Romanian government wants to cancel Oltchims privatisation.

By bne IntelliNews September 25, 2012
Romanian PM Victor Ponta announced that the privatisation of petrochemical plant Oltchim, for which the economy ministry already picked a winning bidder, would be cancelled and resumed next year, news agency Mediafax reported. Economy minister Daniel Chitoiu, however, said that the deal cannot be called off sooner than ten days after the auction and definitely not if the winning bidder pays the price in the meantime. The Romanian PM claimed that the winning bidder does not have the necessary financing. But last Friday, the head of the government's privatisation, Remus Vulpescu, assured that the winning bidder has supplied all necessary documents that demonstrate his resources. As we reported, local investor and politician Dan Diaconescu won last week the auction to buy 55% in Oltchim for EUR 45mn. The government has failed to explain whether it promised or not to Diaconescu that the EUR 45mn price would be temporarily lent to Oltchim for resuming the operations. Ponta blamed the state's privatisation consultant, PricewaterhouseCoopers, for the privatisation strategy and assured that next time the government would instruct the advisor to set tighter selection criteria, including a requirement for bidders to be only strategic investors (with experience and significant activity in the relevant sector). But Ponta failed to explain why the government changed radically the privatisation strategy in late August, several weeks before the auction's day, by cancelling the debt-to-equity of Oltchim conversion that was endorsed by the EC and was close to completion after years of arguments between the state and the minority shareholder - Germany's PCC. IntelliNews Comment : Oltchim's privatisation visibly turned into a political affair. Leftist PM Ponta has openly accused the centre-right PDL party of plotting with Dan Diaconescu with the aim of covering corrupt deals at Oltchim carried out in 2005-2012 period when PDL ruled the country. On his turn, the winning bidder, Dan Diaconescu, hopes to gain popularity for his small political party before December's parliamentary elections and see it in parliament. The opposition PDL blames the leftist government for the failed privatisation. The IMF, which set firm deadlines for the privatisation of Oltchim under Romania's stand-by arrangement, has not yet issued an official comment.
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