7days, 2005. március 27

7/28/2019 7Days, 2005. március 27.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: [email protected]

21 March 2005 Business

Liberal party re-elects leader CEC to sell soon, OTP may be interestedTobacco ads okayed for Formula OneMKB shortens nameSpar reports Ft 184 bln revenue in 2004

Xella factory completedBalaton waste handling worth Ft 12 blnDrivers to bid for minibus outsourcingDefMin sells real estateAtradius opens office in BudapestDebrecen airport to be reconstructedIEB proposes Ft 133 dividend/shareFt 10 bln clean up in MátraPannon celebrates 3 millionth client

EconomicsArable land to be locked for agriculture

PoliticsFidesz wants disclosure of airport contract inquirySzDSz nominates Gombár for presidentRadio governors issue tender for post of president

DomesticTotal of nine rivers under flood alertCounty offices strike in protest of poor fundingHundreds demonstrate on Iraq war anniversaryFrench Institute celebrates Verne


Bombardier to contest MÁV tender awardFreesoft buys Axis for $1.3 mlnAlcatel wins railway equipment contractsSchefenacker - Euro 7.5 mln expansionTravel Expo closesPannon-Flax to up exportsMatáv takes out $151 mln loan from DTSiófok hotels change handsBiogas-Energy plans new plant in TatabányaMalév online ticket sales soaringStrabag wins most public building tenders in 2004

Forte sells production unitWind turbines set up in western HungaryTrading centers set up at Ft 17 blnLukoil buys 15 petrol stations in Hungary

EconomicsConstruction output up 7.9% in JanuaryFinMin subsidises SMEs’ technologyHungary still ranked low on ‘Lisbon Scorecard’Motorway construction approved

PoliticsConstitutional Court members dwindlingTax bill contains clause on MTV HQ

Domestic

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Farmers reject accord on subsidy payments23 March 2005

BusinessMatáv proposes Ft 70 dividendMalév privatization undecidedCopenhagen may bid for Budapest rivalEU nods to BÉT acquisition

St-Glass shares sold to unknown investor OTP buys own sharesMÁV to renovate DéliBorsodi starts new equipmentAntenna may be privatized AprilIndesit expands Budapest center Boscolo renovates Blaha Lujza tér blocksMcDonald’s stats, 20047 tenders submitted to drill tunnels for 4th metroDebt collection to speed upMetro reaches new countryside destinations

EconomicsParliament passes road lawsRetail sales up 3.2%Bp moves up on EIU cost of living indexFarm subsidy applications suspended

PoliticsHouse Speaker visits Constitutional CourtPM rejects proposal for dissolving Parliament

DomesticBroadcasting permits up for renewalPolice after Budapest drug network


MÁV CFO suspended over criticismMOL, INA to upgrade/expand Croat refineriesPannon Tools plans Ft 550 mln factoryPSzÁF fines Union Insurance, warns AHICOBrau Immobilien bid rejectedMalév's online ticket sales boomOTP fund management to be run by board7 companies apply for M4 tunnel tender BIF board proposes Ft 100-per-share dividend

MTV to have new program directors New book plaza opens next ThursdayHungarian fleet to set sail from BiogradHungarian Radio chair tender announced

EconomicsEcofin easing of rules may boost credit ratingPrice of state subsidized medication to be lowered10% of tax rebates unjustifiedDrug expenditure exceeds 05 budgetHungary popular for IT outsourcingGov't to amend trade lawKSH starts small census in AprilPrice of corn may rise

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PoliticsPM to lead delegation in March of the Living

DomesticGrade three-flood alert lifted


Mol shares to be split

Papers report bids for Malév paltryMÁV engine procurement stalledRichter to boost dividend as profit up 10%Lukoil aims for 10% of retail petrol marketYukos to halt exports to HungaryTelco regulator fines Invitel Ft 29 mlnMOL and OTP buy own sharesItaly pays 10-15% more for Hun. lamb

Nestlé's profits healthyAntenna Telecommunication raises capitalWorkers on strike at Zalahús

Péti Nitrogen workers strike Nabi to reduce capital at AGMFactory to sell 476 string instruments

EconomicsSticking to 3.6 % deficit targetHungary benefits to tune of Ft 76 bln

Németh: 2004 agriculture's cruel year NA to take out Ft 125 bln loanEx PM opens Hungarian Business yr in FranceFixed priced taxis proposed

Politics

Opposition MPs give PM Easter giftCoalition agree on key plank re spies

DomesticIAAF elects Hungarian technical director

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Liberal party re-elects leader The Alliance of Free Democrats (SzDSz), the liberal junior governing party, re-elected party leader Gábor Kuncze at a party congress on Saturday. Kuncze won by a wide margin after recent pollsshowed SzDSz had increased its popularity in February and March, indicating the party would nowclear the 5% threshold to get back into parliament when elections are held in 2006. Speaking after the

vote, contender Fodor, a vocal supporter of euthanasia and gay rights, as well as more liberaleconomic policies, said he was prepared to cooperate with Kuncze and the party's new executives. Asked if SzDSz was considering running on a joint ticket with the senior government party at electionsnext year, Kuncze said this was not being discussed as an option. ‘We are confident that SzDSz will beable to exist as an independent party and represent liberal voters adequately if it runs, and wins seatsin parliament, independently.’ (MTI; MH 1, Nv 1, 3, Nb 1, 2)

CEC to sell soon, OTP may be interested The Romanian state plans to put the smaller savings bank CEC SA on sale earlier than the nation'slargest lender, Banca Comerciala Româna SA (BCR), Finance Minister Ionut Popescu said last week.Hungary's OTP Bank Rt is expected to be one of the interested parties. Popescu made the commentsin an interview with newswire Bloomberg, and said he will meet in April with U.S. investment bank JP

Morgan Chase and Co., the firm selected to advise the Romanian government on the sales. ‘We wantto sell CEC first because there are more potential buyers for it and we want to take advantage of this,’Popescu said, without outlining any timetable. CEC and BCR are two of the largest banks still in statehands in Eastern Europe. Last year, OTP bought a small privately owned bank in Romania, RoBankSA, for $47.5 million. (BBJ)

Tobacco ads okayed for Formula OneHungary's ban on tobacco advertising will again be lifted to accommodate this year's money-spinningFormula One Hungarian Grand Prix, the economics minister said on Saturday. EU member Hungaryhas exercised its right to waive the ban in the past and will do so again ahead of August 1, when EUregulations outlawing tobacco adverts and promotion at racing events become binding. Speaking onHungarian public television, János Kóka said the decision was motivated by tourism and business

interests. The event, controlled by Formula One mastermind Bernie Ecclestone, ends on July 31.Hungary has been keen to keep the extravaganza, which brought in Ft 2.5 billion forints in 2004. Thegovernment subsidises Hungaroring to the tune of Ft 3 billion each year, while the estimated VATrevenues from visitors last year totaled Ft 3.7 billion. Health Minister Jeno Rácz said he was against thedecision to put aside the ban. (MTI; NG 5, Nv 5, MH 21)

MKB shortens nameHungarian Foreign Trade Bank (MKB) Rt will change its name to MKB Bank Rt at its upcoming AGM,scheduled for April 27, unnamed sources reported. The shortened name will be MKB Rt, providing theshareholders approve the change. The State Financial Institutions Supervision (PSzÁF) has alreadygiven the green light to the proposal. MKB had unconsolidated after-tax profit of Ft 14.791 billion in2004, up 13.6% from a year before, the bank announced in mid-February. (NG 5) P.O.

Spar reports Ft 184 bln revenue in 2004Food retailer Spar Hungary Kft reported a net revenue of Ft 184 billion last year, 30% more than in theprevious year, the company announced. Spar's revenue increase is due to the fact that the companyopened 20 new shops last year. Currently Spar owns 173 supermarkets and hypermarkets in Hungary.Spar again plans to open 20 new shops this year. The company opened its meat processing plant sixweeks ago in Bicske, west Hungary. Spar, which employs 7,500 people, plans to develop a logisticscenter in Bicske for Ft 3.7 billion this year too. (NG 5) M.K.

Xella factory completed Xella Sand Lime Kft has completed its new sand lime brick factory in Iszkaszentgyörgy, centralHungary, and trial production has already started, the company announced. The plant cost Ft 2 billionto build, and it would churn out around 50,000 cubic meters of sand lime brick a year for the local

market. Xella Sand Lime Kft is the subsidiary of the German Xella Baustoffe GmbH, based in Duisburg.(MH 12) P.O.

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Balaton waste handling worth Ft 12 bln After a four-year planning phase, the Ft 12 billion regional waste management program of 204 townsand villages south of Lake Balaton and in the Sió valley was kicked off a few days ago with the firstpublic tender announcement, said Siófok Mayor Árpád Balázs, who heads the consortium of localmunicipalities coordinating the project. Some 65% of the development costs is covered by EUsubsidies, with another 25% financed by the Hungarian government. The project will include theconstruction of two new regional landfill facilities and the upgrading of a third one, in addition to creatingover 800 selective waste collection sites. The 373,000 inhabitants of the area produce 129,000 tons of

household waste per year. (Nb 6) P.P.Drivers to bid for minibus outsourcing Budapest Airport Rt, the operator of Ferihegy International Airport, has recently invited bids for thesecond time to outsource its minibus service. Airport Express Kft, a company co-owned by some of theairport trade union leaders, is among the bidders in spite of the fact that they were strongly opposed tothe outsourcing plan earlier. According to István Kováts, chairman of the Airport Minibus Drivers' TradeUnion, their decision to participate in the bid falls in line with the union's efforts to represent theinterests of bus drivers in the tender. According to Attila Csorba, who heads the Independent TradeUnion of Civil Aviation Employees, the employees' interests would be better represented if the tradeunion leaders pushed for an employee share option plan instead of trying to secure ownership for themselves through a privately owned company. (Nb 12) P.P.

