Romania calls a halt to Oltchim sale "circus"

Romania has finally ended the “circus” surrounding its attempt to privatise loss making PVC producer Oltchim, after the winning bidder failed to sign the sale contract and come up with the money.

After days of delay and confusion over a deal, the government has pulled the plug on the proposed sale to Romanian TV tycoon Dan Diaconescu who had offered to buy the business for €45m (£36m). 

Chaotic negotiations with Diaconescu ended last week when he reportedly turned up at government offices with bags containing €3m in cash to cover the cost of unpaid salaries at Oltchim.

When he failed to meet the 1 October deadline for completion of the deal the government cancelled the sale contract.

The government has appointed a new general manager at Râmnicu-Valcea-based Oltchim which was forced to close down last month through lack of cash. Ministers now intend to restart production, pay the employees’ unpaid salaries and re start the privatisation process early next year.

But this time, the government plans to change the sale process. Instead of holding an open public auction for its 54.8% stake in Oltchim, it intends to negotiate directly with potential buyers. The administration, which previously made clear it preferred bids for the firm from large industrial groups, possibly from Russia, now wants to negotiate with a strategic investor.

The newly appointed Oltchim manager, Mihai Balan, formerly head of the Romanian energy company CET Govora, said he would “unblock” the chemical firm’s bank accounts, re start manufacturing, pay overdue salaries and try to regain contracts lost when it shut down.

In recent weeks, Oltchim workers have continued protesting against the privatisation process, demanding payment of two months’ back pay and a resumption of the plant’s production.

As for Diaconescu, owner of Romania’s OTV television station and the founder of a political party, he faces possible court proceedings after being accused of fraudulently misleading the state and public over his ability to buy Oltchim.

A criminal complaint has been brought against the TV mogul by the former head of the government’s Office of State Ownership and Privatisation of Industry (OPSI), Remus Vulpescu. He resigned following the sale fiasco after being criticised by Prime Minister Victor Ponta.

The government plans to discuss the new privatisation process with the International Monetary Fund (IMF) before re starting the sale. The IMF has demanded Romania dispose of a number of state run companies as a condition for a loan agreement.

[ Back ]