The Romanian Authority for State Assets Recovery – AVAS announced it suspended the negotiations for the privatization of the Tractorul Brasov factory on Friday, because clauses in the privatization contract were not agreed with by the potential buyer, Indian company Mahindra&Mahindra.

That means the whole privatization offer published in June 2005, as well as the following procedure are suspended.

The transaction failed as the two parties could not reach an accord on state assistance for the Romanian plant, as the Indian buyers considered the Bucharest authorities did not provide enough guarantees this assistance would be approved by the national Competition Council or unchallenged by the European Commission.

This adds to alarming statements of Romanian political leaders and trade union representatives and threats from local authorities that water, electricity and gas supplies to the factory might be suspended.

The Indian investors said however they would remain interested in taking over the Brasov-based factory and would continue the talks in this regard.