DefMin sells real estateThe Defense Ministry plans to sell 57 redundant military properties this year for several billion forints,the ministry announced. The assessment of 40 pieces of real estate has already been completed, andtheir market value has been set at Ft 8 billion-Ft 9 billion. The ministry will announce tenders to sell theproperties. The Defense Ministry is also scheduled to sell 640 apartments for a total of Ft 363 million in2005. Last year, the ministry generated revenues of Ft 446 million from selling apartments. In relatednews, almost Ft 2 billion will be spent on the reconstruction of existing military properties this year. (NG17) P.O.

Atradius opens office in Budapest Loan insurance company Atradius has opened a new representation office in Budapest, office manager Balázs Vanek said. The company was established through the merger of Gerling and NCM. Gerlingwas present in Hungary through Gerling-Konzern Insurance Broker Kft, Vanek said. Hungary's EUaccession brought new opportunities as well as new risks and Atradius wanted to respond to thesechallenges, he added. Hungary has a loan insurance market of Ft 2.5 billion. (NG 5) M.K.

Debrecen airport to be reconstructed The airport at Debrecen, eastern Hungary, will get a face-lift for around Ft 400 million, the local mayor Lajos Kósa announced. The city gets Ft 220 million in non-refundable grants from the Office of Hungarian Regional Development, while the municipality covers Ft 135 million from its own resources.The Debrecen Airport reconstruction project will mainly focus on the control tower, the runway andaviation safety. (MH 12) P.O.

IEB proposes Ft 133 dividend/share

The management of Inter-Európa Bank Rt (IEB) is proposing Ft 133 dividend per share to April 5's AGM, up from the previous year's Ft 88. IEB revised its 2004 consolidated after-tax profit to Ft 2.2billion since the flash report came out. This is 21% more than a year ago, and the bank also saw thenon-consolidated figure rise above the Ft 2 billion mark for the second time since it was established.Consolidated book value increased from 2003's Ft 12.2 billion to 13.8 billion last year. With its Ft 1.960book value per share, IEB's current price per book value ratio is 0.9, which compares with OTP BankRt's 5 P/BV rate. The group is 85.9% owned by Italy's San Paolo-IMI S.p.A., with Holneth BV holdingan additional 9.9% stake. (NG 7) P.P.

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Ft 10 bln clean up in MátraThe State Privatization and Holding Rt (ÁPV) will start work on a Ft 10 billion environmental cleanupproject this year to rehabilitate a lead and zinc mine closed down nearly 20 years ago near Gyöngyösoroszi, a town in the Mátra hills in northern Hungary. The entire project, which is the mostextensive of its kind currently in process, will take 5 years, with Ft 3 billion earmarked for 2005. Themajor environmental problem in the area is that underground streams wash out hazardous heavymetals from the open pit, which measures 130,000 cubic meters. The cleanup will be carried out by

Mecsek-Öko Rt. (Nb 6) P.P.Pannon celebrates 3 millionth client Mobile service provider Pannon GSM Rt has surpassed the magic number of 3 million clients inHungary, after having collected almost 220,000 new clients in the last six months, the companyreported. Pannon currently has a market share of 34.01% of the mobile market in Hungary. More than10% of Pannon clients have a djuice package. Pannon reached the 1 million limit in 1999 and the 2millionth client in 2002, the company said. (Ng 5) M.K.

Economics

Arable land to be locked for agricultureThe Ministry of Agriculture and Rural Development is planning to modify the Land Act to protect thecountry's stock of high-quality arable land, State Secretary Fülöp Benedek said. Over the last 10 years,

more and more agricultural land is being used for different purposes, with the stock of tilled soildecreasing by an annual 5,000-7,000 hectares, a trend triggered by privatization in the early 1990s andfuelled by intensive industrial and residential development ever since. Of Hungary's nearly 8 millionhectares of arable land, only 6 million hectares are used for agricultural production. (NG 3) P.P.

Politics

Fidesz wants disclosure of airport contract inquiry An MP from the opposition party Fidesz called on the finance minister yesterday to disclose theconclusions of a recent inquiry into a controversial contract in connection with the state-owned operator of Ferihegy Airport. Fidesz has claimed Budapest Airport Rt paid twenty times the market value for aplot of land adjoining the airport. The airport operator announced on February 11 that it had obtainedthe plot for a cargo base by purchasing the land's owner, a holding company operated by a number of

Hungarian investors. Fidesz MP Attila Márton claimed yesterday, on the basis of information availableto Fidesz, that State Privatization and Holding ÁPV Rt had concluded its inquiry into the affair.Budapest Airport said the overall cost of building the cargo base would be between Ft 10 billion and Ft14 billion, while ÁPV approved the deal before it was signed. (MTI; MH 3, Nv 5, Nb 12)

SzDSz nominates Gombár for president The Alliance of Free Democrats (SzDSz) is said to be nominating political scientist Csaba Gombár for president of Hungary, unnamed sources close to the liberal party reported. Gombár served as thepresident of the Hungarian Radio from 1990-1993. The other governing Hungarian Socialist Party(MSzP) is expected to name House Speaker Katalin Szili as its nominee for the position. PresidentFerenc Mádl's five-year mandate expires on Aug. 3 of this year. Parliament is scheduled to elect thecountry's new president on June 6 or 7. One presidential candidate will be nominated, and that by the

governing Socialists and Free Democrats, who only hold a slim majority in Parliament. (MH 1) P.O.Radio governors issue tender for post of president The supervisory board of Hungarian Radio Rt has announced a tender for the post of president of thepublicly funded broadcaster. The body's chairman said on Thursday that an invitation for competitionproposals to be submitted by candidates would be advertised on their own homepage this week. Theboard's 8-member presidium on Saturday voted down a move to propose current head, Katalin Kondor,to head the radio for another four-year term. Kondor, whose term of office expires at the end of July,was appointed by the last Fidesz-led government. She has courted controversy with her openly right-wing stance, which is perceived by many as having prejudiced editorial decision-making. (MTI; Nb 2,Nv 3, MH 6)

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Domestic

Total of nine rivers under flood alert A total of 930 km of nine of Hungary's rivers have been put under flood alert, with the highest alertcalled for the Fekete Körös river, while holiday homeowners in the southern Hungarian flood plainsaround Maros have been issued with a warning that their houses were in danger, authorities saidyesterday. Budapest's lower ramparts are also expected to be overwhelmed by the surging Danube bythe middle of this week. With the sudden wave of warm weather starting mid-week, snow-covered hills

have quickly thawed, contributing to swelling rivers in parts of Hungary. A second degree flood-alertwas ordered on Sunday along the entire length of the River Hernád in northern Hungary, with the water level was 270 cm higher than normal, the North Hungarian Environmental Protection and Water Directorate spokesman said. A third degree flood alert - the highest possible - was called along theFekete Körös river, a small section of which flows in eastern Hungary but whose source is in Romania.No inhabited areas are under threat and the river is expected to peak today. (MTI; Nb 1, 4, Nv 1, 16,MH 7)

County offices strike in protest of poor funding Many schools, town halls and museums in the western county of Györ-Sopron ground to a halt onSaturday as local officials protested against inadequate government funding for local administration.‘Out of a total of 182 of the county's local governments, 102 joined our call to protest against the centralgovernment's belt-tightening measures,’ the county assembly deputy chairman Miklós Szabó said.While many villages lined up behind the initiative, larger cities such as Györ and Sopron decided not toparticipate. ‘This is about raising awareness -- our last cry to make the government see that localgovernment simply cannot perform their duties with the current level of funding from the central budget,’Szabó said. (MTI; Nb 2, Nv 4)

Hundreds demonstrate on Iraq war anniversary Hundreds of demonstrators gathered in Budapest's Heroe Square on Sunday to mark the secondanniversary of the Iraq war, demanding an end to military operations and foreign military involvement.The participants in the rally called for conflicts to be settled peacefully in Iraq and other hotbeds of tension, and formed a huge human peace symbol with torch-lights. Organized by the HumanistMovement, the demonstration took place peacefully and without any incidents, police officer RóbertDancs said. (MTI; Nv 2, Nb 3)

French Institute celebrates VerneNedim Hadziahmetovic, a Yugoslav-born sculptor who lives in Budapest, gave the BBJ a preview of hismetal submarine which will be installed on top of the entrance to Budapest's French Institute thisevening. The date marks 100 years, almost to the day, since the death of the French science fictionwriter Jules Verne. The submarine is intended to be a life-size model of the Nautilus, the craft in thenovel ‘20,000 Leagues Under the Sea,’ and is seven meters long, four meters high and three meterswide. The unveiling ceremony will kick off a series of conferences, film screenings and lecturesdedicated to Verne, who is hugely popular in Hungary. (BBJ)


Bombardier to contest MÁV tender award Canadian-German company Bombardier, which lost MÁV Rt’s tender against Swiss-Hungarianconsortium Stadler-Ganz-Translektro to supply the national railways with 30 multiple units announcedthat it will appeal against MÁV’s decision at the Public Procurement Committee and the EuropeanCommission. Stephan Krenz, vice president of Bombardier’s German subsidiary said that the companylost despite of the fact that its quote included prices Euro 40 million lower per unit than the tender winner’s offer. Stephan Krenz also threatened that MÁV’s decision could have a fatal effect on thefuture of Bombardier’s two plants in Dunakeszi (north of Budapest) and Mátranovák, (northernHungary), where the company employs 1,200 people. (MH 1) R.G.

