June 17, 2014
June 17, 2014 This is bne's Southeast Europe daily newsletter, a list of the top stories from the region. You can receive the list as a plain text or html email or as a pdf file. Manage your delivery options here: http://businessneweurope.eu/users/subs.php TOP STORIES 1. Bulgaria Govt Guarantees Supplies for 3-4 Months in Case of Gas Crisis 2. MOL eyes long fight over INA following final decision on former Croat PM 3. Russia expects Serbia to support South Stream 4. Russia Warns Moldova About EU Intergation Risks 5. Turkey's Central Bank hints at further rate cut 'if inflation outlook improves' STORIES FROM WEBSITE 6. Exactly what is a fair price for Ukraine to pay for Russian gas? 7. Hungary's Wizz Air sees IPO plans crash again 8. More leaked tapes threaten Polish government 9. Russia cuts Ukrainian gas supplies RESEARCH & COMMENT 10. Croatia: Koncar Elektroindustrija’s (Hold) unit for generators and motors has signed a new contract 11. Croatia: MOL regrets Sanader decision (neutral) 12. FlashNews Bulgaria - 16.06.2014: Credit rating lower by S&P to BBB13. Romania: Daily Snapshot: NBR Board vote 14. Romania: Electrica: According to the media, about 4,500 investors subscribed 15. Romania: Fondul Proprietatea (FP RO): NAV for end of May increased by 4.5% mom to RON 1.2771 – neutral (company release) 16. Romania: Fondul Proprietatea: Accelerated book building offering for up to 19.24mn Romgaz shares 17. Romania: OMV Petrom, Romgaz (SNP RO, SNG RO): The authorities intend to delay the transfer of SMEs from the regulated to competitive market – neutral (bursa.ro) 18. Romania: Summary of our company report on Transelectrica (Accumulate) 19. Turkey: Sisecam: Quota application approved for Iranian glassware import products (positive) SE Macro 20. Bulgaria turns to c/a gap in Jan-Apr, FDI down – table 21. Bulgaria Will Not Take Another Loan For Now – MinFin 22. Employment in Romania up by 0.4% in first quarter of 2014 23. Foreign Direct Investment in Bulgaria Down 28.4% Y/Y in Q1, 2014 24. Moldova Q1 GDP grows by prelim 3.6% y/y OTHER NEWS 25. Albanian official: 'We are much more pro-European than several EU members' 26. Albanian police storm marijuana village after growers allegedly fire RPGs 27. Bulgarian President to Propose 4 Election Dates on Tuesday 28. Bulgarian Railway Co Prepares Varna-Bucharest High-Speed Train Project 29. Bulgarians Accumulated EUR 20 B in 10 Years 30. Council clears way for signing Association Agreements with Georgia and Moldova 31. Cyprus could supply natural gas to Bulgaria
32. EBRD LOAN HELPS IMPROVE WATER AND WASTEWATER SERVICES IN ROMANIA’S HUNEDOARA COUNTY 33. Energy saving projects to get incentives from Turkish government 34. Experts are confident Albania will obtain EU candidate status 35. Gazprom's EU customers not at risk for now 36. Parliament speaker talks Chinese investment in Croatia 37. Romania Backs Central Bank Board as Isarescu Extends Term 38. Serbia: Economy Minister: Telekom Srbija will be privatised 39. Slovenia NLB Bank Seeks to Raise Debt First Time in 4 Years 40. Slovenia, Albania pledge to strengthen economic cooperation 41. Spar Croatia Gets Anti-Trust Nod to Take Over 20 Dinova-Diona Stores 42. Turkey’s main opposition parties to nominate ex-head of Islamic body Ihsanoglu for presidency --************************************************************ TOP STORIES --************************************************************ 1. Bulgaria Govt Guarantees Supplies for 3-4 Months in Case of Gas Crisis Novinite June 17, 2014 Bulgarian Deputy Prime Minister Daniela Bobeva has explained that the government is ready to secure gas consumption for a minimum of 3-4 months in the case of a gas supply crisis. Bobeva, as cited by the Bulgarian National Radio, announced Monday that additional gas quantities were being injected into the Chiren gas storage facility. Read more here: http://www.novinite.com/articles/161345/Bulgaria+Govt+Guarantees+Supplies+for +3-4+Months+in+Case+of+Gas+Crisis --************************************************************ 2. MOL eyes long fight over INA following final decision on former Croat PM Erste June 17, 2014 MOL regrets the final decision in the lawsuit against former Croatian PM Sanader. Sanader was charged with bribery in the MOL and Hypo-Adria cases. He was sentenced to eight and a half years in a legally binding decision. Sanader was called 'treasonous' by the president of Croatia. MOL will have a long fight to recoup its position in Croatia after the bribery case became a hot political issue in the country. We do not see a quick solution. --************************************************************ 3. Russia expects Serbia to support South Stream InSerbia News June 17, 2014 Russia’s Foreign Minister Sergey Lavrov will discuss with Serbian officials the political relations and economic cooperation between the two countries, especially such
important matters like the South Stream natural gas pipeline, Ukraine and Kosovo, Russian Ambassador to Serbia Alexander Chepurin has said. Clumsy statements by some Serbian officials concerning South Stream have created the wrong impression in Russia that Serbia is going against its own interest and advocating on its own initiative a suspension of the start of construction of the pipeline, that it has made such a decision, Chepurin stated. Read more here: http://inserbia.info/today/2014/06/russia-expects-serbia-tosupport-south-stream/ --************************************************************ 4. Russia Warns Moldova About EU Intergation Risks RIA Novosti June 17, 2014 Russia has warned Moldova about risks it would face if integrated with the European Union, Russian Deputy Minister of Economic Development Alexei Likhachev told RIA Novosti Monday. "Moldova cannot combine two regulatory systems: of the CIS and of the EU. It will have to make some choice. And if it is in favor of the European system, then the CIS system will cease to be comfortable. We have put these thoughts across, but the Moldovan colleagues say they will be able to avoid this and promised to show us relevant proof," Likhachev said. Read more here: http://en.ria.ru/russia/20140616/190557087/Russia-WarnsMoldova-About-EU-Intergation-Risks.html --************************************************************ 5. Turkey's Central Bank hints at further rate cut 'if inflation outlook improves' Hurriyet Daily News June 17, 2014 Turkey’s Central Bank could review interest rates as soon as this month if it is convinced that the outlook for inflation is improving significantly, Governor Erdem Bascı has said. He said that economic growth was on track and that Turkey’s current account deficit - its main economic weakness - would narrow “swiftly” this year as the economy keeps rebalancing. “A cautious, measured, gradual rate cut process is being priced in. We are observing it in long-term rates, as long as the confidence in the Central Bank reducing inflation continues, as long as it’s being observed in long-term rates, we will do it,” Başscı told business leaders in the central city of Konya June 16. Read more: http://www.hurriyetdailynews.com/turkeys-central-bank-hints-atfurther-rate-cut-if-inflation-outlookimproves.aspx?pageID=238&nID=67858&NewsCatID=344
--************************************************************ STORIES FROM WEBSITE --************************************************************ 6. Exactly what is a fair price for Ukraine to pay for Russian gas? Ben Aris in Moscow June 16, 2014 Russia cut Ukraine off from gas deliveries on June 16 after the emergency talks at the weekend to strike a new price for gas failed. From now on Russia won't deliver any gas unless Ukraine pays for it in advance. The row has come down to numbers: so exactly what would be a "fair" price for Ukraine to pay for Russian gas? For 20 years the West has been lecturing Russia about the joys of the free market, which we all know works on the basis of supply and demand: prices are set by striking a balance between a punter's desire to buy a product and its availability. However this assumes that there are lots of sellers so the buyer has a choice. That is not true with gas, where Russia has a virtual monopoly over Ukraine's supplies. That's one of the reasons we have governments – to regulate natural monopolies, prevent them from charging economic rents and force them to set "fair" prices. However, that clearly doesn’t work when the buyer is a country and lurking behind this latest gas war is the assumption that Russia is abusing its monopolistic position. Ukraine finds itself over a barrel because it depends on Russia for between 50% and 75% of its gas needs. The 2009 gas supply contract struck between Moscow and Kyiv was for the delivery of 42bn cubic metres of gas a year (cm/y). In addition, Ukraine produces about 20bn cm/y from its own resources. More recently, Ukraine has cut imports of Russian gas to around 28bn cm/y simply because it can't afford to pay for any more. Currently, Ukraine is paying $485.5 per 1,000 cm against the $286/'000 cm it was paying under the discounted deal struck between the Kremlin and the now-ousted Ukrainian president Viktor Yanukovych in December. Kyiv had been asking to go back to that discounted price, but in the last week it shifted its stance and said it would accept a more reasonable package of $300/'000 cm in the summer and $385/'000 cm in the winter, while Russian President Vladimir Putin says his "final offer" is a flat $385/'000 cm all year. The gap between the two sides seems pretty small. Read more here: http://www.bne.eu/content/exactly-what-fair-price-ukraine-payrussian-gas --************************************************************ 7. Hungary's Wizz Air sees IPO plans crash again bne June 16, 2014 Hungary's Wizz Air scrapped plans to launch an IPO for the second time in close to 12 months on June 16. Citing "market volatility", the halt comes less than four weeks after Central and Eastern Europe's largest budget carrier announced it would list in London this month. “Wizz Air today announces that the company has decided not to proceed with an IPO at this stage due to the current market volatility in the airline sector,” the airline said
