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Romania's government officially announced on Monday the sale of its majority stake in indebted chemical plant Oltchim had failed and pledged to complete the process in 2013, Reuters reported.
The sale of the state's 54.8% stake in Oltchim, part of a revenue-boosting scheme agreed with the International Monetary Fund, was won in a tender by Dan Diaconescu, but it quickly became apparent that the media tycoon and populist politician could not meet the huge RON203m ($58.4m) price he had offered to outbid German chemical group PCC SE, as well as local firms Aisa and Chimcomplex Borzesti.
"The winner did not show documents to prove he holds the sum. It is useless to continue negotiations," said Economy Minister Daniel Chitoiu on Monday.
COMMENT: The sale of Oltchim, a major chemicals firm specialising in PVC, is the latest sorry sell-off saga. Diaconescu had no experience of managing large chemicals companies. Yet his bid trumped that of German chemical firm PCC SE, as well as local industrial companies Aisa and Chimcomplex Borzesti.
If the high offer by Diaconescu a subject of several court cases thickened the plot somewhat, it becomes thicker still when one takes into account his political ambitions and the looming general election on December 9. The mogul's modestly-named People's Party Dan Diaconescu (PPDD) was founded in 2010 and has little current presence at national level, but has won a raft of local government seats.
Indeed, the widespread assumption among the local press is that the Oltchim bid was merely an attempt to raise profile in the run-up to the polls. A generous interpretation of this theory is that his demands on Oltchim post-privatisation highlight the plight of workers in Romania's stalling publically owned companies, and the likely harsh effects of sell-offs.
Diaconescu himself says that he wants the Oltchim deal to mark a break from the privatisations of the past, which all too often saw assets sold to political allies, or led to mass lay-offs. He asserts that his offer will be in the best interests of the workforce and the economy, and accuses the authorities of deliberately undermining the deal by demanding payment so quickly. He has made it clear that he sees Ponta as obstructing the sale.
Enjoyable as speculating about the winning bidder's motives are, the Oltchim debacle highlights pressing issues for the country. The sell-off is part of a package of swift privatisations agreed by Ponta's new government to shore up public finances and appease the International Monetary Fund (IMF). This is also meant to see rail freight operator CFR Marfa and airline Tarom opened to private investors.
Romania badly needs the IMF's cash and to divest itself of loss-making assets. But the confusion over Oltchim as over previous privatisations, including the sale of the country's largest copper mine, abruptly cancelled in April, and the abortive sell-off of a stake in oil company Petrom will not reassure investors.
Meanwhile, the future of Olchim, its 3,300 employees and the many people whose incomes depend on the plant in Ramnicu Valcea in central Romania, hang in the balance. Any future investor seems unlikely to preserve the employment set-up as it is. Buyers will look on current debt levels with extreme wariness. "It's very complicated," Chirileasa, of Ziarul Financiar. "No one really knows what the best solution is, but privatisation is the only hope as the state cannot support the plant any longer."
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