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Freesoft buys Axis for $1.3 mlnFreesoft Rt, a Hungarian software developer that sold shares to the public last year to financeexpansion, said it bought Axis Computing Kft, a local software developer. Freesoft bought Axis for Ft239.7 million ($1.3 million) in cash and shares, the company said in a stock exchange statementyesterday. Half of the purchase price was paid in Freesoft stock, the company said, without saying howmany shares it used as payment. Budapest-based Freesoft, which sells computer services such asdocument management software, raised Ft 693 million in July in an initial public offering to buy

competitors. Its clients include the Prime Minister’s Office, tax authority Apeh and the local unit of Vodafone Rt. In December Freesoft bought local Web site developer Big Fish Internet-technology Kft.(Bloomberg; MH 11, NG 15)

Alcatel wins railway equipment contracts Alcatel said it has won railway equipment contracts in both Hungary and Poland, as part of consortiumsformed with local partners. In Hungary, Alcatel and Mavepcell won two contracts worth Euro 42 millionto install network signaling and train control systems in the Komárom railway station, and on an 85 kmstretch of track between Zalalövö and Boba, which connects Budapest with Slovenia. (AFX)

Schefenacker - Euro 7.5 mln expansionGerman auto parts maker Schefenacker, has finished a Euro 7.5 million investment in its Hungariansubsidiary Sapu Industrial and Trading Bt, managing director Antal Mihalicz announced yesterday. Now

the company’s new painting facility can paint 25,000 car parts a day. ‘The development is a major steptowards turning the company into a development and production centre of European standards’,Mihalicz said. Sapu added 1,500 sqm onto the facility and built a 2,000 sqm warehouse for the project.Sapu will hire another 100 workers to man the facility. Sapu plans to hire 100 more workers after itstarts plastic die-casting at the end of this year. However, Sapu will stop making car lights, which willresult in the loss of 70-80 jobs. Sapu, which aims to become Europe’s biggest maker of side mirrors,had revenue of Euro 143,000 last year. Sapu sells its mirrors and plastic parts to Mercedes, Opel,Volkswagen and Audi. The plant will also make mirrors for the new Mini Morris model to be launched atthe end of 2006. (Econews)

Travel Expo closesTravel Expo 2005, closed its gates on Sunday in the Hungexpo Fair in Budapest’s Distr. 10, having

welcomed 900 exhibitors from 46 countries, over 19,000 sq meters. Several South American and Asiancountries exhibited in the Expo for the first time, while Békés county and Jordan were the honoraryguests of the fair. Leaders of Siófók, in western Hungary and the city of Aquaba in Jordan signed a twintown agreement. (MH 16) R.G.

Pannon-Flax to up exportsTextile manufacturer Pannon-Flax Rt is to increase its export by 25% this year. In 2004, just over a half of its total revenues, Ft 1.7 billion came from domestic sales, whereas Ft 1.6 billion were from exports,which it wants to increase dramatically. Pannon-Flax does not foresee such an increase on the localmarket, although the announcement of some military and hotel tenders may result in a slight increase inthe company’s local sales. The company is working on further cutting its expenses by reorganizing itsproduction structure and eliminating the non-cost-effective production processes to turn last year’s Ft

108 million operating loss into a profit of the same magnitude this year. (Vg 9) E.C.Matáv takes out $151 mln loan from DT Telecom Matáv Rt borrowed Ft 28 billion ($151 million) from majority owner Deutsche Telekom AG tofinance an acquisition in Montenegro. The loan will be due in October 2009 with annual interest of 34basis points above the six-month Bubor, the interbank interest rate, Matáv said in an e-mailedstatement. Budapest-based Matáv on March 16 said it agreed to buy a 51.12 % stake in Montenegrinphone company Telekom Crne Gore for Euro 130.7 million from the Balkan country’s government. Thecompany plans to pay for the remaining shares from its own funds. (Bloomberg; NG 15)

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Siófok hotels change handsPanniónia Hotels Rt is close to signing an agreement to sell its four hotels situated on the prominent Aranypart promenade in Siófok, Napi Gazdaság reported quoting several independent sources. TheFrench Accor-owned hotel chain operator is said to have decided on offloading the hotels due to sharpfall-offs in guest numbers in recent years and after it scrapped plans to refurbish the buildings. Theinvestor, an as yet unnamed real estate developer, is believed to be planning to turn the hotels intoapartment complexes. (NG 1) S.F.

Biogas-Energy plans new plant in TatabányaBiogas-Energy Kft, a fusion of Biopetrol Kft and Consorg 90 Kft, is planning on building an energy plantthat would use the biogas gained from industrial and agricultural organic waste and sewerage fossil togenerate energy. The registration process and the application for the permit have already started, and if all goes as planned, construction may start this year, and the probation period may take place in H2next year. The Ft 3.5 billion investment is to be established in Tatabánya. The plant would use 300thousand tons of fossil and organic waste, and it would produce 28 million kWh electric energy and15.7 million kWh heat energy each year. (Vg 8) E.C.

Malév online ticket sales soaring Hungarian airline Malév Rt announced yesterday that it had sold almost Ft 1 billion in tickets through itsinternet portal, nearly as much as it sold online during the whole of last year. Malév’s online ticket sales

came to Ft 1.17 billion in 2004. Online ticket sales now account for a quarter of Malév’s total ticketsales. In the tenth week of the year, online ticket sales exceeded Ft 110 million, or five times theaverage weekly result last year. In the first two-and-a-half months of the year people buying ticketsonline most often flew Malév to London, followed by New York, Paris, Brussels and Varna. Last year the most popular destinations for travelers purchasing tickets online were London, Paris, Brussels,Zurich and Dublin. (Econews; NG 5)

Strabag wins most public building tenders in 2004Strabag Rt won more tenders - in terms of both value and number - for public building projects than anyother company in Hungary last year. Strabag won 111 tenders for contracts worth a combined Ft163.32 billion, accounting for just over a fifth of the value of all public building tenders, according toHungarian Public Procurement News Kft. Hungary’s national motorway operator AAK and national

motorway company National Motorways Rt accounted for the most (38) and the most valuablecontracts (worth Ft 420.35 billion combined), respectively. There were 1,252 tendered contracts for public building projects last year, worth a combined Ft 747.57 billion, more than double Ft 283.8 billionin 2003. (Econews; Mon Vg 4)

Forte sells production unit Forte Fotókémia Rt, the maker of films and photographic papers, will put up for sale its production unitin the first half of this year, unnamed sources said. Forte, which has been under liquidation sinceNovember 2004 due to a Ft 800 million bad debt, Ft 500 million of which are in tax arrears, still has anorder-book of Ft 1.6 billion and employs a staff of 209. The company’s liquidator has already sold twoForte office buildings for Ft 65 million, while the total value of the asset set to go on the block this timeis estimated at Ft 210 million. The deadline for the bidding is April 12. (NG 5) S.F.

Wind turbines set up in western Hungary The first wind turbine in Vas county (western Hungary) is to be finished in Vép, which is the windiestarea of the county, at 8 km from Szombathely. The project won Ft 210 million on the PHARE CBCtender, which was supplemented with Ft 23 million of own capital, Szélerö Vép Kht CEO Sándor Boldizsár told Népszabadság. Since the public procurement tender closed, construction may soon startwith the erection of a 78m high pole, on top of which a 600 kW engine is to be installed. The 3-armedwind turbine has a diameter of 44 meters, and operates in complete silence. By 2007, there will bethree more wind turbines set up, and in the long term an additional 20 will be set up. The first turbinewill generate 1.2 million kWh energy, which is sufficient to provide energy for 700 households. In order to attract the tourists of the region, the second pole is to have a panoramic balcony attached to the top,thus allowing views to Köszeg and Sümeg. (Nb 7) E.C.

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Trading centers set up at Ft 17 blnSome 16 integrated trading centers will be set up, at a cost of Ft 17 billion, in the country’s 8 regionsunder the aegis of the Human Resources Development Operative Program, a part of the NationalDevelopment Plan, announced Educational Minister Bálint Magyar. From allocated resourcesapproximately Ft 5.5 billion will be spent on the set up of the centers and Ft 11.5 billion oninfrastructural development. (Nv 4) R.G.

