Romania puts off sale of state oil company SNP

BUCHAREST – Romania put off the deadline for privatizing its leading oil company SNP Petrom by three months yesterday, sparking fears that the process – now extended until June – may stumble on political hurdles. Analysts said the delay, the second after the deadline was extended in August to the end of March 2004, sent a worrying signal to international markets about the government’s willingness to let go of strategic assets in an election year. The ex-communist Balkan country is due to hold local and national elections later in 2004. Its government is thought to be concerned that the sale of Petrom, which has about 60 percent of the local oil market, may alienate voters if petrol price rises follow and the firm’s 60,000-strong work force is cut. Economy Minister Dan Popescu told reporters yesterday that issues such as the ownership of land on which Petrom has assets, investments in environment protection or changes in legislation to adapt it to European norms needed to be clarified. «There are still important issues to be discussed,» he said. Analysts were pessimistic about the outcome. «There’s even a chance that this tender will be canceled,» Erste Bank analyst Tamas Pletser told Reuters. «Politics play an important role in the sale of strategic assets in Central and Eastern Europe.» Seven companies, including four vying to consolidate central and Eastern Europe’s fragmented oil sector, are lined up to bid for Petrom. They are: US firm Occidental Oil and Gas, Austria’s OMV, Hungary’s MOL, Poland’s PKN Orlen, Russia’s Gazprom, Greece’s Hellenic Petroleum and Swiss firm Glencore. Popescu said Petrom has assets on around 90,000 hectares of land but only half of that land’s ownership has been clarified since the 1989 collapse of communism, which had nationalized private property. He added that the legal changes needed for the privatization to go ahead would be drafted by the end of this month. «The investors want to find European legislation here,» Popescu said. Some analysts said the decision to extend the deadline would confuse potential buyers. «It’s very difficult to know the real reasons behind the extension decision,» said Emil Ogica, analyst at Intercapital Invest. He added that the government might still be wrangling over a minimum price for the deal, which was estimated by analysts at around $1.0 billion. Other analysts said the bidders now in the race, especially those focused on the Central and Eastern European region, are unlikely to be deterred by the news of the delay. The government owns around 93 percent in Petrom and plans to sell 33.34 percent to an investor who would at the same time buy newly issued shares to raise its stake to 51 percent. The deadline for submitting binding bids is the end of February.

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