Tuesday, October 2, 2012

Romania's sale of chemical plant fails, sees completion in 2013

Oct 1 (Reuters) - Romania scrapped the sale of its majority stake in indebted chemical plant Oltchim on Monday, saying the tender winner, media tycoon Dan Diaconescu, did not submit required documents in due course.

The government pledged to complete the process in 2013.

Oltchim's privatisation is part of a revenue-boosting scheme agreed with the International Monetary Fund, which leads a precautionary standby loan deal for Romania.

The southeastern European state must work to rein in local administration arrears, raise gas tariffs, and launch tenders to list a minority stake in gas pipeline Transgaz and the sale of Oltchim.

The government's OPSPI privatisation agency said on Sept. 21 it sold its 54.8 percent stake in Oltchim for 203 million lei ($58.4 million) to Diaconescu. Diaconescu, who is also a populist politician, outbid offers made by German chemical group PCC SE, as well as local firms Aisa and Chimcomplex Borzesti.

"The winner did not show documents to prove he holds the sum. It is useless to continue negotiations," said Economy Minister Daniel Chitoiu on Monday.

"It failed," Prime Minister Victor Ponta told a news conference, adding that a strategy to relaunch the plant will be unveiled this week and the sale is due to be completed next year.

Diaconescu has said he supplied relevant documents.

The leftist government has met its budget deficit target as part of its IMF-backed aid deal, but it has lagged in other areas, such as absorbing the European Union's development funds and privatising minority stakes in a slew of transport and energy firms.

Diaconescu, whose new party advocates steep tax cuts, has emerged as the country's third political force since last year, after the ruling Social Democrats and the opposition Democrat-Liberals, with 14 percent support in opinion polls.

Romania is to hold parliamentary elections in December. (Reporting by Radu Marinas; Editing by Leslie Adler)

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