Franks: Privatizations off course, six companies tipped to attract investors

Romania’s privatization timetable has slipped and some auctions are failing because they were not well prepared, said the chief of the local IMF mission, Jeffrey Franks

June 2012 - From the Print Edition

The IMF has decided to focus on six companies – Hidroelectrica, Nuclearelectrica, Romgaz, Transgaz and public offerings for Tarom and CFR Marfa – he added. Franks bemoaned the “continuing slippage regarding the timing of privatization, especially since many processes have failed for reasons that could have been prevented.” He added, “We are focusing on companies with a greater economic impact and the greatest impact on attracting investors. But are we not selling Romania’s crown jewels? Even the crown jewels need millions of investment to keep pace with technological developments and a growing economy. The state has no money and it must come from the private sector.”
The IMF official said that the new government will need to focus on listing Hidroelectrica, Nuclearelectrica, Romgaz, Transgaz and the public offerings of Tarom and CFR Marfa, even though “the Oltchim privatization is important.” Franks said that just because a state company is profitable this does not necessarily mean that it is well run.
“Many state companies earn less profit than they should earn because of inefficiency, bad contracts or corruption (...) I’m sorry to say that we have not made adequate progress in the introduction of private management in state companies. I have even heard that there was an attempt to manipulate the process by involving people with political interests,” said the IMF chief. According to previous agreements with the IMF, Cupru Min and Oltchim should be privatized by the end of April.