in a statement. “The board will continue to focus on executing its strategy of driving growth and value.” The move comes as other low-cost carriers such as Ryanair and Easyjet have seen their share prices drop by up to 10% since the start of June. Ireland-based Ryanair has fought a bitter fight with Wizz Air to fill the void left by the 2012 grounding of Hungarian national carrier Malev, grabbing extra slots in Budapest in order to expand regional coverage. The FTSE Mid-250, the index on which Wizz Air was set to launch, has also sagged recently. The wariness on the airline sector stems from dismal forecasts announced by major European carriers, albeit they're concentrated on Western European markets. Germany's Lufthansa saw its shares drop sharply on June 11 after it cut earnings forecasts for this year and next, blaming a capacity boost at Gulf competitors, reports Bloomberg. Spiking oil prices due to increasing strife in Iraq has also hit the outlook for fuel guzzling carriers. Read more here: http://www.bne.eu/content/hungarys-wizz-air-sees-ipo-planscrash-again --************************************************************ 8. More leaked tapes threaten Polish government bne June 17, 2014 When Wprost, a Polish weekly, published snippets of a private conversation between the interior minister and governor of the central bank, it was widely expected that heads would roll. Yet in his official statement on June 16, Prime Minister Donald Tusk did not dismiss Sienkiewicz, attempting instead to lower the political temperature by focusing on the illegal nature of the recordings. More secret tape recordings are likely to follow, which will make this strategy hard to continue as pressure grows on the government. Speaking over a meal at a popular restaurant in Warsaw in July 2013, Bartlomiej Sienkiewicz and Marek Belka appeared to be negotiating the fate of Jacek Rostowski, the finance minister who was replaced a few months later, among other things. Delicate times The wiretapping scandal comes at a delicate time for Tusk’s centre-right Civic Platform government and has potentially far-reaching political consequences. Three weeks ago, in the elections to the European Parliament on May 25, Civic Platform managed to finish a modest 0.35 percentage points ahead of the conservative Law and Justice, the biggest opposition party. But election season is only just beginning, with local elections this autumn followed by presidential and parliamentary ones next year, in which a third Civic Platform government is by no means assured. If the next polls show a drop in its ratings, the governing party could face “its biggest crisis in years,” says Wojciech Szacki, a political analyst at Polityka Insight, a think-tank in Warsaw. The Law and Justice party has been quick to pounce, submitting a motion on a noconfidence vote in Sienkiewicz and calling for the entire cabinet to resign. “Every day that the government remains in place poses a threat to the state’s security,” declared Jaroslaw Kaczynski, the party’s leader.
Read more here: http://www.bne.eu/content/more-leaked-tapes-threaten-polishgovernment --************************************************************ 9. Russia cuts Ukrainian gas supplies bne June 16, 2014 Russia's state-owned Gazprom cut Ukraine's gas supply off at 10 a.m. Moscow time for failing to pay its bills after talks broke down ahead of a June 16 deadline. “This decision was taken due to systematic failure of Naftogaz Ukraine to pay," Gazprom said in a statement. "The debt of the company for Russian gas stands at $4.458bn, including $1.451bn for November and December 2013, and $3.007bn for April-May 2014. Starting today, the Ukrainian company will only get the Russian gas it has paid for." Ukraine's national gas utility Naftogaz declined to comment, saying it would issue a statement later in the day. However, the Ukrainian pipeline operator Ukrtransgaz said it was operating normally. Brokered by the EU, the Russian gas giant conducted a series of last-minute negotiations with new Ukrainian President Petro Poroshenko to reach a compromise gas price. An agreement was demanded by Ukraine before it paid off its debts. European Energy Commissioner Guenther Oettinger said Moscow had declined a compromise proposal during the talks, in which Kiev would pay $1bn immediately, instead of the $1.45bn Moscow was demanding, and then make monthly debt payments. Read more here: http://www.bne.eu/content/russia-cuts-ukrainian-gas-supplies --************************************************************ RESEARCH & COMMENT --************************************************************ 10. Croatia: Koncar Elektroindustrija’s (Hold) unit for generators and motors has signed a new contract Erste June 17, 2014 Koncar Elektroindustrija’s (Hold) unit for generators and motors has signed a new contract on the refurbishment and upgrading of two generators at HPP Svarthhalsforsen in Sweden, with an option to refurbish the third generator in two years. The contract value amounts to EUR 16mn. The news is positive, but we do not expect a significant share price reaction. Anto Augustinovic
--************************************************************ 11. Croatia: MOL regrets Sanader decision (neutral) Erste June 17, 2014 * MOL regrets the final decision in the lawsuit against former Croatian PM Sanader. * Sanader was charged with bribery in the MOL and Hypo-Adria cases. He was sentenced to eight and a half years in a legally binding decision. * Sanader was called ‘treasonous’ by the president of Croatia. MOL will have a long fight to recoup its position in Croatia after the bribery case became a hot political issue in the country. We do not see a quick solution. Tamas Pletser --************************************************************ 12. FlashNews Bulgaria - 16.06.2014: Credit rating lower by S&P to BBBElana Trading June 17, 2014 The rating agency Standard&Poor’s lowered Bulgaria’s sovereign debt rating on lateFriday to BBB-. The outlook is stable. The Agency cited the political environment as a challenge for the implementation of reforms needed to tackle deep-rooted institutional and economic problems. The absence of meaningful reforms should lead to lackluster growth and high unemployment. Bulgaria's sovereign debt is rated Baa2 by Moody's and BBB- by Fitch, both with stable outlook. After the European Parliament election in end-May, Bulgaria's ruling parties leaders called for early elections, pointing the limited public support for the government. Bulgarian President Rosen Plevneliev will hold a meeting on Thursday with all political parties in parliament to set a date for early parliamentary elections. We expect this move to help to lower the current political instability. Aside of the political uncertainties, the Agency noted that the downgrade reflects corruption and demographics. The procedure to revoke the licenses of electricity distribution companies is increasing business uncertainties. Furthermore, inefficiency in state-owned companies in railway transport and energy is risk for liabilities to emerge. Despite the political uncertainty, there is a gradual improvement of the economy, as GDP accelerated to 1.2% y-o-y in Q1 2014. Recent developments in Ukraine and Russia are projected to have modest growth effects through trade and investment channels. Nevertheless, dependence on Russian gas imports represents a potential risk. According to last IMF mission in Bulgaria, hold during June 6-11, economic growth in 2014 will pick-up, driven by firming domestic demand and higher absorption of EU funds. The 2014 deficit target will be within the legal limit, as low public sector debt and limited exposure to capital markets have continued to insulate Bulgaria from international market volatility. Tsvetoslav Tsachev
--************************************************************ 13. Romania: Daily Snapshot: NBR Board vote ING June 17, 2014 Trading remains fairly dull in the RON FX market as the Romanian currency closed Friday at 4.3920/EUR, the very same opening level. This morning saw the RON inch weaker, to 4.3950/RON, somewhat matching the poor mood visible in core markets. Static price action remains likely, though ING’s soft call for today’s key US data could aid the RON slightly in late local trading. Today sees the Parliament kick off the process of selecting a new NBR Board. The latest news from the local press suggests there will be no major changes, though hints from late last week saw some high-ranking MinFin officials planning to join the board of the central bank. No major moves in the front end of the FX swap curve, with cash slightly cheaper at 0.7% and the 1M-3M segment basically unmoved at 1.30-1.60%. The 1Y rate is the exception, with it softening from 1.90% to almost 1.75%. This is less than 10bp firmer than its January record low. We maintain our near-term call that there is more downside potential. We look for a maximum yield in the region of 3.30% at today’s RON0.3bn 4Y T-bond tender following the recent strong demand in such tenors. Vlad Muscalu --************************************************************ 14. Romania: Electrica: According to the media, about 4,500 investors subscribed yesterday Erste June 17, 2014 Electrica: According to the media, about 4,500 investors subscribed yesterday (the first day of the IPO for a 51% stake in the company), placing orders worth about EUR 26mn. The subscription period ends on June 26, while the price range set for the IPO is RON 11-13.5/share. --************************************************************ 15. Romania: Fondul Proprietatea (FP RO): NAV for end of May increased by 4.5% mom to RON 1.2771 – neutral (company release) Raiffeisen June 17, 2014 * As many companies from its portfolio passed the ex-dividend date, FP has booked as receivables the dividends which should be received ; this amount stands at RON 617.4 mn , up from RON 34.7 mn in April, and was the main reason for the positive evolution of NAV; * Listed shares portfolio was down 1.6% mon while unlisted stakes value was increased by 1.9% mom; cash position stood at RON 463 mn, down 7.7% mom;
