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Friday, October 22, 2004

ROMANIA: Energy Privatization Injects EUR 2.2 Bln into Economy

Source: seeurope.net

2004-10-22 10:56:23

The sale of 51% in Petrom, Distrigaz Nord, Distrigaz Sud and two branches of Electrica will bring 2.25 billion euros to the Romanian economy by the end of the year, with the State directly receiving 958 million euros. It has taken Romania fourteen years to reach the peak of privatization, although Hungary and the Czech Republic, for example, had already managed this by 1995-1996. German company Ruhrgas, part of the world's largest utilities company E.ON, yesterday signed the 304 million-euro privatisation contract for a 51% stake in the natural gas distributor, Distrigaz Nord. The deal with Ruhrgas is the Romanian State's first real privatization in that it involves the sale to a private company of the majority share in a state-owned company. The Germans will pay 125 million euros for the direct acquisition of 30% in Distrigaz Nord and will also make a cash contribution of 179 million euros, which will increase their stake to 51%. The foreign investor will also take on net financial debts of 13 million euros According to officials from the Ministry of Economy and Trade, the transaction (the purchasing of the 30% stake and the capital increase) will be completed by the end of the year. Until that time, Ruhrgas representatives will be actively involved in all major strategic decisions of the company. The privatization contract for Distrigaz Nord SA Targu Mures was signed yesterday at Victoria Palace (the Government headquarters) by Dorin Mucea, head of the Office for State Participations and Industry Privatisation, with Burckhard Bergmann, chairman of the E.ON Ruhrgas Board, and Achim Saul, head of Ruhrgas Sales Division for Central and Eastern Europe. The Ruhrgas offer values the entire Distrigaz Nord stock at 416 million euros. The offer by the Germans is very similar to the proposition made by Gaz de France, which took over Distrigaz Sud for 311 million euros, paying 128 million euros for 30% of the shares. The price appears much higher since the value of the regulatory asset base released by the Natural Gas Regulation Authority is bigger in the case of Distrigaz Sud than in the case of the other gas distributor. However, Ruhrgas will take over a company that seems to be cleaner, whose net debts are seven times smaller than those of Distrigaz Sud, and which has more clients and a bigger network (17,000km). "As a future member of the E.ON group, Distrigaz Nord will benefit from our powerful position and from our expertise in this field. We are coming to Romania as a long-term investor and not only as a majority shareholder, but as a partner as well," said Burckhard Bergmann, an E.ON board member. In the final stage of the tender, Italian energy group Enel, which was said to have good chances to win either Distrigaz Nord or Distrigaz Sud (having bid for both), came in second in both cases.

Posted by Mircea : 10/22/2004 09:14:00 pm