At this stage the Economy Ministry remains the principal owner of tobacco holding Bulgartabac, Economy, Energy and Tourism Minister Traicho Traikov told the press Tuesday. He was speaking after a meeting with the Prime Minister and tobacco growers on the prospects of the tobacco sector. "We believe that the privatization of Bulgartabac will be accomplished by the middle of next year," said the Minister.
He also said that the vision and will of the government is for "a fast, transparent and competent privatization of the company which can best happen at the Ministry of Economy, Energy and Tourism".
A call to tender for the selection of a privatization consultant has already been published and it is expected to bring in prime investment banks with experience in this sector, said Traikov.
A control board will be set up to examine the shape of the company and the situation in the tobacco industry. It will include the Economy Minister himself, Deputy Prime Ministers Tsvetan Tsvetanov and Simeon Djankov and Agriculture Minister Miroslav Naydenov. Bulgartabac will report to this control board and it will make all decisions.
The current Board of Directors of Bulgartabac has until January 5, 2010, to submit to the Prime Minister and the new control board a report with proposed measures for improving the performance of the company, a vision for its privatization and ways to support the tobacco sector.
One of the worst problems for Bulgartabac is illegal trade in cigarettes and this is expected to get worse with the increase of excise duties from the beginning of next year, said Traikov.
The Economy Ministry called "catastrophic" the situation of tobacco growers. He blamed that on his predecessor Nihat Kabil.
"When European and national funding for the premiums for tobacco growers were being negotiated, then Agriculture Minister Nihat Kabil slept through the deadlines by which Bulgaria was expected to declare its position and claim what it deserved," said Traikov. He used Greece as an example, where tobacco growers received an annual subsidy of 380 million euro in 2006-09 and half of this due for the next four-year period. "During the same period, Bulgaria got zero subsidy because it did not ask any. Furthermore, for the next four-year period from 2010, this country is not even allowed to provide national support to tobacco growers."
Traikov said that tobacco growers heard all of the above at the meeting with the Prime Minister earlier in the day.
He said Bulgaria also made a mistake not to do as Greece and pay the tobacco subsidy per area of arable land rather than for tobacco output. He explained that what Greece did gave growers a period during which they were paid the money without necessarily growing tobacco and could experiment with other crops for a long period of time. In Greece, tobacco production has been decimated from 122,000 t to 22,000 t over several years, he said.
In this situation what Bulgaria should do is similar to what it did for the decommissioning of reactors at the Kozloduy N-plant: seek additional compensations from the EU, said the Minister.
He added that Bulgartabac is not in a position to pay any subsidies to growers because it is a public company with more owners than the State, is struggling for survival and cannot make anti-market decisions that go counter the EU rules and anti-trust legislation.