Government reschedules SNTR debts and exempts the company from penalties

The Government last week agreed, in a note addressed to the Ministry of Agriculture, to reschedule the debts amounting to over 500 billion lei that the National Company “Tutunul Romanesc” (SNTR) holds towards the state budget. The company will also be exempt from paying penalties for these debts, which stand at another 500 billion lei, Finance minister Decebal Traian Remes told Ziarul Financiar.

The Agriculture minister Ioan Muresan argued that Inter Agro, the company that won the tender for SNTR, offered a price of 40 million dollars for the company’s shares and pledged to “unconditionally assume the active and passive assets,” while Leaf Tobacco A. Michalides (LTAM) conditioned the price on rescheduling the debts towards the state budget.

The SNTR debt towards the state budget amounts to 547.7 billion lei, and the note sent by the Government required the debit’s payment by means of equal monthly installments within five years, the maximum deadline stipulated by the law.

“All payment breaks will be applied if the privatisation contract is signed and respected. This was the situation of dozens of companies that have been privatised.” If the contract is not respected, the company will be re-charged with all the debts, minister Remes said.

“All debts towards the centralised state budget and to the local budgets, corresponding to 1998 and 1999 and to the first and the second quarter of 2000, that have not been paid in due time, should be exempt from payment delay penalties, meaning annulment of the 584.047 billion lei debit, resulted from payment delay penalties corresponding to 544.5 billion lei,” the Government note reads.

LTAM has contested in court the decision of the Agriculture Ministry concerning the winner of the SNTR privatisation tender. A final decision is to be made by the Supreme Court of Justice on September 18.

The Court of Appeal had initially issued a decision stipulating the suspension of the SNTR privatisation contract, which was attacked by the Ministry of Agriculture.

SNTR has a share of 42-43% of the domestic market, corresponding to approximately 40,000 tonnes of cigarettes. In 1999, the company sold 17,000 tonnes of cigarettes accounting for 25% of the total value of the cigarettes sold on the market.

The company has an output capacity of almost 60,000 tonnes of cigarettes annually, 50% more than consumers’ demand. In 1999, SNTR registered net profit amounting to 200 billion lei, against turnover standing at 3,300 billion lei.