Divided opinions concerning privatization of state assets

IMF delegation was in Bucharest for the Fifth Review of the Stand-By Arrangement with Romania, facing the most difficult task since the beginning of agreement, considering that the most previous targets for Romanian authorities for state companies were not complied.

In addition, another important point of approached issues, wages reunification, is a delicate issue and the situation becomes complicated with the obligation to return the contributions withheld to retirees by state.

The fifth evaluation of a preventive agreement, signed by Romania with the IMF and European Commission, runs from Tuesday.

If at the previous evaluation Romania had fulfilled the commitments undertaken, the situation could be different this time and that is because the implementation of private management at state-owned companies, as well as the liberalization of energy markets.

In addition, neither the effective activity in public enterprises is carried at their own pace by international donors.

So far the government has achieved the sale of a package of 15percent of Transelectrica by a secondary public offering at stock exchange and developed processes that have been designated brokers for listing the 15percent of Romgaz and 20percent of Tarom, but also by who have selected legal advisers for the privatization of CFR Marfă and the listing 10percent of the Hidroelectrica shares.

All had due for completion by the end of April.

The same time limit is also provided for selecting brokers in order to sell the minority shareholding of Poşta Română, the majority shareholding of Electro Serv, and to appoint legal advisers for the privatization of Electrica Serv and Electrical Furnizare and listing of 10percent of Nuclearelectrica .

Government has therefore more than a week to meet these commitments.

Moreover, by the end of April, it should be privatized Cupru Min, where due to cancellation will resume the first call, and Oltchim, where has not been yet over either transformation process of receivables in actions, but had to be also conducted the selling public offer at stock exchange of a 15percent package of Transgaz, which has been delayed to May or June.

Authorities "should not rush to privatize state assets"

Invited at the show "Actualitatea în dezbatere " at RRA, the economic analyst Lucian Isar supports, however, that authorities should not rush to privatize state assets.

"Do not jump from a loss of an asset that can produce, directly to privatization. Go through intermediate stages: change management, restructure coarse and only after that you can go in the privatization area , which in theory implies other purposes. So basically, you privatize if you want. Additional capital should be the main step to get you on stock.

"Because if, let’s say Transelectrica , if you have listed on the stock exchange, on the contrary, with a 15percent discount having the company unprepared and not even have a new capital contribution but only you changed the state-owned property on private property, who has not the opportunity to come up with fresh money or know-how, you did really nothing." said Lucian Isar.

Economic analyst added that the Bucharest Stock Exchange is too small, does not have sufficient liquidity and is poorly managed, therefore unable to determine a fair price for strategic assets, such as those in energy.

In response, the economic analyst Aurelian Dochia present in the same show said that listing on the stock exchange requires companies to a greater transparency and also leads to improved performance.

Aurelian Dochia brings that argument in favour of privatization of what happened after 1990.

"I consider that we still forget about the 20 years when we had this discussion on the state companies, for about 20 years all say that is good and necessary to have good management, that is good and necessary to restructure, that is good and necessary to recapitalize.

"They did this in 20 years and again and never get better, because we are in a system of interest, ultimately, the state companies cannot be broken," said Aurelian Dochia.

In his opinion, political or other interests cannot be eliminated only by privatization or ensuring a private professional management.


Translated by Ioana Vioreanu
MTTLC, Bucharest University