EXCLUSIVE: FROM "DEVELOPMENT" TO "TOURISM" A new cash-strapped investment company

• Minister Elena Udrea wants to dismantle the investment company of the Ministry of Development, but will set up another one, controlled by the Ministry of Tourism

• With a budget of just 800,000 lei, the investment company will manage the tourism assets owned by the Romanian state

Eleven days before announcing the dismantling of the National Investment Company, minister Elena Udrea approved the creation of a new investment company that will manage the assets of the Romanian state in the tourism sector.

"The Investment Company for Tourism", was set up on May 14th by changing the name and the business line of the joint stock company "Centrul de Învăţământ pentru Turism SA", the company which handles the training of workers in the tourism sector. On May 25th, it was Minister Elena Udrea who announced that she had decided to dismantle the National Investment Company to eliminate any suspicion concerning the inappropriate use of public money on the construction of sports halls and skating rinks.

The company will manage all the commercial activities of the state in the tourism sector, including sales, acquisitions or mergers, according to official sources from within the company.

The new structure will also invest in the training of tourism employees, thus covering the former line of business of the former Center for Tourism Training, our sources say.

Surprisingly, however, it would seem the new investment company was not created for investments, but rather to sell off the state"s holdings in the tourism sector. In other words, whatever is left to sell after the great privatization in the tourism sector, performed by former minister Dan Matei Agaton.

The fact that according to our sources the new company will have a minuscule budget this year (around 800,000 lei), equal to the one of the former Center of Training for Tourism, seems to lend additional weight to this theory. Less than 200,000 Euros would be insufficient for any major investments in tourism, under the current economic circumstances. What"s more, the new company will take over the assets of the Training Center, namely a plot of land with a surface of almost 6 hectares with the afferent buildings, located in Bucharest.

"Considering the budgetary difficulties, at first the company will initiate the process for the sale of the state"s holdings in the tourism sector, and in the future, with the funds obtained, it will use some of the money to continue the investment projects which have already been initiated", our sources claim.

Besides, the company"s line of business is "hotels and other accommodation facilities", and the announcement of the Official Gazette contains no mention of the key word, "investments".

Minister Elena Udrea repeatedly said that she favors the plan to sell the tourism infrastructure owned by the state to tour operators. The Ministry expects to earn 10 million lei from privatizations this year.

According to the Minister, these companies have been continually losing money while under the management of the state, and selling these hotels would allow the state to find the money needed for other investments for which there is a more pressing need, such as infrastructure.

The state still owns attractive holdings in the tourism sector, with stakes in 22 companies, some of which manage famous hotels: Lido (42.8%), Athenee Palace (33.9%), Mamaia (96%), Neptun-Olimp (52.2%), Litoral (82.27%), Predeal (89.9%) or Robinson (21.5%).

This means we may see these stakes being sold in the near future.

• Professional Associations: We were not consulted on the subject of the new investment company

Professional associations say that the Ministry did not consult with them when making the decision to set up the Company for Investments in Tourism, by changing the name and the line of business of the Center for Tourism Training.

"We were not aware of this project, normally we should have been consulted", said Daniel Vasilescu, the chairman of the Federation of Professional Associations in the Romanian Tourism Sector (FPTR).

In his opinion, the state"s decision to sell its minority stakes is the correct thing to do: "It is easier for the state to hold responsible a company in which it is no longer a majority shareholder".

Mihai Râjniţă, the secretary general of the Federation of the Hotel Industry of Romania (FIHR) said that he found out from other sources about the action of the ministry: "We have not been consulted on this matter, even though we could have provided valuable expertise". He also expressed his skepticism about this project.

• What the Ministry says:

"The company that you are referring to has been operating as a public limited company since 2008, but its name did not match its line of business, given the fact that the company owns and manages the state"s tourism infrastructure. Following the last session of the General meeting of Shareholders, it has been decided to change the name from SC Centrul de Învăţământ Turistic SA (ed. note: The Center For Training in Tourism PLC) and the changing of its line of business to "Hotels and other similar accommodation facilities - NACE code 5510". (Up to 2008, the Center for Tourism Training operated as a public company controlled by the ministry). The company will not handle the sale of the stakes that the state has in various companies in the tourism sector, because those stakes belong to other companies. As to what concerns the budget of the company, we must add that it is not funded from the state budget".