By Chris Bryant in Vienna
Published: April 22 2010
Romania on Wednesday unveiled plans to sell several government-held stakes in key energy companies as it battles to boost investment in spite of severe budgetary constraints.
Adriean Videanu, economy minister, said in Bucharest that the government would raise “a very significant” sum by selling stakes in companies including oil group OMV Petrom and utilities Transgaz and Transelectrica.
“Money from the sale of these stakes will be used solely on investment in infrastructure,” the minister said, adding that the process could begin within nine months. The holdings will be divested via stock exchanges or a bidding process.
Romania approached the International Monetary Fund for a €20bn bail-out last year when external funding dried up and the government has since been forced to use part of the money to plug a hole in the state budget.
Under the IMF agreement Romania is obliged to cut public spending this year in order to lower the deficit from 7.1 per cent to 5.9 per cent.
But with tax revenues among the lowest in the European Union, there are few resources left to fund the kind of investments that would create jobs and help the economy recover from a deep recession.
“It’s very important that these [energy-sale] funds should be put towards investment in energy infrastructure and not towards pensions and salaries,” Lucian Anghel, chief economist at Banca Comerciala Romana, said.
The government is scrambling to find ways to finance projects without exacerbating the deficit, for example by developing public-private partnerships and making better use of European Union funds.
Mr Videanu said that state-controlled energy companies would invest Lei 8.3bn this year, an increase of about 65 per cent, which they would fund from their own resources.
Bucharest also plans to establish up to €3bn in public-private partnerships with international energy groups to finance infrastructure projects.
The state will keep at least an 8 per cent stake in Petrom, which was privatised in 2004 via the sale of a majority holding to Austria’s OMV; the government retained a 20.6 per cent stake.