August in Review

More visitors, more business schools for Budapest MBA autumn fair

ORGANIZERS OF THE WORLD MBA TOUR are predicting a 40% jump in visitors at the Budapest MBA Fair this autumn, as would-be MBA students take advantage of Hungary’s accession to the EU and use their new freedom of movement to study in Western Europe.

The fair enables prospective MBA students to meet school staff and discuss course and related topics face-to-face. In addition, QS TopMBA, the company that runs the MBA Tour, and the schools hold seminars and discussion groups in side rooms during the fair, giving students deeper insight into the world of management education and its implications for their lives and careers. "With Hungary having joined the European Union, we expect increased interest in MBA education [abroad]. Our target is for 600 visitors in 2004, up from 380 in 2003, and we fully expect to reach this number," said Nunzio Quacquarelli, QS TopMBA director.

This year’s fair - the third in Budapest - will almost certainly see a record number of management schools on hand, all eager to convince potential students of the excellence of their courses. By late August, 49 schools had committed to attend, already two more than last year’s total, and with local institutions typically leaving arrangements until September, Quacquarelli expects the final number to be around 60. And - in spite of the fact that EU accession will have no affect on their accessibility to students - this year sees a surge of interest from US schools, with at least 16 in attendance compared to only nine in 2003. Names include Duke, Thunderbird and Haas. The second largest group comprises 14 schools from the UK (against nine last year), including heavyweights such as Henley, Warwick and Durham. For those who would prefer to study closer to home, representatives of leading schools such as Insead (France), Rotterdam (Netherlands) and Instituto de Empressa (Spain) will be shouting the advantages of studying in continental Europe. The adventurous (and well-monied) may also think about a down-under MBA in Melbourne, Australia. While a visit to the fair is no substitute to an on-site visit at the favored school’s campus, it does allow potential students the chance to get a broad overview of the variety of institutions and courses available, and facilitates a better-considered final choice of course. It certainly seems to work, at least in some cases. "Last year we recruited two great Hungarian candidates from the World MBA Tour. We are seeing growing interest from Central Europe in general," said Peter Johnson, admissions director at The Haas School, University College of Berkeley, California.

The fair takes place Tues., Oct. 26 from 5-9 pm at the Budapest Marriott Hotel, Apáczai Csere János utca 4. Candidates can register to attend at ww.topmba.com.

Hungary to allocate 29 million tons worth of carbon credits

THE STATE WILL ALLOCATE EMISSION QUOTAS FOR 29 MILLION TONS OF GREENHOUSE GASES for the period 2005-2007 to 170 Hungarian companies under guidelines established in the Kyoto Protocol, said Istvan Őri, state secretary at the Ministry of the Environment and Water Management. Under the protocol, Hungary aims to cut its emissions of greenhouse gases in 2008-2012 by 6% from their levels in 1985-1987. Energy companies will get the most of the so-called carbon credits – 20 million tons worth. Steel makers will get 3 million tons worth, as will cement factories. Refineries will get 1.2 million tons worth of credits and ceramics makers will get 500,000 tons worth, Őri said. The credits may be freely traded on the market and are already going for between EUR 3 and EUR 9 per unit. Ministry of Economy and Transport official István Bart said the Ministry plans to auction 1% of Hungary’s total allocation to the companies. He also noted that 5% of the country's total quota would go to newcomers on the market. Tibor Faragó, an official at the Ministry of the Environment, said the carbon credits will be distributed in more sectors when Hungary enters the second phase of the program in 2008-2012. Companies that exceed their quotas will have to pay a EUR 40-per-ton fine during the first year of the program as well as purchasing more carbon credits to cover the amount in question. In 2008 the fine will rise to EUR 100 per ton. According to figures from the Ministry of the Environment, Hungary emitted an annual 111 million tons of greenhouse gases between 1985 and 1987. According to the latest figures, Hungary emitted a total 75.6 million tons of greenhouse gasses in 2002, down 30% from the 1985-1987 average. However, the Ministry expects emissions to grow to 97.2 million tons by 2010, just 6.92% under the level in 1985-1987.

