The postponement of major listings as a result of hydro-power company Hidroelectrica’s insolvency, the failure to sell companies such as mining company Cupru Min and chemical plant Oltchim and the suspension of the privatization process at freight rail operator CFR Marfa have put privatizations on hold.
What can still be expected this year is the sale on the stock exchange of 15% in gas transmission company Transgaz (TGN.RO). The Economy Ministry’s intention was to sell 10% in Hidroelectrica on the stock exchange. But the company lost around EUR1.5 billion from contracts with “smart guys,” and is now insolvent.
The term “wise guys” is used for a small number of companies, especially traders, who bought energy directly from Hidroelectrica at less than the market price and sold it for much higher profits.
The result of these failed privatizations has been that there is no more talk of stock exchange privatization of 15% in Cupru Min, 10% in nuclear power producer Nuclearelectrica and 10% in Hidroelectrica. The sales of Cupru Min and Oltchim, set to be conducted in 2012, are a failure, and even the sales processes of state-run airline Tarom and of the Romanian postal company do start, it is doubtful whether they will be successfully completed under the current market circumstances.
When markets were peaking and the state was able to get a better price, previous governments did not sell and did not conduct stock exchange privatizations. Now there are few prospective buyers and the state has to continue to carry the burden of companies with losses of hundreds of millions of euros.
(English version by Daniela Stoican)