The only account on which Austrian experts agree with Romanian authorities is the advance of the GDP estimated to progress by six percent in 2006.

This BA-CA report revises its own estimations from the previous one, which suggested for 2006 a current account deficit of 9.4 percent of the GDP, an economic growth rate of 6.3 percent and an inflation rate of seven percent.
The Austrian financial institution believes Romania could attract foreign direct investments (FDI) worth approximately eight billion euros this year, representing nine percent of the GDP. Almost half of the amount could originate in privatizations in the banking system, according to the same BA-CA report.

A significant share of the estimated investment in the banking system would by the settlement of the transaction for the BCR privatization. The local bank was acquired by Erste Bank at the end of December 2005 for 3.75 billion euros. The last state bank to be privatized in 2006 is the Romanian Savings Bank (CEC) whose price is estimated at 500 million euros.

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The mutual fund market will continue to grow in 2006, driven by the declining yields in the banking sector, and by the entry of new players on the market, Ziarul Financiar writes.
"We expect this year's growth to be even higher than in 2005. The positive trend will be favored by the reduction of the banking performance, as well as by the emergence of new operators and new investment products. Therefore, I believe we will witness an increase in the quality and quantity of the mutual fund market," stated Dan Nicu, the manager of SG Asset Management, the company that manages the investments of BRD-Groupe Société Générale.
Mutual fund assets went up by more than 65% in 2005, exceeding 80 million euros. However, Romania is lagging far behind the neighboring countries in terms of collective placement bodies, which creates the premises for this positive development to consolidate.

"The total value of the managed assets, of less than 100 million euros is insignificant if we look at the over 5bn euros on the Hungarian market alone. Therefore the growth potential of this sector is far from being exhausted," stated Radu Hanga, the manager of BT Asset Management, the investment management company of Banca Transilvania.
"The continuation of growth will be favored by the economic balances, by the decline of inflation and interest rates, as well as by the continuation of Romania's economic growth after a not so fortunate 2005 in this respect. If these requirements continue to be met - and there are no signs that this is not going to happen, I believe a 40% growth forecast is not very optimistic," Hanga specified.

The market structure in its turn will keep changing so as to accommodate more equity funds, which will gain ground on the funds that invest in fixed-income instruments.
"Most of the fund managers increased their exposure to the capital market towards the end of last year and this trend will probably be maintained in 2006. Most new funds launched on the market are either diversified or equity funds, that is funds invested on the Stock Exchange," stated Doru Tiberiu, the head of BCR Asset Management.

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A conflict between the Romanian Academy and the Health Ministry regarding the management of Bucharest's Elias hospital continues as the head of the academy, Eugen Simion, accused the Health minister yesterday of removing hospital managers due to political reasons.
The scandal stemmed from last month, when Minister Eugen Nicolaescu announced that he was removing 15 leading hospital managers and 24 administration boards across the country, including the head of Elias; a hospital under the administration of the Romanian Academy.
According to Nicolaescu, the decision was made after several ministry checks found various irregularities in the hospitals' activities.
The manager of Elias was Social Democrat Sorin Oprescu, a man who had repeatedly criticized Nicolaescu in the past for his actions. The minister's decision also prompted protests on behalf of the medical staff in Bucharest's University Hospital, which was also run by Oprescu.
The Social Democrat also appealed the minister's decision to remove him from the University Hospital's management. His appeal was analyzed by the Bucharest Court of Appeals yesterday and a decision on the matter was to be made later yesterday.
Oprescu's lawyer, Social Democrat Senator Antonie Iorgovan presented a memo from hospital unionists, which complained that the hospital has been going through a difficult period and lacks vital supplies since Oprescu was dismissed.
When the scandal emerged, Oprescu said that, in his opinion, he could not be replaced as Elias manager by the Health Minister, as only the Academy has this right. The Academy shares administration of the hospital with the Elias Foundation.
Nicolaescu subsequently blamed the scandal on political interests, accusing Oprescu of trying to undermine his actions and Simion of fraternizing with the Social Democrats.
Simion retorted that the minister's statements are clear proof his decision to replace Oprescu was politically motivated all along and that Nicolaescu's sole intention was to remove the Social Democrat from Elias's management.
At the end of last month, both the Academy and Nicolaescu appointed a successor for Oprescu and the hospital practically had two managers until the Academy's preferred candidate, Constantin Balaceanu-Stolnici, gave up the position saying the conflict should be solved by the law.
Vlad Romano, the new manager appointed by Nicolaescu, praised the decision as "elegant and natural."

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All three indexes of the Bucharest Stock Exchange (BVB) reached new historic records as the total liquidity of the market reached 24.33 million euros, which is three times yesterday's level. "Obviously, both foreign and local funds massively entered the market and the acquisition pressures were extremely high" said BT Securities general director Rares Nilas. The capital market is very active but still has a certain growth potential in the short term, he added. BET-Fi, the index of the five financial investment companies (SIFs) closed 4.26 percent higher than the day before. The SIFs had a liquidity of 11.85 million euros which represented almost 50 percent of the liquidity of the market.
 BET, the index expressing the evolution of the most liquid ten companies gained 3.36 percent as BET-C, the index describing the general evolution of the stock exchange advanced by 3.05 percent. Nilas estimates the growth of the BVB will slow down and a stabilization of quotations could come up.

