Kazakhstan's state-owned KazMunaiGaz (KMG) might request damages of at least $2bn from the Romanian state in case of arbitration over the seizure of its Romanian refinery Petromidia, the senior vice president of Petromidia's owner KMG International (KMGI), Azamat Zhangulov, told Economica.net.
In May, the Directorate for Investigating Organised Crime and Terrorism (DIICOT) seized some $680mn worth of assets owned by four people involved in the privatisation of Petromidia in 2000, as well as assets of three companies. DIICOT said at that time it was taking action to recover alleged losses incurred by the state budget during the privatisation process. Also, former Prime Minister Victor Ponta is reportedly part of an investigation related to the settlement of a $600mn debt of KMG, Euractiv reported in July.
KMGI said in July that together with KMG it had submitted a notice of investment dispute to the Romanian authorities, a first step towards eventual international arbitration. “The arbitration dispute concerns the treatment applied by the Romanian authorities to the investments performed by KMG and KMGI in their Romanian subsidiaries,” KMGI said in a statement at that time.
The letter to the Romanian government also detailed asset freezes totalling more than $2.1bn and the company's belief that it appears to be the intention of the authorities to seize and nationalise assets that have generated benefit for the Romanian economy and people, the statement said.
However, the Kazakh group has not yet been invited to negotiations by the Romanian state related to the situation of the seized assets, Zhangulov said.
“There is no dispute at the moment […] It has not been launched, because before the launch you have to go through a so-called zero step, this zero step is a notice of dispute which we already sent on July 26 and we expect the Romanian state to take some measures, to negotiate this notice before the launch of the dispute. In this period of six to seven weeks which have passed since then, we haven't had meetings with governmental institutions,” he added.
The KMGI official considers that the current “incorrect” situation limits the Kazakh's company plans on the Romanian market and brings no certainty regarding the future of the company's investments in Romania. KMGI has already said it could cut its losses and pull out of Romania if it loses the dispute with the country over Petromidia.
There are no quantified operating losses following the seizure of the assets, but losses created by the fact that some projects which could have brought profit were not started, Zhangulov said.
He added that the KMG will demand damages of more than $2bn in case of arbitration, taking into consideration the fact that the Kazakh group has invested around $4bn in Romania.
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