Lukoil buys 15 petrol stations in Hungary

Russian oil firm Lukoil said yesterday it had bought 15 filling stations in Hungary from the Austrian firm ABA AG, more than doubling the size of its retail network in Hungary, Reuters reported from Moscow.Lukoil said in a statement that it now had 26 petrol stations in Hungary, accounting for around 5% of thelocal market. The acquisition is the latest move into the downstream and out of Lukoil’s home market,helping it find outlets for its vast reserves, which are the world’s second biggest after ExxonMobil,Reuters added. Lukoil has refineries in Bulgaria, Ukraine and Romania and last week it got EUclearance to buy two Finnish petrol station operators, giving it a retail foothold a short distance frommajor oil ports on Russia’s Baltic coast. (Econews)

Economics

Construction output up 7.9% in January Construction industry output rose 7.9% yr/yr in volume terms in January, according to both working-day

adjusted and unadjusted figures, the Central Statistics Office (KSH) announced yesterday. Januaryoutput was up 4.2% from December, according to seasonally and working-day adjusted figures.Construction sector output rose 6.8% in 2004 after a 2% rise in 2003. The construction sector’s biggestbranch, ‘completed buildings and other construction’, expanded 8.7% in January. The buildinginstallation branch expanded by one-third compared to one year earlier. The output of the completedconstruction branch, however, dropped 40%. The building construction branch’s volume rose 7% yr/yr in January, while volume of other constructions increased 9.1% yr/yr. Construction contracts were88.2% more in volume terms at the end of January than they were a year earlier. (Econews; NG 3)

FinMin subsidises SMEs’ technology As part of the Economic Competitiveness Operational Program (GVOP), the Finance Ministry has abudget of Ft 6.8 billion separated to support SMEs in order to improve their technological background.

SMEs can apply for a non-refundable subsidy of up to 35% of the total expenditures, a minimum of Ft 1million up to Ft 25 million. The deadline for the first application period is April 1. The second round of applications is expected between August 1 and September 2. (Vg 6) E.C.

Hungary still ranked low on ‘Lisbon Scorecard’ Hungary has made the most progress toward achieving goals outlined in the Lisbon Strategy, the EU’sprogram to boost competitiveness in the region, according to the Centre for European Reform’s ‘LisbonScorecard’. The London-based think tank timed the publication of this year’s report to coincide with thestart of a summit of EU leaders in Brussels today and tomorrow. The survey gauges the performanceand the progress of all 25 EU member states, along with Romania and Bulgaria, in relation to criteriaoutlined in the Lisbon Strategy. While Hungary was twenty-first on the list in terms of performance, itranked top of the list in terms of improvements made since 1999, when the Lisbon Strategy was

introduced. Sweden heads the performance list, followed by Denmark, the UK, the Netherlands,Finland and Austria. Hungary ranks above Italy, Poland, Romania, Bulgaria and Malta. (Econews; VG1, MH 3, Nb 14)

Motorway construction approved Parliament yesterday voted through a draft of legislative amendments paving the way for 18 newmotorway construction projects in the next two years. Terms of the M5 motorway concession contracthave also been modified to allow AKA Rt to take over construction and maintenance of a new 15-kmsection connecting Szeged with the southern border. The net present value of the stand-by fee thestate will pay for section 2 is Ft 208 billion, which will grow to Ft 246 billion with the completion of thethird phase. The eventual price tag of the entire 160-km stretch the state will have to pay, includingconstruction and stand-by costs, will be an annual Ft 1.5 billion to a kilometer for 27 years. (NG 3) S.F.

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Politics

Constitutional Court members dwindling For the first time in its 15-year history the Constitutional Court had no quorum yesterday and its sessionhad to be suspended. Since judge János Strausz retired in December 2004, the 11-member Court iscurrently operating with 8 members, the minimum stipulated in the constitution. Some of the judgesyesterday chose to take part in the National Conference of Student Societies instead of the Court’ssession, which some sources interpret as a demonstration against the parliamentary parties delay in

the appointment of new judges. (MH 1) R.G.Tax bill contains clause on MTV HQ The tax bill submitted by the government to the Parliament yesterday contains a clause authorizingHungarian state television MTV to construct its new headquarters as part of a PPP (public privatepartnership) assignment. The clause, which actually has no relevance to tax issues at all, finallyenables the relevant tender to be issued. The draft also makes it clear that a previous deadline for theconstruction’s realization, the end of 2005, is no longer feasible and sets the start of a possible leaseperiod of the future complex at the second quarter of 2007. According to the draft the realization of theproject will cost Ft 75 billion. (NG 5) R.G.

Domestic

Farmers reject accord on subsidy payments

Hungarian farmers refused to agree on government subsidies Friday over differences on ‘animalwelfare’ payments, sparking further demonstrations by farmers countrywide, the weekly BudapestTimes reported. Representatives for farmers said they will only negotiate with Hungarian Prime Minister Ferenc Gyurcsány, after Agriculture Minister Imre Németh suspended talks late last week, thenewspaper said. Németh said the farmers were motivated by ‘political reasons’, the paper said. Fundsfor animal care and feed are left unresolved with farmers asking for all Ft 10 billion in subsidies thisyear, while the government wants to pay in two installments - this year and early next year, the Timessaid. Compromise has been reached on most of the farmers’ demand, including immediate payment of EU farm subsidies, protection from cheap food imports and quicker processing of grain for storage.(Bloomberg)

23 March 2005

Business

Matáv proposes Ft 70 dividend The management of telecom service provider Matáv Rt proposes the payment of Ft 70 per commonshare as dividend after last year’s results, the company said yesterday. Matáv also confirmed that it willpursue acquisitions that provide added value, and therefore it will seek out further opportunities for expansion in the region, in line with its stated strategy. Matáv’s AGM will take place on April 27, thecompany added. Matáv posted Ft 34.64 billion net income in 2004, down 39.7% from the previous year,according to the company’s consolidated IFRS flash report. Sales revenues slipped by 1% from 2003 toFt 601.44 billion, including a 10.9% drop in domestic fixed-line revenues to Ft 196.44 billion. Mobiletelecom services remained a growth area with an 8.2% rise in revenues to Ft 216.88 billion. (Econews;NG 12)

Malév privatization undecided The current, second tender for the privatization of national carrier Malév Rt may be concluded without asale, according to daily Népszabadság. Although the State Privatization and Holding Rt (ÁPV) wassupposed to pick the tender winner by yesterday, the privatization agency has not yet reached adecision, nor is the issue on the agenda of ÁPV’s next board meeting on Thursday. The state receivedthree valid bids for the airline from Russia’s KrasAir, Irish-Hungarian Cape Clear Aviation Kft andBritish-Hungarian Aviation Solution International Kft. According to Népszabadság’s information, thedecision is delayed as ÁPV found none of the three bids satisfactory. If the second attempt to sellMalév is unsuccessful, the privatization agency will have more freedom in negotiating the sale withpotential investors in a third tender. (Nb 11) P.P.

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Copenhagen may bid for Budapest rival Copenhagen Airports A/S said it may bid for a stake in Budapest Airport Rt, which the Hungariangovernment wants to sell this year, MTI news agency reported. Copenhagen Airports wants to make‘major developments’ in Budapest’s international airfield, said Rasmus Christiansen, vice president atthe Danish company, MTI said. An operator with international experience would make Budapest Airportmore competitive, Christiansen added. Hungary wants to raise Ft 300 billion by selling assets this year and may sell shares of Budapest Airport to the public or look for a single buyer. An initial public offering

may fetch as much as Ft 150 billion, according to an estimate published by the news Web sitePortfolio.hu. (MTI, Bloomberg; Nv 5)

EU nods to BÉT acquisitionThe European Commission has approved the acquisition of a 68% stake in the Budapest StockExchange (BÉT) Rt and in the Budapest Commodity Exchange Rt (BÁT) by a consortium of Wiener Börse AG and four Austrian banks last May, wire service AFX reported. The decision clears the way for the merger of the bourses of Budapest and Vienna. The EC found that keeping fees low is in the mutualinterest of the two stock markets, thus the merger is expected to stimulate competition. (BBJ; NG 1, MH3)

St-Glass shares sold to unknown investor The state-owned Hungarian Investment and Asset Management Rt (MBV) and subsidiaries Borsod 200

Kft and Treport Kft have offloaded their combined 85% stake in glassware manufacturer St-Glass Rt toan unnamed financial investor that will manage the company until a strategic investor is found,President András Vincze said. Based in Salgótarján, northern Hungary, St-Glass has been goingthrough rough times since it was privatized last year, mostly due to rising raw material costs and thestrong Hungarian forint, with Ft 500 million accrued as a result in addition to one month’s pay in arrears.The remaining 15% of St-Glass shares are owned by the employees and smaller local companies. (Nb6) P.P.

OTP buys own sharesOTP Bank Rt bought more than half million of its own shares on Monday, the company announcedyesterday. The 536,281 stocks were purchased at Ft 6,466 average price each; so the total value of thetransaction almost reached Ft 3.5 billion. With these OTP has 10,422,459 of its own shares. Members

of the management exercised their option and bought 20,000 OTP shares, the company alsoannounced. (NG 12) G.R.