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Romgaz natural gas company and Muntenia Sud electricity company are the most important energy companies of Romania expected to sell well in 2006.Romgaz owns half of the gas production of Romania, whereas Electrica Muntenia Sud is the most important electricity distribution company. Besides, the energy compound works of Turceni, Rovinari and Islanita will also be up for grabs. With an annual output of 6.5-7 billion cubic metres, Romgaz has reported handsome profits of 6,000 billion ROL (1 US dollar = app. 30,000 ROL) for the first ten months of 2005. These profits are expected to double as a result of the gas prices going up from $110 per 1000 cubic metres to $300 per 1,000 cubic metres on January 1, 2007. The privatisation of Electrica Muntenia Sud, expected to draw over 500 million euros, is the second biggest such project of the year. About this privatisation Economy Minister Codrut Seres says, "We are trying to do our best to make a good deal on Muntenia Sud. That is why we prolonged the deadline for the submission of bids to January 31. Among the bidders are AES Corporation of the US, CEZ of the Czech Republic, Enel of Italy, EnBW Energie of Germany, EVN of Austria, Gaz de France, Iberdrola of Spain, RWE Energy of Germany and Union Fenosa International of Spain. The privatisation of the energy compound works of Rovinari, Turceni and Isalnita is still waiting for the final consultancy report of Deloitte Touche. In order to increase the attractiveness of these companies, the authorities have decided to attach some hydro power plants. The three works reported a total profit of 60 million euros in 2005.

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At Butimanu, Dambovita County, in southern Romania, a village that is relatively near Bucharest, there is the biggest artificial gas depot in the Balkans, which belongs to Romgaz. A large part pf Romania's strategic heat reserve is stored here. The importance of the capital city's "gas cylinder" increased against the backdrop of the Russian-Ukrainian scandal. At Butimanu there are 18 heavy-duty compressors. Most of them were brought here over 2000-2002, when many new rooms were also built, and come up to western standards. The investment in new equipment and retooling amounted to 11 million euros.

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Romania wants the quick unblocking of Nabuco project about the transport of natural gas from the Caspian Sea and the Middle East to Europe, in which companies from Turkey, Bulgaria, Romania, Hungary and Austria participate to avoid future crises like the present one between Ukraine and Russia. Minister Seres declared yesterday on Romania News station that ?the Romanian, Turkish and Egyptian ministers will meet in Ankara in February to unblock this project which advances slowly because five states are involved?. The investment to be made by Romania in this project is about 800 million euros, and has in view the construction of a gas pipe section of 457 km on its territory by 2010. NABUCO will measure 2,842 km and will have a transport capacity of 30,000 million cu.m. of natural gas.

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After a meeting on Tuesday with officials concerned with natural gas supply, Minister of Economy and Commerce Codrut Seres said lawyers are assessing whether the contract concluded with Winterschall, who is entitled, together with IMEX, to import natural gas from Russian Gazprom company, has been violated. "Our concern so far has not been to see whether or not this contract was violated, but to supplement stored gas to avoid system disequilibria," said Seres. The minister explained that there are various contracts between Winterschall and IMEX, on one hand, and Distrigaz Nord, Distrigaz Sud, Romgaz and Electrocentrale, on the other. "There is no global contract of the Romanian State, but there are various commercial agreements between separate legal entities," Seres said. The minister mentioned that the contract with Winterschall says the pressure of delivered gas may go up or down 20 percent over the agreed value, and that compliance with this provision is currently being assessed.

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Premier Calin Popescu Tariceanu says the low pressure of gas delivered by Russia does not affect Romania and the government is prepared to cope with a crisis. ?Technically speaking there is no problem. We have over two billion cu.m, of stored natural gas. This reserve is added to the domestic production, which represents 60% of consumption. We have no technical problem at the level of individual or industrial consumers,? Calin Popescu Tariceanu said. The premier declared that his government took into consideration the drop of gas production and the passage to alternate fuel: lignite, which is cheaper and black coal. He added that the low gas pressure delivered from Russia will not determine any price rise in the domestic market. ?The price of gas will not be modified and the price adopted on January 1 remains valid. If we see that the share of imported gas drops we will settle prices and have lower bills,? the premier pointed out.

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Omnilogic estimates a turnover this year worth about $162 million, up 35 percent as against last year. From this value, about 100-110 million dollars were domestic sales (traditional distribution), the difference up to 162 million dollars deriving from local or regional projects together with external partners. Omnilogic estimates that the profit on 2005 will treble as against last year. Over 90 percent of sales were made due to traditional distributors: IBM, Hewlett-Packard, Dell, SUN, Cisco, Nortel, Lexmark etc. The most dynamic sector was the sector of indirect sales of added value products and services, particularly in the context of the public sector being below last years' expectations. Omnilogic managing director Gabriel Marin claims the strengthening of the national currency in 2005, as against the dollar and the euro had a strong positive influence on the profitability of businesses from the domestic IT&C sector, given that most components and products are imported, so local sales in lei generated more dollars or euros for the payment of external suppliers. Marin deems a part of the specialized players will leave the IT market or re-direct towards other businesses.

