The news on April 15 that four bidders have been selected for the tender to sell 70% of the river shipping concern also raises hopes of possible progress on other, higher-profile sell-offs and operating concessions in the shipping and transport sector.
Such progress would be welcomed by many logistics and shipping firms. They frequently complain that neighbouring Romania is leaping ahead of Bulgaria as a transport hub for the lucrative trade that uses Black Sea ports as entry-points for cargo to Central and Western Europe.
While Bulgaria’s two main harbours at Burgas and Varna are relatively modern and receiving a wave of new investment, clients who try to use them often complain that management is slow to respond to the needs of shippers, or to meet the docking requirements of the latest generation of larger cargo vessels.
Yet Bulgaria is steadily integrating itself into the EU-defined wider European transport infrastructure. From high-profile construction projects such as the new Danube bridge to the electrification of train lines to Istanbul, the links are falling into place.
Prime Minister Simeon Saxe-Coburg recently opened the construction of a new border checkpoint and Danube ferry facility at Nikopol, which will connect the town with the Romanian city of Turnu Magurele on the other side.
But some areas of the transport network are moving faster than others. According to private transport and logistics firms, one of the slower areas has been reform of Bulgaria’s ports and the sale of the country’s merchant fleet.
So, news that the Bulgarian River Navigation sale was moving ahead gave rise to hopeful speculation that there might be progress on long-delayed sales of other shipping concerns, specifically River Navigation’s sea-going cousin, Navigation Maritime Bulgare (Navibulgar). Navibulgar holds the national merchant fleet and is a major player in Black Sea shipping. It was also posted for privatisation back in 2003, alongside Bulgarian River Navigation.
But while privatisation officials are on record as being optimistic that parliament is soon to approve a sell-off strategy for Navibulgar, others are more cautious.
Deputy Prime Minister Nikolay Vassilev warned in March that even if the current parliament gives the Navibulgar sale the green light, the process will undoubtedly be a lengthy one, possibly spilling over into the summer’s elections and beyond, he said.
Similarly, the process of selling operating concessions and licences at the two Black Sea ports has been a slow one, hampered by legal challenges and inertia.
While major investment has begun to improve facilities at Varna and Burgas, clients say Romania’s Constanza port has been hoovering up business in the Black Sea, offering the ability to handle larger ships, and deal with them faster.
Yet there should be significant modernisation of these ports over the next few years. For example, a project involving $120m of Japanese finance should give Burgas a terminal with the capacity to handle 15m tonnes per annum by 2005, and two new terminals are planned in Varna.
However, plans to offer private operators the right to operate certain terminals or docks at the ports look stalled. Local municipalities are challenging the right of central government to sell the concessions. Compared to the rapid progress toward awarding concessions for Black Sea airports, the liberalisation of Bulgaria’s two main Black Sea hubs is crawling.
Despite these delays though, the progress toward a final deal to sell River Navigation has been broadly welcomed. Analysts familiar with the firm say the sell-off of River Navigation could net as much as 10-15m euros (just under $20m). The firm employs nearly 600 people and runs 122 barges on the Danube, with a load-carrying capacity of 178,937 deadweight tonnes, according to the Privatisation Agency.
Cargo shipping on the Danube has recovered rapidly from the chaos and shutdowns caused by conflict in Yugoslavia, surpassing pre-embargo levels for the first time in 2003. River Navigation is active along the length of the Danube and has a diversified fleet ranging from tugs and barges to passenger ferries.
According to the Privatisation Agency, River Navigation reported a profit of Lv31,000 ($20,695) in the first quarter of 2004, after a loss of Lv296,000 ($197,600) over the whole of 2003.
The company said it handled 1.66m tonnes of freight last year, up 38.3% from the previous year. Its total revenue rose 44.2% to Lv25.04m ($16.7m), as sales revenues went up by 48% to Lv24.79m ($16.72m) in 2004.
With 70% of the company up for sell off, the remaining 30% is controlled by the local Alfa Finance Holding, a share that cost Alfa Lv10.9m ($7.4m).
The Privatisation Agency has given four potential buyers the go-ahead to bid for the tender, having eliminated a fifth for failing to meet qualification standards.
The remaining bidders are three Bulgarian concerns, Kaolin AD, Himmimport AD and Toplivo AD, and a fourth from Cyprus, Bulcom Ltd.
