EXCLUSIVE: Romanian Govt Arrears Almost Eliminated, Focus Moves To Cos' Debts – IMF Official

Franks said the debts of state-owned companies are much larger than the government's arrears. They could be settled if the companies become profitable, or, if this turns out to be impossible, the debts may be restructured, by agreement with creditors. Ultimately, the debtor companies might have to declare bankruptcy.

Romania's future agreement with the IMF says the list of monitored state-owned companies will be extended to include airline Tarom, national postal company Posta Romana, chemical fertilizer producer Oltchim (OLT.RO), mining company SNLO, as well as power supplier Electrica Transilvania Nord.

The Government has pledged to search for an alternative strategy to overhaul its energy system if its current plans to set up two national champions fail to produce the desired results by year-end, according to the draft letter of intent agreed with the International Monetary Fund. The authorities are considering selling majority stakes in some of the energy companies and selling minority or strategic stakes in individual companies slated to the part of the two energy champions, says the letter.

The Government will also adjust the energy and natural gas prices of existing contracts signed by state-owned companies to market rates as soon as possible, and new bilateral contracts signed by state-run gas and electricity generators will be made transparently and non-discriminately through the energy market OPCOM.

The authorities will hire an international consultant to prepare key-privatizations of state run companies, including chemical producer Oltchim SA (OLT.RO), according to the letter.

As regards the transport sector, railway company CFR SA will close 20% of the country's railroad network, about 4,000 kilometers of railway lines, unless it finds investors to ensure their maintenance; railway passenger carrier CFR Calatori will increase ticket prices to better cover its costs; Bucharest public transport companies Metrorex and RATB will hike their fees beyond inflation-indexing.

The Government plans to sell a minority stake in rail freight carrier CFR Marfa by end-2011, and will seek a strategic investor for Tarom by end-2011, with a view toward full privatization when market conditions permit it.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.