Archive for July, 2004

Regulation on Access to Gas Transmission and Gas Distribution Networks

Wednesday, July 28th, 2004

The Ministry of Energy and Energy Resources adopted Regulation No. 7 of June 9, 2004 on Access to the Gas Transmission and Gas Distribution Networks (promulgated in the State Gazette Issue No. 63 of July 20, 2004). The Regulation has been issued pursuant to Article 196 (1) of the Energy Act and essentially regulates the conditions and procedures for access of gas distribution companies, eligible customers, gas generation companies and undertakings which store natural gas to the gas transmission network, currently owned and operated by the state monopoly Bulgargas AD. The Regulation also provides for the conditions and procedures for access of industrial and household customers to gas distribution networks. The adoption of the Regulation is a further step in the establishment of the legal framework of the liberalized gas market in Bulgaria.

New Member of SEE Legal Group

Wednesday, July 28th, 2004

Borislav Boyanov & Co. is proud to announce the further expansion of SEE Legal network – an organization of leading independent law firms from South East European countries co-founded by Borislav Boyanov & Co. After the joining of the Croatian law firm Divjak, Topic & Bahtijarevic from Zagreb in May 2004, now the Bosnian law firm Branko Maric Law Offices has joined SEE Legal’s ranks. Branko Maric Law Offices is a leading multi practice law firm based in the capital of Bosnia, Sarajevo. The firm is highly spoken of by domestic and international colleagues. Branko Maric specializes in advising foreign clients on investments into Bosnia & Herzegovina.

Final Ranking of the Bids for the Electricity Distribution Companies Approved

Monday, July 19th, 2004

On July 15, 2004 the Government of the Republic of Bulgaria acting upon proposal of the Privatization Agency approved the final ranking of the bids for the seven regional electricity distribution companies. CEZ (The Czech Republic) is approved as a buyer of the West Bulgaria package of electricity distribution companies which includes Sofia, Sofia Region and Pleven. EVN (Austria) will be the buyer of the companies included in the Southeast Bulgaria package – Plovdiv and Stara Zagora. E.ON (Germany) will acquire the Northeast Bulgaria package – Varna and Gorna Oryahovitza. The successful bidders CEZ, EVN and E.ON offered €281,5 mln., €271 mln. and €140,7 mln., respectively, for 67% stakes of the share capital of the distribution companies. The cumulative price of all seven companies amounts at €693,2 mln., and thus, in terms of its proceeds this sale will become the biggest privatization deal in Bulgaria so far.

Borislav Boyanov & Co. is a member of the consortium lead by BNP Paribas which advised the Government on this privatization deal. One of the reasons for this successful privatization, as stated in the press release of July 15, 2004 of the Government, is “the very good co-ordination between all interested institutions – the Ministries of Economy and of Energy and Energy Resources, the Privatization Agency and BNP Paribas, the international advisor on the privatization deal”.

Rules on Application of the State Aid Act Adopted

Monday, July 19th, 2004

The Rules on Application of the State Aid Act adopted by the Council of Ministers were promulgated in the State Gazette Issue 59 of July 7, 2004. The Rules introduce inter alia the criteria and the conditions in accordance with which it will be assessed whether certain state aid is compatible with the principles of the free competition, the specific powers of the Minister of Finance with respect to the monitoring and ensuring transparency in the granting of state aids, the preparation of a regional map of the state aids as well as detailed rules regulating the proceedings before the Commission on Protection of the Competition on the review and assessment of state aids.