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Oltchim shareholders want to double their profit in 2006, to 43,500 lei.During a meeting on December 22, 2005 they analyzed the main indices expected in the revenues and costs budget in the coming year. Thus, the total costs are expected to amount to 1.6 million lei, whereas the gross profit will be worth 43,500 lei, nearly doubling that in 2005, when the revised profit amounted to 22,100 lei. The expenditure stood at 1.4 million lei and the turnover at 1.4 million lei, in 2005. Oltchim expects a turnover worth 1.6 million lei in 2006. The shareholders decided to select one or several investors to set up two companies having joint capital with Oltchim and whose activity is to focus on the production of PVC profiles and heat-isolating panels, respectively. The shareholders agreed on selling two plots of land, measuring 1,283.14 sq m and 3,376 sq m respectively. Oltchim will put up for sale a plot of land of 6,052.67 sq m for housing allowance and one of 22,431 sq m, as well as some buildings in the company's yard. The shareholders postponed discussing the issue of starting liquidation of Koprom Chemicals Co. because of the impossibility to hit the targets, as well as the submitting for approval of the setting up of a joint venture with foreign investor Universal Holding Co.(One euro sells for some 3.6 lei.)

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Romania's Chamber of Commerce and Industry awarded prizes on Wednesday, December 28, in the presence of Romania's President, Traian Basescu, to Romanian companies having reported the best economic results in 2005. Romania's Chamber of Commerce and Industry presented the Excellence Trophy, the most prestigious distinction for exceptional economic results in the past five years, and the Award for Excellence in Business, for the best results in the past three years. The Trophy went to the companies Somes, Romtrans, Coca Cola Romania and the Award to 12 companies, including Billa Romania, Metalrom, Vultur Group. Managing director of New Design Composite Co., Marian Doru, was given the prize for the best enterpriser, and General Manager of Siveco Romania Co., Irina Socol, the prize for businesswomen. The Romanian Foreign Investment Agency, the National Institute for Small and Medium Size Companies, the National Association of Exporters and Importers of Romania and the State Office for Inventions and Trademarks were also presented awards.

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The Romanian Government decided that 10,000 new work permits for foreigners can be issued in 2006, besides the number set in agreements, conventions or bilateral understandings Romania has concluded with other states, a release says on Thursday. Work permits are issued for six months. Both the permits to be issued this year and the ones already issued can be prolonged, at the request of the owner, for new periods of six months. The Government annually sets a number of work permits for foreigners, in accordance with the policy on the migration of workforce and taking into account the situation of the work market in Romania. As many work permits were requested in the past few years and the unemployment rate was low in Romania in the first three quarters of 2005, the Government decided to raise the number of work permits for foreigners from 3,000 in 2005, to 10,000 in 2006. If there are more requests than the number of work permits set, the Government can increase that figure, at the proposal of the Ministry of Labour, Social Solidarity and the Family, on the basis of a memo of the Office for the Migration of Workforce.

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The national currency leu will continue to appreciate as against the euro in 2006, the dealers say. In December 2005, the transacted amounts doubled compared to previous months, but the intensification of activities is specific to the end of the year. "The pressure on the leu's appreciation will remain, in spite of the worsening of the external deficit," said Radu Craciu, chief-analyst with ABN AMRO. He expects fluctuations in the exchange rate, so the minimal rate could be registered in summer rather than at year-end. He also expects the National Bank of Romania to protect a lower limit around 3.4 lei for one euro. "The national currency will probably appreciate with a few percent. I don't think the interest will have a categorical influence over the first three quarters, while the exchange rate should be used as anti-inflationist instrument. The central bank should not intervene at a 2-3 percent appreciation for leu," said Dorin Badea, chief dealer with Bancpost.

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Local taxes are established by local and county councils and by the General Council of Bucharest, within the limits of the law, as of 1 January 2006. From the income tax owed to the state budget, the paying company sends a share of 50% to the state bydget, 40% to administrative territorial units where it carries out its activity and 10% to the county budget. For Bucharest the share is 50% and is devided by the General Council of Bucharest for sector budgets. The shares can be annually modified through the state budget law. Local, county councils and Bucharest general Council establish and approve additional fares within maximum limits approved by law and according to needs of a normal functioning of public services of local interest and carrying out the attributions belonging to authorities of the local public administration.

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Romanian Finance Ministry (MFP) will restructure its portfolio of financial instruments and will attempt to draw the equivalent in lei of 1.15 billion euros. According to the MFP 2006 schedule for issuing Government securities, MFP will discard securities repayable in more than 10 years, after it issued in 2005 the first series of such securities maturing in 12 and 15 years.

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Romania's electricity works Transelectrica recently signed an agreement with a consortium of electrical equipment company Electromontaj and electricity distributor Romelektro to build a 90km section of a 400kV power line between Bekescsaba (SE Hungary) and Oradea in Romania, business daily Vilaggazdasag reported on Tuesday, citing the Romanian Mediafax.

Transelectrica and the Hungarian Electricity Works (MVM) signed a contract to build the 130km line in May. MVM will pay for the EUR 20m cost of the Hungarian section of the line, and Transelectrica will pay for EUR 30m for the Romanian section.

There is already one high-voltage power line between Hungary and Romania. The new line is being built for the connection of Southeastern Europe's power network with the unified European network.

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The Ministry of Transport spent most of 2005 on raising funds for infrastructure projects in Romania, particularly for road and railroad infrastructure on pan-European Corridor IV for which there were no funds earmarked, said Minister of Transport, Construction and Tourism Gheorghe Dobre, ACT Media news agency reports.


Minister Dobre said that securing all the necessary funds for the same corridor, which crosses Romania from Nadlac, in the western part of the country, to Constanta, in the southeast, will be the main priority of his ministry in 2006.