3G license winners to pay initial fee of HUF 5.5 billion each

WINNING BIDDERS FOR FOUR, THIRDGENERATION (3G) licenses up for sale in Hungary will be expected to pay an initial fee of HUF 5.5 billion (EUR 22 million) to the government by the end of year, chairman of the national telecommunications regulator NHH Daniel Pataki said. Bids for the 15-year licenses will include a one-off cash payment as well as a percentage of annual revenue from the services. Winning bidders will have to make 3G services available at least within the center of the capital by January 2006, and to 30% of the population by the start of 2008. The licenses will be offered to Hungary's three established GSM service providers - T-Mobile, Pannon GSM and Vodafone - and one newcomer. The newcomer will be allowed to pay the license fee in installments and it will not have to meet a penetration requirement, leveling the playing field. The newcomer will be offered a frequency band at either 1,800 MHz or 900 MHz. Pataki said the three established GSM companies would be offered an additional band at 1,800 MHz along with their licenses. Also, payments for two of the three licenses being offered to the established GSM companies will be accepted in installments. Pataki noted that if the license reserved for a newcomer is not sold at the auction, it will not be put up for sale again for another two years. Likewise, if a band reserved for one of the three established GSM companies is not sold, it will not be put up for sale for one year, preventing any of the three from purchasing two licenses.

Bids will be evaluated using a 100-point system. For the established GSM companies, price will count for up to 90 points, and up to 10 points will be based on the roaming services they agree to offer any newcomer. For the newcomer, price will count for up to 55 points, with as many as 15 points counting for previous experience on the mobile market, 10 points for previous experience on the telecom market, and the rest counting for the company's business plan. IT and Telecommunications Minister Kálmán Kovács said there were four or five companies interested in participating in the auction and some would probably put in a bid. Pataki said that, in line with EU regulations, the winners would not be prohibited from reselling their licenses. However, he added that it would be better to see long-term investors participate in the auction. 3G networks allow for transmission rates of up to 2Mbits per second for stationary users, up to 512Kbits per second for walking users and 144Kbits per second for users in cars or on trains. The bidding documentation will be available for EUR 3,000 from Wednesday. The deadline for bids to be received will be Nov. 2, and the winners will be announced on Dec. 1.

Ministry announces details of M6 motorway construction decision

THE Ministry of Economics and Transportation announced the details of a tneder to build a 57-kilometer stretch of the M6 motorway between Érd and Dunaújváros and operate it for 22 years. The tender winner, M6 Duna Autópálya, a consortium of Austrian and German companies, including Bilfinger Berger BOT, Porr Infrastruktur and Swietelsky International Baugesellschaft, was announced Aug. 6.

Pending parliamentary approval, the Minister of Economics and Transportation is due to sign a 22-year concession contract for the private-public partnership (PPP) project with the tender winner by Sept. 30. The ministry, which evaluated the bids based on the projected cost of construction, upkeep, financing terms and comments on the draft concession contract, in addition to technical considerations, said the bid of M6 Duna Autópálya, for EUR 508 million at net present value, carried the least risk. The consortium had the best bank guarantees and credit availability, as well as attaching the fewest conditions to the contract. The 22-year state obligation for the price of the contract contains an 8% discount in euro terms and a 10% discount in forint terms from the cross-rate on Oct. 1, 2004. The runner-up in the tender, which was announced in January, was a consortium of Vinci Concessions, Vince and Betonut, with a bid of EUR 555 million, followed by a consortium of Euroinvest, TriGranit, Strabag, OTP, ASF and Egis, which bid EUR 601 million. The latter consortium, however, had the second-best available credit. A consortium of Mota Engil, Mota Hungaria, Kellogg Brown and Root, Viadom Építôipari, Banco Espirito Santo and SANEF, had put in a bid for the project in the pre-qualifying round, but did not make it to the second round. The winning consortium agreed to spend HUF 23 billion over the term of the contract to resurface the stretch twice over the 22 years of the concession contract. The consortium of Vinci Concessions, Vince and Betonút had calculated resurfacing to cost HUF 31.5 billion, while the consortium of Mota Engil, Mota Hungaria, Kellogg Brown and Root, Viadom Építőipari, Banco Espirito Santo and SANEF said it would cost HUF 45.6 billion. The ministry noted that these promised amounts made little difference in the tender because they are already included in the cost of upkeep. The state has the option to withhold the fee of upkeep if the concession holder does not keep the motorway in good condition or otherwise fails to meet the terms of the contract.

