Problematic privatisations

The governments efforts to privatise a number of state-owned companies as part of its pledge to international lenders have so far seen little progress.

Corina Cristea, 24.10.2013, 13:03

The privatisation of a number of state-owned companies is one of the commitments made by Romania before its international lenders as part of three financial agreements signed since 2009. The efforts to find the right investors have so resulted in failure.

Last summer, the privatisation of the chemical plant in Ramnicu Valcea failed when the man winning the tender, namely Dan Diaconescu, a TV owner and leader of a populist party, did not transfer the 45 million euros he promised to pay. Due to its huge debts, the plant is now insolvent, while its future remains uncertain.

Another important privatisation on the government’s agenda is the sale of CFR Marfa, the freight division of the Romanian Railways Company. The privatisation of this company was due to end on 14 October, after the tender was awarded to the Romanian Railways Group. In September, the transport ministry in Bucharest signed a privatisation contract with the Group, which pledged to pay 202 million euros for 51% of the shares and to make investments worth another 204 million euros. The Group failed, however, to pay the difference of 170 million euros, as a number of banks to which CFR Marfa is indebted did not agree with the change in shareholder structure.

Currently on a visit to Bucharest to assess a stand-by agreement signed last month, an International Monetary Fund delegation asked the government to restart the privatisation of CFR Marfa. The transport minister Ramona Manescu says a new privatisation timetable has already been established, hoping that the process will be concluded by next summer.