RAFO Replaces Petromidia In Petrochemical Supply Chain

RAFO, Oltchim and Arpechim could form a petrochemical supply chain after the Government on Wednesday approved a memorandum for issuing a 330 million EUR State guarantee for RAFO - Onesti. The money will finance an investment plan and the establishment of the petrochemical supply chain RAFO - Oltchim - Arpechim.

"We have adopted a memorandum by which the Government expresses readiness to issue a State guarantee for the amount of 330 million EUR to be used by RAFO - Onesti for implementing their investment plan and actually creating the petrochemical supply chain RAFO - Oltchim - Arpechim. This achievement will rescue some 1,500 - 2,000 jobs and put in place a petrochemical supply chain of extreme importance for the Romanian industry and economy," Prime Minister Emil Boc announced.

The idea to create a petrochemical supply chain is not actually new. The former Nastase Government, represented by Minister of Economy Dan Ioan Popescu, attempted to create a petrochemical supply chain comprising Petromidia, Arpechim and Oltchim in 2003.

At that time, RAFO responded with another project, the Moldova Company, which was disclosed exclusively to BURSA by Corneliu Iacubov. According to him, the Moldova Company was planned to comprise RAFO, CAROM and Solventul. The merger of the three companies and therefore the establishment of the Moldova Company failed because it was opposed by the Government, which held a 2 billion RON receivable over RAFO.

Under those circumstances, the RAFO owners tried to push for a merger with Petromidia, but Dinu Patriciu refused. In the face of failure, the RAFO owners started buying shares in Petromidia and came to control as much as 5 per cent in Patriciu"s refinery.

Eventually, RAFO came under a reorganization procedure, whereas the owners of the future components of the Moldova Company - Marian Iancu, Ovidiu Tender and Corneliu Iacubov - were arrested in early 2005, soon after Traian Basescu became the President of Romania. Basescu had complained the most about the way in which the RAFO affair had been managed. After Iancu, Tender and Iacubov were arrested, RAFO changed owners and continued the reorganization process until the new owners, the Russian-based Alfa Oil, paid all of the company"s debts to the State.

While the Government was adopting the memorandum on issuing State guarantees for RAFO, President Traian Basescu was in Slobozia, announcing that the Government was considering issuing State guarantees for RAFO, a company undergoing modernization after having cleared all debts to the State, and for the Mangalia Shipyard.

President Basescu emphasized that the Government had already issued a 400 million EUR State guarantee for the Ford factory in Craiova and a 69 million EUR State guarantee for Oltchim - Ramnicu Valcea as both companies were likely to generate jobs on a horizontal plane by buying various products from small- and medium-sized enterprises.

The future petrochemical supply chain comprising RAFO, Oltchim and Arpechim is only a developing prospect as Oltchim is controlled by the State and Arpechim is controlled by OMV. However, as Russian investors have been interested in Oltchim and Arpechim for several years, we may witness two spectacular acquisitions in the near future.