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European Commission calls into question Oltchim privatization


The European Commission has asked Romania to provide details on the privatization of Oltchim chemicals factory, following suspicions of the state not behaving like a private investor, and taking over Petrom's Arpechim refinery might create advantages to this oil company, Competition Council chair Bogdan Chiritoiu told Agerpres.

'There is a suspicion that taking over Petrom's Arpechim refinery would result in advantages for Petrom, which would be freed from some very costly obligations related to closing this refinery, such as the decontamination of the area,' Chiritoiu mentioned.

The Arpechim refinery of Pitesti (northwest of Bucharest) is Oltchim main supplier of raw material, and the Romanian state promised to buy it from Petrom and sale it in a package with Oltchim, should potential investors be interested.

Petrom has closed down Arpechim in 2011, because the demand of oil products was low on the domestic market; the refinery is now in conservation.

According to Chiritoiu, the EC has asked Romania to demonstrate a private investor behaviour as regards the privatization of Oltchim.

'The Commission asked explanations of the fact that although Oltchim has debts to the state, the state does not foreclose it like any creditor would; this raises questions about a possible state aid,' the competition watchdog official detailed.

The EC has approved in 2012 the conversion into shares of a 135 million euros debt of Oltchim to the Romanian state; the step has not been taken yet, because it is conditioned by the privatization process.

The Oltchim petrochemical factory has posted a loss of 114.51 million lei (1 leu = 0.22 euros) in the first half of 2014, down 22 percent year-on-year from 147.49 million lei. Operational loss amounted to 108.8 million lei, and financial loss to 5.7 million lei.

Oltchim is insolvent since January 2013, and the privatization deadline has been set for December, after several delays.

So far, several companies showed interest in taking over Oltchim, including SOCAR (Azerbaijan), Chimcomplex Borzesti (Romania), Oil and Gas Trade (Russia), the Baota Petrochemical Group and Junlun Petroleum Co. consortium (China) and MOL (Hungary) through its petrochemical division Petchem.