Review of sector transport, infrastructure and communications in bulgaria

conclusions

• 
  From 1991 to 1996 progress in Bulgaria was slow and erratic. Its most recent history is characterised by the remarkable turnaround that occurred after the change of leadership in 1997. Since then Bulgaria has re-energised long pending structural reforms. The IMF supported currency board had a positive impact on the country’s financial discipline, privatisation has accelerated, and price control has been liberalised.
  
• 
  Bulgaria’s economy showed its increasing resilience to adverse external environment – the Kosovo conflict, continuing effects from the Russian crisis and shrinking demand in the Euro area – especially in the first half of 1999.
  
• 
  Fiscal policy was tightened (consolidated budget deficit came in at only 1%), important steps were taken in the area of privatisation, banking sector reforms, agricultural liberalisation, energy pricing and legal reforms, required to improve the prospects for sustainable economic growth and European Union accession.
  

• 
  The Government has prepared a programme for the year 2001 in which the privatisation of SOE’s is defined as a key element of the structural enterprises (over 600) in the sectors of industry, construction, agriculture, tourism and trade. The plan envisages preparatory stage of the privatisation of certain facilities in the sectors of infrastructure and public services – energy, railway transport, water supply and sewerage.
  
• 
  A report published by the Bulgarian International Business Association “BIBA White Paper on Foreign Investment – Issue 2001” reads that substantial scope for improvement remains, which could substantially ameliorate the “business climate” and overall competitiveness of industry. It specifies issues such as: Public-Private partnership / legislation drafting and implementation, quality/productivity culture in industry, public administration performance and education, transport sector technology and infrastructure, law implementation and enforcement, border crossing initiatives.
  

1. Transport, infrastructure and communications

• 
  Government Transport policy directions are the result of national consensus and primarily geared towards membership of EU and NATO, development of free market relations as well as democratisation of political, economical and social processes.
  
• 
  Main priorities are: Harmonisation of national legislation and transport regulations with those of the EU member states, Development of transport infrastructure and Implementation of structural reform and privatisation in the transport sector.
  
• 
  Harmonisation includes regulations on the type approval of motor vehicles, Regulation on dangerous goods, regulations on extra-dimension and heavy road vehicles. The agreement on occasional international transport of passengers by bus has been signed. In the maritime sector a number of important European and International agreements have been signed, for example the European Agreement on Inland waterways and the International Convention on Sea Search and Rescue.
  
• 
  The social and economic difficulties suffered by Bulgaria, coupled with a lack of finance for road infrastructure has brought about a deterioration of the roads in general. Moreover road building in Bulgaria is difficult and costly as some 40% of the country’s territory is mountainous.
  
• 
  The programme ‘Transit Roads” rehabilitated 1400 km of the main road network up to 1999. Financing came from the EIB, EBRD and the Phare programme. Currently “Transit Roads III” is covering the rehabilitation of another 600 km, to be completed in 2002.
  
• 
  According to the Inter-departmental programme on the development of transport infrastructure drawn up by the Ministry of Transport and Communications and of Regional development and Public Works 1,200 million Euro will be needed for rehabilitation and construction of roads of national and international importance. The programme will create 15,000 jobs and financing will come from national and international sources. The participation of Bulgaria in the TINA project is a very important component of the development of transport infrastructure.
  
• 
  River transport is still not very significant, with total inland water transport accounting for around 5% of Bulgarian vessel tonnage. There are plans for significant modernisation of ports over the next few years.
  
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  The two major seaports of Bulgaria – Varna and Burgas handle more than 60% of the national foreign trade freight turnover. These ports have container terminals, Ro-Ro equipment and many berths for different type of bulk and liquid freight. The drop in traffic and the obsolete equipment are major problems for the Varna Port development. The port authorities hope for foreign investments. First joint ventures have been realised with a Belgian and Italian enterprise.
  

• 
  A renewed Sofia airport was opened in September 2000. There is a plan to develop and expand the airport with the capacity and modern facilities to deal with demand expected early next century. The US$200 million project will be financed by the EIB and the government.
  

• 
  According to new laws and directives it is envisaged that only railway infrastructure will remain under state ownership.
  

The railway industry and other sections of the National Company "Bulgarian State Railways", together with the commercial activities of railway transport, are subject to privatisation. To date 8 out of 13 railway enterprises have been privatised (concerned with rolling stock repairs and construction, etc).

• 
  Telecommunication: Bulgaria inherited relatively high line density from the pre-transition period. Recent investments increased further the fixed line telephone penetration. The quality of the network is less advanced. Although mobile telephone penetration has grown fast there is considerable room for growth.
  

