JESSICA helps to revitalise six major cities in Bulgaria

Release date: 03 January 2012 Reference: 2012-001-EN. The European Investment Bank (EIB), in its capacity as the Manager of the JESSICA Holding Fund Bulgaria, has concluded an agreement establishing an Urban Development Fund with “Regional Urban Development Fund” (“UDF”) to invest in Urban Projects in six major cities in Bulgaria.

The UDF is established as a joint stock company by Societe Generale Expressbank, Elana Holding, Elana Investment and Balkan Advisors, namely the members of a Consortium led by Société Générale Expressbank, to invest approximately EUR 18.8 million of JESSICA funds and approximately an additional EUR 37.6 million of its own funds (in total EUR 56.4 million) in the next four years into urban projects located in the cities of Plovdiv, Varna, Burgas, Ruse, Stara Zagora and Pleven.

EIB Vice-President Wilhelm Molterer commented: “In addition to lending operations, the EIB provides professional expertise in the framework of the JESSICA initiative, an innovative instrument focused on a more efficient utilisation of EU Structural Funds, which aims to create revolving funds investing in sustainable urban development projects”.

On the basis of their specific experience and know how, the Consortium partners are expected to fulfil the main objectives of the UDF, namely to support sustainable urban transformation investments aimed at more competitive, socially inclusive and sustainable urban areas fostering better quality of life and welfare, as well as improved accessibility to basic public and private services. The JESSICA investment portfolio in the abovementioned six major cities may include projects with the following scope: rehabilitation of deprived urban areas, basic infrastructure works, energy networks and energy efficiency in the context of a wider urban development plan, etc.

The Ministry of Regional Development and Public Works (“Managing Authority”) established a JESSICA Holding Fund (“HF”) within EIB with the aim to deploying EU Structural Funds for revitalisation investments in city areas. The respective Funding Agreement was signed on 29 July 2010.

Societe Generale Expressbank (“SGEB”): one of the leading Bulgarian banks, subsidiary of the French Société Générale S.A. (“SG”), a major European financial services company with a substantial global presence. Following the SG policy on local markets, SGEB applies the model of universal commercial bank offering to its clientele the full range of banking services. SGEB implements modern banking practices and new technologies to service a wide range of clients, including individuals and liberal profession specialists, small and medium enterprises, large corporate and financial institutions. The long term issuer default rating assigned to SGEB is BBB+ with a positive long term rating perspective.

ELANA Holding: one of the largest non-banking financial groups in Bulgaria and Co-Fund manager of the Bulgarian Energy Efficiency Fund Initiative (“BEEF”). For the last seven years through BEEF, ELANA Holding has been successfully supporting local authorities/municipal administrations and public investments in the field of promoting energy efficiency activities by way of arranging bilateral and syndicated loans, guarantees and other financial products.

ELANA Investment: a leading Bulgarian expert in consulting enterprises and public administration on funding from EU & international donor Programs.

Balkan Advisors: an international investment consulting firm with experience in real estate, media and strategic consulting in Bulgaria and the Balkans.

Dušan Ondrejička d.ondrejicka@eib.org

For more information about Projects in Bulgaria see EASTERN EUROPE Projects

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Bulgaria.Energy Efficiency Project

Ratings for the Energy Efficiency Project for Bulgaria were as follows: outcomes were satisfactory; risk to development outcome was low or negligible; Bank performance was satisfactory; and borrower's performance was also satisfactory. Some lessons includes: before introducing a new instrument on the market, carefully determine the basic assumptions for why and under which circumstances the instrument is intended to work and then make a careful reality check in the form of a market survey. Often, a new approach tested successfully in one country has less successful outcomes when introduced in another country.

Innovative projects are particularly vulnerable to developments in the external environment that are different from what was expected at appraisal. A mid-term review should carefully analyze whether the original project philosophy still holds. Lured by supposedly high leveraging ratios, publicly backed guarantees have become a popular choice for finance-sector engagement programs.

The development of the market for Energy Efficiency (EE) in the multi-apartment building sector depends on the creation of well-functioning condominium associations and on the introduction of 'energy poverty' schemes to solve the issue of poor households living in those apartment buildings that are unable to access loans to pay for their share of the total cost of the EE investment. In countries, like Bulgaria, with high energy saving potential, sufficient scope exists for the financing and implementation of EE projects without investment grant support.