* We remind that FP has not yet adjusted its NAV for the special dividend of RON 0.05; the manager will adjust it only after the FSA validation of the shareholders’ resolution which approved it. Alexandru Combei --************************************************************ 16. Romania: Fondul Proprietatea: Accelerated book building offering for up to 19.24mn Romgaz shares Erste June 17, 2014 * Fondul Proprietatea launched an accelerated book building offering for up to 19.243mn Romgaz shares. * Book building starts immediately. * The offering is addressed solely to qualified investors and/or certain other investors not exceeding 150 natural or legal persons per member state, other than qualified investors. * Goldman Sachs International is Sole Bookrunner while Erste Group Bank will act as joint lead manager. If FP manages to sell the 19.24mn Romgaz shares, its stake in the company will decrease to around 10.01%, from 15% currently. Considering the entire portfolio of the fund, the share of listed holdings would decrease to 58%, from 64% currently. At the current share price, the stake in Romgaz available in the offering amounts to RON 685mn (EUR 155.7mn). Most likely, the proceeds will be used to finance the intensive buyback program (76mn shares left to be repurchased in the third buyback, while the fourth buyback for 991mn shares was already approved) and the RON 0.05/share extra cash distribution to shareholders via cutting the face value of FP shares (contingent upon market regulator ASF’s approval). Raluca Florea Marina Spataru --************************************************************ 17. Romania: OMV Petrom, Romgaz (SNP RO, SNG RO): The authorities intend to delay the transfer of SMEs from the regulated to competitive market – neutral (bursa.ro) Raiffeisen June 17, 2014 * According to media, 170,000 SMEs will be supplied from the regulated gas market until December 31; the previous intent was to switch them to liberalized market from July 1; * Their regulated price will remain unchanged at the current level RON 89 /MWh. Iuliana Mocanu
--************************************************************ 18. Romania: Summary of our company report on Transelectrica (Accumulate) Erste June 17, 2014 * Our DCF analysis leads to a target price of RON 23.8/share and an Accumulate recommendation, even after the strong share price performance in the last year (+60% y/y), which we do not think has exhausted the upside potential for the medium term. * We believe that the company’s net profit will stabilize close to RON 200mn from now on, in contrast with the large y/y variations seen since its listing, with annual levels well below those in FY13. This will translate into a 2014 dividend yield of over 10%, at a payout ratio of 75%, which should also be sustainable in the coming years. * A reduction of grid losses and maintenance expenses alongside annual transmission tariff growth of between 4% and 5.5% in the coming five-year regulatory period (July 2014-June 2019) will keep profitability close to the record level from FY13. * Transelectrica is still valued at a large discount of around 30% related to its Regulated Asset Base (RAB), in contrast to its much more indebted western peers, which are traded close to or at a premium to their RABs. Such a valuation gap (also signaled clearly by the high dividend yield) indicates that the stock is supported by LT fundamentals. Mihai Caruntu --************************************************************ 19. Turkey: Sisecam: Quota application approved for Iranian glassware import products (positive) Erste June 17, 2014 * According to an announcement today in the Official Gazette, the General Directorate of Imports extended a protection measure to Iranian glassware import products for four years (2014-18). * The protection measure also turned it into a quota measure. We views the news as slightly positive for Sisecam and believe that the decision will bring a stronger pricing environment to Pasabahce, Sisecam’s flagship company in the glassware segment, in its domestic operations. Evrim Dairecioglu
--************************************************************ SE Macro --************************************************************ 20. Bulgaria turns to c/a gap in Jan-Apr, FDI down – table SeeNews June 17, 2014 Bulgaria turned to current account deficit of 211.6 million euro ($286.3 million) in the January-April period from a surplus of of 54.2 million euro a year earlier, the central bank said on Monday. Foreign direct investments (FDI) in Bulgaria decreased to 218.5 million euro in January-April, equivalent to 0.5% of the projected gross domestic product (GDP), from some 305.1 million euro, or 0.8% of GDP, a year earlier, the Bulgarian National Bank said in a statement. Read more here: http://wire.seenews.com/news/bulgaria-turns-to-c-a-gap-in-janapr-fdi-down-table-425762?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 21. Bulgaria Will Not Take Another Loan For Now – MinFin Novinite June 15, 2014 Bulgarian Finance Minister Petar Chobanov, photo by BGNES For the time being we do not need to take another loan at the international markets, Bulgaria's Finance Minister Petar Chobanov told Darik national radio. According to him, the state debt strategy was implemented “calmly and smoothly”. He said that in spite the “hysterical talking”, the budget was stable and the claims of a BGN 10 B deficit in the budget were untrue. “If we often witness such talk and people believe it, this would create instability,” Chobanov said. “We cannot say the state was bankrupt, when in end of February the fiscal reserve was BGN 3.9 B and in end of April it reached BGN 6 B." Read more here: http://www.novinite.com/articles/161297/Bulgaria+Will+Not+Take+Another+Loan+ For+Now+%E2%80%93+MinFin?utm_source=twitterfeed&utm_medium=twitter#sth ash.xvCyc5b8.dpuf --************************************************************ 22. Employment in Romania up by 0.4% in first quarter of 2014 Romania Insider June 17, 2014 Employment grew by 0.4 percent in Romania in the first quarter of 2014, compared to the same period of 2013, according to preliminary data presented by Eurostat. This is lower than the 0.7 percent growth in employment across the European Union. The statistic doesn’t mention how many employees Romania actually has. In Romania there are different figures from different institutions.
Read more here: http://www.romania-insider.com/employment-in-romania-up-by0-4-in-first-quarter-of-2014/125026/ --************************************************************ 23. Foreign Direct Investment in Bulgaria Down 28.4% Y/Y in Q1, 2014 Novinite June 17, 2014 Foreign direct investment in Bulgaria in April 2014 amounted to EUR 106.6 M, compared to a rate of EUR -67.8 M in April 2013, according to the Bulgarian National Bank(BNB). In Q1, 2014, foreign direct investment in Bulgaria stood at EUR 218.5 M (0.5% of GDP), compared to EUR 305.1 M (0.8% of GDP) in the same period of 2013, down by EUR 86.6 M (28.4%), according to preliminary data of BNB. Read more here: http://www.novinite.com/articles/161343/Foreign+Direct+Investment+in+Bulgaria+ Down+28.4+Y+Y+in+Q1,+2014?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 24. Moldova Q1 GDP grows by prelim 3.6% y/y SeeNews June 17, 2014 Moldova's economy expanded by an annual 3.6% in real terms in the first quarter of 2014 on strong agriculture and industry, the country's statistics office said on Monday. Calculated at current prices, the country's gross domestic product (GDP) totalled 21.47 billion lei ($1.54 billion/1.14 billion euro) through March, the office said in a statement. Read more here: http://wire.seenews.com/news/moldova-q1-gdp-grows-by-prelim3-6-y-y-425796?utm_source=twitterfeed&utm_medium=twitter --************************************************************ OTHER NEWS --************************************************************ 25. Albanian official: 'We are much more pro-European than several EU members' EurActiv June 17, 2014 Greece and Italy play a catalytic role for the European perspective of the Albanian people, who are much more pro-European than in many EU member countries, says Ralf Gjoni. Ralf Gjoni is Chief Foreign Policy Adviser at the Albanian Parliament and International Secretary of the Socialist Movement for Integration of Albania (LSI). He spoke to EurActiv Greece’s Sarantis Michalopoulos ahead of an EU summit on 26-27 June.
