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Privatization procedures to kick off by 2014 for all companies in Economy Ministry's portfolio

The Ministry of Economy (ME) intends to start by the end of next year privatization procedures for all the companies in its portfolio, less some that pertain to Romania's security core, Minister of Economy Varujan Vosganian declared at the end of the meeting with the joint delegation of the International Monetary Fund (IMF), the World Bank (WB) and the European Commission (EC).

According to information provided by the Ministry of Economy, Vosganian said that talks with representatives of the international institutions focused on three elements: the stage of cooperation with the international lenders, developments in the areas under the Ministry's direct responsibility, and the arrears of state-owned companies.

'In the beginning we had an in principle dialogue on the stage of our collaboration. We presented the views of the Ministry of Economy according to which the priority in the next period is to strengthen Romania's economic stability, and that by virtue of this principle we back the conclusion of a new agreement with the IMF, which should envisage the Government's devising a strategy that should also get the validation of the IMF, a highly important asset for the external image and the credibility of the Romanian market. Secondly, we made a presentation of the current developments in the areas under the direct responsibility of the Ministry of Economy: we presented data on industry and exports and the IMF agreed with us, that at this point, the industry and exports are the major pillars for Romania's development. Agriculture could add in, provided that we have an economically good year. The IMF also said yes to this. We reconsidered the GDP growth to 2%. And I said that if the industry and exports keep their trend so far, chances are that we even exceed 2%,' Vosganian said.

In connection with the arrears, the Minister of Economy said that he told the representatives of the international institutions that he would want the arrears of state-owned companies to no longer be an issue and the companies be put into private hands.

'We reiterated our commitment to have the Ministry of Economy initiate by the end of next year the privatization process for all the companies in its portfolio, less some which pertain to Romania's security core,' Vosganian said.

He added that the parties also discussed the commitments undertaken by the Ministry through the Energy Department regarding the privatization calendar in the coming period.

'We presented the calendar the Energy Department referred to us for Romgaz, Nuclearelectrica, CE Oltenia and Hidroelectrica. The IMF considers our plans to launch this fall stock exchange offerings for Nuclearelectrica and Romgaz are ambitious. We said that the procedures were already initiated and that we consider the program is realistic. They asked us why the deadlines for Hidroelectrica and CE Oltenia are set for 2014 and we answered that in their case the evaluation must also take into account the strategies for the participation of the two on the energy market, which requires a somewhat longer period,' Vosganian explained, adding that the program for Hidroelectrica is set for the second half of 2014.

The Minister mentioned that another topic discussed was Oltchim, which 'is almost at break-even point' in July.

'I reminded them that the IMF had suggested me to close Oltchim down and that I had opposed the idea. Here we are, six months later this July, with Oltchim close to break-even point, it will still see losses up to 700,000 euros, which is very little for its size and the scale of its previous losses. The IMF asked me the reason for Oltchim's visible improvement in the past six months and I explained that it got rid of the parasitic companies, has a long-term strategic thinking, also as concerns the workforce. I said that we also must observe the collective labor agreement, that we stuck to the insolvency calendar and that by September Oltchim will be ready for privatization, in the sense of having a special purpose vehicle built that is practically free of debt and the debt should remain with the old Oltchim. Then they asked about the position of the current shareholders, PCC and the Romanian state, and I replied that once the insolvency procedure was triggered Oltchim submits to the decision of its creditors, who are to decide the selling price and that they will get satisfied from the outcomes of the privatization,' Vosganian explained.

An IMF team headed by Andrea Schaechter was in Romania over July 17 - 31 to discuss the next program with Romania.