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Energy Sector Overview

Explore Bulgaria's energy sector potential and investment opportunities, with a focus on current projects, incentives for investors, and the country's positioning as a reliable energy transit hub. Learn about major projects like the Maritsa East TPP and the Nabucco Gas Pipeline, along with investment categories and tax reforms, creating a conducive environment for energy sector growth.

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Energy Sector Overview

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  1. Energy Sector Overview  Positioning of Bulgaria as a reliable base for the transit of oil, natural gas and electric power and as a regional dispatching centеr  Biggest exporter of electricity on the Balkans –6,790 GWh  Available electricity generation capacity–10,234МW  Trend towards greater energy independence through development of local energy resources

  2. Investments in the Energy Sector Project:Rehabilitation of U 1-4 &construction of FGDs at units 5 and 6 of Maritsa East 2 TPP • Rehabilitation of 4x150 MW units + installation of FGDs & Construction of FGDs at units 5 and 6 • EPC ContractorU1-4: Mitsui Co Ltd, JapanEPC Contractor FGDs 5&6 : tender May 2004 • Total investment EUR 226 M financed by JBIC – 85% of the project's cost 75 million euro, co-financed by ISPA (grant), EBRD (credit) and Maritsa East • Status: financial arrangements in process, S&P assigned 'BB' long-term corporate credit rating to Maritsa East II TPP

  3. Investments in the Energy Sector Project:Construction of replacing capacity on the site of Maritsa East 1 New capacity 2x335 MW + installation of FGD`s Total expected investment: EUR 900 M Project financed: BOO Status: financial arrangements in process, expected financial closure end 2004 • Expression of interest: • AES; • Mitsui + ENEL

  4. NABUCCO GAS PIPELINE PROJECT Gas Bridge between Asia and Europe BASIC DATA • The pipeline length – 3.400 km • Consumption estimated: 20-25 billion m3 p.a. • Status: Feasibility Study ongoing; New pipeline effective operation expected 2012; • Starting at Georgian/Turkish and Iranian/Turkish border leading to Central and West European markets • Estimated investments costs – 4.4 Billion Euros

  5. The Regional Perspective New natural gas interconnections The main destinations: • Increase of Russian natural gas transit through Bulgaria to Greece, Turkey and FYROM. • Opening up of opportunities for Russian natural gas transit to Italy by means of a transit gas pipeline viewed as part of the development of European corridor № 8. • Construction of a gas pipeline between Bulgaria and Serbia and Montenegro for Russian natural gas transit. • The “NABUCCO” Project

  6. Credit Rating of Bulgaria Bulgaria has proven higher investment credibility BBВ- (stable outlook)by Standard&Poor’s; BBВ- (stable outlook)by Fitch IBCA; Bа1(stable outlook)by Moody’s; BBВ-(positive outlook)bythe Japan Credit Rating Agency June 2004 Standard&Poor’s gave an investment-grade foreign-currency rating

  7. Tax Reform – Budget 2005 Corporate tax: 15% Incometax rate: min - 10%; max - 24% Increasing the amortization normfornewplant and equipment: 50% Expenditure on research and development of the companies are not subjects to taxation Tax Preferences: establishing new enterprise expanding of an enterprise increasing the average number of employees

  8. Investment Categories Third category – universal measures (Euro 5-25mln.) Submission of information, prepared and processed in advance;  Certificate, specifying the investment category and the type of administrative services, provided by the central and local executive authorities;  Minimum deadlines. Second investment category (Euro 25- 50mln.)  Individual administrative services;  Individual information services;  Institutional support. First investment category (aboveEuro 50mln.)  Universal measures; Institutional support; State aid for developing the necessary elements of technical infrastructure.

  9. Requirements to investors Establishing a new enterprise, expanding or modernizing an existing one  Term of project implementation – up to 3 years  Creating new jobs  Economic efficiency

  10. Investment incentives in Bulgaria 15% corporate income tax in 2005 0% corporate tax in areas with above average unemployment Depreciation rates – 2 years for computers and related equipment and 3 1/3 years for manufacturing equipment 2-year VAT exemption for imports of equipment, consumables and components related to investment projects valued over € 5 million 0% capital gains tax The highest bracket for personal income tax is only 29% for monthly income over € 300 The Employment Agency’s Programmes and measures for employment of young people

  11. Innovation Strategy measures for stimulating innovative and research potential • Stimuls for research, related to industry and the co-operation among R&D units, universities and business; •  Improvement of the innovations funding, evolving mechanisms for attracting private equity/capital; • encouraging implementation of new technologies; • support for the establishment of clusters in sectors, traditional for our country; • support for newly established companies and firms that develop successfully in view of enhancing their innovative potential; • creating mechanisms for attracting foreign investment in the spheres of science and technology.

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