Privatisation

One of the biggest and most problematic deals of 2006 was the privatisation of Boyana Film Studios. The company was bought by the American Nu Image for 12.224 million leva. The privatisation contract also included additional 30 million leva of investment. Boyana Film Studios appealed the deal and required a new and procedure for attracting investments.Another major investor is the Czech power company CEZ, which bought the Varna thermal power plant. The deal totalled 206 million euro. CEZ has committed itself to invest a further 40 million euro by 2010. The Russian RAO EES won the original tender. Its offer came to 192 million euro. After the Russian company decided to leave the deal, the Privatisation Agency continued negotiations with CEZ, the company ranking second after RAO EES. After the privatisation deal was concluded, CEZ requested a 6.9 per cent increase in electricity prices in Bulgaria. Since 2001, the state has made several unsuccessful attempts to sell Bulgartabac Holding, its largest cigarette producer. In 2006 the company registered a 37.46 million leva unconsolidated net profit. According to the adopted privatisation strategy, the holding retains its profitable cigarette-making factories and started selling only the tobacco processing plants. The privatisation fate of the holding, however, remains unclear. The country’s flag carrier Bulgaria Air was also privatised in 2006. The privatisation process was hindered by disagreements between the transport and economic policy parliamentary commissions on the privatisation strategy. Still, 99.9 per cent of the company were sold to Bulgaria-based Balkan Hemus Group. The company paid 13 million leva for the air carrier and promised to invest another 82.1 million euro over the first five years after the purchase. Bulgaria will continue participating in the air company’s management through a golden share.