The building costs are put at 4-5 billion euros, for a length of 800 km. Dobre said that they concluded internationally-sponsored contracts worth over 1.1 billion euros in 2005 for construction works on the road and railroad infrastructure of Corridor IV and for rebuilding infrastructures damaged by floods.

The funds raised so far came from the Development Bank of the Council of Europe, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), from the World Bank, as well as under the EU ISPA instrument. In 2006, the Ministry of Transport is expected to receive about 1.4 billion euros from the European Investment Bank (EIB), the EBRD and under the EU-sponsored ISPA pre-accession instrument.

The ministry already signed a loan agreement worth 1.4 billion euros with the EBRD for the financing of works on the beltway around Constanta City.

It also secured 250 million euros for finalising the Cernavoda-Constanta segment of the Sun Motorway, assisted by the EIB.

EIB might also finance in 2006 the rehabilitation of approximately 800 km on national roads in Romania, as well as the Lugoj-Timisoara segment, in western Romania, that is part of Corridor IV.

The works are estimated to cost 120 million euros. Also in 2006, works will resume on the Transilvania Motorway, halted for renegotiating the contract with US Bechtel company, the constructor of the motorway, for which 100 million euros were earmarked for 2006.

Works on the Brasov-Bors motorway started on June 16, 2004. The total costs of this 415-km long motorway are put at 3.8 billion euros, 2.2 billion are for the construction works.

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A series of legal and administrative amendments took place in 2005 in the Romanian economy, yet, the concrete results were not those expected by authorities and nor by the business circles.

The courageous measures implemented by the new Government, which took the office early last year, starting with the flat tax of 16% and up to the liberalisation of the exchange rate and capital account during this spring, in spite of being regarded by businessmen positively, had a minor impact on the economic growth and on the other macro-economic indicators, including the level of foreign direct investments.

One may affirm that these liberalisation acts even had an effect contrary to the one envisaged, in the sense that the cash abundance in the market has resulted in a soaring public consumption.

Apart from the fact that the consolidation of the national currency has led to important losses for the Romanian exporters, imports advanced in order to meet the domestic demand, trade deficit continues to widen.

In addition, the rise of the administered prices charged for natural gas, as of July 1, along with increasing the price of electric energy and fuels, have put high pressure on the inflation rate which, according to estimations, would exceed the initial target by 1.5 per cent (8.5 per cent instead of 7 per cent).

The relationship with IMF, a financial body concerned mainly with the macro-economic developments, became excessively strained, the future of the cooperation with this institution being placed under a huge amount of doubt.

Nevertheless, the Government?s economic policies are not the major reason for these developments.

The floods, which have dramatically impacted on agriculture and transport, producing major damages which needed to be covered, at least partially, from the budgetary reserves, the evolution of energy prices worldwide, and, above all, the unprecedented rise of the oil price, were other important causes which have led to failures in accomplishing the targets set.

Yet, this does not mean that the economy is experiencing hard times.

In spite of not having reached the estimated pace, the Romanian economy continued to advance at a significant pace if we compare it to the other countries of the region, and the inflation rate, the most important indicator of a transition economy, continued along a downward trend.

The major investments continued along a positive trend, the conclusion of the privatisation contract for BCR, with the Austrians from Erste Bank being the most important privatisation contract in the history of the country.

Another important investment accomplished in 2005 is the one made by the Italian group ENEL which took over two branches of the national electricity provider Electrica and submitted an offer for Electrica Muntenia Sud as well (a branch responsible for supplying electric energy to Bucharest), announcing investments in Romania in excess of EUR 1 bln. over the next years.

One should not overlook the acquisition of the mobile phone operator Connex by the giant Vodafone as well as the success above expectations that Dacia Logan, which has become a real national brand, enjoys in the world.

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Economy Minister Codrut Seres said deliveries of Russian gas to Romania are gradually returning to normal, after plunging 25 pct on Monday Jan 1, when Russia halted deliveries via Ukraine as a result of its dispute with Ukraine over gas prices.

'We have already noticed a rise in the amount of gas delivered by Gazprom, and we think that by Wednesday morning the situation will return to normal', Seres said on national radio.

The ministry said that even if the dispute between Moscow and Kiev continues, Romania has sufficient reserves to satisfy its needs for the next two months.

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After officially taking control over two branches of the national electricity provider (Electrica Dobrogea and Electrica Banat), the Italian group informed that it considered to invest up to ¤1 bln over the next 15 years, in Romania, in the energy sector.

Currenlty in Bucharest, Paolo Scaroni, CEO of the Italian group, declared that the main points of interest were Electrica Muntenia Sud (a branch that provides electric energy to Bucharest), as well as the energy plants from Turceni, Rovinari and Craiova.

Scaroni did not exclude a possible participation of ENEL in completing the works at Unit 3 of Cernavoda Nuclear Plant and within the Romanian natural gas distribution system.

He said that natural gas is a field where ENEL has started only lately to participate, but that they are very concerned about the distribution system in Romania, particularly when this sector is fully liberalised.

In the field of oil industry, it is worth mentioning that Rompetrol has entered the Western market.

Rompetrol bought the only independent chain of petrol stations in France, Dyneeff.

Like Petrom, Rompetrol also registered record profit figures for this year.

Part of the money left in the accounts were due to adopting the flat tax quota which has reduced the fiscal burden that press companies.

In terms of foreign acquisition contracts in Romania, the most spectacular were those in the field of communications.

