Romania’s government will auction its 27% stake in Rompetrol Rafinare within two weeks, Azamat Zhangulov, vice-president KazMunaiGas (KMG) International, the main owner of the refinery, said in an interview with Adevarul daily.

Under an agreement signed between the Romanian government and KMG International, the latter promised to pay $200mn for the stake. However, the government is required by law to sell the stake through an auction and not under a direct agreement with the buyer.

Romania’s government endorsed on July 28 a decision to sell the 26.7% stake held by the ministry of energy in Rompetrol Rafinare refinery in an open auction.

The starting price will be the nominal price of the shares – RON1.18bn ($295mn). The ministry of energy will decide, based on bidders’ interest, whether the auction will be competitive (e.g. rising prices) or will be a “Dutch auction” (e.g. decreasing prices). However, the government will not sell the stake unless it gets $200mn.

In principle, any bidder is invited to take part, but the $200mn KMG International is prepared to pay is high enough to prevent competition, Zhangulov commented. The size of the stake up for sale, compared to the majority control held by KMG, is also set to discourage potential strategic and financial investors.

The financial situation of Romania’s largest refinery has recently improved, as the crude oil price dropped.

Rompetrol Rafinare reported $62mn net profit in 2015 from $58mn losses in 2014. The company thus breaks even after 11 years in the red.

EBITDA also increased by 30% y/y to $112mn. The performance, driven by low crude oil prices and significant investments in capacity and modernisation, will help the Romanian state to sell its 26.7% stake in the company.

The performance was recorded despite a 32% decline in turnover, to $3.84bn.