• 
  The adoption of the new Telecommunications Law in 1998 introduced a liberalised regime for activities in the telecommunications sector. All services were liberalised except voice telephony and leased lines, which will be opened to competition on 1 January 2003. This is well in advance of the WTO commitment of 1 January 2005.
  

1. Donors and financing

• 
  There are many bilateral projects in all sectors. Particularly, Germany and Italy are very active in Bulgaria.
  
• 
  The EU is an important donor to Bulgaria. The major objectives of the support are the opening of the Bulgarian transport system for EU member states, Restructuring the transport sector in accordance with European standards and market economy principles, Development of infrastructure, technological modernisation and new investments.
  
• 
  In the period 1992-1999 Bulgaria has received ECU 94 million from the Phare National Programme. For the Cross Border Co-operation programme Euro 86 million has been allocated. Bulgaria expects to receive Euro 420 million for the period 2000-2006 for the development of transport infrastructure through the EU ISPA programme. Priority projects have been identified.
  

• 
  EBRD is a major financing institution for Bulgaria. The EBRD will continue to promote privatisation, post-privatisation restructuring and sound corporate governance of selected companies in the enterprise sector, through both debt and equity investments. In the case of large enterprises, the EBRD will continue to work alongside foreign strategic partners as well as with domestic investors. Project selection will be oriented towards transactions that have clear demonstration effects in order to promote the transition process to the largest degree possible.
  

• 
  The EBRD will proactively support the rapidly growing interest by private investors in the infrastructure sector, particularly in power generation, in telecommunications and in certain municipal services. The future water concession and the district heating projects with the Sofia Municipality should constitute landmark transactions. Besides, the EBRD will also continue to provide selective sovereign-based support for crucial sectors such as district heating, energy transmission and transport. Lastly, the EBRD will continue to provide guidance on the restructuring of the energy sector.
  

• 
  Since Bulgaria joined the World Bank in 1990, Bank assistance to the country has been aimed at fostering sustainable development and economic growth by investing in physical and social sector infrastructure, and by accelerating structural reforms and rapid development of the private sector.
  

The World Bank is presently not involved in many projects in the fields of transport, infrastructure and communications. The World Bank is implementing transport and trade facilitation projects in Bulgaria and projects focussed on improving border crossings and customs facilitation.

1. Business opportunities for Dutch Enterprises.

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  The implementation of the massive road construction and rehabilitation plans offers opportunities in the field of road building technology and machinery.
  
• 
  Automation of the railways including traffic and safety systems.
  
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  Co-operation in the design, manufacturing and marketing of trailers, semi-trailers, tankers and special vehicles.
  
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  Co-operation in renting/leasing/trading in special vehicles for municipality services.
  
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  Co-operation in the field of high quality tanks for fuels, liquid gas and chemicals for the automotive sector and fuel/gas distributors.
  
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  Quality improvement of agricultural products by conditioned transport.
  
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  E-commerce business planning for transport companies.
  
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  Co-operation in the manufacturing of buses in Omürtag
  
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  Co-operation in the production of buses for suburban Sofia.
  
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  Development of Bonded Warehouses, Value Added Logistics services and regional distribution.
  
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  Modernising REI production facilities. Improve plant infrastructure and logistics, increase efficiency through application of new technologies.
  
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  Production and assembly of cable beams for the Automotive industry.
  
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  Co-operation in the field of production of high quality measuring devises (meters), including distance reading option for distribution companies (gas, water).
  
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  Co-operation in manufacturing and application of optical fibre cable technology.
  
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  Application of On-board computers for trucks and buses including digital tachograph devise and navigation systems for vehicles.
  
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  Establishing a leasing company for the commercial vehicle sector.
  
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  Co-operation in the field of Sofia airport technical maintenance.
  
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  Co-operation in water management and distribution project in Plovdiv. Design of a water distribution system and assistance in setting up management and operations.
  
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  Application of maritime communication and safety systems.
  
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  Co-operation in tank cleaning and chemical waste management.
  
• 
  Management training at Ministry of Transport emphasising Public-private partnership implementation.
  
• 
  Development of integrated postal service.
  

Privatisation progress in Bulgaria offers a wide range of business opportunities for Dutch enterprises. Local financing is one of the main problem areas, due to the high interest rates charged. Cross border financing is increasing.

1. 
   White Paper on Foreign Investment in Bulgaria - 2000; Bulgarian International Business Association.
   
2. 
   National Strategy Transport Sector; Ministry of Transport and Communications; June 2000.
   
3. 
   2000 Country Investment Profile Bulgaria; EBRD.
   
4. 
   Pre-Accession Status Bulgaria - November 2000; Transport policy and Telecommunications and Information Technologies.
   
5. 
   Useful addresses.