Read more here: http://www.euractiv.com/sections/enlargement/albanian-officialwe-are-much-more-pro-european-several-eu-members-302813 --************************************************************ 26. Albanian police storm marijuana village after growers allegedly fire RPGs Al Jazeera June 17, 2014 Hundreds of police, backed by armored vehicles, stormed a village in southern Albania Monday after suspected marijuana growers allegedly fired rocket-propelled grenades, mortars and machine guns at officers during a drug raid. Police said no one was hurt in the hostilities in and around Lazarat, a major marijuana-producing center about 140 miles south of the capital, Tirana. Read more here: http://america.aljazeera.com/articles/2014/6/16/albaniamarijuanavillage.html --************************************************************ 27. Bulgarian President to Propose 4 Election Dates on Tuesday Novinite June 17, 2014 Bulgaria's President Rosen Plevneliev is expected to propose 4 possible dates for early parliamentary elections during Tuesday's Consultative Council for National Security. The dates which Plevneliev will propose to the leaders of the political parties will most likely be the Sundays from September 21 to October 12, Standartnews reveals. Read more here: http://www.novinite.com/view_news.php?id=161335 --************************************************************ 28. Bulgarian Railway Co Prepares Varna-Bucharest High-Speed Train Project Novinite June 17, 2014 A project for a high-speed train connecting Bulgaria's Varna to Romania's Bucharest is being prepared at the National Railway Infrastructure Company. The first stage of the project envisages the reconstruction of the rail line Varna – Ruse, for which a tender procedure is to be called in the second half of the year, according to reports of Trud daily. Read more here: http://www.novinite.com/articles/161319/Bulgarian+Railway+Co+Prepares+VarnaBucharest+HighSpeed+Train+Project?utm_source=twitterfeed&utm_medium=twitter
--************************************************************ 29. Bulgarians Accumulated EUR 20 B in 10 Years Novinite June 17, 2014 Bulgarians got by EUR 20 B richer since 2004, shows an analysis of the UniCredit Bulbank on the households' financial assets. In 2004 the Bulgarians had a little over EUR 7 B in bank deposits, stocks and other financial instruments. By the end of the year they would reach over EUR 26.9 B. Last year the assets were a total of EUR 24.94 B. Read more: http://www.novinite.com/articles/161330/Bulgarians+Accumulated+EUR+20+B+in+ 10+Years?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 30. Council clears way for signing Association Agreements with Georgia and Moldova ENPI Information Centre June 17, 2014 The Council of the European Union has concluded technical preparations for the signature of the Association Agreements with Georgia and Moldova, due to take place in the margins of the European Council on 27 June together with the EUUkraine Association Agreement. The accords will aim “to deepen the political association and economic integration with the EU and will also lead to a deep and comprehensive free trade area with both partners,” a press release said. Read more here: http://enpiinfo.eu/maineast.php?id=37661&id_type=1&lang_id=450 --************************************************************ 31. Cyprus could supply natural gas to Bulgaria Ekathimerini June 17, 2014 Bulgaria’s foreign minister said Cyprus could supply his country and other Central European nations with natural gas to lessen the region’s heavy dependence on Russian deliveries. Kristian Vigenin said after talks with his Cypriot counterpart Ioannis Kasoulides (photo) on Monday that Cyprus could play “an important role” in an envisioned “north-south corridor” supplying gas to Central Europe via Greece. Read more here: http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/06/2014_540599
--************************************************************ 32. EBRD LOAN HELPS IMPROVE WATER AND WASTEWATER SERVICES IN ROMANIA’S HUNEDOARA COUNTY EBRD June 17, 2014 180,000 people in six towns to get safe clean water and better sanitation The EU Cohesion Fund and the EBRD are continuing their joint efforts to further modernise and upgrade water and wastewater services in Romania. The EBRD is lending RON 30 million (€6.6 million) to S.C. APA PROD S.A., a regional company supplying water and wastewater services in six towns of Hunedoara county: Brad, Calan, Deva, Hateg, Hunedoara and Simeria. The loan will co-finance the company’s RON 599.3 million (€132.7 million) regional investment programme to extend and upgrade water supply and wastewater facilities and networks under EU Cohesion Fund financing for Romania. More specifically, the investments will increase access to water and wastewater services in the area, and improve the quality of those services, with over 180,000 people in six towns benefiting from the upgrade, in line with EU water sector legislation. Jean-Patrick Marquet, EBRD Director for Municipal and Environmental Infrastructure, said: “We are pleased that the EBRD financing will make a difference for almost 200,000 people in Hunedoara, bringing them cleaner water and better wastewater services and removing health hazards associated with low-quality drinking water and poor sanitation. Our financing will also help reduce water losses and will make the water company more efficient.” This EBRD loan is the 22nd investment under the Bank’s Romania EU Cohesion Funds Water Co-Financing Framework, launched in 2010. The facility was originally approved in November 2010, with a volume of €200 million, and further increased by €130 million in September 2012, following strong local demand. To date, the EBRD has mobilised approximately €2 billion of EU funding in Romania’s water and wastewater facilities. The Bank is the largest institutional investor in Romania. Since the start of its operations in the country, the EBRD has invested approximately €6.7 billion across 360 projects in the country. The Bank has further mobilised over €14 billion for these ventures from other sources of financing. --************************************************************ 33. Energy saving projects to get incentives from Turkish government Hurriyet Daily News June 17, 2014 The government is set to include energy saving investments within the scope of incentives, as it hopes to save around 15 billion lira-worth of energy per year, Energy Minister Taner Yıldız has announced.
Speaking at a meeting on the issue, Yıldız said increasing energy efficiency across the whole sector would earn the Turkish economy around 65 billion liras by 2023. Read more here: http://www.hurriyetdailynews.com/energy-saving-projects-to-getincentives-from-turkishgovernment.aspx?pageID=238&nID=67879&NewsCatID=348 --************************************************************ 34. Experts are confident Albania will obtain EU candidate status Southeast European Times June 17, 2014 Onlookers said they expect the European Council to follow a recommendation by the European Commission (EC) that Albania obtain EU candidate member status. The EC issued a report stating Albania has made progress, but it recommended the country continue on-going reforms, improve its efforts against organised crime and nurture political compromise. Read more here: http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/20 14/06/16/feature-01 --************************************************************ 35. Gazprom's EU customers not at risk for now Teneo Intelligence June 16, 2014 Following the failure of negotiations on natural gas pricing and debt between Russia and Ukraine last weekend, Russian company Gazprom reduced supply volumes to Ukraine, the main transit country for gas delivered to Gazprom's EU customers. However, Gazprom continues to deliver contracted amounts to the EU for now, and Kiev will likely refrain from siphoning the supply, given its reliance on support from Brussels in the ongoing dispute with Moscow. Gazprom's move to cut gas supplies to Ukraine should be interpreted as an attempt to gain the upper hand in the talks with its neighbor. It will also remind the EU of its role not just as a negotiator but also as a party directly affected by a potential breakdown of the negotiations. Kiev has built up gas storage levels in recent months and hence has sufficient reserves to weather several weeks of cuts, especially as demand is low during the summer. Both sides have now filed a case with the Stockholm Arbitration Court and the process of reaching a deal may be protracted by several weeks. Meanwhile, Ukraine will likely avoid siphoning off the transport volumes for EU countries, as this would both alienate its EU supporters and prove Gazprom's point that Ukraine is an unreliable gas transit country. This might further strengthen the case for Gazprom's South Stream pipeline, which is designed to bypass Ukraine. However, substantial cuts over several months would again raise the risk to winter supplies to the EU due to potentially insufficient transit pipeline pressure if Ukrainian storage levels are low. Therefore, the effect of the cuts on storage levels at the end of summer will determine the level of risk to EU supplies in the winter of 2014/2015.
An escalation of the wider crisis in eastern Ukraine therefore represents a risk to the EU, as Russia may choose to cut gas supplies in response to potential broad economic sanctions implemented by the Europeans and the United States. --************************************************************ 36. Parliament speaker talks Chinese investment in Croatia Dalje June 17, 2014 China is interested in investing in 16 Central and Eastern European (CEE) countries, including Croatia, which is expected to brief Chinese business people about costeffective investment projects, the Croatian parliament said on Monday after Speaker Josip Leko held talks with a Chinese delegation. The delegation of the Central Politburo Standing Committee of the Communist Party of China was headed by Sun Zhengcai. Read more here: http://dalje.com/en-croatia/parliament-speaker-talks-chineseinvestment-in-croatia/512186 --************************************************************ 37. Romania Backs Central Bank Board as Isarescu Extends Term Bloomberg June 17, 2014 Romania’s parliament gave backing to the new makeup of the central bank board, extending the mandate of Governor Mugur Isarescu and raising concerns that political influence may play a bigger role in monetary policy. Lawmakers in Bucharest voted today to approve the nine-member board, with Budget Minister Liviu Voinea becoming deputy governor. Florin Georgescu will stay as first deputy governor and Bodgan Olteanu remains as a deputy. Deputy Governor Cristian Popa’s mandate wasn’t extended. The new board will take office in October. Read more here: http://www.bloomberg.com/news/2014-06-16/romania-backscentral-bank-board-as-isarescu-extends-term.html --************************************************************ 38. Serbia: Economy Minister: Telekom Srbija will be privatised InSerbia News June 17, 2014 Serbia’s Minister of Economy Dusan Vujovic has said the government will try to avoid reducing pensions, but that, on the other hand, government companies will have to reduce their costs and raise their efficiency. The laws on bankruptcy, privatisation and subsidies will be adopted in July, he told Radio and Television of Serbia, adding that the telecommunications company Telekom Srbija would definitely be privatised. Read more here: http://inserbia.info/today/2014/06/economy-minister-telekomsrbija-will-be-privatised/
