After the American investor addressed the Arbitration Court, the government decided to reach a compromise with Ford and partially reimburse the company’s penalties for failure to produce the agreed-upon number of cars in Craiova and allegedly damaging the environment, Mediafax informs.
The government justifies this compromise by invoking the large financial effort necessary to hire lawyers, as well as the desire not to “distort” the Romanian investment climate and public image to potential investors. The American group took over Automobile Craiova plant in 2007 from the state by paying EUR 57 million for 72.4 percent of shares. According to the privatization contract, the investor had an obligation to make technological and environmental investments of EUR 675 million and a production volume of approximately 250,000 vehicles before March 19, 2012.
Romanian authorities claim the investment program was met with, but as a result of the economic crisis, Ford requested that the target number of vehicles and, proportionately, the state aid volume for investments be decreased, thus forgoing the state aid for professional training approved by the European Commission. Nonetheless, the investor was still bound to pay a penalty of 25 percent of the purchased shares price, namely EUR 14.25 million.