Clare Nuttall in Bucharest -
The Romanian government passed an emergency decree to set up a new department to handle privatisation on April 24, after attempts to sell off several major companies flopped in 2013. The move reflects claims by Bucharest that it is determined to to sell off stakes in several of the country’s largest companies, including utility Electrica and Posta Romana, this year.
Creation of the Department for Privatisations and State Shareholdings Administration is intended to increase the efficiency of the privatisation process, and to ensure state controlled companies operate profitably. It will also be responsible for amending relevant legislation, says a government statement quoted by Agerpres. The new department will replace the existing State Industrial Shareholdings and Privatisation Office (OPSP), as well as taking over duties from other ministries and agencies currently involved in privatization.
The restructuring and sale of state owned companies is a major part of Romania’s commitment to the International Monetary Fund (IMF). In September, the IMF approved a €1.98bn stand-by arrangement with Bucharest. The Romanian government also requested a €2bn precautionary loan from the EU.
Bucharest listed a 10% stake in Nuclearelectrica the same month. This was followed by the successful float of a minority stake in Romgaz - the country’s biggest ever IPO - in November, raising RON1.7bn. However, a February statement at the conclusion of an IMF and European Commission staff visit worried that progress on reducing state-owned enterprise arrears “has stalled”.
That said, the lenders appeared to accept that Bucharest remains committed to the process. The statement added that “corrective actions are being launched, including budgetary transfers and restructuring measures... Building on the success of the Romgaz IPO, progress toward completion of IPOs of three other state-owned enterprises remains broadly on schedule.”
The IPOs of several other energy companies originally due to take place in 2013 are now on the agenda for this year. On April 10, the government announced plans to list 51% of Electrica in a dual listing in Bucharest and London; there are also plans to list 10% of hydropower company Hidroelectrica.
Romania is also set to make fresh attempts to find buyers for the likes of rail freight operator CFR Marfa - the sale is a specific commitment to the IMF - as well as Posta Romana. A €202m deal to sell 51% of CFR Marfa to private Romanian rail company Grupul Feroviar Roman (GFR) - the sole bidder - was agreed in June. However, the deal collapsed four months later, with GFR and the government each blaming the other for the breakdown. Transport Minister Dan Sova said in March that the sale would be handled by the new privatisation department. However, the timing of the sale is not yet clear.
An attempt to sell heavily indebted Posta Romana in May also failed. The government has since agreed to make the company more attractive to buyers by converting debt of around RON242.5m (€56m), but is currently waiting for EU approval for the move. Bucharest is looking for an investor to take majority control, but retains plans to float it on the domestic stock exchange if no bidder comes forward.
Meanwhile, the privatisation of petrochemicals company Oltchim has been postponed yet again until May, after a failure to attract bids for the insolvent company ahead of a March 28 deadline. Potential bidders, which are understood to include both domestic investors and a Chinese consortium, are thought more likely to step forward if the Romanian government goes ahead with plans to combine the Oltchim Special Purpose Vehicle (SPV) with the Arpechim refinery.
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