Vodafone, the second mobile phone operator worldwide, bought Mobifon against $2.5 bln., which owns Connex brand.

The cable and communication operator Astral Telecom has been taken over for ¤400 mn, by company UPC Romania - a branch of the American company Liberty Global.

It is also in this field that the Greek company Cosmote bought from RomTelecom, against ¤120 mn, 70% of the mobile phone service provider Cosmorom (recently rebranded Cosmote Romania).

The rising consumption has rendered retail as an interesting field for foreign investors.

Chain stores such as Plus, Kaufland, Penny, miniMAX, Discount, have entered the market this year.

The other chain stores Cora, Selgros, Bricostore, Praktiker, continued to open new stores.

The chain stores Artima and La Fourmi were sold by owners to foreign investment funds.

One should remind also the acquisition, by the Dutch company Zentiva, of the pharmaceutical company Sicomed, against $100 mn.

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As many as 4.371 million tonnes of crude oil were extracted January through October 2005, with the largest amount - 457,411 tonnes - extracted in January, says the National Statistics Institute. In October, 434,078 tonnes of oil were extracted, down 22,189 tonnes from the year-ago period. Eighty-one thousand tonnes of oil were reported to exist in stored on October 31, 2005. As many as 7.113 million tonnes of crude were imported January through September this year.

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The Romanian Government issued an Emergency Ordinance providing the legal framework for funding from the state budget steps aimed at preserving and using animal genetic resources. The list comprising the genetic resources of the animals found in a critical state, species in danger of extinction and vulnerable animals that can enter the preservation programme has to be approved by the Minister of Agriculture, Forests and Rural Development, at the proposal of the National Agency for Amelioration and Reproduction in Zootechny "Prof. Dr. G.K. Constantinescu", with the okay of the Commission for the Management of Animal Genetic Resources. The preservation and using programme is financed by the state, through the budget of the Ministry of Agriculture, Forests and Rural Development. The Government annually approves the sums for these programmes, earmarked on species and races. An Emergency Ordinance issued in 2000 regarding funding from the state budget of steps for the protection of the genes of animals as well as any other decisions going counter to the latest ordinance are abrogated.

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Romanians have spent 2.5 billion euros in 2005 for buying new cars, 700,000 euros more than in 2004. 2005 total unit sales, December sales excluded, are standing at a record 197,711. March was the month with the highest sales figures (13,314 units), whereas August witnessed the lowest car sales, of below 3,000 units. Unfortunately local automobile producers ARO and Daewoo did not partake of the revolution of the automotive market in Romania, as they had the hardest year in decades. On the other hand, Dacia Group Renault had a good year, working at full capacity and putting out 85,000 Logans. ARO four-drive wheel carmaker went bankrupt in the autumn of 2005 after a long time of agony. The company only managed to sell 25 motor vehicles and 36 minivans. More surprising than the situation of ARO was the decline of Automobile Daewoo Romania. For the first time, Renault-Nissan Romania, a car importer, outperformed Daewoo, having reported unit sales in the first 11 months of 2005 of over 25,000, by 6,000 more than Automobile Daewoo. Leading in the classifications of automobile sales in Romania is Tiriac Auto, with this holding owned by the richest Romanian having derived over 500 million euros from car sales. Tiriac Auto is made up of ten importers that reported sales of 11,730 cars in 2004.

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Romania ranks 2nd, after Poland, on the East-European foods and drinks market, with a 15 percent quota, said data from a survey of Food for Thought consultancy company.

Poland, 44 percent, tops the East-European foods and drinks market. Poland, Romania and Hungary cover 73 percent of food and drink consumption, also due, among others, to their number of inhabitants, accounting for 75 percent of Eastern Europe's population. The Czech Republic and Slovakia come next, 14 and 7 percent respectively, and Bulgaria ranks last, 6 percent. Of the 109 billion euros representing the value of the products sold in this market in 2004, the largest quota, 18 percent, goes to alcoholic drinks, followed by fruit and vegetables, 12 percent, the same as the fresh meat one.

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The Transylvania Motorway (Brasov - Bors) may be finalized one year later than scheduled, i.e. in 2013, inform Averea and Evenimentul Zilei dailies. The two dailies quote Transport Minister Gheorghe Dobre, who said last week that "the 2012 deadline may be extended".If the Bucharest authorities unblock the project of the 160 km of motorway between Bucharest and Brasov, in 2013 Rumanians will be able to drive from Bucharest to the Hungarian border in seven hours on the motorway.

Minister Dobre promised that in March-April 2006 he would set the rules for the new public-private partnership under which the Bucharest-Brasov motorway will be built. In their turn, Hungary aim to finalize the Bors-Budapest motorway in 2015. Thus, in 2015, the Bucharest-Vienna drive may take only ten hours, writes Evenimentul Zilei. The Transilvania motorway is 415 Km long and it will connect Brasov (centre), Oradea (west), and Bors (near the Hungarian border). It will connect Brasov, Fagaras, Sighisoara, Targu-Mures, Cluj-Napoca, Zalau and Oradea. The motorway was divided into eight segments for an easier design and contruction. The motorway will have four lanes, 300 bridges, 73 flyovers and 19 road knots.

