Petrom's privatisation to benefit other retailers

The privatisation of Romania’s national oil & gas company SNP Petrom SA will be positive for most retail operators in the country, says international rating agency Fitch Ratings.sleadnedt The agency has recently placed Petrom and its EUR125 million eurobond issue’s senior unsecured BB minus ratings on Rating Watch Positive. The short-term rating is B. This followed the Romanian authorities’ announcement of the initiation of direct negotiations with Austria’s OMV AG concerning the privatisation of Petrom. Meanwhile, Petrom’s shareholders changed their decision to use part of last year’s profit to cover the losses of the previous years and settled for distributing 25 million euros in dividends instead. “Petrom represents ‘the national heritage’ retail brand, still a common feature in the Central and Eastern European countries. The relative lack of global brands’ presence and hence competition (although it has significantly increased since 1994) is a result of Petrom’s ability to keep its prices low through its, unlike many national flagships in the region, strong domestic upstream business,” Fitch analysts say. Although pricing has been nominally liberalised, price changes at Petrom are approved by the Board of Directors, which is a direct representative of, and/or nominated by, the government, via the Ministry of Economy and Commerce. Fitch believes that following the privatisation, the government will have less power to control retail prices as it had previously done for social or inflation control reasons. This is likely to benefit the retail sector overall. ZF