MOL to announce number of bidders for gas division in September

MOL WAS SCHEDULED TO ANNOUNCED THE NUMBER OF BIDS IT RECEIVED AUG. 26 FOR ITS THREE GAS COMPANIES, after a Sept. 2 board meeting, daily Nepszabadáag reported. The MOL board decided February 2004 that it would consider selling its three wholly-owned gas companies, Földgáztároló, Földgázszállító and Földgázellátó. The board also decided to explore involving a partner. Nepszabadság reported that it had learned that several bids were made, and that MOL had opened the data room to representatives of Russia's Gazprom, Germany's Ruhrgas, Austria's OMV and France's Gas de France.

The company is also looking for a partnership to ensure its independence on the quickly consolidating European gas market, MOL strategic and business development director Zoltán Áldott said at a conference of Hungarian institutional investors organized by the Budapest Stock Exchange. Áldott said that the sale would be completed by the end of this year or the beginning of 2005. Áldott declined to specify the size of the stakes up for sale, but noted that changes to regulations now made it economically viable for MOL to retain partial ownership of the gas division. He also pointed out that the only way an Eastern European company can remain independent on the quickly consolidating market was to form a strategic partnership. Meanwhile, a spokesman for Austrian oil and gas company OMV, which owns 9.1% of Hungarian oil and gas company MOL, has said OMV had not submitted a bid for MOL's gas divisions. The spokesman said OMV "had enough in the pipeline already."

Richter extends joint venture in India

BUDAPEST-BASED PHARMACEUTICALS COMPANY GEDEON RICHTER RT. announced it would extend its joint venture with Indian drugmaker Themis Medicare Ltd. The Budapest Stock Exchange's Internet homepage reported that the project could be worth USD 20 million. The as-yet unnamed active ingredients and intermediate products manufacturer Richter-Themis Medicare (India) Private Ltd has subscribed capital of 140 million rupees (USD 3.1 million). Richter has a controlling stake of 51%, while Themis holds 49%. Richter owns an 8.2% share in Themis Medicare. According to the company's press release, the development costs will mainly be financed long-term subordinated loan provided by the Hungarian company.

Production is expected to start in 2006. The financing of Richter's investment will not have to rely on external sources, as, according to the company's IFRS consolidated H1 report Richter had a positive cash flow of HUF 22.27 billion on June 30 and the technology for the plant will be exported by Richter to India. Themis Medicare Limited was established in 1969 as a joint venture with Gedeon Richter Limited of Hungary. The company is engaged in the manufacture and marketing of bulk APIs (active pharmaceutical ingredients) of synthetic and biotech origin, bulk intermediates and formulations for domestic and international markets as well as in research and development activity.

Finance minister presents first draft of 2005 budget to government

FINANCE MINISTER TIBOR DRASKOVICS HAS PRESENTED THE FIRST DRAFT OF THE 2005 BUDGET TO THE GOVERNMENT, said Finance Ministry spokesman Ferenc Pichler. Under the General Government Act, the government must submit the budget bill to Parliament for debate by Sept. 30. The budget's main aims are to cut taxes as well as reduce the general government deficit, continue motorway construction projects and provide assistance to disadvantaged people. The budget's main figures are in line with Hungary's convergence program. Finance Minister Tibor Draskovics said in July that the ministry was drawing up the 2005 budget calculating with GDP growth of 3.5-4%, a 2% rise in real wages, an inflation rate of 4.5%, a 3% rise in consumption and a general government deficit of 4.1% of GDP. According to the convergence program, tax and non-tax budget revenue will fall from 2004's 44.2% of GDP to 43.4% in 2005, and government spending will fall from 48.7% of GDP to 47.5%. Public debt will fall from 59.4% of GDP to 57.9% in 2005.