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Natural gas, electrical and thermal energy, food, clothing and train travel will become more expensive in 2006, the main reason being the necessity to comply with European Union prices, specialists inform. Thus, on January 1, the price for natural gas will go wup by 17 percent, from 110 dollars/ 1000 cubic metres, and the electrical energy will go up by 1.85 percent ? 3,649 lei/ k//Wh.The National Authority for Regulation in the domain of Natural Gas / ANRGN/ explains the rise in price for the gas delivered to the population by the substantial increase in the imported gas, from 250 dollars/thousand cubic metres during the fourth quarter 2005 to 285 dollars in January, adding an increase of gas imports of 4 percent. The minimum wages/ economy goes up by 200,000 lei in 2006, reaching 3.3 million ROL. To cover a part of the expenses, the authorities will allocate subsidies of 3,000 billion ROL for gas and 3,500 billion ROL for heating.

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The national currency went up in 2005, in real terms by 7.29 percent compared to euro, the BNR reported on Friday, December 30, an exchange rate of 3.6771 RON ( 36.771 ROL) for one euro as compared to 39,663 ROL at the end of 2004. Over the last week, leu dropped by 0.42 percent against the euro. Over 2005, euro reached a peak of 39,310 ROL ( 3,9310 RON) on January 3, and on August 10 the lowest exchange rate, of only 34,022 ROL ( 3, 4022 ROL). As compared to the US dollar, leu dropped in real terms by 6.91 percent, the dollar being 29.067 ROL ( 2.9067 RON) on December 31, 2004 while the exchange rate for December 30, 2005 was 31.078 ROL ( 3,1078 RON). On March 11, 2005, the American currency reached its lowest rate of only 26.771 ROL ( 2,6771 RON) while the peak was on November 8 ? 31,384 ROL ( 3,1384 RON). Over the last week, the dollar exchange rate grew by 0.77 percent against the leu. As compared to the end of 2004, the price of gold grew by 25.09 percent, 102.757 ROL or 10,2757 RON respectively, reaching 512,270 ROL ( 51,2270 RON) against 409,513 ROL on December 31, 2004.

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The deadline for the presentation of bids for the acquisition of the stock package of SC Electroputere Craiova was extended to January 5, 2006, at the request of one of the four investors who bought the presentation file, ACT Media news agency reports.

Electroputere was launched for sale by way of negotiation based on final, improved and irrevocable bid on November 21, deadline for the bids being established December 19, 2005.

Following the publication of the advertisement , four presentation files were purchased by a foreign company and three Romanian ones.

One of the companies requested the extension of the period for bid presentation in order to draft its purchase bid. Shareholding structure and number of shares shall be definitive pursuant to the transfer of some assets that were subject to a definitive and irrevocable Court ruling.

Moreover, potential buyers are informed that during the negotiation process, the stake of shares held by AVAS could be amended further to the swap into shares of the receivables owned by AVAS.

In such cases, AVAS shall sell the entire stake of shares come out from share capital amendment.

Only bidders who meet the following pre-qualification criteria shall be allowed to take part in the negotiation:

?Bidders that, directly or through the companies in which they are shareholders/ majority shareholders, did not bring substantial damage to the economic/ financial situation of the previously privatised companies, due to the belated fulfilment of the obligations undertaken through the share sale-purchase contracts concluded with the SOF and/ or APAPS/ AVAS, may take part in negotiations.

The Craiova company deals in the domain of electrical engines, generators and transformers and has a social capital of over 12,416 million RON.

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After the BCR sale, the 6% owned by the SIFs in this bank amounted to a double value - 1.330.69 million RON, ACT Media news agency reports.

After the BCR privatisation, the value of SIF assets looks as follows: SIF Banat Crisana - 2,167.73 million RON, SIF Moldova - 2,204.44 million RON, SIF Transilvania - 2,250.15 million RON, SIF Muntenia - 2,142.13 million RON and SIF Oltenia - 2,672.91 million RON.

Each SIF owns bank deposits, bonds, and shares of 500 million RON in BRD, other shares floated on the former market RASDAQ and other minority interests in companies that are not floated on Stock Exchange. Doubling the value of the assets had a major impact on the rise of SIF shares, and it was taken into account by investors, when they bought SIF shares this autumn.

Moreover, if BCR continues to grant in the future dividends and is floated on Stock Exchange, the SIF shares may go up by 30%.

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The mobile telephony operator Zapp invested in 2005 over 50 million dollars, a sum that is similar to the investments made in 2004, said Mihaela Lupu, head of Zapp Corporate Affairs, ACT Media news agency reports.

"The investments were mainly aimed at extending and modernizing the CDMA450 network, also supporting the launch of some new products and services based on state of the art technologies," said Mihaela Lupu.

In 2005, Zapp ended the fourth phase of extending and modernising the network after which it covers more than 90 percent of this country's territory.

Thus, Zapp network covers now 240 towns and cities, 6,300 km of national roads and 1,500 villages.

The main goals for 2006 refer to launching some innovative services based on state of the art technologies.

"The quality of voice transmissions and the speed of data transfers together with attractive commercial offers are a priority for us," Mihaela Lupu also said.

As for the evolution of the Romanian mobile communications market in 2006, Zapp managers think that it is one of the most dynamic markets of the Romanian economy, with an additional growing potential.

In 2004, Zapp posted 93 million dollars in turnover and curently has more than 300,000 users.

Zapp is the only mobile telephony operator in Romania that offers completely integrated communications services, developed on a state of the art network (CDMA2000 in the 450 MHz band).

The main shareholder of Zapp is Inquam Limited, an international company that mainly deals with supplying services in the field of the mobile networks of communications.

