Government and IMF have included Electrica and Constanta Maritime Port Administration on the list of companies set to have private management.
According to a document obtained by Mediafax, the Romanian government and the International Monetary Fund (IMF) have agreed that CFR Freight will be removed from the list of companies set to have private management and will be sold to a strategic investor in a process that should be completed by the end of October 2012, a process in which the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), the World Bank’s investments division, should be involved. The changes were agreed this autumn and were included in the letter of intent. Prior to this latest agreement, the letter that the government and the IMF had signed in September saw CFR Freight in the group of the first nine companies set to be given private management, with the outlook of selling only 20 per cent of its shares. This autumn however, the Supreme Defence Council (CSAT) decided to sell over 50 per cent of the shares, President Traian Basescu stating that CFR Freight was “severely infested by economic parasites” and that the only way of diminishing the state-owned companies’ vulnerabilities is to privatize them.
Thus, according to the latest agreement with the IMF, the state will hire a privatization consultant by the end of January 2012, will publish the share sale plan by mid-June 2012 and will complete the privatization by the end of October 2012. During that time, the measures through which companies are persuaded to pay their unpaid bills will continue. However, new names have appeared on the list of companies set to have private management – Electrica and the Constanta Maritime Ports Administration. Likewise, the government is taking into account the possibility of setting up a real-estate company that would include in its portfolio the real-estate assets belonging to state-owned transportation companies, an operation through which the authorities claim they are trying to raise revenues and improve assets management in this sector.
Hidroelectrica contracts signed outside OPCOM, to be cancelled
The document obtained by Mediafax also shows that the government took the commitment to send the concerned companies notices to cancel all bilateral Hidroelectrica contracts for which the transaction was not completed through the OPCOM (Operator of Electricity Market in Romania) energy market. Two weeks ago, President Basescu stated that as Head of State he did not manage to put an end to the “famous wise guys problem” within the energy sector, but deemed that Romania will receive considerable support from Brussels in order to solve this problem. Nevertheless, ‘Adevarul’ daily notes that “at this moment the “wise guys” are exerting pressures on Hidroelectrica in order for it to lift its force majeure clause from contracts. ArcelorMittal officials have exerted pressures in order to sign a new contract for 2012,” energy sector sources stated. However, the moment it will sign a new contract with Mittal, Hidroelectrica will have to deliver the entire amount of electricity stipulated in the contracts, but it has no way of doing so. Consequently, it would have to buy electricity from thermal power plants where the price is very high, thus registering huge losses.
EUR 20-60 M from selling tarom shares on stock market
The government estimates it will obtain EUR 20 M to EUR 60 M from selling 20 per cent of Tarom’s shares on the stock market. Nevertheless, the scenario on whose basis the intermediary’s commission was calculated points to proceeds of EUR 40 M from this transaction.
Following negotiations with the IMF, the government decided this summer to sale 20 per cent of Tarom’s shares through a secondary IPO on the Bucharest Stock Exchange. Given the delay in selecting the intermediary for the process of listing the company on the stock market, the government and the IMF agreed to postpone the deadline until the end of April 2012. The government reconsidered its decision to cancel the tender on selecting an intermediary after the consortium formed by the Carpatica Invest and Swiss Capital brokerage companies revised its offer and lowered its commission by half.
In other developments, the consortium formed by Raiffeisen Capital & Investment (RCI), BT Securities and Wood & Co. brokerage company, filed yesterday the only bid to intermediate the operation through which the state wants to sell 15 per cent of Transgaz (TGN) shares on the stock market. If the sale takes place at the quotation that Transgaz shares had at the end of the trading day on Wednesday, the state could obtain RON 376.1 M (EUR 86.4 M).