Romania plans to sell minority stakes in nuclear and hydropower operators in the next 12 months as it needs significant investments in the energy industry, International Monetary Fund official Jeffrey Franks said.
The government will probably sell share packages of more than 10 percent of the country’s atomic power company Nuclearelectrica SA and the hydropower generator, Hidroelectrica SA, Franks, who is the IMF’s mission chief to Romania, said in an interview in Bucharest yesterday.
The IMF and the European Union, which have extended Romania a combined 5 billion-euro ($7 billion) precautionary agreement over the next two years, have urged the government to improve the way the state-owned companies are run and bring in private management to help reduce a budget deficit to 3 percent of gross domestic product by next year from 6.5 percent in 2010.
The Balkan country is trying to attract investors to help spark the economy after a two-year recession. The government plans to sell minority stakes in its utilities Transgaz SA andTranselectrica SA (TEL) and largest oil company OMV Petrom SA (SNP) to finance infrastructure investments.
It added Nuclearelectrica and Hidroelectrica to the sales list as the government will probably discard a plan to divide energy assets into two holding companies because of legal issues, Franks said.
“I’m very happy that one of the achievements of this mission is that the government agreed to bring in additional private capital to Hidroelectrica and Nuclearelectrica,” Franks said. “They also agreed to sell minority or even majority stakes in some coal-fired power plants. This could bring billions of euros of investment to Romania in the energy sector in the coming years and that can help economic recovery.”
Prime Minister Emil Boc’s government still must decide on the “exact size” of the stakes to be sold in Nuclearelectrica and Hidroelectrica and also on the sale procedures, whether it will be through a strategic investor or via the stock exchange, said Franks.
The European Bank for Reconstruction and Development, which has disbursed about 4.1 billion euros to finance projects in Romania in the past 10 years, may be interested in becoming a shareholder in the sales of majority stakes, EBRD director Claudia Pendred said.
“We cannot invest in nuclear, but we could consider, subject to successful due diligence, co-investing alongside a strategic investor in the other energy companies if the government decides it wants to sell a majority stake to a strategic investor,” Pendred said in an interview in Bucharest today. “It doesn’t have to be 100 percent, it has to be a majority, 50 percent plus 1 share.”
The government pledged to international lenders it will sell majority stakes is unprofitable coal-fired power plants Turceni, Rovinari, Craiova and in the PVC maker Oltchim SA, according to Franks.
The Balkan nation still needs to solve the problem of unpaid debts of state-owned companies which total about 5 percent of gross domestic product, Franks said yesterday at a press conference.
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