Regulation on the Interconnection of Telecommunications Networks

Monday, July 19th, 2004

Regulation No. 10 of June 29, 2004 of the Ministry of Transport and Communications on the Conditions and the Procedure for Interconnection of Telecommunications Networks was promulgated in the State Gazette Issue 60 of July 9, 2004. The Interconnection Regulation based on Article 114(3) of the Telecommunications Act will apply to licensed public telecommunications operators that (i) provide telecommunication services through fixed and/or mobile public telecommunication networks, or (ii) provide the service “leased lines” through public telecommunication networks, or (iii) provide telecommunication services through telecommunication networks and their licences expressly provide for interconnection. Pursuant to the Regulation the above categories of operators will have both rights and obligations to interconnect with each other. The interconnection must ultimately make the following services available to the end-users connected to the networks of the operators: voice telephony (including transfer of facsimile messages as well as transfer of data through modem with speed of at least 2,400 bit/sec) and access to services for emergency calls. When interconnected the operators must provide each other the following basic network services: generation – transfer and commutation of out-going traffic/calls initiated by end-users of the network, and termination – transfer and commutation of out-going traffic originating from other networks to the network. The Regulation inter alia provides rules on entry into interconnection agreements between operators, the grounds for refusal to interconnect, etc. as well as detailed rules which shall apply exclusively to the operators having significant market power within the meaning of the Telecommunications Act.

Methodology on the Telecommunications Operators with Significant Market Power

Monday, July 19th, 2004

Decree No. 155 of July 5, 2004 of the Government of the Republic of Bulgaria on Adoption of Methodology on Assessment of Operators with Significant Market Power was promulgated in the State Gazette Issue 61 of July 13, 2004. The Methodology based on Article 45(1) of the Telecommunications Act will apply to licenced public telecommunications operators which (i) operate fixed telephone networks and provide fixed voice telephony services, or (ii) provide the service “leased lines”, or (iii) operate mobile telecommunications networks and provide mobile voice telephony service. The power to determine the telecommunications operators with significant market power is vested with the Communications Regulation Commission (the “CRC”), the national regulatory authority in the telecommunications sector. The CRC will determine the individual market shares of the telecommunications operators and designate the operators with significant market power every year on the basis of the results of the annual investigation of the relevant product and geographical telecommunications markets. Whether an operator has significant market power depends on a number of factors, specified explicitly in the Methodology, but the starting presumption is that an operator with market share equal or more than 25% of the relevant market will be considered to be with significant market power for the purposes of the Methodology.

Bids for Electricity Distribution Companies Opened Today

Friday, July 9th, 2004

The Privatization Agency of the Republic of Bulgaria opened today, July 9, 2004, in a public session, the final bids submitted by the potential investors in the seven regional electricity distribution companies in Bulgaria. Offers were submitted by CEZ (the Czech Republic), Enel (Italy), EVN (Austria), E.ON (Germany) and PPC (Greece). The seven electricity distribution companies were grouped in three separate pools: West Bulgaria, Southeast Bulgaria and Northeast Bulgaria. The highest prices for the three pools were as follows: for Western Bulgaria – EUR 302 million; for Southeast Bulgaria – EUR 271 million and for Northeast Bulgaria – EUR 140.7 million. While the final ranking of the bids will be announced next week, it is clear that the total sale proceeds for the Bulgarian Government from the privatization of the companies will reach approx. EUR 700 million, thus making the deal the biggest privatization deal in Bulgaria so far in terms of sale proceeds. In a brief press-conference held immediately after the opening of the bids, the Minister of Energy and Energy Resources of Bulgaria stated that the Government was very pleased with the bids and the prices offered and intends to complete the privatization deals by the end of October 2004. The Minister further expressly thanked to the advisor of the Government on this deal – a consortium of financial, technical and legal advisors led by BNP Paribas. Borislav Boyanov & Co. is a member of that advisory team and advises on local legal matters related to the deal.

Piecemeal Privatization of Bulgartabac Starts

Wednesday, July 7th, 2004

The Bulgarian tobacco monopoly Bulgartabac will be offered for a piecemeal privatization to strategic investors who will be able to bid for the four best factories of the monopoly. The factories will be grouped into two pools as follows: Blagoevgrad BT and Slantse – Stara Zagora BT (producing the cigarettes Victory, Prestige, Melnik, Nevada, Country, Vereya and Shipka) and Sofia BT and Plovdiv BT (manufacturing, respectively, the brands Sredets, Trezor, New Line, MM, Femina and Arda). Each investor will be eligible to bid for one pool only. The candidates are required to have at least five years of experience in the sector of cigarette production and to have at least EUR 500 mln in net sales revenue during the last financial year.

According to the information announced by Bulgartabac’s officials, the candidates should submit their offers until the end of September 2004 and the short-listed bidders will become known until the end of November. The sale itself is projected to be completed until the end of the year.