2013-03-13 17:42:15 - Fast Market Research recommends "Bulgaria Shipping Report Q2 2013" from Business Monitor International, now available

BMI have become a little more optimistic about Bulgaria's economic outlook over the last three months. We have revised up our estimate for 2012 GDP growth to 0.4% (from 0.1% previously) and we are now forecasting GDP expansion of 1.5% in 2013. The change reflects a better-than-expected performance in H212, the emergence of what looks like a modest recovery in the eurozone, and domestic factors such as a more expansive fiscal policy ahead of parliamentary elections due in mid-2013. On the external front we expect export growth to accelerate to 5.4% in 2013 as the eurozone returns to growth. Although import growth will also pick up somewhat in response to the pickup in investment, this will be offset by the

better export performance.

We are expecting positive growth in tonnage and box throughput in the Port of Varna this year, at fasterthan- GDP levels. Over the medium term, plans to concession the port's container operations offer upside risk to our forecast of a steady recovery, but we highlight that there has not yet been any interest and currently the country's privatisation drive is centred instead on concessioning ports on Bulgaria's part of the Danube River.


Full Report Details at
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The country's inland waterways play a major role in Bulgaria's freight transport sector. In 2011 (last historic data) Bulgaria's inland waterways handled the second-largest amount of freight after road and so far seven of the country's Danube ports have been concessioned out of a total of 12 that are due to be tendered.

Headline Industry Data

* 2013 Port of Varna tonnage throughput forecast to grow 7.7%; over the medium term (to 2017) we project an average annual increase also at the 6.1% level.
* 2013 Port of Varna container throughput forecast to grow 6.9%; over the medium term we project a 5.9% average annual increase.
* 2013 total trade growth forecast at 5.0%.

Key Industry Trends

Port Invest Wins Port Terminal Lom Concession

Port Invest, a subsidiary of Bulgarian River Shipping (BRS) was selected as the winner of a 35-year concession to operate Port Terminal Lom. Port Invest committed itself to invest BGN22.43mn (US $15.26mn) in the facility. The new concessionaire said its aim was to turn Lom into a highly competitive and modern river port. A minimum of BGN6.377mn would be invested in the first four years. The initial target was for the facility to handle 480,000 tonnes of cargo per annum, as well as 1,800 passengers. It was also announced that Sviloza TPP had won a 35-year concession to operate the Vidin-South port terminal with a pledge to invest BGN7.1mn (US$4.75mn) in the facility. Of this BGN5.7mn (US$3.81mn) would be committed within the first 10 years of the concession.

New Port Projects: Only 'Class A' Investors Need Apply

An MP in the ruling GERB Party has suggested that the law will be changed so that only 'Class A' investors will be able to build new ports in the country, although he also suggested that the approvals procedure would be streamlined and simplified. Dimitar Atanasov, MP of centre-right ruling party GERB, and Deputy Chair of the Parliamentary Committee on Transport, Information Technologies and Communications, said that class A investors had provided sufficient evidence to demonstrate their serious intentions, and there was no need to call a tender, thereby sidestepping potential appeals and obstructions to the development of a project. Under existing Bulgarian regulations a Class A investment certificate is issued to companies who meet a range of criteria. The most important is that the minimum value of the investment be no less than BGN20mn (US$13.84mn).

Lukoil Boosts Bunker Supplies

The Bulgarian arm of Russia's bunker company, Lukoil-Bulgaria, supplied a greater volume of bunker fuel in 2012 compared to 2011. The company said it was able to increase bunker supply by 10%. 'Growth was achieved despite severe ice conditions at the beginning of 2012,' the company said. In July 2012 Lukoil Bulgaria acquired the 250dwt tanker Neftyanik-1. Lukoil-Bulgaria Bunker supplies bunkers in Bulgarian ports of Ruse, Silistra, Vidin, Lom, and Burgas. It also supplies the oil ports of Rosenets (Romania) Varna, Constanta (Romania), and Kladovo (Serbia).

Risks to Outlook

The country's exposure to the eurozone continues to be a risk. While we believe a slow recovery is taking shape, we cannot rule out a serious deterioration in the sovereign debt crisis, with a sovereign default or member exit the worst-case scenario. This would significantly drag on headline growth, with a knock-on effect on the ports sector. The banking system is particularly vulnerable to a Greek exit from the eurozone given the presence of several Greek banks in Bulgaria. However, our core view remains for the currency bloc to 'muddle through' the crisis.

Our port activity forecasts might also be influenced by the entry of a new private competitor on the local market. Despite the concessioning of existing ports, we believe the entrance of a major new port operating company on a large-scale basis is a rather low probability at the moment.

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