Friday, April 1, 2011

Romania must sell of energy sector to end corruption

BUCHAREST (AFP) – The US ambassador to Romania Mark Gitenstein on Thursday urged authorities to sell off the country’s state-owned energy companies in order to uproot corruption and cronyism.

“The energy sector here will require significant amounts of new investment if the sector is to be a driver for, and not a drag on, Romania?s recovery,” Gitenstein said during a ceremony at the Bucharest Stock Exchange.

“In the energy sector alone you need something in the range of 10 billion euros to modernize the sector and thereby unleash your most important strategic assets,” he added.

However, this “will not happen as long as these assets are tied up in inefficient state-owned enterprises run by inexperienced political cronies making decisions based not on what?s best for the company but what serves their own interests.”

Romania’s gas production covers 70 percent of its needs while its wind-power potential makes it an El Dorado for investors in renewable energy sources. The country also has oil fields in the Black Sea and in Transylvania.

Gitenstein called on Romania to follow in the footsteps of Poland, whose government announced in 2009 that it would raise over 10 billion euros ($14 billion) by selling part of its interest in state enterprises.

Unlike Romania, he stressed, “Poland did this not by giving preferential deals to political allies who bought the assets below their fair value but by using its equity markets.”

The ambassador added that instead of taking steps to deal with the real problems of this sector, Romania was “rearranging the deck chairs on the Titanic.

“The on-going effort to reorganize state-owned energy companies into two ‘national energy champions,’ instead of exploring full or partial privatization options, is not only an inefficient use of valuable resources” but also a policy that would significantly impede competition, he said.

The government’s plan to set up two energy champions, Electrica and Hidroenergetica, has been criticized by several of the companies concerned as well as by foreign experts.

Gitenstein also said he was impressed by Romania’s efforts to reform the state and end corruption but stressed that “the drive for reform should be coming from inside the country and not be imposed from the outside.”

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