The implementation of private management in state owned companies moving very slowly

The adoption of private management in state owned companies is a project which the government has taken on since 2009, but one which it implemented two years later, at the end of 2011. The lack of deermination in taking the steps which would bring the first private managers in the energy area has led to the current government having to change the list of companies which were due to receive private managers, in the initial version agreed with the international institutions. The old privatization plans have now overlapped with the new plans to sell the majority stakes which the state owns in companies such as Oltchim, Electrica Furnizare and the Oltenia and Hunedoara Energy Complexes.

Except that the privatization process is taking place very quickly and in some cases, is going faster than the process for the selection of private managers. For example, "Oltchim", still has one month and a half before the name of the strategic investor which will take over the majority stake, and the process for the selection of the private manager is in an incipient stage. At the end of last year, the Ministry of the Economy signed with Danish company "Pedersen&Partners Consulting", the consulting contract for the recruitment of management personnel, by which the recruitment firm would help the institution draft the tender books and organize the calls for bids which would appoint the companies which would select the candidates for the management positions of the companies controlled by the ministry. At the top of the list are Oltchim, Hidroelectrica, Romarm and Electrica Furnizare.

Authorized sources from the ministry of the Economy have said: "It is obvious that it wouldn't make any sense any more to select a private manager for companies such as Oltchim or Electrica Furnizare, which the state wants to sell completely. Private management only makes in the case of companies where the state is looking to remain a majority shareholder. On the next visit of the IMF delegation, we will propose a clarification of the list of companies which will have private manager".

In December 2011, the government approved an emergency ordinance which sets the conditions for the selection of private managers in public companies, in the broader context of extending the principles of corporate governance to state owned companies. The law concerns national companies, companies in which the state or its territorial-administrative divisions hold a controlling or full interest, as well as the public corporations set up by the state or by territorial administrative divisions.

At the time, the minister of Justice, Cătălin Predoiu, said that the adoption of the project by the Government represents the implementation of the obligations which Romania has taken on based on the Letter of intent addressed to the IMF, and that, by implementing this law, Romania is going to have private management in all state owned companies.

According to the Emergency Ordinance, in the first stage, approximately one month from the passing of the law, state owned companies which have a turnover of over 1 billion lei in 2010 and over 1,000 employees, will begin the procedures for the selection of the first private managers and administrators.

In the Letter of Intent agreed with the IMF in March 2012, the authorities said: "The Ministry of the Economy has requested and has received bids for the selection of a company which would assist in the selection of the private management teams for the main companies in which it will retain a majority stake. The new management teams and the members of the Boards of Directors will be selected by the end of April 2012 and will begin their terms later, as fast as the law will allow. In the case of the sale of significant stakes, this schedule could be adjusted to allow for the participation of the new majority shareholders. For companies controlled by the Ministry of Transports and Infrastructure the similar process will begin by the end of February".

Emilian Frâncu, the liberal senator who is the initiator of the Law of private management, said: "We have included an amendment in the law which stipulates that the process for the selection of private managers would not include the companies which are currently in the process of being privatized. The law was successfully voted in the Senate and still needs to receive the permit of a commission of the Chamber of Deputies in order to be approved and implemented".

Aside from Oltchim, Electrica Furnizare and the Oltenia and Hunedoara Energy Complexes, the letter of intent signed with the IMF also proposes the full privatization of Electro Serv, Cuprumin, Electrica Serv and Electrocentrale Bucharest.