The measure is included in an addendum to the privatization contract concluded between Romania’s privatization authority AVAS and Ford Motor Co. for local car plant Automobile Craiova.The act will be approved through an emergency ordinance to amend the law on the privatization of the plant.
The act was drawn up following negotiations between Ford and a Government commission in May 2010 – December 2011.
Ford bought Romanian car plant Automobile Craiova in 2007. Under the deal, the U.S. carmaker pledged to pay the state up to 25% of the purchase price unless it stepped up production to over 250,000 units by September 2011.
Under the deal, Romania was to offer Ford state aid for investments and staff training, which had to be approved by the European Commission.
The Commission noted Romania granted Ford illegal state aid worth EUR27.56 million, and called on the Government to recover the money.
Later, the Commission approved a state aid worth EUR143 million for a EUR675 million project Ford planed to develop in Craiova, as well as EUR57 million in aids for staff training at the Romanian plant.
Considering the difficult international and local economic situation, Ford asked for the contract to be reanalyzed. Following negotiations, Ford and Romanian authorities agreed to sign an addendum to extend by December 31, 2012 the deadline by which Ford will have to meet the investment terms included in the contract.
They also revised clauses regarding state aid: the state aid for investments was capped at EUR75 million. Ford gave up on the staff training state aid.
The addendum was sent to the EC for a standpoint.
Ford announced in January it will produce 60,000 B-Max cars this year at its plant in Craiova, and estimated production will hit at least 100,000 units in 2013.
Ford manufactured 17,105 Transit Connect commercial vehicles between April 2010 and October 2011.
The Transit Connect production was relocated to Ford’s car plant in Valencia, following a decision taken in June, aimed to reorganize Ford’s Europe-based car plants.
Car sales in Romania dropped 19% in 2010 to 119,417 units and 7.4% last year, to 110,598 units.