MÁV to renovate Déli Déli station will be the first among the large railway stations to be reconstructed by Hungarian StateRailways (MÁV) Rt, associate-CEO Zoltán Mándoki announced yesterday. The construction will startwithin two years and will cost about Ft 10 billion. MÁV wants private funds to be involved in theinvestment. The company will not discontinue any of the routes, although the number of services will beslightly decreased, he added. MÁV had 46,400 employees at the end of 2004, a figure which this year will decrease by about 5,000. Some 1,500 will be laid off; the rest of them will have jobs in outsourcedcompanies. MÁV decreased its operating expenses by Ft 22 billion last year; and in 2005 a further Ft 8billion - Ft 9 billion cost cut is planned. (NG 1) G.R.

Borsodi starts new equipment New brewing equipment started production at Borsodi Brewery Rt yesterday. The construction cost Ft1.5 billion and increased the existing capacity of 3.7 million hectoliters per year by one-third. BelgianInterbrew, owner of Borsodi, has invested about Euro 100 million into the company in the last 12 years,regional vice-president Ludo Degelin said. Euro 2.4 million sewerage works are currently under construction. The company did not wish to announce last year’s turnover or results. (NG 4) G.R.

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Antenna may be privatized April HVB Bank Rt is still laying the groundwork for the privatization of Antenna Hungária (AH) Rt, whichcould begin as early as mid-April, Márton Vági, head of the privatization authority ÁPV Rt said in a radiointerview yesterday. If the sale goes through as planned, a majority stake of 75% in the state-ownedbroadcaster will be sold to an investor by the end of the first half. On the other hand, AH is still under investigation by the Competition Office (GVH), which was launched following complaints the companyhad unfairly fixed its broadcasting prices and which analysts say could cause potential delay. In other

news, the company is due hold a general meeting next week to propose dividends to shareholders.(NG 12) S.F.

Indesit expands Budapest center Italian white goods maker Indesit has extended the area served by its regional center in Budapest. Untilnow the center served three countries (Hungary, Slovakia and the Czech Republic), but now a further eight countries will be added: Austria, Poland, Switzerland, Iceland, Denmark, Norway, Sweden andFinland. In line with this the storage yards will be extended from the existing 13,000 sqm to 35,000sqm, regional director, Giuseppe Parma said. Last year Indesit was the third largest white goodsmanufacturer in Hungary with a 12.2% market share. (NG 5) G.R.

Boscolo renovates Blaha Lujza tér blocksThe Italian Boscolo Group is set to rebuild the long-empty former headquarters of Hírlapkiadó on Blaha

Lujza tér. The new building, which is to be called Europeum, will include a 180-room hotel, retail andservice shops and offices. The Ft 9 billion investment will be finished by 2007. Most of the former officeblock will be demolished, with only its front will be kept, which is national monument. The buildingcontractor is Ablon Kft. Boscolo is also the renovator of another building on Blaha Lujza tér - the NewYork Palace. (NG 4, Nv 5) G.R.

McDonald’s stats, 2004The McDonald’s fast food chain posted Ft 27.4 billion revenue in 2004, 6% up on the previous year.The operating profit of the company rose 7% to Ft 1.983 billion in 2004 year-on-year. The 87restaurants of the chain served a total of 66 million and averaged Ft 319 million after-tax revenue. Thecompany spent Ft 1.2 billion on developments, upgrades and other investments. The chain employed5,000 last year. (BBJ; NG 5, MH 12)

7 tenders submitted to drill tunnels for 4th metroSeven bids were submitted in the first round of a tender to drill tunnels for the first section of Budapest’sfourth underground line, László Gulyás, project manager for the new line, announced yesterday. All of the tenders met formal requirements, Gulyás added. The companies include big Hungarianconstruction as well as foreign companies, from Europe and elsewhere, Gulyás said. The results of thefirst tender will be announced in the second half of May. Five companies are expected to be selectedfor the second and final round, and a contract signed with the winner probably sometime beforeChristmas. Drilling the tunnels will cost about Ft 10 billion, not including VAT. Drilling is expected tostart next year and take two years to complete. (Econews)

Debt collection to speed upThe Justice Ministry is preparing a crucial amendment to debt collection laws to bring them in line with

EU regulations and thus smooth the process of cross-border debt collection subsequent to a courtorder, deputy department head Edit Juhász told business daily Világgazdaság. The changes willeliminate the cumbersome intermediate steps in the process as long as the debt is not disputed,regardless of on which side of Hungary’s borders the verdict was reached. The bill will be submitted for a vote in Parliament in a month or two. Currently, debt collection is overly time-consuming if another EUcountry is involved, Juhász explained. (Tue Vg 3) P.P.

Metro reaches new countryside destinations As of April 4, free daily newspaper Metro will add five towns in the provinces to its circulation area,including Dunaújváros and Jászberény in central Hungary, Nagykanizsa and Sopron in westernHungary, and Hódmezővásárhely, southeastern Hungary. First launched in Budapest, the paper is nowavailable in all of Hungary’s 19 county seats and has a combined circulation of 330,000 per day. As a

result of adding the five new locations, Metro’s circulation will increase by 50,000. (BBJ)

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Economics

Parliament passes road lawsParliament approved two new laws about the financing of highway construction and traffic regulationson highways. According to the Highway Act, the budget funds used in PPP highway projects can infuture be classified as refundable state subsidies. The new law also raised the limit on governmentguarantees offered towards bridging loans, as well as requiring the state to cover the costs of buyingout private landowners for the purposes of motorway development. The law on the use of public roads,

in line with corresponding EU laws, specifies the number of hours truck drivers can spend driving andminimum rest time. It also provides for black boxes to be used in freight and passenger vehicles for better traffic control. (Tue Vg 5) P.P.

Retail sales up 3.2%Seasonally and calendar-adjusted retail sales rose 3.2% in the 12 months to January and were up0.4% over December, the Central Statistics Office (KSH) said. This compares to an average growth of 5.7% in 2004 and the final quarter’s rise of 3.4%. The retail sales value in current prices in the firstmonth was a modest Ft 348 billion, or 56.9% of the year-ago period as the rise in real wages ground toa halt in the second half of 2004 and consumers increasingly stayed away from shops. Sales of foodstuff contracted by 0.4% in January compared to the same period last year, while non-foodturnover jumped 6.6%. (NG 3) S.F.

Bp moves up on EIU cost of living index Budapest has moved up fifteen slots on country analyst Economist Intelligence Unit’s international costof living survey to have become the 81st most expensive city to live in on a global list of over 130metropolises, a survey published yesterday revealed. Tokyo still tops the EIU’s worldwide cost of livingsurvey. Paris is the most expensive city in Europe, and Prague is the most costly of the new EUmembers. Budapest soared upward by 15 slots to become the 81st most expensive city. (MTI; MH 11)

Farm subsidy applications suspended As of March 25, the Agricultural Ministry is indefinitely suspending applications in three categories of the Agricultural and Rural Development Program (AVOP) in order to be able to process the unusuallylarge number of applications it has already received, Agriculture Minister Imre Németh said. Thedecision concerns husbandry-, cultivation- and horticulture-related investment projects on agricultural

development and boosting rural income opportunities. For agricultural investment, farmers can getaccess to grants of Ft 1 million-Ft 90 million, up to 45% of the total value of the project in the case of general and 50% of tourism-related investments. (NG 3) S.F.

Politics

House Speaker visits Constitutional Court House Speaker Katalin Szili met with Constitutional Court Chief Justice András Holló yesterday, anddiscussed court-related staffing and operational issues. In December last year, when a third justiceretired, the body reached a functional limit, as a minimum of eight members must be present for adecision to be made. Following the meeting, Holló told the media that he felt that regulations needed tobe changed to re-staff the Constitutional Court. Szili she would do what she could to supportappointments of the justices, though, she added, she was only a ‘facilitator’ in the process. At present

no candidates are supported by all four parties in parliament. (MTI; MH 6)PM rejects proposal for dissolving Parliament Prime Minister Ferenc Gyurcsány has rejected a proposal by the smaller opposition conservative MDFparty that Parliament should be dissolved because an absence of cooperation between its two major parties makes genuine decision-making impossible. Speaking over public radio yesterday morning,Gyurcsány ‘essentially’ agreed with the view that ties between the two major forces in Parliament hadbecome tenser recently, but found the MDF Chair Ibolya Dávid’s proposal unacceptable. (MTI)

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Domestic

Broadcasting permits up for renewal Representatives of the ruling political parties and opposition members in the National Radio andTelevision Board (ORTT) are divided over the question of whether the broadcasting permits of commercial television channels RTL Klub and TV2 should be renewed on expiry or opened to newapplicants in a public tender, broadsheet Népszabadság reported citing unnamed sources. Bothchannels posted record figures last year, and the state is also collecting hefty broadcasting fees.

However, these would in all probability have to be significantly lowered if the contracts are re-negotiated, as the forthcoming switch from analog broadcasting to digital will create 12-17 newfrequency bands in addition to the current 3 by 2012 the latest, with advertising revenues to be spreadout among several channels accordingly, the newspaper noted. In additional to the financial aspects of broadcasting, ORTT will also have to consider the quality of RTL’s and TV2’s programs, which havemet with increasingly severe criticism from the national media watchdog over recent years. (Nb 2) P.P.

