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The government is on the verge of cancelling the privatization of the country’s largest chemical company, Oltchim, on the grounds that the buyer doesn't have the money.
“The privatization of Oltchim plant has failed. Most likely, we will organize a new tender early next year,” Romanian Prime Minister Victor Ponta said on Monday.
The apparent breakdown of the sale deal followed the first round of negotiations between the government and the controversial businessman who last week bought a majority stake in the company.
Businessman and media mogul Dan Diaconescu offered 203 million lei [45 million euro] for 54.8 per cent of the chemical firm on September 21.
But on Monday Diaconescu refused to sign the privatization contract, claiming that the government had failed to deliver a clear document.
"I am ready to pay for Oltchim’s shares but the privatization contract is incomplete and lacks certain clauses and addenda," Diaconescu said.
After agreeing the deal, the government said it awaited delivery of the cash by the end of this month.
Under Romanian regulations, a contract must be signed within 10 days of the time of the auction.
“The privatization will fail if Diaconescu doesn’t pay up in 10 days,” the Economy Minister, Daniel Chitoiu, said.
The government is under pressure to sell its holding in Oltchim and a minority stake in Transgaz, the natural-gas grid operator, by the end of this month, as part of a commitment to economic restructuring being carried out in consultation with the IMF.
The sales would help unlock the next tranche of a precautionary accord with the IMF.
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 former Prime Minister Emil Boc naked in a sports locker room.
Diaconescu is also leader of People's Party, PP, a party that advocates big tax cuts and higher wages and pensions.
According to recent polls, it may come in third place, on around 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 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.
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