Privatisation of Romanian cargo railway company turns into political clash

By bne IntelliNews July 25, 2013

The ongoing sale of Romanian cargo railway company CFR Marfa to local investor GFR has turned into a political clash between leftist PM Victor Ponta and President Traian Basescu, while facing uncertain outlook.

Basescu wants to hold Ponta responsible for the possible failure of the privatisation process, while Ponta made an attempt to share the responsibility with Basescu. The government would not go further with the privatisation unless the president-headed security council approves the deal, Ponta stated under a government decision.

The winning bidder was picked by the government earlier in June as authorities tried to demonstrate their commitment for structural reforms and convince the IMF to complete the stand-by agreement with Romania despite all other delays and failures.

As we reported, transport minister Relu Fenechiu – the manager of the privatisation process, resigned in mid-July after he was indicted to five years in jail for corruption [in a case that was not related with CFR Marfa]. PM Ponta claimed back then that Fenechiu is innocent and the privatisation process of CFR Marfa is a success story.

As regards to the privatisation outlook, the winning bidder – local investor Gruia Stoica through its group Grampet and its cargo railway division GFR, admitted he still seeks bank financing to pay the EUR 200mn for 51% in CFR Marfa. Local media at the same time keeps unveiling the siphoning of money from CFR Marfa to Stoica’s Grampet group through joint-ventures over the past years.

President Basescu will delay appointing a new transport minister until the privatisation contract is signed directly by PM Ponta as interim minister, Basescu announced earlier this week.

In a response, Ponta endorsed on July 24 a government decision, under which the contract would be signed only after the country security council CSAT – headed by President Traian Basescu, gives the green light. Nonetheless, presidential spokesperson Bogdan Oprea responded that CSAT cannot discuss details related to the privatisation of CFR Marfa other than those with an impact on the national security. CSAT has endorsed last year the privatisation of CFR Marfa.

 

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