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Romania Keeps Majority Stake in Romgaz

Published: October 12, 2013; 19:38 · (Vindobona)

Romania´s government will privatize 15% of the country´s biggest natural gas producer. The opening of the economy to foreign investors bears potential dangers.

Romania Keeps Majority Stake in Romgaz / Picture: © Vindobona.org

In November, the Romanian government will sell a 15% stake in the energy group Romgaz via the stock exchange. The partly privatization of the biggest Romanian natural gas producer will be the biggest IPO in Romania this year. The Romanian state will keep a 70% stake in Romgaz. Moreover, the state-owned property restitution fund holds a 15% stake. In total, the IPO is expected to reach about € 600m. The price range will be published at the end of October. According to Romania´s Minister of Energy Constantin Nita, the privatization of Romgaz is an important milestone for the reform of the energy sector.

In the last years, IMF put pressure on Romania to continue the privatization of state-owned companies. As a result, Romgaz is not the only privatization target. In spring, Romania sold a 15% stake in Transgaz, which is specialized in natural gas grids. One year before, the government sold a 15% stake in the energy group Transelectrica. The rail cargo division CFR Marfa may be sold until the end of October. In order to comply with the newly signed IMF agreement, Romania´s privatization program must be finished until the end of November.

With the privatization program, Romania opens its economy further to foreign investors. However, Romania´s economy is highly vulnerable to foreign investments and foreign sentiments. According to the Romanian Chamber of Commerce and Industry, the number of companies with foreign owners comes at 180,000. This corresponds to 40% of the total number of registered companies. Foreign investments (registered capital and re-invested profits) come at € 35bn. Moreover, the main exporters of Romania are owned by foreign multinational companies. The most important companies are automotive, energy and steel producers. In total, 60% of Romania´s exports are made by foreign companies.