Gabriel Dumitraşcu: "We want a stabilization mechanism for the price of the Romgaz IPO"

The Romanian authorities are also interested in how the shares of Romgaz will perform after the IPO, given that the Romanian state will remain a majority shareholder, and as a result they want to have a mechanism for the stabilization of the price.

Gabriel Dumitraşcu, the head of the Privatization Division of the Energy Department, told us that, for the first time, the listing of Romgaz will bring a stabilization mechanism. This mechanism will also mean that about 15-20% of the shares allocated for the IPO will be given to a brokerage firm, which will trade them after the listing, to avoid major fluctuations of the price of the Romgaz stock.

Goldman Sachs, the intermediary of the listing of Romgaz, will issue GDRs (global depositary receipts) specifically for the producer of natural gas owned by the state, said Gabriel Dumitraşcu, the head of the privatization department of the Department for Energy. Thus, the price of certificates that will be traded on the London Stock Exchange will fluctuate strictly depending on the price of the shares and the performance of Romgaz.

The official of the Energy Department yesterday said, in a press conference, that Romanian investors are expected to invest approximately 200-220 million Euros in the shares of Romgaz. The Romanian authorities have decided to structure the offer of Romgaz in shares listed on the Bucharest Stock Exchange (BSE) and GDRs in London. The IPO will begin at the end of October and will conclude in November.

Gabriel Dumitraşcu said: "The Romanian market is not willing to place significant amounts in Romgaz. Pre-marketing showed us that Romanian investors will spend about 200-220 million Euros in the offer of Romgaz. We want to sell 15% of the shares of the company, and our target is to raise a maximum of 600 million Euros. The difference will need to be raised from foreign investors".

The main goal of the management plan of Romgaz is to stop the drop in production, and had the company remained at its production levels it had about 10-12 years ago, gas imports would be close to zero now, says the head of the Privatization Division of the Energy Department.

He said: "In the case of Romgaz, with debts which are almost zero, there was no need for an IPO to attract investments. In Romgaz we need an increase in performance, and the listing will force the management to be performing. We were adamant that the main objective of the management plan would be to stop the drop in production. Our priority is not to abandon the control of energy companies. When these companies will perform the way we want them to, that is when the state will become a minority shareholder".

Romgaz Mediaş has not found any new deposits, but it invests in storage areas and in stations for the drying of gas, said Corneliu Condrea, a director in the Department for Energy.

Working for the government is not a walk in the park, and the executives are constantly being threatened with being reported to the National Anti-Corruption Department and the Court of Accounts, said Gabriel Dumitraşcu. In the case of many state-owned companies, the people that have responsibilities in the financial sector have remained at the level of small-time accountants, he said: "On the financial segment, the state-owned companies lack qualified people. The analysts are saying that as well. Our people still have a limited vision and are the prisoners of the old accounting system. This is the first need of the state-owned companies, just like they need lawyers and corporate issues specialists. This is a general problem of the state-owned companies".

The official of the Department for Energy also mentioned that it wasn't always the best and brightest that applied for the selection of professional managers in the state owned companies.