THROUGH THE PRIVATIZATION OF CFR MARFĂ The state erases the debts of CFR SA again

The privatization of CFR Marfă is the way for the state to clean up again the debts of CFR SA, after it erased the almost 4 billion lei of debts which CFR owed to the state budget, by converting it into shares.

According to some government sources quoted by Mediafax, CFR Marfă will take on budget debts of 606 million lei from CFR SA, by offsetting some of the amounts through the amounts which the company has in the infrastructure company, and the budget claims will be converted into stock, meaning that the privatization revenues will go to the state budget.

"There will be an emergency ordinance through which CFR Marfă will take on the debt of 606 million lei which CFR Infrastructură owes the ANAF. Through this operation, the ANAF will discharge CFR Infrastructură of its debt, and CFR Marfă will partially extinguish its debt towards CFR Infrastructură. In the second step, the state will have the ability to convert into stock the debt it took on, for the purpose of privatization".

"This procedure will also significantly reduce the arrears of the state-owned companies monitored by the IMF, as well as replenish the budget revenues", the quoted sources said, adding that the operation has also been discussed with the representatives of the European Commission.

CFR SA owes 610 million lei to the state - overdue debts which accrued in less than a year, as stated a few days ago by Dimitris Sophocleous, the general manager of the company, who said: "CFR accrues debts of 40-45 million every month. (...) CFR has financial difficulties, as at the end of 2012 it had financial arrears to the state budget and to the suppliers of electricity. Almost all of the accounts of the company are frozen by the ANAF and by the employees, who were awarded the rights to their salaries which were unpaid since 2008, and earned in court".

Aside from the overdue amounts to the state budget, CFR also has over 400 million lei in arrears to the energy suppliers, of, as well as to other suppliers, as the total of the company's debt amounts to 1.6 billion lei.

CFR Marfă on the other hand, owes 1.5 billion lei, according to the minister or Transports, of which approximately 600 million lei to the state budget and 600 million lei to CFR Infrastructură, with the balance of the amount representing delay penalties and payments overdue to the private suppliers.

The announcement concerning the privatization of the railroad company was published on Friday, and it stipulated that the call for tenders for the 51% stake of the stock of CFR Marfă will start at 798.05 million lei (180 million Euros). The winner will probably be determined in mid-June.

The minister of transports Relu Fenechiu said that the assessment of the company considered the conversion into stock of all the debts which the company has in the Romanian state, all the way to privatization. According to him, the European Commission considers that the conversion of the debts into shares represents a state aid, which is only allowed in the context of a privatization.

Last year the debts of CFR SA were erased, through a derogation from the current legislation which regulates the public debt. The ordinance based on which the debts of CFR Infrastructură were converted into stock emphasized the fact that, due to the fact that CFR is on the list of the companies monitored by the IMF, the failure to adopt this measure "urgently", would prevent the meeting of the objectives set in the agreement with the international financial institution.

Relu Fenechiu said that so far, a number of eight "important companies" have manifested their interest in participating in the privatization of CFR Marfă.

"Three days ago, when we had a talk with the consultants, they told that were 27 companies, I think, which had expressed interest in CFR Marfă and eight important companies, we are not saying anything about the miscellaneous companies, which had announced their clear intention to participate in the privatization", the minister said.

Fenechiu mentioned that there are also social requirements, as the state is interested in taking over the control of CFR Marfă to keep as many employees which are currently working in the company.

The privatization of CFR Marfă represents one of the commitments taken on by the Government in the agreement with the IMF.