New Privatisation Plans in Energy Sector

A key element to Romanias economic growth is a wide-scope reform of the energy and transport sector.

Roxana Vasile, 07.08.2013, 13:50

At the end of last month Romanian authorities, the International Monetary Fund and the European Commission agreed on a two-year precautionary loan deal worth 4 billion euros. The IMF board will discuss it in autumn, but in the meantime Romanian newspapers have published a version of the letter of intent that Bucharest plans to send to Washington. The text includes new promises, as well as old ones that have not been kept.

In a nutshell, the Government intends to increase property taxes for owners of apartments used for business purposes; to amend insolvency regulations and the Civil Code; to keep a tight budget deficit, while reorganising the National Fiscal Administration Agency; to speed up public healthcare reforms and sell the minor stakes it holds in several companies. One company to be privatised is the National Freight Railway Corporation, in which the Romanian state still holds most of the shares.

As far as the energy industry is concerned, the Stock Exchange listing of the shares of some local energy giants, scheduled to take place this year, has been postponed to next autumn. One of these companies is Nuclearelectrica, which produces electricity using nuclear power. The Government holds around 90% of the stock, and by the end of September 2014 it intends to launch an initial public offer on 10% of the shares. As for Romania’s largest natural gas producer, Romgaz, which is subordinated to the Economy Ministry, an offer will be launched for 15% of its stock no later than the end of this October. The taxation regime for the securities of companies traded in foreign stock markets is, however, to be clarified, and if necessary new legislation will be endorsed.

By next summer, an initial public offer should also be launched for Electrica, one of the key players in the national energy delivery, supply and service market. The future of five of this company’s six regional maintenance units is rather unclear. At least three, but possibly all of them should be separated from the parent company and sold. And last, but not least, Hidroelectrica, which ranks 7th in a top of the most valuable 100 companies in Romania, will have 10% of its stock listed in the Stock Exchange in late June next year, but a special government order is yet to be issued in this respect.