[Intl-tobacco] Bulgaria Mulls 3 Privatization Options

[robert weissman]

3 Options for Bulgaria's Tobacco Monopoly Privatization
December 21, 2005

Bulgaria's Economy and Energy Ministry has presented three variants for the
privatization of Bulgaria's tobacco monopoly Bulgartabac.

Economy and Energy Minister Rumen Ovcharov announced Wednesday that the
matter will be discussed at the next meeting of the Council of the ruling
coalition.

The first suggestion is for the privatization of all factories, "which
means
that they could be purchased by companies that might not retain their
production", Ovcharov voiced his fears.

Under the second option only the factories in Plovdiv and Stara Zagora will
be privatized as there is declared interest for them. The rest of the
market
would be stabilized by expansion on the foreign markets - the European
Union, thre Arab countries and Russia.

The third option suggests that four cigarette factories and two tobacco
processing ones are retained, planning a privatization on a later stage of
their development.

Ovcharov expressed hopes that the privatization procedure will begin in the
middle of 2006.

The privatization of Bulgartabac was one of the reasons that led to the
Bulgaria's cabinet reshuffle in February. The deal collapsed when British
American Tobacco (BAT) withdrew from negotiations was seen by many as the
trigger of a political crisis, which eventually made economy and
agriculture
ministers pay with their seats.

The government blocked the sale in late January due "to unacceptable
conditions" proposed by BAT. On February 1, BAT withdrew its offer to
buy three of Bulgartabac's 22 factories for EUR 200 M.