--************************************************************ 39. Slovenia NLB Bank Seeks to Raise Debt First Time in 4 Years Bloomberg June 17, 2014 Nova Ljubljanska Banka d.d., Slovenia’s biggest bank, is planning to sell corporate debt for the first time since since 2010 as the nation’s borrowing costs fell to a record. NLB, as the state owned bank is known, may sell euro-denominated bonds after investor meetings, which start June 17, Mojca Strojan, spokeswoman for the NLB, said in e-mailed response to questions. NLB last sold notes in euros in May 2010, according to data compiled by Bloomberg. Read more here: http://www.bloomberg.com/news/2014-06-16/slovenia-s-nlbbank-seeks-to-raise-debt-first-time-in-four-years.html --************************************************************ 40. Slovenia, Albania pledge to strengthen economic cooperation Xinhua June 17, 2014 Slovenian Foreign Minister Karl Erjavec met with his Albanian counterpart Ditmir Bushati here on Monday, with the two sides pledging to beef up business cooperation. Speaking to reporters after the meeting, the two ministers agreed that the fields of energy, infrastructure and tourism are those of the biggest potential. Read more here: http://www.shanghaidaily.com/article/article_xinhua.aspx?id=224690 --************************************************************ 41. Spar Croatia Gets Anti-Trust Nod to Take Over 20 Dinova-Diona Stores FriedlNews June 17, 2014 Croatia's antitrust regulator, AZTN, said on Monday it has cleared the plans of local retailer Spar Hrvatska to take over 20 stores from peer Dinova Diona located in the capital Zagreb and Zagreb county. This concentration would have no significant effect on the local competition landscape since it will not lead to the creation of a new player on the market or to the strengthening of a dominant position of the parties involved, AZTN said in a statement. Read more here: https://www.friedlnews.com/article/spar-croatia-gets-anti-trustnod-to-take-over-20-dinova-diona-stores
--************************************************************ 42. Turkey’s main opposition parties to nominate ex-head of Islamic body Ihsanoglu for presidency Hurriyet Daily News June 17, 2014 The two major opposition parties represented at the Turkish Parliament have finally announced their agreement for nominating the former head of the Organization of Islamic Cooperation (OIC), Ekmeleddin Ihsanoglu, as their joint presidential candidate. Main opposition Republican People’s Party (CHP) leader Kemal Kilicdaroglu officially announced on June 16 that the senior diplomat would be announced as a joint candidate with the Nationalist Movement Party (MHP), in a move they dub “The Grand Conciliation.” Read more here: http://www.hurriyetdailynews.com/turkeys-main-oppositionparties-to-nominate-ex-head-of-islamic-body-ihsanoglu-forpresidency.aspx?pageID=238&nID=67850&NewsCatID=338
32. EBRD LOAN HELPS IMPROVE WATER AND WASTEWATER SERVICES IN ROMANIA’S HUNEDOARA COUNTY 33. Energy saving projects to get incentives from Turkish government 34. Experts are confident Albania will obtain EU candidate status 35. Gazprom's EU customers not at risk for now 36. Parliament speaker talks Chinese investment in Croatia 37. Romania Backs Central Bank Board as Isarescu Extends Term 38. Serbia: Economy Minister: Telekom Srbija will be privatised 39. Slovenia NLB Bank Seeks to Raise Debt First Time in 4 Years 40. Slovenia, Albania pledge to strengthen economic cooperation 41. Spar Croatia Gets Anti-Trust Nod to Take Over 20 Dinova-Diona Stores 42. Turkey’s main opposition parties to nominate ex-head of Islamic body Ihsanoglu for presidency --************************************************************ TOP STORIES --************************************************************ 1. Bulgaria Govt Guarantees Supplies for 3-4 Months in Case of Gas Crisis Novinite June 17, 2014 Bulgarian Deputy Prime Minister Daniela Bobeva has explained that the government is ready to secure gas consumption for a minimum of 3-4 months in the case of a gas supply crisis. Bobeva, as cited by the Bulgarian National Radio, announced Monday that additional gas quantities were being injected into the Chiren gas storage facility. Read more here: http://www.novinite.com/articles/161345/Bulgaria+Govt+Guarantees+Supplies+for +3-4+Months+in+Case+of+Gas+Crisis --************************************************************ 2. MOL eyes long fight over INA following final decision on former Croat PM Erste June 17, 2014 MOL regrets the final decision in the lawsuit against former Croatian PM Sanader. Sanader was charged with bribery in the MOL and Hypo-Adria cases. He was sentenced to eight and a half years in a legally binding decision. Sanader was called 'treasonous' by the president of Croatia. MOL will have a long fight to recoup its position in Croatia after the bribery case became a hot political issue in the country. We do not see a quick solution. --************************************************************ 3. Russia expects Serbia to support South Stream InSerbia News June 17, 2014 Russia’s Foreign Minister Sergey Lavrov will discuss with Serbian officials the political relations and economic cooperation between the two countries, especially such
important matters like the South Stream natural gas pipeline, Ukraine and Kosovo, Russian Ambassador to Serbia Alexander Chepurin has said. Clumsy statements by some Serbian officials concerning South Stream have created the wrong impression in Russia that Serbia is going against its own interest and advocating on its own initiative a suspension of the start of construction of the pipeline, that it has made such a decision, Chepurin stated. Read more here: http://inserbia.info/today/2014/06/russia-expects-serbia-tosupport-south-stream/ --************************************************************ 4. Russia Warns Moldova About EU Intergation Risks RIA Novosti June 17, 2014 Russia has warned Moldova about risks it would face if integrated with the European Union, Russian Deputy Minister of Economic Development Alexei Likhachev told RIA Novosti Monday. "Moldova cannot combine two regulatory systems: of the CIS and of the EU. It will have to make some choice. And if it is in favor of the European system, then the CIS system will cease to be comfortable. We have put these thoughts across, but the Moldovan colleagues say they will be able to avoid this and promised to show us relevant proof," Likhachev said. Read more here: http://en.ria.ru/russia/20140616/190557087/Russia-WarnsMoldova-About-EU-Intergation-Risks.html --************************************************************ 5. Turkey's Central Bank hints at further rate cut 'if inflation outlook improves' Hurriyet Daily News June 17, 2014 Turkey’s Central Bank could review interest rates as soon as this month if it is convinced that the outlook for inflation is improving significantly, Governor Erdem Bascı has said. He said that economic growth was on track and that Turkey’s current account deficit - its main economic weakness - would narrow “swiftly” this year as the economy keeps rebalancing. “A cautious, measured, gradual rate cut process is being priced in. We are observing it in long-term rates, as long as the confidence in the Central Bank reducing inflation continues, as long as it’s being observed in long-term rates, we will do it,” Başscı told business leaders in the central city of Konya June 16. Read more: http://www.hurriyetdailynews.com/turkeys-central-bank-hints-atfurther-rate-cut-if-inflation-outlookimproves.aspx?pageID=238&nID=67858&NewsCatID=344
--************************************************************ STORIES FROM WEBSITE --************************************************************ 6. Exactly what is a fair price for Ukraine to pay for Russian gas? Ben Aris in Moscow June 16, 2014 Russia cut Ukraine off from gas deliveries on June 16 after the emergency talks at the weekend to strike a new price for gas failed. From now on Russia won't deliver any gas unless Ukraine pays for it in advance. The row has come down to numbers: so exactly what would be a "fair" price for Ukraine to pay for Russian gas? For 20 years the West has been lecturing Russia about the joys of the free market, which we all know works on the basis of supply and demand: prices are set by striking a balance between a punter's desire to buy a product and its availability. However this assumes that there are lots of sellers so the buyer has a choice. That is not true with gas, where Russia has a virtual monopoly over Ukraine's supplies. That's one of the reasons we have governments – to regulate natural monopolies, prevent them from charging economic rents and force them to set "fair" prices. However, that clearly doesn’t work when the buyer is a country and lurking behind this latest gas war is the assumption that Russia is abusing its monopolistic position. Ukraine finds itself over a barrel because it depends on Russia for between 50% and 75% of its gas needs. The 2009 gas supply contract struck between Moscow and Kyiv was for the delivery of 42bn cubic metres of gas a year (cm/y). In addition, Ukraine produces about 20bn cm/y from its own resources. More recently, Ukraine has cut imports of Russian gas to around 28bn cm/y simply because it can't afford to pay for any more. Currently, Ukraine is paying $485.5 per 1,000 cm against the $286/'000 cm it was paying under the discounted deal struck between the Kremlin and the now-ousted Ukrainian president Viktor Yanukovych in December. Kyiv had been asking to go back to that discounted price, but in the last week it shifted its stance and said it would accept a more reasonable package of $300/'000 cm in the summer and $385/'000 cm in the winter, while Russian President Vladimir Putin says his "final offer" is a flat $385/'000 cm all year. The gap between the two sides seems pretty small. Read more here: http://www.bne.eu/content/exactly-what-fair-price-ukraine-payrussian-gas --************************************************************ 7. Hungary's Wizz Air sees IPO plans crash again bne June 16, 2014 Hungary's Wizz Air scrapped plans to launch an IPO for the second time in close to 12 months on June 16. Citing "market volatility", the halt comes less than four weeks after Central and Eastern Europe's largest budget carrier announced it would list in London this month. “Wizz Air today announces that the company has decided not to proceed with an IPO at this stage due to the current market volatility in the airline sector,” the airline said
in a statement. “The board will continue to focus on executing its strategy of driving growth and value.” The move comes as other low-cost carriers such as Ryanair and Easyjet have seen their share prices drop by up to 10% since the start of June. Ireland-based Ryanair has fought a bitter fight with Wizz Air to fill the void left by the 2012 grounding of Hungarian national carrier Malev, grabbing extra slots in Budapest in order to expand regional coverage. The FTSE Mid-250, the index on which Wizz Air was set to launch, has also sagged recently. The wariness on the airline sector stems from dismal forecasts announced by major European carriers, albeit they're concentrated on Western European markets. Germany's Lufthansa saw its shares drop sharply on June 11 after it cut earnings forecasts for this year and next, blaming a capacity boost at Gulf competitors, reports Bloomberg. Spiking oil prices due to increasing strife in Iraq has also hit the outlook for fuel guzzling carriers. Read more here: http://www.bne.eu/content/hungarys-wizz-air-sees-ipo-planscrash-again --************************************************************ 8. More leaked tapes threaten Polish government bne June 17, 2014 When Wprost, a Polish weekly, published snippets of a private conversation between the interior minister and governor of the central bank, it was widely expected that heads would roll. Yet in his official statement on June 16, Prime Minister Donald Tusk did not dismiss Sienkiewicz, attempting instead to lower the political temperature by focusing on the illegal nature of the recordings. More secret tape recordings are likely to follow, which will make this strategy hard to continue as pressure grows on the government. Speaking over a meal at a popular restaurant in Warsaw in July 2013, Bartlomiej Sienkiewicz and Marek Belka appeared to be negotiating the fate of Jacek Rostowski, the finance minister who was replaced a few months later, among other things. Delicate times The wiretapping scandal comes at a delicate time for Tusk’s centre-right Civic Platform government and has potentially far-reaching political consequences. Three weeks ago, in the elections to the European Parliament on May 25, Civic Platform managed to finish a modest 0.35 percentage points ahead of the conservative Law and Justice, the biggest opposition party. But election season is only just beginning, with local elections this autumn followed by presidential and parliamentary ones next year, in which a third Civic Platform government is by no means assured. If the next polls show a drop in its ratings, the governing party could face “its biggest crisis in years,” says Wojciech Szacki, a political analyst at Polityka Insight, a think-tank in Warsaw. The Law and Justice party has been quick to pounce, submitting a motion on a noconfidence vote in Sienkiewicz and calling for the entire cabinet to resign. “Every day that the government remains in place poses a threat to the state’s security,” declared Jaroslaw Kaczynski, the party’s leader.
