Chemical Industry Faces Crisis Oltchim Is Not For Sale

• Government announces VAT returns

• Oltchim stays with the State

throughout the crisis

• The chemical plant to get 488 million EUR investment plan and restructuring process

• State promises cheaper electricity, debt-for-share swap and guarantees for acquiring the petrochemical division of Arpechim

Oltchim - Ramnicu Valcea, one of the leading players in the European chemical industry, is not for sale in the current context of global economic and financial crisis. Considering the severe lack of liquidities on the market, the State does not intend to privatize the largest exporter in the Romanian chemical industry, who has built a history as a reputed chemical producer of over four decades. As any industrial company, Oltchim is strongly affected by the ongoing crisis. The year 2008 ended with losses of 225.64 million RON, despite an 11.26% increase in turnover to 1.94 billion RON.

Economy Minister Adriean Videanu and Finance Minister Gheorghe Pogea visited the chemical plant yesterday to meet the management and discuss ways to help the plant past the financial difficulties. Both ministers stated that the Government would become actively involved in supporting the plant, via both a restructuring plan and an investment plan. They promised fiscal incentives and State guarantees to help Oltchim acquire the petrochemical division of Arpechim, as well as help on the matter of converting debts to the State into shares.

Earlier this year, Oltchim announced they were going to ask the European Commission for clearance to get State aid to bring production back to normal parameters following severe effects of the global crisis. On this note, the minister of Economy announced yesterday that Oltchim would get a 488 million EUR investment plan focused on general modernization and the acquisition of the petrochemical division or Arpechim - Pitesti, a refinery controlled by Petrom. Videanu pointed out that the upcoming restructuring plan did not necessarily include layoffs.

"Within the restructuring process, we will have to identify the assets which contribute to the performance of the company and get rid of the assets which only consume Oltchim resources," Videanu said. Referring to the conversion of debts to the State into shares, Videanu said it was necessary to notify the European Commission prior to such move in order to remain in line with the E.U. legislation on State aid. According to Videanu, the notification process is in progress and Brussels will answer in the following weeks.

Oltchim received further good news from Finance Minister Gheorghe Pogea, who announced that the Government would unblock overdue VAT returns. In Oltchim"s case, the State needs to reimburse 13.4 million RON worth of VAT. According to NewsIn, Pogea also said that the State would also help Oltchim with the electricity price: "Considering that Oltchim is a major industrial consumer, the electricity suppliers could offer some incentives," said Finance Minister Pogea.