Privatisation of state-owned companies - a Sisyphus effort?

Effects of hiring international financial consortia to privatise Romanian companies following programmes financed by the World Bank and the IMF will become apparent at the end of summer, when investment banks will say whether there are investors for the 63 enterprises included within the PSAL programme, which are the most important companies left unsold from the State Ownership Fund portfolio.

The success of this privatisation effort made through foreign corporations will set the future trend of Romanian economy: either a Sisyphus attempt will keep being made for the sale of these mastodons until they die of a natural death, or they will be transferred to some investors that can “get them back on their feet.”

However, before getting to the sale issue, corporations have not even drawn up strategies for the sale of companies, yet.

Official sources within SOF say that the deadline for submitting privatisation strategies for the 63 companies to the Government will be delayed by almost a month as to the initial date, settled for mid-July. Consequently, the moment they are to be put out for sale will be delayed too, to the end of the year.

“Most privatisation agents for the 63 commercial companies included within the PSAL programme have not drawn up preliminary evaluations in line with counseling contracts stipulations,” the above-quoted sources maintain.

Vasile Olievschi, head of the Project Management Unit (UMP) within the Transport Ministry, thinks that, for the time being, one cannot say for sure what the chances are for all 63 companies to be privatised.

“Everything depends on the market reaction. If there isn’t at least minimal interest in a certain enterprise, procedures will be resumed,” he also said.

However, economic analysts reject statements made by SOF officials, saying that privatisation conducted by investment banks is a much better choice than the sale conducted by SOF. “The problem is that, no matter how much privatisation advisors struggle to find potential investors, it is still SOF that, as the owner, will negotiate the direct sale for each of these companies,” says Gabriela aendroiu from Creditanstalt.

This opinion is also shared by economic analyst Dragos Negrescu: “Privatisation agents are not magicians. Their success also depends upon the authorities’ attitude, if they are willing to accept the terms of price and payment requested by investors. Theoretically you can sell anything, it only depends upon how willing you are to reach a compromise.”

Marius Manoiu, a manager within Central Europe Trust, a company included in the consortium that offers assistance for the privatisation of Alro Slatina and Alprom Slatina, Antibiotice Iasi and another two packages of 10 companies each, states that the delay in submitting the privatisation reports was triggered by some accidental circumstances. Alro is the only company included in this programme that has real chances to be sold without any difficulties. The others are companies that either SOF has failed to sell, or they were not offered for privatisation because there were no potential buyers for them.