Romania’s government will publish a preliminary privatisation plan for ailing petrochemical plant Oltchim in the last week of May and will attempt to boost the plant’s operations to 50% of capacity from current 33%, economy minister Varujan Vosganian announced as quoted by Ziarul Financiar daily.
He confirmed talks with several prospective bidders have been underway but named only Russian group TISE. The Russian investor, however, is interested in buying at the same time the plant's main raw materials supplier – the Arpechim refinery, currently owned by OMV Petrom but not operational.
Oltchim is critical for the industrial activity in the southern Olt county and the region where it employs 3,600 -- but also for Romania’s agreement with the IMF. After the failed privatisation attempt last September and the plant filing for insolvency in January 2013, Oltchim faces gloomy prospects.
While the IMF might accept further delays on IPO deadlines for sound state companies like Nuclearelectrica, Hidroelectrica or Romgaz, it is unlikely that the Fund would accept to complete the on-going stand-by agreement with Romania in July unless a final decision on Oltchim is taken. Oltchim’s privatisation has been delayed for years. Siphoned for years by former management supported by highly-paid employees, the company has mounted large debts to banks and the state.
Minister Vosganian will also discuss with PM Victor Ponta a EUR 25mn financing plan for Oltchim. The money is needed for the service of unpaid utility bills and for raw materials. At 50% capacity, the plant would achieve break-even and become more attractive to investors, Vosganian explained. The financing would be extended by banks in exchange for collaterals on plant’s assets.
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