Police after Budapest drug network Police have discovered a well-organized network of drug dealers in and around Budapest and are nowon the trail of an operation which could include as many as several hundred members, a Pest countypolice official said yesterday. What had started out as a case of illegal possession of firearms, withpolice following a lead to discover three rifles complete with silencers and a cache of ammunition at an

apartment in Kistarcsa, just outside of Budapest, soon turned into a drug case with tracks leading to acomplex, hierarchical system of drug distribution, Colonel Jenö Szabó said. A resident of Jászszentandrás, identified only as József Sz. became incriminated, as police found other weaponsand drugs in his home during a search. Further investigation led to evidence that a network of youngdealers in their twenties was operating in Budapest, trafficking marihuana, ecstasy tablets and speed ina highly organized fashion. (MTI; Nb 19)


MÁV CFO suspended over criticismThe chief executive of the Hungarian state railways, MÁV Rt, yesterday suspended the company's chief financial officer for criticizing a decision about a tender in which a Swiss company was awarded a

contract to deliver 30 electric trains. CFO András Ökrös was suspended after informing the online newsportal Index yesterday that the bids should have been compared using present value discounting, andnot the method that was actually applied. Ökrös said the method used to evaluate the bids wasextremely complex, and that Switzerland's Stadler had won the bid with a score of just 7 points -- of atotal 1,000 points -- more than the Canadian manufacturer Bombardier. MÁV chief executive ZoltánMándoki also ordered an investigation of Ökrös 's activities. He said that Ökrös, in his earlier capacityas MÁV's Treasury head, and later as CFO, had been part of the public purchase process all along,and was well aware of the progress of the talks, but never raised any objections during the procedure.(MTI; Nv 4, NG 4 MH 13 Nb 12, Wed Vg 13)

MOL, INA to upgrade/expand Croat refineriesOil company MOL Rt and Croatia's INA Industrija Nafte d.d. will upgrade and expand two refineries to

reach more consumers in Balkan countries. MOL and INA will spend as much as USD 900 millionupgrading the Croatian company's two refineries to EU standards by 2009 and expanding their combined capacity to 7.7 million tons a year, MOL said yesterday. Budapest-based MOL bought 25 %of INA for USD 505 million in 2002. The company is expanding in central Europe and the Balkans aseconomies and fuel consumption in the region grow faster than in the west. MOL plans to use INA as aplatform for reaching consumers in Southeast Europe. (Bloomberg; NG 11 piac)

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Pannon Tools plans Ft 550 mln factory Hungary's Pannon Tools, a family-owned toolmaker, is planning to build a Ft 550 million factory in theGy?r (NW Hungary) industrial park, managing director Lajos Tót said in yesterday's issue of businessdaily Világgazdaság. The factory, to be built on a greenfield site, will be 3300sqm. Pannon Tools,already based in Gy?r, supplies tools and parts to Alpine, Toyoseat, Shinwa, Modine, Scanfil, Cascadeand Audi. From September the company will start supplying the Peugeot Citroen factory in Trnava,Slovakia, through the Hungarian unit of France's EM Technologies. Pannon Tools signed a ten-year

contract with EMT a year ago. Pannon Tools, a family business, plans to double sales to Ft 1 billion thisyear. (Econews; Wed Vg 16)

PSzÁF fines Union Insurance, warns AHICO The Hungarian Financial Supervisory Authority (PSzÁF) has fined insurer Union Biztosító Rt Ft 2 millionfor overcharging some clients. PSzÁF found during an on-site audit of the company carried outbetween August 30 and September 24, 2004, that Union Biztosító charged some clients more thanwhat was stipulated in their contracts. PSzÁF ordered the company to correct its practices and refundclients who were overcharged. In another on-site audit, PSzÁF found that the First American-HungarianInsurance Company (AHICO) Rt had failed to pay some clients an extra yield stipulated in their contracts. PSzÁF did not fine AHICO, but ordered the company make terms clearer in their contracts,and to observe more closely regulations on allowing third parties access to customer data. (Econews;NG 5)

Brau Immobilien bid rejected The Interest Group of Individual Stock Market Investors (Tebész) has rejected the latest, Ft 17,200 per share purchase bid recently made by Austrian parent company Brau Immobilien GmbH to smallstockholders of its subsidiary Brau Union Hungária Rt in a never-ending saga of wrangling betweensmall investors and the majority owner. The controversy started in the autumn of 2003 when theHeineken group tried to buy out Brau Union Hungária through its Hungarian subsidiary Amstel Sörgyár Rt, but small shareholders in the company argued the offer price was too low and brought their case tocourt., Tebész has now said it appreciates the improvement since Brau GmbH's first offer of Ft 12,273per share, but its members will not withdraw their claims until they get the Ft 24,492 per share that theyconsider as the fair price.

Malév's online ticket sales boomHungarian Airlines Malév Rt upgraded its website recently and the new online ticket sales portale isvery popular, the company said. In the first ten weeks of this year Internet users bought tickets for almost Ft 1 billion through the website. Currently about 25% of all Malév tickets are sold through theInternet, the most popular destinations are London, New York and Paris. Malév gives a 5% pricereduction to clients buying tickets on its website. Currently Malév serves 35 cities in 21 countries of theworld. (Nv 10) M.K.

OTP fund management to be run by board OTP Bank Rt's, OTP Fund Management, will be managed by its board of directors, instead of a CEO,the fund manager's AGM decided on March 21. The AGM also approved the appointment of Peter Holtzer, OTP Fund Management's former CEO, as chairman of the board, as well the appointments of

the current CEO, Sándor Szalai, and deputy CEO Benedek Köves as members of the board. Holtzer will run the fund manager and be responsible for defining its strategy for managing domestic andregional funds, institutional funds and foreign funds, according to a statement by OTP Alapkezelo. The AGM also approved payment of a Ft 1.8 billion dividend from last year's after-tax profit of Ft 2.775billion. The rest of profits will be placed into profit reserves. At the end of last year OTP FundManagement had total assets of Ft 8.6 billion. (Econews; NG 11,12)

7 companies apply for M4 tunnel tender Seven consortiums applied for the tunnel construction tender for Metro 4, József Pandula, the chief-engineer of the DBR Metro Projekt Board said. These are mainly Japanese, Austrian, Turkish, German,French, Spanish and Hungarian companies. 5 of the 7 consortiums will be selected in April, and finalcontract is to be signed in December. The winner of the public procurement will be responsible for building a 7,3 km long and Ft 10 billion worth tunnel section. The project is a part of a Ft 300 billionmetro investment. (NG 3) Fr.Sz.

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BIF board proposes Ft 100-per-share dividend The board of directors of Budapest Real Estate (BIF), a real estate developer and propertymanagement company traded in category 'B' of the Budapest Stock Exchange, will propose a dividendpayment of Ft 100 per share at the company's AGM on April 25. Last year's net profits minus thedividend will come to Ft 58.5 million, according to the AGM announcement published yesterday. Thecompany had unconsolidated pre-tax profit of Ft 378 million. BIF said it did not plan to pay a dividend inits 2004 preliminary report, published in mid-February. BIF also paid a dividend of Ft 100 per sharefrom its 2003 profits. In 2002, the company paid a Ft 150-per-share dividend, and the dividend in 2001

was Ft 300 per share. (Econews; NG 11-12)MTV to have new program directorsHungarian Television (MTV) Rt will have new program directors and department heads from today, aspart of the company's restructuring. MTV got two vice-presidents on March 4, when Imre Takáts and András Simon started their new jobs. From now on vice-president András Simon will be responsible for channel M1, György Kósa-Somogyi will be M2's program director. MTV plans to launch M3 in the near future, which will be managed by András Pusztay. M1 will get a special director soon too. MTV will havedepartments for news, culture, sports, entertainment, science and other fields. MTV used to have 157managers on a medium level, but will keep only 65-70 of them. (Nv 3, Nb 2) M.K.

New book plaza opens next Thursday

Book retailer Pécsi Direkt Rt will open Hungary's largest bookstore in Budapest, near Nyugati station,next Thursday, general manager Dezs? Matyi said. Pécsi Direkt, which operates its stores with thename ‘Alexandra’, reported a turnover of Ft 10 billion last year. The new book plaza will cover an areaof 2,200 sq.m. and will present books, CDs and DVDs on five stores. Visitors will be able to choosefrom approx. 25,000 volumes in the store. Specialists expect smaller book shops near Nyugati to suffer from the giant's appearance. (Nv 6) M.K.