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The year 2006, which will decide the destiny of Romania's accession to the European Union, will register a general economic growth worth 5.3 percent, according to the estimates of the European Bank for Reconstruction and Development (EBRD), ACT Media news agency reports.

The fields which are expected to develop most are constructions and the real estate sector, where important projects have already started at residential level, but also in infrastructure, trade, communications and information technology. After the extraordinary growth registered in the car market, particularly in the first half of this year, importers say it is very hard for this performance to repeat in 2006 and a slight increase of only 10 percent is expected. Increases are also expected in 2006 in two sectors with huge potential, which are agriculture and food industry and tourism, fields which have been promising several years now but where development is sluggish.

In the agriculture sector, 2006 could bring the introduction of the tax on farmland, which will prompt its efficient use in big farm holdings to the detriment of its use for the production bound for home consumption.

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Romania, which imports a quarter of its gas from Russia, said it was 'unaffected at the moment' by Russia's decision to cut gas supplies to Ukraine, an unnamed source at Transgas said.

'So far, we have not seen the effects of a drop in pressure,' the source said.

Gazprom Sunday cut off supplies to Ukraine, which depends on Russia for around a third of its natural gas import needs, because Kiev had failed to accept a steep increase in gas prices for 2006.

The unnamed source said: 'Romanian consumers have nothing to fear as they won't be affected' by the Russia-Ukraine dispute.

Whilst countries in the region such as Hungary, Austria and Poland have reported a drop in Russian gas imports, a Transgas technician explained to AFX that the gas pipeline supplying Romania is a branch from the main pipeline supplying Europe.

'For example, gas bound for Hungary does not pass through Romania,' he said.

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Romania?s organic farmers are exporting 70 per cent of their produce, missing out on sizeable potential at home due to a lack of demand and investment.

Romania, which has the capacity to produce large quantities of organic food and is competitive on the international market because of the suitable climate and cheap labour, is failing to sell organic products at home because of low income levels.

Consultant at Organic Monitor Amarjit Sahota, told CEE-foodindustry.com: ?There are two reasons for the lack of growth in the organic market in Central and Eastern European countries: a lack of awareness and low purchasing power.?

He said the problem was the same in many African and Latin American countries, where consumers are restricted by their low incomes and cannot afford to pay the required 40 to 100 per cent higher prices for organic produce.

Sahota believes the demand for organic foods will eventually increase in Romania, mirroring what happened in the Czech Republic and Hungary following their accession to the European Union in May 2004.

He said the main difference between Romania and EU countries, where the market for organic produce is growing at an incredible rate, is the fact that a large part of Romania's population is lower-middle or working class.

For example, the UK has a very large middle class population and demand for organic goods is much greater there. Britain is now Europe's second biggest organic food market, behind Germany.

Romania's projected EU accession in 2007 may help to lift organic food consumption through an increase in purchasing power.

But, Romania's organic food industry has also struggled to access funds from the Accession Program for Agriculture and Rural Affairs, known as Sapard, which aims to help prepare the country for EU membership.

It is thought Romania's organic producers need investment from sources like this if they are to achieve their full potential on the domestic market.

Other possible solutions that have been offered are to improve legislation and create producers' associations in order to increase access to the market.

Romania's Ministry of Agriculture said the main export destinations are European Union (EU) countries, particularly Germany and Holland where local producers deliver cereals, vegetables honey and fruit.

Most of Romania's organic products are developed in the east as west of the country and there are currently 260 farms practicing organic agriculture, using 74,000 hectares of land.

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Property and Building Corp. Ltd. (TASE:PTBL) and BST Enterprise and Construction Ltd. will invest NIS 59.4 million in equal shares in a 27,500-sq.m. lot in downtown Bucharest, Romania. The lot is zoned for 800 housing units, the proceeds from which are estimated at NIS 500 million.

Banca Romania SA will provide a ¤5 million non-recourse loan for the deal; the remaining ¤5.8 million will come from equity. Property and Building said construction would begin in 2006.

Nazareth-based BST is the largest construction company in Israel?s Arab sector.

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Simultec, an Elbit Systems Ltd company yesterday announced that it has delivered to the U.S. State Department two Full Mission/Full Motion Simulators for Mi24 and Mi8 helicopters, following an USD 7.5M contract. An official acceptance was done and signed by the U.S. State Department representative.
Elbit Systems? advanced simulators will be used to train helicopter pilots and co-pilots in Uzbekistan, as part of a high-priority project to enhance border security and ensure continued support to Operation Enduring Freedom. The contract was performed over a two-year period.

The Full Mission Simulator provides training that covers every aspect of the helicopter?s routine, emergency and mission operations for diverse scenarios. It includes the simulation of a variety of flight conditions and tactical environment preparedness. The high-end Full Motion Simulator, built on a moving structure, simulates the feeling of flight under various conditions, providing pilots with a realistic flight experience. Turbulence and various flight conditions, as well as aural cues, are simulated in order to maximize realism and minimize the transition to complex, actual missions.

? It?s a result of a very intensive cooperation between US Department of State, Israeli and Romanian companies and is a significant contribution to offset obligation between Elbit Systems and Romania. We have win this contract following an international bid, in which we beated Lookhed Martin!?, proudly said Constantin Olivotto, General Manager of Simultec In his turn, Jacob Rimon, Vice President of Simulation and Training of Elbit Systems commented: ?In order to provide our customer an advanced training solution The MI-8 and Mi-24 Simulators have been developed using our extensive experience in Simulator?s technology and methodology.