Read more here: http://www.bne.eu/content/more-leaked-tapes-threaten-polishgovernment --************************************************************ 9. Russia cuts Ukrainian gas supplies bne June 16, 2014 Russia's state-owned Gazprom cut Ukraine's gas supply off at 10 a.m. Moscow time for failing to pay its bills after talks broke down ahead of a June 16 deadline. “This decision was taken due to systematic failure of Naftogaz Ukraine to pay," Gazprom said in a statement. "The debt of the company for Russian gas stands at $4.458bn, including $1.451bn for November and December 2013, and $3.007bn for April-May 2014. Starting today, the Ukrainian company will only get the Russian gas it has paid for." Ukraine's national gas utility Naftogaz declined to comment, saying it would issue a statement later in the day. However, the Ukrainian pipeline operator Ukrtransgaz said it was operating normally. Brokered by the EU, the Russian gas giant conducted a series of last-minute negotiations with new Ukrainian President Petro Poroshenko to reach a compromise gas price. An agreement was demanded by Ukraine before it paid off its debts. European Energy Commissioner Guenther Oettinger said Moscow had declined a compromise proposal during the talks, in which Kiev would pay $1bn immediately, instead of the $1.45bn Moscow was demanding, and then make monthly debt payments. Read more here: http://www.bne.eu/content/russia-cuts-ukrainian-gas-supplies --************************************************************ RESEARCH & COMMENT --************************************************************ 10. Croatia: Koncar Elektroindustrija’s (Hold) unit for generators and motors has signed a new contract Erste June 17, 2014 Koncar Elektroindustrija’s (Hold) unit for generators and motors has signed a new contract on the refurbishment and upgrading of two generators at HPP Svarthhalsforsen in Sweden, with an option to refurbish the third generator in two years. The contract value amounts to EUR 16mn. The news is positive, but we do not expect a significant share price reaction. Anto Augustinovic
--************************************************************ 11. Croatia: MOL regrets Sanader decision (neutral) Erste June 17, 2014 * MOL regrets the final decision in the lawsuit against former Croatian PM Sanader. * Sanader was charged with bribery in the MOL and Hypo-Adria cases. He was sentenced to eight and a half years in a legally binding decision. * Sanader was called ‘treasonous’ by the president of Croatia. MOL will have a long fight to recoup its position in Croatia after the bribery case became a hot political issue in the country. We do not see a quick solution. Tamas Pletser --************************************************************ 12. FlashNews Bulgaria - 16.06.2014: Credit rating lower by S&P to BBBElana Trading June 17, 2014 The rating agency Standard&Poor’s lowered Bulgaria’s sovereign debt rating on lateFriday to BBB-. The outlook is stable. The Agency cited the political environment as a challenge for the implementation of reforms needed to tackle deep-rooted institutional and economic problems. The absence of meaningful reforms should lead to lackluster growth and high unemployment. Bulgaria's sovereign debt is rated Baa2 by Moody's and BBB- by Fitch, both with stable outlook. After the European Parliament election in end-May, Bulgaria's ruling parties leaders called for early elections, pointing the limited public support for the government. Bulgarian President Rosen Plevneliev will hold a meeting on Thursday with all political parties in parliament to set a date for early parliamentary elections. We expect this move to help to lower the current political instability. Aside of the political uncertainties, the Agency noted that the downgrade reflects corruption and demographics. The procedure to revoke the licenses of electricity distribution companies is increasing business uncertainties. Furthermore, inefficiency in state-owned companies in railway transport and energy is risk for liabilities to emerge. Despite the political uncertainty, there is a gradual improvement of the economy, as GDP accelerated to 1.2% y-o-y in Q1 2014. Recent developments in Ukraine and Russia are projected to have modest growth effects through trade and investment channels. Nevertheless, dependence on Russian gas imports represents a potential risk. According to last IMF mission in Bulgaria, hold during June 6-11, economic growth in 2014 will pick-up, driven by firming domestic demand and higher absorption of EU funds. The 2014 deficit target will be within the legal limit, as low public sector debt and limited exposure to capital markets have continued to insulate Bulgaria from international market volatility. Tsvetoslav Tsachev
--************************************************************ 13. Romania: Daily Snapshot: NBR Board vote ING June 17, 2014 Trading remains fairly dull in the RON FX market as the Romanian currency closed Friday at 4.3920/EUR, the very same opening level. This morning saw the RON inch weaker, to 4.3950/RON, somewhat matching the poor mood visible in core markets. Static price action remains likely, though ING’s soft call for today’s key US data could aid the RON slightly in late local trading. Today sees the Parliament kick off the process of selecting a new NBR Board. The latest news from the local press suggests there will be no major changes, though hints from late last week saw some high-ranking MinFin officials planning to join the board of the central bank. No major moves in the front end of the FX swap curve, with cash slightly cheaper at 0.7% and the 1M-3M segment basically unmoved at 1.30-1.60%. The 1Y rate is the exception, with it softening from 1.90% to almost 1.75%. This is less than 10bp firmer than its January record low. We maintain our near-term call that there is more downside potential. We look for a maximum yield in the region of 3.30% at today’s RON0.3bn 4Y T-bond tender following the recent strong demand in such tenors. Vlad Muscalu --************************************************************ 14. Romania: Electrica: According to the media, about 4,500 investors subscribed yesterday Erste June 17, 2014 Electrica: According to the media, about 4,500 investors subscribed yesterday (the first day of the IPO for a 51% stake in the company), placing orders worth about EUR 26mn. The subscription period ends on June 26, while the price range set for the IPO is RON 11-13.5/share. --************************************************************ 15. Romania: Fondul Proprietatea (FP RO): NAV for end of May increased by 4.5% mom to RON 1.2771 – neutral (company release) Raiffeisen June 17, 2014 * As many companies from its portfolio passed the ex-dividend date, FP has booked as receivables the dividends which should be received ; this amount stands at RON 617.4 mn , up from RON 34.7 mn in April, and was the main reason for the positive evolution of NAV; * Listed shares portfolio was down 1.6% mon while unlisted stakes value was increased by 1.9% mom; cash position stood at RON 463 mn, down 7.7% mom;
* We remind that FP has not yet adjusted its NAV for the special dividend of RON 0.05; the manager will adjust it only after the FSA validation of the shareholders’ resolution which approved it. Alexandru Combei --************************************************************ 16. Romania: Fondul Proprietatea: Accelerated book building offering for up to 19.24mn Romgaz shares Erste June 17, 2014 * Fondul Proprietatea launched an accelerated book building offering for up to 19.243mn Romgaz shares. * Book building starts immediately. * The offering is addressed solely to qualified investors and/or certain other investors not exceeding 150 natural or legal persons per member state, other than qualified investors. * Goldman Sachs International is Sole Bookrunner while Erste Group Bank will act as joint lead manager. If FP manages to sell the 19.24mn Romgaz shares, its stake in the company will decrease to around 10.01%, from 15% currently. Considering the entire portfolio of the fund, the share of listed holdings would decrease to 58%, from 64% currently. At the current share price, the stake in Romgaz available in the offering amounts to RON 685mn (EUR 155.7mn). Most likely, the proceeds will be used to finance the intensive buyback program (76mn shares left to be repurchased in the third buyback, while the fourth buyback for 991mn shares was already approved) and the RON 0.05/share extra cash distribution to shareholders via cutting the face value of FP shares (contingent upon market regulator ASF’s approval). Raluca Florea Marina Spataru --************************************************************ 17. Romania: OMV Petrom, Romgaz (SNP RO, SNG RO): The authorities intend to delay the transfer of SMEs from the regulated to competitive market – neutral (bursa.ro) Raiffeisen June 17, 2014 * According to media, 170,000 SMEs will be supplied from the regulated gas market until December 31; the previous intent was to switch them to liberalized market from July 1; * Their regulated price will remain unchanged at the current level RON 89 /MWh. Iuliana Mocanu
--************************************************************ 18. Romania: Summary of our company report on Transelectrica (Accumulate) Erste June 17, 2014 * Our DCF analysis leads to a target price of RON 23.8/share and an Accumulate recommendation, even after the strong share price performance in the last year (+60% y/y), which we do not think has exhausted the upside potential for the medium term. * We believe that the company’s net profit will stabilize close to RON 200mn from now on, in contrast with the large y/y variations seen since its listing, with annual levels well below those in FY13. This will translate into a 2014 dividend yield of over 10%, at a payout ratio of 75%, which should also be sustainable in the coming years. * A reduction of grid losses and maintenance expenses alongside annual transmission tariff growth of between 4% and 5.5% in the coming five-year regulatory period (July 2014-June 2019) will keep profitability close to the record level from FY13. * Transelectrica is still valued at a large discount of around 30% related to its Regulated Asset Base (RAB), in contrast to its much more indebted western peers, which are traded close to or at a premium to their RABs. Such a valuation gap (also signaled clearly by the high dividend yield) indicates that the stock is supported by LT fundamentals. Mihai Caruntu --************************************************************ 19. Turkey: Sisecam: Quota application approved for Iranian glassware import products (positive) Erste June 17, 2014 * According to an announcement today in the Official Gazette, the General Directorate of Imports extended a protection measure to Iranian glassware import products for four years (2014-18). * The protection measure also turned it into a quota measure. We views the news as slightly positive for Sisecam and believe that the decision will bring a stronger pricing environment to Pasabahce, Sisecam’s flagship company in the glassware segment, in its domestic operations. Evrim Dairecioglu
