THE ROMPETROL AFFAIR Radu Sârbu: The PETROMIDIA theater play

• Act I: The privatization conducted by the National Peasants' Party

At the time of its privatization, in the autumn of 2000, the shareholder structure of SC PETROMIDIA SA was dominated by the State Property Fund (FPS) (69.991%), together with SIF Transilvania (21.796%) and small shareholders (8.213%).

The financial terms of the privatization contract concluded by the Proprietatea Fund with ROMPETROL, on October 31st, 2000, were the following: 2 US dollars per share, namely USD 50,517,620 USD for the entire stake, to be paid in three annual payments; the full acceptance of the debts of the company, namely, 340 million dollars, of which 2,300 billion lei in debts to the state budget and 171 million dollars owed to banks, following the imports to of crude in the previous years, for which PETROMIDIA had obtained payment reschedulings from its creditors BANCOREX and the Ministry of Finance (for the CHASE MANHATTAN loan, for the liability "Egypt-Iran receivables" and for other liabilities); a share capital contribution of 205 million US dollars, of which 55 million lei for technology investments; 20 million US dollars for investments in protecting the environment.

• Second act: The social democrat forgiveness

In February 2001, after paying the first installment, ROMPETROL gained ownership of the shares. Shortly thereafter, the refinery was made operational again, and the petrochemical segment followed soon after. However, ROMPETROL never paid the historical debts of PETROMIDIA, only its current liabilities. The PSD government, which came to power after the elections of the year 2000, accepted in 2003 the softening of the contractual conditions, by converting the historic debts into bonds, with a seven year maturity, meaning they would have to be redeemed in 2010.

Moreover, if the bonds were not redeemed after the seven years, the state would become once again a shareholder, perhaps even a majority shareholder, in PETROMIDIA; the choice was left at the discretion of the borrower! PETROMIDIA, rechristened ROMPETROL RAFINARE, became bankable and grew.

"The generous souls" who went ahead with those terms of the agreement were Adrian Năstase, Dan Ioan Popescu and Mihai Tănăsescu...

• IIIrd act of the play: the sale by the liberals

In February 2007, even though the state had not yet collected on the almost 600 million dollars it was owed, the AVAS - the Authority for State Assets Recovery (the heir of the State Property Fund - FPS and of the APAPS), which was led at the time by liberal Theodor Atanasiu, ended the post-privatization monitoring of Rompetrol, with the blessing of finance minister Varujan Vosganian and of prime-minister Tăriceanu, thus causing the Romanian state to completely lose control of its receivable and paving the way for the sale of the Rompetrol group. Which is precisely what happened, because, in 2007, Patriciu sold 75% of the shares of the Rompetrol Holding group to the state-owned company of Kazakhstan. The market value of the Rompetrol Group was calculated at 3.616 billion dollars, which means that the value of the deal was 2.712 billion dollars. Thus, the problem of paying the company's debts shifted to another party, because the bonds were due in 2010.

• IVth act: The Kazakh management

"The food chain" of oil comprises three links: extraction, refining, and distribution. The strongest link is extraction, because regardless of how the price of oil fluctuates, this link will never lose money, as generally, profits are big to very big. On the contrary, the weakest link is refining, especially in the case of refineries which aren't linked with oil deposits.

Looking back, it now seems obvious that from the very beginning, the project of Dinu Patriciu was to sell the refinery to a company which owns deposits and wants to enter new markets, especially in the European Union. It is just as obvious that the Kazakh group can keep the refinery in the red indefinitely, transferring the profit upstream or downstream; which is precisely what he did.

Unfortunately, it is just as obvious that the impotence of the Romanian government of doing anything about it, because of the contract it signed in 2003.

• The Vth act and the finale: it is being written by the PSD and the PNL

The circle opened by Năstase will be closed by his former disciple, Victor Ponta, but it is clear that it won't be a beautiful ending, but rather one causing losses for the nation's budget. I think that it is just a matter of days before we find out how much the USL government has (already) settled for, because it won't take them long to sugarcoat the turd with the promise of future investments. The losses of the state budget will amount to over 200 million dollars, in other words huge. Meanwhile, the former wife of Dinu Patriciu is demanding ten times as much in the divorce settlement...