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State companies privatization, "inappropriate at the moment"

The General Director of Employers' Confederations in Industry, Trade and Services, Adrian Izvoranu, believes the ideal solution for the state companies that bring losses is management privatization.

State companies privatization, "inappropriate at the moment"

11 Mai 2012, 12:14

Employers consider that IMF insistence on privatization of state is justified because they make liabilities instead to represent a budgetary resource.

In an interview with Radio Romania Actualitati editor, Cristina Grecu, general manager of the Employers' Confederations of Industry Trade and Services, Adrian Izvoranu, warns, however, that beyond the ideal solution that would be the privatization, it must be carefully analysed the economic context in which would do this.

"Maybe it is appropriate or not to do privatization now, in a prolonged crisis and a development of unpredictable crisis. Nobody knows how it takes.”

"In these market conditions, now it is clear that any privatization will be at a loss because there is not the time, it is not the season to be investors willing to buy Romanian assets, especially under the difficult situation on which there are in at the present time. " believes Adrian Izvoranu.

The representative of employers considers that currently the ideal solution is the management privatization, not privatizing.

"Why? Because privatization of the company is at risk for to be privatized by these companies, by competing entities, not necessarily interested in solving the problem, but the blocking of assets in question , the concerned production capacity or services." said Adrian Izvoranu.

General Director of Employers' Confederations from Industry, Services and Trade said that by private management means very large companies with valuable assets and many employees.

"In such cases, to outsource the management by an entity, by a consulting firm specializing in management which comes and implements in the undertaking company a management system so as to achieve economic performance, namely profit.”

"But this thing should be done so that the company has to be paid with a part of the profit, and not with the amounts by which is paid employment." said Adrian Izvoranu.

General Director of Employers' Confederations from Industry Trade and Services considers that there is no party leader to bridle the lusts of party lower echelons.

"I do not think anyone will be able to keep in the lusts of party lower echelons inferior , meaning those which have been used so far in 20 years to consider these companies as a source of funding.

"In these circumstances the only solution, in my opinion, is to aggregate all state-owned assets into a single entity, a state asset management agency, and that state asset management business agency to be managed privately in whole.

"At that time, it is impossible for any party to be able to exercise any influence, because there will always be a manager that has interest to make big profit, so that he can take a huge amount" , said Adrian Izvoranu.

The privatization of state enterprises "will continue"

The head of IMF mission evaluation, Jeffrey Franks, said on the program "News in the debate" from Radio Romania Actualitati that the intention letter negotiated with Ponta government, the privatization program of state enterprises will continue.

"The privatization program has not evolved as we wanted , so we need to focus on certain companies, to make them move on these quickly.

“At that point, it is impossible for any party to exercise any influence anymore, because there will always be a manager who has interest to make great profit , that can take a very large amount, said Adrian Izvoranu.

"Then the others would have to happen sometime later, because there has not been a plentiful movement. But the need to bring private capital in Romania continues to revive these companies," said Jeffrey Franks.

The head of IMF mission evaluation nominated companies that should be privatized soon.

"On the energy sector, we are talking about Romgaz, Transgaz, Hidroelectrica and Nuclearelectrica. In the transport sector, we are discussing about CFR Marfa and Tarom. That does not mean we have abandoned the idea, for example, that we must try to privatize Oltchim this year. It is all on the agenda.”

"But what we are looking to see is that the six are those who would bring the greatest economically benefit for the country, bringing inside those private companies," said The Head of IMF mission evaluation.

Translated by Ioana Vioreanu

MTTLC, Bucharest University

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