--************************************************************ SE Macro --************************************************************ 20. Bulgaria turns to c/a gap in Jan-Apr, FDI down – table SeeNews June 17, 2014 Bulgaria turned to current account deficit of 211.6 million euro ($286.3 million) in the January-April period from a surplus of of 54.2 million euro a year earlier, the central bank said on Monday. Foreign direct investments (FDI) in Bulgaria decreased to 218.5 million euro in January-April, equivalent to 0.5% of the projected gross domestic product (GDP), from some 305.1 million euro, or 0.8% of GDP, a year earlier, the Bulgarian National Bank said in a statement. Read more here: http://wire.seenews.com/news/bulgaria-turns-to-c-a-gap-in-janapr-fdi-down-table-425762?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 21. Bulgaria Will Not Take Another Loan For Now – MinFin Novinite June 15, 2014 Bulgarian Finance Minister Petar Chobanov, photo by BGNES For the time being we do not need to take another loan at the international markets, Bulgaria's Finance Minister Petar Chobanov told Darik national radio. According to him, the state debt strategy was implemented “calmly and smoothly”. He said that in spite the “hysterical talking”, the budget was stable and the claims of a BGN 10 B deficit in the budget were untrue. “If we often witness such talk and people believe it, this would create instability,” Chobanov said. “We cannot say the state was bankrupt, when in end of February the fiscal reserve was BGN 3.9 B and in end of April it reached BGN 6 B." Read more here: http://www.novinite.com/articles/161297/Bulgaria+Will+Not+Take+Another+Loan+ For+Now+%E2%80%93+MinFin?utm_source=twitterfeed&utm_medium=twitter#sth ash.xvCyc5b8.dpuf --************************************************************ 22. Employment in Romania up by 0.4% in first quarter of 2014 Romania Insider June 17, 2014 Employment grew by 0.4 percent in Romania in the first quarter of 2014, compared to the same period of 2013, according to preliminary data presented by Eurostat. This is lower than the 0.7 percent growth in employment across the European Union. The statistic doesn’t mention how many employees Romania actually has. In Romania there are different figures from different institutions.
Read more here: http://www.romania-insider.com/employment-in-romania-up-by0-4-in-first-quarter-of-2014/125026/ --************************************************************ 23. Foreign Direct Investment in Bulgaria Down 28.4% Y/Y in Q1, 2014 Novinite June 17, 2014 Foreign direct investment in Bulgaria in April 2014 amounted to EUR 106.6 M, compared to a rate of EUR -67.8 M in April 2013, according to the Bulgarian National Bank(BNB). In Q1, 2014, foreign direct investment in Bulgaria stood at EUR 218.5 M (0.5% of GDP), compared to EUR 305.1 M (0.8% of GDP) in the same period of 2013, down by EUR 86.6 M (28.4%), according to preliminary data of BNB. Read more here: http://www.novinite.com/articles/161343/Foreign+Direct+Investment+in+Bulgaria+ Down+28.4+Y+Y+in+Q1,+2014?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 24. Moldova Q1 GDP grows by prelim 3.6% y/y SeeNews June 17, 2014 Moldova's economy expanded by an annual 3.6% in real terms in the first quarter of 2014 on strong agriculture and industry, the country's statistics office said on Monday. Calculated at current prices, the country's gross domestic product (GDP) totalled 21.47 billion lei ($1.54 billion/1.14 billion euro) through March, the office said in a statement. Read more here: http://wire.seenews.com/news/moldova-q1-gdp-grows-by-prelim3-6-y-y-425796?utm_source=twitterfeed&utm_medium=twitter --************************************************************ OTHER NEWS --************************************************************ 25. Albanian official: 'We are much more pro-European than several EU members' EurActiv June 17, 2014 Greece and Italy play a catalytic role for the European perspective of the Albanian people, who are much more pro-European than in many EU member countries, says Ralf Gjoni. Ralf Gjoni is Chief Foreign Policy Adviser at the Albanian Parliament and International Secretary of the Socialist Movement for Integration of Albania (LSI). He spoke to EurActiv Greece’s Sarantis Michalopoulos ahead of an EU summit on 26-27 June.
Read more here: http://www.euractiv.com/sections/enlargement/albanian-officialwe-are-much-more-pro-european-several-eu-members-302813 --************************************************************ 26. Albanian police storm marijuana village after growers allegedly fire RPGs Al Jazeera June 17, 2014 Hundreds of police, backed by armored vehicles, stormed a village in southern Albania Monday after suspected marijuana growers allegedly fired rocket-propelled grenades, mortars and machine guns at officers during a drug raid. Police said no one was hurt in the hostilities in and around Lazarat, a major marijuana-producing center about 140 miles south of the capital, Tirana. Read more here: http://america.aljazeera.com/articles/2014/6/16/albaniamarijuanavillage.html --************************************************************ 27. Bulgarian President to Propose 4 Election Dates on Tuesday Novinite June 17, 2014 Bulgaria's President Rosen Plevneliev is expected to propose 4 possible dates for early parliamentary elections during Tuesday's Consultative Council for National Security. The dates which Plevneliev will propose to the leaders of the political parties will most likely be the Sundays from September 21 to October 12, Standartnews reveals. Read more here: http://www.novinite.com/view_news.php?id=161335 --************************************************************ 28. Bulgarian Railway Co Prepares Varna-Bucharest High-Speed Train Project Novinite June 17, 2014 A project for a high-speed train connecting Bulgaria's Varna to Romania's Bucharest is being prepared at the National Railway Infrastructure Company. The first stage of the project envisages the reconstruction of the rail line Varna – Ruse, for which a tender procedure is to be called in the second half of the year, according to reports of Trud daily. Read more here: http://www.novinite.com/articles/161319/Bulgarian+Railway+Co+Prepares+VarnaBucharest+HighSpeed+Train+Project?utm_source=twitterfeed&utm_medium=twitter
--************************************************************ 29. Bulgarians Accumulated EUR 20 B in 10 Years Novinite June 17, 2014 Bulgarians got by EUR 20 B richer since 2004, shows an analysis of the UniCredit Bulbank on the households' financial assets. In 2004 the Bulgarians had a little over EUR 7 B in bank deposits, stocks and other financial instruments. By the end of the year they would reach over EUR 26.9 B. Last year the assets were a total of EUR 24.94 B. Read more: http://www.novinite.com/articles/161330/Bulgarians+Accumulated+EUR+20+B+in+ 10+Years?utm_source=twitterfeed&utm_medium=twitter --************************************************************ 30. Council clears way for signing Association Agreements with Georgia and Moldova ENPI Information Centre June 17, 2014 The Council of the European Union has concluded technical preparations for the signature of the Association Agreements with Georgia and Moldova, due to take place in the margins of the European Council on 27 June together with the EUUkraine Association Agreement. The accords will aim “to deepen the political association and economic integration with the EU and will also lead to a deep and comprehensive free trade area with both partners,” a press release said. Read more here: http://enpiinfo.eu/maineast.php?id=37661&id_type=1&lang_id=450 --************************************************************ 31. Cyprus could supply natural gas to Bulgaria Ekathimerini June 17, 2014 Bulgaria’s foreign minister said Cyprus could supply his country and other Central European nations with natural gas to lessen the region’s heavy dependence on Russian deliveries. Kristian Vigenin said after talks with his Cypriot counterpart Ioannis Kasoulides (photo) on Monday that Cyprus could play “an important role” in an envisioned “north-south corridor” supplying gas to Central Europe via Greece. Read more here: http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/06/2014_540599
--************************************************************ 32. EBRD LOAN HELPS IMPROVE WATER AND WASTEWATER SERVICES IN ROMANIA’S HUNEDOARA COUNTY EBRD June 17, 2014 180,000 people in six towns to get safe clean water and better sanitation The EU Cohesion Fund and the EBRD are continuing their joint efforts to further modernise and upgrade water and wastewater services in Romania. The EBRD is lending RON 30 million (€6.6 million) to S.C. APA PROD S.A., a regional company supplying water and wastewater services in six towns of Hunedoara county: Brad, Calan, Deva, Hateg, Hunedoara and Simeria. The loan will co-finance the company’s RON 599.3 million (€132.7 million) regional investment programme to extend and upgrade water supply and wastewater facilities and networks under EU Cohesion Fund financing for Romania. More specifically, the investments will increase access to water and wastewater services in the area, and improve the quality of those services, with over 180,000 people in six towns benefiting from the upgrade, in line with EU water sector legislation. Jean-Patrick Marquet, EBRD Director for Municipal and Environmental Infrastructure, said: “We are pleased that the EBRD financing will make a difference for almost 200,000 people in Hunedoara, bringing them cleaner water and better wastewater services and removing health hazards associated with low-quality drinking water and poor sanitation. Our financing will also help reduce water losses and will make the water company more efficient.” This EBRD loan is the 22nd investment under the Bank’s Romania EU Cohesion Funds Water Co-Financing Framework, launched in 2010. The facility was originally approved in November 2010, with a volume of €200 million, and further increased by €130 million in September 2012, following strong local demand. To date, the EBRD has mobilised approximately €2 billion of EU funding in Romania’s water and wastewater facilities. The Bank is the largest institutional investor in Romania. Since the start of its operations in the country, the EBRD has invested approximately €6.7 billion across 360 projects in the country. The Bank has further mobilised over €14 billion for these ventures from other sources of financing. --************************************************************ 33. Energy saving projects to get incentives from Turkish government Hurriyet Daily News June 17, 2014 The government is set to include energy saving investments within the scope of incentives, as it hopes to save around 15 billion lira-worth of energy per year, Energy Minister Taner Yıldız has announced.