Hungarian fleet to set sail from Biograd The biggest ever Hungarian sailing project is coming to an end in April with the launch of 20 Bavaria42M sailboats in Biograd, Croatia. The competition fleet was established within the frames of a projectcompany, Adriatic Challenge Hungary Kft, and its afilliate Adriatic Chalenge D.o.o. (ACD) which werefounded by Nelson Fleet Leasing Kft, Axon Leasing Rt. and by Róbert Láng, the former owner of LángMotorparts, Lajos Varga, Nelson CEO said. The investment is worth Euro 3 million, the sailboats aresupplied by German and Slovenian producers. ACD plans include boat rental, competions and charter sailings (NG 5, Fr)

Hungarian Radio chair tender announced The board of Hungarian Radio (MR) announced the tender to recruit candidates for the position of chairperson of MR. The current president Katalin Kondor's mandate will expire on July 31. Bids must besubmitted by April 19 and the board must take a decision in 30 days from that deadline. The decisionmust be approved by a two-third majority. Kondor said she didn't intend to apply for a second term. If the tender is not successful, vice-chairman János Hollós will become managing chairperson of MR for the interim period. (Nv 3) M.K

Economics

Ecofin easing of rules may boost credit rating A decision by the European Council of Finance Ministers (Ecofin) on March 21 to ease budget deficitrules outlined in the EU's Stability and Growth Pact has positive implications for Hungary's timetable toadopt the euro, according to a statement by ratings agency Fitch yesterday. ‘As Fitch views theeventual adoption of the euro as a net positive for long-term foreign currency (LTFC) ratings, this couldaffect credit ratings in the future,’ according to the statement. Under the relaxed rules, ECOFIN will takeinto consideration several factors, most notably the costs of pension reforms, before starting ‘excessivedeficit procedures’ against member states running budget deficits exceeding the 3 % of GDP limit.(Econews; NG 3)

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Price of state subsidized medication to be lowered As of April 1, manufacturers will lower the price of 40 state-subsidized medications by 5%-20%,department head Gábor Lengyel of the National Health Administration Fund (OEP) said. Triggered byincreased competition from generic drugs after 200 new additions of the latter were made to the drugsubsidy list in October, the price cut will affect some of the most widely used blood pressure andcholesterol control drugs, antibiotics and antifungal medications. At the same time, OEP will add 136new drugs to the list of 12,000 subsidized medications, including 70 new generic drugs, Lengyel said.

In other news, the government is preparing to legalize online pharmacies and the home delivery of medications. (Vg 1, Nb 1) P.P.

10% of tax rebates unjustified Some 600,000 individuals filed their personal income tax returns by March 19, a day before the olddeadline until this year's changes to the tax schedule, the State Tax Office (Apeh) said. By mid-March, Apeh checked 3,500 of the 280,000 income tax returns where a tax rebate was indicated - with morethan 10% of the claims found unjustified. Tax inspectors keep an eye out for those claiming eligibility for tax breaks, with the likelihood of being chosen for a detailed tax inspection increasing in proportion withthe tax rebate. As of this year, the deadline for submitting personal income tax returns is May 20 asopposed to the earlier March 20, with online tax returns available from April 1. (Vg 5) P.P.

Drug expenditure exceeds 05 budget

This year's drug expenditeures exceed the official budget scheduled for the first 11 weeks of 2005 by Ft7 billion. The reason for the excess is the 7,5% rise in medicine prices in February, which generated ahuge buy-up fever in January. The flu epidemic also resulted in a 16.2% rise in drug-store sales. Lastyear's drug consumption rose by 23%, which makes this year's figures unlikely to change radicallythroughout the rest of 2005, Rácz Jen?, the Minister of Health, Social and Family Affairs said. (NG 3, Fr Sz)

Hungary popular for IT outsourcing Hungary is currently the 5th most popular IT outsourcing target of American companies, according to anewly released study by U.S.-based IT publisher Ziff Davis Media. Currently, the IT industry employs260,000 Hungarians, with highly skilled labor and modern infrastructure listed among its most attractivefeatures of the country. However, by 2015 Hungary will be relegated to the 26th place in the top 30 list,

the study warned, citing limited human resources and rising wage costs as the main reasons for thedramatic forecast. Both the 2005 and the 2015 chart is topped by India and China. (Vg 2) P.P.

Gov't to amend trade law The government is planning to revise the trade law in terms of dominant market position. According tothe law a minimum 30% market share is considered a significant market power. According to themodification act, trade companies with more than 8% market share are forbidden to abuse their economic power with small and medium sized supplier companies. Expert say that the regulation of market power will only make trade companies search for cheaper supply channels abroad, and willresult in increased import activity. Small domestic suppliers and retailers are heavily lobbying againstthe new act. (NG 4, Fr. Sz)

KSH starts small census in April

The Central Statistics Office (KSH) plans to hold a small census in the first three weeks of April, vice-chairperson Eszter Bagó announced. KSH wants to update figures of the last census in 2000 bycollecting some new data, Bagó said. In Hungary national censuses requesting data from each citizenare held every ten years. 2,100 commissioners will be responsible for getting data for the small census,they will visit 83,600 households and put questions to 210,000 people, Bagó said. (Nv 4) M.K.

Price of corn may riseThe Ministry of Agriculture and Rural Development is hoping to pass an act on grain intervention. If passed, the act will accelerate the intervention process, which will bring about virtual trade on themarket, and will cause corn prices to rise. Yesterday, a ton of corn was Ft 23 500. (NG 4, Fr. S.)

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Politics

PM to lead delegation in March of the Living Remembering the victims of the Holocaust, more than one thousand Hungarians will join the March of the Living between the two concentration camps of Auschwitz and Birkenau in Poland on May 5, theHungarian organizers said yesterday. Survivors, youth, as well as highly-esteemed public figures andrenowned personalities from the arts and media will be among the members of the Hungariandelegation, which will be led by Prime Minister Ferenc Gyurcsány. This May, on the 60th anniversary of

the Holocaust, over 18,000 participants from all over the world are expected to walk together the threekilometers distance between Auschwitz and Birkenau Nazi death camps. (MTI; Nv 4)

Domestic

Grade three-flood alert lifted A grade-three flood alert has been lifted for all parts of the country, Minister of the Environment andWater Management Miklós Persányi said yesterday. Lower-level flood alerts are still in effect along2,155km of Hungary's rivers, 121km more than on Tuesday. Grade-two flood alerts are in effect along390km of rivers. So far this year, Hungary has spent Ft 1,095 billion on flood protection, Persányi said,including Ft 80 million yesterday alone. About 11 cubic kilometers of snow along the Danube and 6cubic kilometers along the Tisza are still expected to melt, both above average amounts. (MTI; Nv 1,Nb 1,4)


Mol shares to be split The denomination of the Mol shares may decrease if the members of the ordinary general meeting,which is to be held on April 27, officially accept the modification. The reason for splitting the shares isthat their prices have gone way above the original selling price, which was Ft 1100. Splitting the stocksis expected to result in increased liquidity and price growth, however, is not yet decided whether thedenominations are to be halved or decimated, nor is its planned execution date. (NG 11) E.C.

Papers report bids for Malév paltry The latest attempt to privatize Hungarian airline Malév Rt could fail yet again, according to press

reports yesterday that put the offers at just a couple of hundred million forints. Hungary's StatePrivatization and Holding Company (ÁPV) said it had received five bids for a 99.95% stake in Malév byFebruary 28, the deadline for bidding, but added that only three of the bids could be considered actualbids; the other two were only letters of intent. ÁPV did not name the bidders, but market observersspeculate they include Russia's KrasAir, Ireland's Cape Clear Aviation and Aviation SolutionInternational, a company reported to have been set up by former Malév CEO Ferenc Kovács.(Econews; NG 1)

MÁV engine procurement stalled The Public Procurement Regulatory Board forbade Hungarian State Railway Rt (MÁV) from signing thecontract on the purchase of 60 new engines with the winning consortium of Swiss Stadler and GanzTranselektro Rt. The Board decided to investigate in detail the complaints filed by the runner-up of the

tender, the German Bombardier Group. MÁV cannot sign the agreement until the Board finishes itsinvestigation, the first hearing will be held on April 19. (Nb 1) A.K.

Richter to boost dividend as profit up 10%Gedeon Richter Rt, the largest drug maker in the 10 new EU member countries, plans to increase itsannual regular cash dividend to Ft 500 per share after 2004 profit rose 10 %. Richter shareholders willvote on the proposed dividend at the annual general meeting on April 27, the company said today in astatement to the Budapest Stock Exchange. Richter paid a dividend of Ft 440 last year. (Bloomberg;NG 11)

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Lukoil aims for 10% of retail petrol market Lukoil Downstream Hungary Kft aims to spend USD 120 billion over the next three years to open 100-120 petrol stations in Hungary, giving it a 10% share of the retail petrol market, business weekly HVGreports in its latest issue published yesterday. On Monday, Lukoil announced it had bought 15 AVA --formerly called Avanti -- petrol stations in Hungary for an undisclosed price. Lukoil already had earlier 19 of its own petrol stations in the country. Avanti still was still left with more than 20 petrol stationsafter the sale, but lowered its registered capital from Ft 1.72 billion to Ft 50 million following the sale.

(Econews; Vg Thurs 11)Yukos to halt exports to Hungary Oil company Yukos has decided to halt exports to Hungary and sell its quota for the second quarter of 2005 to another firm, its outgoing vice-chair told the Interfax wire service yesterday. Alexander Temerkosaid Yukos was cutting back its exports of crude after being denied use of the pipelines it wanted.Regarding Hungary, Temerenko told Reuters that ‘we are going to find somebody to replace us.’ Yukosdeclared a vis major state in January after its main production unit was auctioned off for non-paymentof taxes, a state that affected a ten-year contract it had signed with Hungary's oil company MOL Rt in2003, calling for deliveries of seven million tons/year. MOL has already shifted its business to Lukoil,now Russia's market leader, signing a five-year contract for five million tons/year for deliveries startingin April. (MTI; Nb 12, MH 1)

Telco regulator fines Invitel Ft 29 mlnHungary's National Telecommunications Regulator (NHH) has fined alternative telco Invitel Ft 29 millionfor failing to produce a completed revenue and expenditure statement, the NHH said yesterday. Thedecision cannot be appealed. Invitel turned in a revenue and expenditure statement in December, butthe NHH did not approve it. Under the law, the NHH must levy a fine, but it may decide on the size of the fine. The fine, however, may not exceed 0.5% of the preceding year's revenue. The decision isunappealable. Invitel may turn to a court within 15 days for a review of NHH's resolution, but this willnot delay the fine (Econews; Nv 6, MH 11)

MOL and OTP buy own sharesThe management of two of the most important publicly traded companies fuel monopoly MOL Rt andOTP Bank Rt both announced the purchase of own shares in the past few days after the price of both

shares fell sharply on the Budapest Exchange. While the timing is identical, the underlying motive for the transactions is quite different in the two cases according to analysts. MOL is seeking to optimize itscapital structure, while OTP is trying to prevent the further erosion of its share price, as it looks tocontinue to expand abroad through acquisitions. (Vg Thurs. 13) A.K.

