By Sindhu Nair, Qatar Today
11/03/2012
With a heady mix of culture and rich history, tantalising sky resorts, award-winning golf courses and exotic mineral spa resorts, Bulgaria is keen to expand its areas of expertise to benefit countries that are willing to invest. Traicho Traikov, Minister of Economy, Energy and Tourism in Bulgaria, explains to Qatari investors why Bulgaria is a country to look out for.
What portion of the Bulgarian GDP does energy command?
If we take into account coal mining, gas, electricity power generation and investments in the energy sector, then energy is around 20% of GDP.
How about the tourism sector?
Tourism takes 10% of the GDP and it is developing very well – we have an increase of 5% year-on-year. Even during the economic crisis, the figures were quite high.
Last year Bulgaria was visited by 6.2 million tourists and most of them visit our Black Sea resorts and winter ski resorts. We are now trying to bridge the two seasons with everything else that the country has to offer and promote Bulgaria as an all-season tourist destination. Bulgaria has a very rich history of seven different civilisations — The Thracian period, Roman, Byzantine, 1st Bulgarian Kingdom, 2nd Bulgarian Kingdom, Ottoman period (when we lived together as one country with Qatar of today) and the contemporary period. We have excellent historical artefacts from all these periods, especially from the Thracian and Roman era. We also keep discovering new monuments from these periods and this is why we are focusing on the historical aspects of the country to attract tourism.
Bulgaria is also famous for its hot spring tourism. Actually, Bulgaria has one of the richest sources of mineral springs in Europe; we have around 800 of them around the country. A number of 5-star hotels have opened around these water sources and numerous spas have also developed in these areas.
We are also famous for wine tourism, pilgrims and most recently golf tourism. Bulgaria was awarded by the International Association of Golf Tour Operators (IAGTO) as the ‘2012 Undiscovered Golf Destination of the Year’. The start of Qatar Airways flight to Sofia (QA flies four times a week to Sofia), is extremely welcomed and we hope to attract more visitors from the Gulf region and around the world.
Tell us more about the energy sector in Bulgaria? Do you export energy?
We cover a considerable part of the electricity deficit in our region. Around 20% of the electricity generated in Bulgaria is exported. Bulgaria sells electricity to neighbouring Greece, Serbia and Macedonia. Our main focus is now to provide a high-quality supply for domestic markets and to increase our energy efficiency.
Around 35-40% of our energy supply is from nuclear power, 45-50% is from coal, and around 12% is from renewable energy sources which include hydro-generated power (9%).
What is the country’s long-term policy on nuclear energy?
Bulgaria was one of the first European countries to start generating electricity from nuclear power plants. Our first commercial nuclear power reactor began operating in 1974. The government’s commitment to the future of nuclear energy is strong. We have an excellent track record in safety.
We currently have two nuclear reactors generating about 35-40% of the total electricity output. Their project life is until 2017 and 2019, respectively but we are confident they have the capacity to stay online for at least more ten years. The Bulgarian state will institutionally support the development of nuclear energy but we heavily rely on investments to the new reactors from private investors. We have one new reactor in the construction stage but the capital funding for this project is under negotiation. The technology being used is Russian. There are a number of issues in technology and capital funding that are still in the discussion stages.
How dependant is Bulgaria on gas imports?
All of the imported gas comes from Russia. Gas is mainly used for district heating facilities and as a raw material in industry. We have a local production of around 10%.
Is Bulgaria looking at Qatar for meeting its gas needs? Is this a bid to move away from the country’s dependence on Russian gas?
In 2010, when the Bulgarian delegation visited Qatar, we signed an agreement between our Prime Minister and Qatari Prime Minister, HE Sheikh Hamad bin Jassem bin Jabor Al-Thani, from which Bulgargaz and Qatargas started commercial discussions. There are some issues here too. Firstly we cannot bring gas directly through the Black Sea because of the 19-mile-long Bosphorus strait. This is the sole shipping passage between the Black Sea and the Mediterranean. As a result, the waterway is heavily congested with tanker traffic to and from Bulgaria, Romania, Georgia, Ukraine and southern Russia, and has been the scene of many maritime accidents and hence a very risky passage for the huge LNG ships. Gas can be imported via LNG terminals in Greece and Turkey. For this reason, we have to build interconnectors from Greece and Turkey. We have made advancements in the Bulgarian-Greece connectors. It will be complete in a year. The second issue with the Qatari gas is price. We hope that the price of LNG that we are being offered are comparable to the price that is made available to the rest of Europe. There will be further talks after the infrastructure needs are met.
Now our gas needs are met by Russia and it is a monopoly. Everyone tries to bench-mark their price against the monopoly and when the monopoly is abolished, prices will be different.
What is Bulgaria’s plan on renewable energy?
We have a lot of renewable energy projects in the pipeline. If the planned projects are executed we will reach and exceed our targets for 2020. Our target is 16% of the total gross consumption and we have reached 12% at the moment. The question is not about reaching targets but at what costs they will be achieved. Earlier we had a very generous approach to such projects and this generated more interest in renewable projects, so this year we have altered the law in such a way that new developments in wind and solar are completed in a more balanced way until the technologies get cheaper.
How has Bulgaria weathered the economic crisis?
In 2009 we had a sharp decline in the GDP, but ever since the situation has been improving. In 2010, the real GDP growth was almost flat, with a 0.2% growth. 2011, was better, with a real GDP growth of 1.6% and this year we expect it to reach 2.5%. So we are on a growth path. But we are largely dependent on what happens in the rest of the European Union, where 60% of our exports go.
In 2009 and 2010 we resisted the temptation to fight the crisis through fiscal stimulus and instead focused on maintaining solid fundamentals such as: low taxes, low government debt and budget deficits. For example we have only 10% for corporate and personal income taxes (which is the lowest in the EU) and 16% of government debt in the GDP (the third lowest in the EU). Our budget deficit for 2011 is around 2.2% of GDP. The short fall of this budget is we cannot stimulate consumption so internal consumption has shown the slowest rate of improvement during periods of crisis. The main driver of our economic growth are exports, which are growing by around 30% for each of the last two years.
Which are the areas that Bulgaria is intent to develop?
Traditionally Bulgaria has competitive strengths in industries such as machine building, pharmaceuticals, ICT, , chemicals, non-ferrous metals such as copper, lead and zinc, agricultural products like grain and processed food, and cosmetic products.
Have there been any talks of Qatar buying Bulgarian land for agricultural purposes?
Yes, this is one of the areas that Qatar has shown an interest. China has already invested in land here for agricultural purposes Agriculture receives a lot of support from national and European Union sources and foreign investment in the sector can additionally increase productivity. Non-agriculture real estate developments are also being planned with Qatari Diar.
Exports to Qatar
Exports and imports between Qatar and Bulgaria are rather low but we want to encourage Bulgarian businesses to have more partnerships with Qatar. An economic commission is set up to improve the business activities between both countries. The Bulgarian Exhibition at the Doha Exhibition Center Businesses in Qatar this month is one of the activities of the commission and will hopefully foster more partnerships.