THE ROMPETROL AFFAIR Cristina Chiriac: "The Romanian state will clearly lose out on this deal"

Reporter: What is your take on the deal between the Romanian state and Rompetrol by which the state will sell part of its shares owned in Rompetrol Rafinare, with the price the deal has been concluded at being lower than the historic debt of 500 million Euros?

Cristina Chiriac: The much discussed privatization of Rompetrol Rafinare SA is still causing turbulence in the Romanian economy, as it is still a touchy subject, or maybe even an Achilles' heel.

516 million was the amount which Rompetrol Rafinare SA owed the Ministry of the Economy, hence the Romanian state, a claim which was the object of a share capital increase in October 2011, with the Romanian state becoming a majority shareholder, with a percentage of 44.69% of the share capital at the aforementioned date.

What the Ministry of the Economy did to protect its interests and how it used its position of majority shareholder, everybody could see (?!).

In fact, we can very well say that it did nothing, in fact it lost the position of majority shareholder within one year, it has seen the stock drop in price, as well as the imminent acquisition on the open market by Rompetrol Group NV, with the latter clearly looking to gain control.

Why didn't the Ministry of the Economy sell the block of shares it owned in Rompetrol Rafinare SA in 2011 or 2012?

Strategy!

This is the word we keep hearing thrown around!

But "strategy" means not selling in times of crisis, when everybody knows that prices are low, "strategy" means finding a dependable investor and with an impeccable economic behavior, and if you still decide to sell, then you should choose the best method - transparent and competitive.

Why does the Government still want to remain a significant shareholder, that is another question which the government or the strategists will have to answer to.

Lately, the Ministry of the Economy has failed pathetically in all its attempts to sell the State's assets, with them ending with insolvencies instead.

Reporter: The prime-minister recently said that the agreement also involves investments by the Kazakh group of one billion dollars in Romania. How would you comment on that?

Cristina Chiriac: The Romanian state will clearly lose out on this deal!

Any contractual restriction (when we are talking about sales of assets or shares, starting with 2007) is out of the question, according to the new provisions in effect, so we can only speak of a verbal agreement.

If they had 1 billion dollars they would have paid the debt towards the Romanian state and then it would have been much easier for them.

I am skeptical and I tend to believe that this thing will never fully come true, especially considering the behavior of the Romanian state, which is far from positive.

Reporter: What would be the reasons of the government to sell its stake right now, just as the Kazakhs have used the legislative flaw to avoid paying their debt in cash?

Cristina Chiriac: In the current context, when all the countries are trying to consolidate their market economies, by focusing on preserving their economic sectors revolving around resources, any motivation in that regard lacks consistency.

The way this privatization is shaping up, it looks more like the state is wishing to close a chapter as fast as possible, rather than change a course of events.