Simultec is a wholly-owned subsidiary of Elbit Systems in Romania. It manufactures training systems and flight simulators for the Romanian Ministry of Defense. Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of defense-related programs throughout the world, in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence, surveillance and reconnaissance (?C4ISR?), advanced electro-optic and space technologies. The company focuses on the upgrading of existing military platforms and developing new technologies for defence and homeland security applications. by Mihai George

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Besides Orange and Vodafone, two more companies will receive licenses to provide 3G services in Romania starting early 2006, Bursa news agency reports.


According to the representatives of the General Inspectorate for Communications and IT (IGCTI) a tender to award two new licenses to use radio electric frequencies to support 3G services will be organized early in 2006.

The signals from foreign operators that are interested in participating the tender and Cosmote's intention to auction for a 3G license made the representatives of IGCTI estimate that the two licenses would be organized during the tender that is scheduled for early 2006.

In order to participate in the tender, a company should have a turnover of minimum 300 million EUR in the electronic communications field and be able to offer minimum coverage for Bucharest and ten cities in the country.

Currently, Orange and Vodafone are licensed to provide such services but only Vodafone provides them.

Orange announced that it will launch such services next year.

At that time the two companies will pay the Romanian state the first installment of $10.5 mn, of the overall amount of $35 mn that they have to pay for the frequencies.

According to IGCTI, the licenses are valid for 15 years with the option to renew at every 10 years after that, without any additional costs.

3G mobile telephony allows transmission of high speed multimedia and voice transmissions and makes possible the transfer of high fidelity audio and video signals.

3G allows better transmission than GSM and enhanced data traffic which make possible services such as video-telephony, TV transmissions on the mobile phone, rapid access to the Internet, the browsing of web pages that have complex graphic elements.

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Prista Oil Ltd., Bulgaria's biggest lubricant producer, has opened an car service center in Romanian city Craiova under a program for the deployment of a network of oil change outlets.
Romania is the project's first foothold abroad.

Prista Oil kicked off the construction of the oil change centers in the fall of 2004. The network will ultimately consist of 150 outlets with the company targeting 90 operational units by early 2006. At the launch of the 2 mln euro project, Prista Oil said the network will first stretch to Romania and then to Hungary.

Prista Oil said 2006 investment spending will total 9 mln levs. More than half of the allocated funds will be invested in the construction of a terminal for base oil components on a site owned by the company in Varna, on the Black Sea.
Another 3.2 mln levs have been earmarked for a new automated line for the production of synthetic and semi-synthetic oils with a 5 mln liter capacity and for the construction of a new laboratory unit.
In October, the lubricants maker said profit was seen falling 30% to $3 mln in 2005 despite an anticipated 20% increase in annual turnover to $80 mln. The downside was attributed to the rampaging cost of input materials which is outrunning the price of the finished products.

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Software company TotalSoft posted a turnover of ¤7 million in 2005, up by 35 percent compared to last year with the revenues mainly deriving from three main fields of activity while the most important was the sale of Charisma Enterprise ERP solution to private companies and public institutions reaching revenues from such sales to ¤4 mn, Bursa news agency reports.


Sales of customized software on the domestic and foreign markets also contributed to the increase in the company's turnover.

Of the most important customized solutions, the company completed projects in the medical field in countries in the Eastern Europe and within the eProcurement procedures on the German market.

Project management solutions also posted high increases during 2005. Year 2005 was of high importance for TotalSoft as the company's product called Charisma was recognized as international brand and implemented at companies from Turkey, Serbia, Albania and Poland.

Charisma made its success in 2005 in the Leasing & Banking fields as it is the only product on the Romanian market that transposes the leasing process into an integrated system.

Currently, 23 Romanian and foreign companies that operate in these two fields use the Charisma product and manage some 200,000 contracts with it.

Charisma was implemented with success in 2005 the construction, distribution and retail fields as well.

TotalSoft's plans for 2006 involve the increase of the sales of Charisma Enterprise in foreign countries by opening own offices and signing partnerships with companies in Italy and Greece.

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FOB exports made in the first 11 months of 2005 totaled 10.43 billion euros, on the rise by 17.4% compared to the level recorded in the same period of 2004, revealed data from the National Statistics Institute (INS), ACT Media news agency reports.


In November 2005, exports amounted to 2038 billion euros, on the rise by 22.2% compared to November.

The largest share of the volume of exports continues to be held by garments and textiles ? 19.1%, the group of products - machines and mechanical devices, electric equipment, recording equipment ? 17.6%, metallurgical products 14.9%, mineral products (crude, oil products, ore, coal, cement and salt ? 10.9%, transport materials and means -7.8%, footwear and similar items ? 5.9%.

Compared to the same period of 2004, the value of exports to EU has grown by 9.4%, having a share of 68/2% of total exports.

In the analysed period the first commercial partners in carrying out exports were Italy (19.4% of total exports), Germany ? 14.1%, Turkey 7/8%, France (7.5%), Great Britain 5.6%, Hungary 4.2%, USA 4.1%, Austria 3.1%, Holland ? 2.7%, Bulgaria 2.6%, Spain 2.4% and Greece 2.1%.

According to customs regimes granted by law, 51.7% of total exports is represented by final exports and 48.1% by exports of goods resulting from the active improvement of goods imported temporarily or for processing.

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