Speaking at a meeting on the issue, Yıldız said increasing energy efficiency across the whole sector would earn the Turkish economy around 65 billion liras by 2023. Read more here: http://www.hurriyetdailynews.com/energy-saving-projects-to-getincentives-from-turkishgovernment.aspx?pageID=238&nID=67879&NewsCatID=348 --************************************************************ 34. Experts are confident Albania will obtain EU candidate status Southeast European Times June 17, 2014 Onlookers said they expect the European Council to follow a recommendation by the European Commission (EC) that Albania obtain EU candidate member status. The EC issued a report stating Albania has made progress, but it recommended the country continue on-going reforms, improve its efforts against organised crime and nurture political compromise. Read more here: http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/20 14/06/16/feature-01 --************************************************************ 35. Gazprom's EU customers not at risk for now Teneo Intelligence June 16, 2014 Following the failure of negotiations on natural gas pricing and debt between Russia and Ukraine last weekend, Russian company Gazprom reduced supply volumes to Ukraine, the main transit country for gas delivered to Gazprom's EU customers. However, Gazprom continues to deliver contracted amounts to the EU for now, and Kiev will likely refrain from siphoning the supply, given its reliance on support from Brussels in the ongoing dispute with Moscow. Gazprom's move to cut gas supplies to Ukraine should be interpreted as an attempt to gain the upper hand in the talks with its neighbor. It will also remind the EU of its role not just as a negotiator but also as a party directly affected by a potential breakdown of the negotiations. Kiev has built up gas storage levels in recent months and hence has sufficient reserves to weather several weeks of cuts, especially as demand is low during the summer. Both sides have now filed a case with the Stockholm Arbitration Court and the process of reaching a deal may be protracted by several weeks. Meanwhile, Ukraine will likely avoid siphoning off the transport volumes for EU countries, as this would both alienate its EU supporters and prove Gazprom's point that Ukraine is an unreliable gas transit country. This might further strengthen the case for Gazprom's South Stream pipeline, which is designed to bypass Ukraine. However, substantial cuts over several months would again raise the risk to winter supplies to the EU due to potentially insufficient transit pipeline pressure if Ukrainian storage levels are low. Therefore, the effect of the cuts on storage levels at the end of summer will determine the level of risk to EU supplies in the winter of 2014/2015.
An escalation of the wider crisis in eastern Ukraine therefore represents a risk to the EU, as Russia may choose to cut gas supplies in response to potential broad economic sanctions implemented by the Europeans and the United States. --************************************************************ 36. Parliament speaker talks Chinese investment in Croatia Dalje June 17, 2014 China is interested in investing in 16 Central and Eastern European (CEE) countries, including Croatia, which is expected to brief Chinese business people about costeffective investment projects, the Croatian parliament said on Monday after Speaker Josip Leko held talks with a Chinese delegation. The delegation of the Central Politburo Standing Committee of the Communist Party of China was headed by Sun Zhengcai. Read more here: http://dalje.com/en-croatia/parliament-speaker-talks-chineseinvestment-in-croatia/512186 --************************************************************ 37. Romania Backs Central Bank Board as Isarescu Extends Term Bloomberg June 17, 2014 Romania’s parliament gave backing to the new makeup of the central bank board, extending the mandate of Governor Mugur Isarescu and raising concerns that political influence may play a bigger role in monetary policy. Lawmakers in Bucharest voted today to approve the nine-member board, with Budget Minister Liviu Voinea becoming deputy governor. Florin Georgescu will stay as first deputy governor and Bodgan Olteanu remains as a deputy. Deputy Governor Cristian Popa’s mandate wasn’t extended. The new board will take office in October. Read more here: http://www.bloomberg.com/news/2014-06-16/romania-backscentral-bank-board-as-isarescu-extends-term.html --************************************************************ 38. Serbia: Economy Minister: Telekom Srbija will be privatised InSerbia News June 17, 2014 Serbia’s Minister of Economy Dusan Vujovic has said the government will try to avoid reducing pensions, but that, on the other hand, government companies will have to reduce their costs and raise their efficiency. The laws on bankruptcy, privatisation and subsidies will be adopted in July, he told Radio and Television of Serbia, adding that the telecommunications company Telekom Srbija would definitely be privatised. Read more here: http://inserbia.info/today/2014/06/economy-minister-telekomsrbija-will-be-privatised/
--************************************************************ 39. Slovenia NLB Bank Seeks to Raise Debt First Time in 4 Years Bloomberg June 17, 2014 Nova Ljubljanska Banka d.d., Slovenia’s biggest bank, is planning to sell corporate debt for the first time since since 2010 as the nation’s borrowing costs fell to a record. NLB, as the state owned bank is known, may sell euro-denominated bonds after investor meetings, which start June 17, Mojca Strojan, spokeswoman for the NLB, said in e-mailed response to questions. NLB last sold notes in euros in May 2010, according to data compiled by Bloomberg. Read more here: http://www.bloomberg.com/news/2014-06-16/slovenia-s-nlbbank-seeks-to-raise-debt-first-time-in-four-years.html --************************************************************ 40. Slovenia, Albania pledge to strengthen economic cooperation Xinhua June 17, 2014 Slovenian Foreign Minister Karl Erjavec met with his Albanian counterpart Ditmir Bushati here on Monday, with the two sides pledging to beef up business cooperation. Speaking to reporters after the meeting, the two ministers agreed that the fields of energy, infrastructure and tourism are those of the biggest potential. Read more here: http://www.shanghaidaily.com/article/article_xinhua.aspx?id=224690 --************************************************************ 41. Spar Croatia Gets Anti-Trust Nod to Take Over 20 Dinova-Diona Stores FriedlNews June 17, 2014 Croatia's antitrust regulator, AZTN, said on Monday it has cleared the plans of local retailer Spar Hrvatska to take over 20 stores from peer Dinova Diona located in the capital Zagreb and Zagreb county. This concentration would have no significant effect on the local competition landscape since it will not lead to the creation of a new player on the market or to the strengthening of a dominant position of the parties involved, AZTN said in a statement. Read more here: https://www.friedlnews.com/article/spar-croatia-gets-anti-trustnod-to-take-over-20-dinova-diona-stores
--************************************************************ 42. Turkey’s main opposition parties to nominate ex-head of Islamic body Ihsanoglu for presidency Hurriyet Daily News June 17, 2014 The two major opposition parties represented at the Turkish Parliament have finally announced their agreement for nominating the former head of the Organization of Islamic Cooperation (OIC), Ekmeleddin Ihsanoglu, as their joint presidential candidate. Main opposition Republican People’s Party (CHP) leader Kemal Kilicdaroglu officially announced on June 16 that the senior diplomat would be announced as a joint candidate with the Nationalist Movement Party (MHP), in a move they dub “The Grand Conciliation.” Read more here: http://www.hurriyetdailynews.com/turkeys-main-oppositionparties-to-nominate-ex-head-of-islamic-body-ihsanoglu-forpresidency.aspx?pageID=238&nID=67850&NewsCatID=338
