Twelve years of privatisation later, the state is still the business leader

After twelve years of privatisation, with some of the deals even hailed as historical, the state-owned economy has managed to stay afloat and even tower over the biggest Romanian businesses. The top of Romania’s 20 largest companies shows that our accelerated privatisation has barely managed to exceed the speed of snails. In fact, half of the twenty largest companies in terms of turnover are still state-owned.
Moreover, the forced industrialisation that was applied in the golden years of socialism still reigns in the economic structure. Steel mills, production activities, electrical power companies and the mines will not give in to services – telecoms and distribution or to the production of finite goods, such as automobiles.
The three leading Romanian companies in terms of turnover – Petrom, Electrica and Termoelectrica are still held by the state, while the fourth – RomTelecom is dangling between state and private ownership, being semi-privatised. Sidex and Petromidia rank only fifth and sixth and they acquired the status of privately-owned companies as late as 2001.
The force of the private sector (or the inertia of the state-owned one) are best seen in the case of the only two 100% private companies that made it into Top 10. Both of them – Metro and Mobifon – were established five years ago and they can now hold their own against railway transportation or coal mines as far as the business volume is concerned. The same goes for Orange and Interbrands.
Furthermore, considering the state has only waived control over the big privatised companies included in Top 20 (RomTelecom, Sidex, Alro, Dacia and Astra Refinery) after 1997, it can be safely said that the history of “high-level” Romanian capitalism has just started five years ago.
“The private sector started out late and hesitantly and is just now fully developing. The industry needs big investors. Foreign investment has generally been small and fragmented,” says Anca Ioan, general manager of consultancy company Roland Berger.
The structure of the big companies only resembles the European one in the field of oil and gases: a quarter of the top 20 companies belongs to this sector, both in Romania and in Europe. However, in Romania, three of these companies (Petrom and the two Distrigaz) are still owned by the state.
The top of the 20 largest non-banking companies in Europe is dominated by carmakers, retailers and consumer goods manufacturers. In Romania, the highest “consumption” is still posted in the field of coal or tin plate: iron (from Sidex) and aluminium (from Alro).
“The consumption of food & beverages or other consumer goods is limited by the modest purchasing power. That is why there are no big investors in this sector,” Anca Ioan explains.