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The Romanian government has cancelled the privatisation of the country’s largest chemical company, Oltchim.
The bid to privatise Romania’s state–owned chemical producer, Oltchim, had been cancelled, Prime Minister Victor Ponta announced on Monday evening, after the previous bid winner, Dan Diaconescu, failed to pay for the majority stake.
“We have to end this circus,” Ponta said.
The government will try to restart the privatisation process next year, with a new CEO and a new managerial team to be named as soon as possible.
Journalist-turned businessman Dan Diaconescu refused on Monday to sign the privatisation contract to buy a majority stake in Oltchim, claiming that he has until February to pay.
On September 21, Diaconescu offered 203 million lei [45 million euro] for a 54.8 per cent stake in the chemical firm. Under Romanian regulations, a contract must be signed within 10 days of the time of the auction.
Diaconescu, who is in the middle of a media scandal as many are worried he does not have the money to pay for the company, said on Monday that he would only pay 3 million euros, at this stage, to cover the salaries of Oltchim workers.
“I want to give my money to Romanian people, as the government is not interested in the workers’ fate”, Diaconescu said publicly.
Late last week, following the first round of negotiations between the government and the controversial businessman, Prime Minister Victor Ponta said that from his point of view “the privatization of the Oltchim plant has failed”.
Diaconescu is the owner of a populist TV station, OTV, which in the past has been penalised, among other things, for incitement to racial hatred and for broadcasting a video showing the former Prime Minister Emil Boc naked in a sports locker room.
Diaconescu is also the leader of the People's Party, PP, a party that advocates big tax cuts and higher wages and pensions. According to recent polls, the PP may take third place, with about 10 per cent of the vote, in the general election due in early December.
Based at Ramnicu Valcea in southern Romania, Oltchim produces caustic soda, petrochemicals, agrochemicals, inorganic products and building materials. The company has registered losses for the last five years and has debts of around 500 million euro.
Production at Oltchim stopped last month, with the company apparently suffering from a lack of capital to secure feedstock supplies.
To keep its reform policy credible for investors, the government must find common ground with the IMF and look for a new arrangement, experts say.