Romania Delays Sale of Main Chemical Firm

The cash-strapped country has postponed the sale of the plastics manufacturer Oltchim.Romania on Monday again extended the deadline for receiving preliminary bids in the sale of its 55-per-cent stake in cthe hemical producer Oltchim Ramnicu Valcea to September 21.

The economy ministry pushed back the deadline, responding to the fears of potential investors concerning a lawsuit initiated by a group of small investors who have challenged the privatization plan.Bucharest has been hoping to earn at least 250 million euro from the sale of its majority stake in the company.

In recent months, the government has been pushing forward with a privatisation timetable, as part of a commitment to economic restructuring being carried out in consultation with the IMF.

As part of the plan, it must also sell a minority stake in the natural-gas grid operator Transgaz this month to get IMF approval to obtain the next tranche of funds from a precautionary accord.

“There is no other solution for Oltchim but to have a private investor… because the government can’t afford to keep pumping money into the company anymore,” Prime Minister Victor Ponta said recently.

Faced with a pressing need for cash, Romania has tried in recent months to sell off some state-owned companies, most in the energy sector, but it has failed to make headway.

Last year, Bucharest failed to sell a minority stake in the oil company Petrom on the stock exchange.

It is also late with selling the natural gas producer Romgaz, and the government’s stake in national carrier Tarom.

While most experts approve of the privatization plans in general, they are critical about the context. “Romania has a growing need for cash, but any privatization has to be carefully planned in order to get as much money as possible,” economic analyst Ilie Serbanescu says.

“We have to sell or reform state-run companies, but we also need a clear strategy to reinforce the economy and get out of the recession,” he adds.

The upcoming Oltchim privatization caused industrial unrest, with employees protesting at the plant in Ramnicu Valcea, and 17 executives, including the General Manager, handing in their resignations.