IMF intent letter: the government will privatize some energy companies if it will fail to create Electra and Hidroenergetica giants

Vineri, 11 februarie 2011, 12:57 English | Top News

The government will sell its minority shares it holds at energy companies that should be part of the Electra and Hidroenergetica giants. However, it will not be done unless the strategy of setting up the new national giants will not be successful until the end of 2011, the government’s intent letter to the IMF, for the end of the January – February evaluation reads quoted by Romanian news agency Mediafax. The letter reads that the listing of 15% of the shares held by the Economy ministry at Romgaz, the natural gas producer will be undertaken until Spring 2012 with a several months delay than initially planned. The letter also reads that energy prices from bilateral contracts will be increased to the market value. 

The process setting up the two energy giants has been blocked for several months due to contestations submitted by unions, creditors and Proprietatea Fund. At the moment, there are 20 such complaints submitted in justice. Initially, Economy ministry representatives said that the re-organization will take place in 2010 but with the complaints, the state advanced a new term for the end of 2010. 

The government also modified law 31 on commercial companies so that the re-organization process cannot be affected by the trials. However, not even this modification eliminated the blockages in justice. Economy ministry state secretary Claudiu Stafie said on Tuesday that authorities are considering failure of re-organizing the energy sector by creating two national companies as the project is blocked in justice and already consider a backup plan that might include re-privatization plans of some energy producers.  

The listing of 15% shares owned by the Economy ministry in the Romgaz Medias natural gas producer will be undertaken until Spring 2012 with a several months delay than initially estimated. The government also plans to sell its shares it holds at Oltchim by 2012. At the end of 2010 Oltchim had debts of about 545 million euro and was included among the other 20 state companies that will be monitored in the new 2 year agreement the government will sign with the IMF/EC and WB.  

Moreover, in the energy sector, prices set by state companies selling electric energy and gases through bilateral contracts will be adjusted to the market level as soon as the legislation allows it to. New bilateral agreements will be transparent and un-discriminatory.