Romania Energy Companies Merged Ahead of Sale

Romania's government has approved the merger of three state-owned thermal power plants and coal mines in a move to increase the efficiency of the new company and attract a buyer.

Thermal power plants Complexul Energetic Craiova, Complexul Energetic Rovinari and Complexul Energetic Turceni together with Societatea Nationala a Lignitului will merge into a new company called Complexul Energetic Oltenia, the Economy Ministry announced. The merger has been approved by minority shareholders.

“The newly created entity  is to become... a strong and viable company, which will ensure the necessary framework for increased efficiency and needed investments,” the ministry said.

The merged Oltenia company is to be sold by mid-2012 if all goes to plan. Furthermore,  Romania may also merge other two thermal power plants and brown coal mines into a second company called Hunedoara, according to a draft law to be announced soon.

The sale of energy companies is part of a larger government plan to raise money under the terms of a €20-billion bailout loan led by the International Monetary Fund, IMF.

Bucharest is also planning to sell a minority stake in the natural gas producer Romgaz via the stock exchange, though this company is not yet listed.

In addition the Economy Ministry plans to finish selling minority stakes in the utilities Transgaz SA and Transelectrica SA by 2012 as it raises money to fill holes in the state budget.

Facing a growing need for cash, Romania is largely dependent on foreign borrowing to finance its investment plans.