World Bank.Document Date:  2010/09/22.Document Type:  Implementation Completion and Results Report.Report Number: ICR1575.Volume No:  1 of 1

Bulgaria.Energy Efficiency Project

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In 18 months Bulgaria will have indentified needed water and wastewater investments thanks to a World Bank supported project

World Bank. Sofia, December 8, 2011. Bulgarian Minister of Regional Development and Public Works Lilyana Pavlova attended the signing of the three contracts for development of Regional Master Plans for water supply and sewerage systems in Bulgaria. The event is part of the World Bank supported Municipal Infrastructure Development Project, that aims at achieving compliance with EU water standards through improving the reliability and quality of water provision in Bulgaria.

“The Regional Master Plans will give us information about the real situation in the water sector and needed investments”, Minister Pavlova said at the signing. She emphasized the strong interest for this task coming from 288 companies united into 87 consortiums that have competed for plans development. “I believe the best companies were selected for this task following the World Bank’s transparent and rigorous selection procedures”, Minister Pavlova said.

Markus Repnik, the World Bank Country Manager of Bulgaria, mentioned that only about half of Bulgaria’s population is supplied with water that meets EU quality standards, about 10% of the population lives in areas with water supply restrictions, and only 45% of generated wastewater is treated. “These numbers indicate: urgent action is needed. And the Government is decisively acting on this, including through the Municipal Infrastructure Development Project”, Repnik said at the signing.

Deputy Minister of Regional Development and Public Works Dobromir Simidchiev, who signed the contracts with the selected 3 consortiums, added that the documents should be ready in 18 months and will provide the framework for for investments in the water and wastewater sector ahead of EU next programming period.

Available in: български

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Proposal for further €500m for decommissioning old nuclear reactors:Bulgaria, Lithuania and Slovakia

EUROPEAN COMMISSION. Brussels, 24.11.2011.COM(2011) 783 final.2011/0363 (NLE). The assistance will be available to Bulgaria, Lithuania and Slovakia if they meet set conditions, including a requirement to comply fully with EU nuclear safety and management rules.The present proposal for a Council Regulation foresees an extension of financial support from the Union with the general objective to reach an irreversible state within the decommissioning process of Kozloduy units 1 to 4, Ignalina units 1 and 2 and Bohunice V1 units 1 and 2 nuclear power plants, in accordance with their respective decommissioning plans, while keeping the highest level of safety.

The Union's financial support is an expression of European solidarity towards Bulgaria, Lithuania and Slovakia. However, the ultimate responsibility for nuclear safety remains with the Member States concerned, which also implies the ultimate responsibility for its financing,including the financing of decommissioning. Any such financing from EU or national sources which constitutes state aid within the meaning of Article 107(1) of the TFEU shall be
implemented in compliance with the relevant EU state aid rules.

It is expected from the three Member States that they are ready to provide the required additional financing to cover the remaining financial needs in order to ensure efficient and effective use of the additional Union support as well as to ensure the transition towards full Member State funding for the completion of safe decommissioning. Based on the current cost estimations for decommissioning this means in the order of €668 million for Bulgaria, €1140 million for Lithuania and €321 million for Slovakia. New commitment appropriations will be entered into the EU budget until the end of 2017 for the Bohunice and Ignalina Programme and until the end of 2020 for the Kozloduy Programme. However, on the basis of these commitments appropriations, payment appropriations will continue for several more years, most likely at least until 2021 for Bohunice and Ignalina and until 2024 for Kozloduy These appropriations will be subject to a review by the end of 2015 within the framework of an interim evaluation.

Proposal for a COUNCIL REGULATION on Union support for the nuclear decommissioning assistance programmes in Bulgaria, Lithuania and Slovakiaa

Evaluating Designs for a Fiscal Rule in Bulgaria

The enhanced Stability and Growth Pact calls on euro area members and aspirants to set boundaries to fiscal deficits through high-level legislation. A limit on the deficit, such as the deficit ceiling in Bulgaria’s organic budget law, serves to protect solvency.

The recent crisis clearly indicated that the key challenges are not only to contain the deficit but also to avoid a procyclical stance during upswings and to build a buffer for rainy days.

Ideally, fiscal policymaking is guided by a fiscal rule that adapts through the economic cycle. This paper lays out the objectives of fiscal rules and analyzes how these objectives can be met in Bulgaria through either a growth-adjusted balance rule or an expenditure rule complemented by a deficit ceiling.

IMF. Author/Editor:Andritzky, Jochen R.Authorized for Distribution:November 01, 2011.Series:Working Paper No. 11/272.This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Evaluating Designs for a Fiscal Rule in Bulgaria