Italy pays 10-15% more for Hun. lambHungary expects to sell 220,000 lambs, or about 4,200 tons of lamb meat, on the Italian market thisEaster, Gyula Békési, who heads the Hungary's Sheep Council, said in yesterday's issue of businessdaily Világgazdaság. Dealers expect to get 10-15% more for their sheep this year than last, with pricesat Euro 2.4-3.1 per kg, Békési said Most of the lambs Hungary exports to Italy are raised inside thecountry, although a small number are raised in Romania. (Econews; Thurs Vg 1)

Nestlé's profits healthy

Nestlé Hungária Kft had consolidated turnover of Ft 70.3 billion last year, by 20.5% higher than in 2003.Pre-tax profit was up by 19.7%, reaching Ft 3.3 billion, general manager Laurent Freixe said. Exportincomes increased by 32.4% to Ft 32.8 billion. Domestic sales remained at the level of the previousyear. The growth of the profits was supported by the favorable change of Forint-Euro rates, financialdirector Péter Noszek added. (Nv 6) G.R

Antenna Telecommunication raises capital The company court officially registered the Ft 2 billion capital increase effected by AntennaTelecommunication Rt. The company's base capital rose to Ft 10.53 billion as a result of thetransaction, while its ownership structure remained unchanged with broadcaster Antenna Hungária Rtowning 99.9934 percent and Antel Invest 0.0066 percent. (VG Thurs. 13) A.K.

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Workers on strike at ZalahúsWorkers from meat processing company Zalahús Rt held a silent protest yesterday in front of thecompany's factory to call public attention to the fact that the company owes them over 2 full months'wages. Zalahús was recently sold to asset manager Re-N Kft, by its owner and former CEO ImreFarkas, who said that the contract stipulated that the workers' overdue salaries are to be paid, but adeadline was not specified. László Fekete current CEO said that the situation will hopefully be resolvedat the company's upcoming AGM on March 29. (Nb 13) A.K.

Péti Nitrogen workers strikeEmployees of Péti Nitrogen Works Rt held 2-hours warning strike yesterday morning. Workers wants toreach 10% wage raise, chairman of the trade union, Sándor Falussy said. The company's plans includeraise of 6% for this year. (Nv 5) G.R.

Nabi to reduce capital at AGM Bus manufacturer Nabi Rt will ask its shareholders to approve a capital reduction at the company'sannual general meeting on April 29, shows the AGM notice Nabi published yesterday. Nabi said itwould have to slash its capital as the audited balance sheet is expected to show the company'sshareholders' equity fall below the legally required minimum of two-thirds of the registered capital.However, Nabi warned in a separate note also published yesterday, that the audited balance sheet maynot be available by April 29 and the AGM may then have to be postponed to the end of May at the

latest. (Econews)Factory to sell 476 string instrumentsHungary's last state-owned musical- instrument maker is looking to sell Ft 19.5 million of violins, violasand double basses after growing competition from Chinese and Romanian manufacturers forced it toclose, the daily Napi Gazdaság said. The company, which was established in 1953 by the state andsold to private investors in 1993, closed in 2003 as the U.S. customer that bought 95 % of its outputturned to cheaper Chinese and Romanian suppliers, the newspaper said. The factory in Szeged,southeast Hungary has 476 instruments, made mainly for students, to sell, according to László Ézsaiás,a spokesman for Pactorex Ktf., the company's liquidator. Hungary, the third-largest of the 10 new EUmembers, has a state-run system of music schools, founded in 1952 with the help of renownedmusicians such as Zoltán Kodály or Béla Bartók, who wanted music to be a part of general education.

(Bloomberg)Economics

Sticking to 3.6 % deficit target Despite the EU's stability pact reform, Hungary is sticking to its targeted deficit of 3.6 % of GDP for 2005 come hell or high water, the finance minister told the media yesterday. The only thing the alteredstability pact does for Hungary, Tibor Draskovics said, was that it considers the effects on the budget of a pension reform, but even that is only temporary. The reform is aimed at improving competitiveness,Draskovics said, but financial stability remains a basic prerequisite, and nothing will change that. (MTI;Nv 6, MH 11)

Hungary benefits to tune of Ft 76 blnHungary has gained a Ft 76 billion surplus from the EU in 2004, when taken into consideration all paidto and received from Brussels to date. This surplus will top Ft 100 billion this year - according toFinance Ministry calculations. The State Treasury received a Ft 171 billion EU subsidy, which has beencomplemented by a Ft 12 billion state subsidy to go to municipalities, enterprises and individuals. Therehave been Ft 93 billion already transferred, and the rest has been theoretically allocated and secured.Hungary may expect a Ft 360 billion EU subsidy this year. (NG 3) E.C.

Németh: 2004 agriculture's cruel year In spite of rich crops, 2004 was a cruel year for agricultural producers, Hungary's Agriculture Minister Imre Nemeth said yesterday. The minister said that while farmgate prices had increased by 5.9 % in2003, they fell back by 5.4 % the next year. At the same time, industrial prices, determining the cost of agricultural production, had increased considerably, he added. Food prices grew by 6.5 % in 2004, butvegetable products within that category became 13.8 % cheaper, and the price of animal products

increased by only 4 %, the politician said. The country's agricultural exports increased by three % from2003, but imports went up by 24 %. (MTI; Nv 3)

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NA to take out Ft 125 bln loanNational Motorway (NA) Rt is to take out Ft 125 billion in loans for motorway construction. Thecompany received the bids from 25 domestic and foreign banks. The money will be spent currentlyopperational investments. Last week, the taking of another Ft 158 billion loan was decided. It will begranted by National Development Bank (MFB) Rt also for building of motorways. For both transactionsamending of the motorway law was necessary, that was done by the parliament on Monday. (MH 11)G.R.

Ex PM opens Hungarian Business yr in FranceHungary considers France a strategic partner, which reflects in the bilateral relationships in politics andeconomy, since France is the 5th biggest investor in Hungary, said ex PM Péter Medgyessy on theopening ceremony of the Hungarian Business year in France. It is the first time that Hungary hasorganized such a business year abroad - the event hosts business conferences and meetings, whereHungarian companies can introduce themselves to enhance the relationships among suppliers.Hungary exported Euro 2.5 billion worth of goods and services last year, which is a 14% increasecompared to 2003, and the imports reached Euro 2.2 billion, which is a 22% growth. By the end of 2004, there were 350 French companies operating in Hungary with an invested capital of Euro 3 billion.(NG 3) E.C.

Fixed priced taxis proposed

A proposal by Budapest City Council on setting fixed taxi prices would seriously decrease thecompetition on the market, according to the opinion of the Competition Office. As a result of the draft,the current average fee of Ft 160 per km would grow to about Ft 240 per km. The proposal wouldchange the prices to encourage waving down of the cabs instead of ordering one on the phone, thiswould also decrease the service level for the passengers, the Office added. (Nv 13) G.R.

Politics

Opposition MPs give PM Easter gift Two deputies of the main opposition Fidesz party approached the prime minister with an Easter package, in reference to issues around food safety, MTI learnt yesterday. ‘We wanted to see PMFerenc Gyurcsány to give him a little Easter basket, and remind him that such thing as food safety, hasbeen non-existent in Hungary for months,’ MP Gabriella Selmeczi told reporters, after they left the gift

at Gyurcsány office. MP Peter Szijjártó asked whether the prime minister was aware of what is servedas food for Hungarian families, and what kind of products were allowed to be imported. (MTI)

Coalition agree on key plank re spiesThe governing coalition partners have agreed on the central plank to an amendment to the secretservices law to allow an independent committee total access to files of communist-era spies andinformers, said a daily yesterday. The Socialist politician responsible for drawing up his party's bill anda senior liberal party official told Népszava they had reached agreement on setting up a committee withthe authority to decide which documents can be made open to public scrutiny. (MTI)

Domestic

IAAF elects Hungarian technical director Imre Mátraházi Jr. of Hungary has been elected technical director of the International Association of

Athletics Federations (IAAF). Mátraházi, 46, will be responsible for all technical matters of track andfield, including the supervision of competitions, verification of records and tracks, and reforming therules. The new technical director will join the 67-member permanent staff of the Monaco-based IAAF,which has 211 member countries. Mátraházi himself used to be an excellent long jumper. His father,Imre Mátraházi Sr., acted as competition director of the 1966 and 1998 European championshipsorganized in Budapest. (MTI)



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