Romania would need investments of around EUR 10 million to modernize the energy sector and that cannot be accomplished with tax revenues alone, said Mark Gitenstein, the US Ambassador to Romania (in picture), who attended the Bucharest Stock Exchange opening on Thursday. “And it will not happen as long as these assets are tied up in inefficient state owned enterprises run by inexperienced political cronies making decisions based not on what’s best for the company but what serves their own interests,” he added.
According to Gitenstein, Romania would need to sell the state owned energy companies through the local stock market, similarly to Poland. In Poland, the government announced in 2009 that it would undertake a program to raise over EUR 10 billion by selling part of its interest in state enterprises and managed to do it without the government losing control of critical assets, he went on. The sale of these assets should be done through the stock market, according to him.
“Poland did this not by giving preferential deals to political allies who bought the assets below their fair value, but by using its equity markets. Under the supervision of reputable financial managers these assets were offered on a transparent open market to the highest bidder. Ultimately many of these state companies will be owned by average Polish shareholders themselves. That’s what should happen here. Average Romanians should own these companies,” Gitenstein added.
He expressed his dissaproval of Romania’s plan to create two energy champions. “The on-going effort to reorganize state-owned energy companies into two “national energy champions,” instead of exploring full or partial privatization options, is not only an inefficient use of valuable resources, but as one outside expert commented, “contrary to government claims, the policy would significantly impede competition, crowd out private investment and raise prices,” Gitenstein added.
He also gave Polan’d example in terms of the number of investors on the stock market. “In Poland there are over 1.5 million retail investors, average Poles who get up every morning, drive their own car to work, and earn a salary. In Romania there are probably less than 10,000 retail investors. That has to change,” according to him.
“Your government also needs to move on the commitment it made to deregulate its energy price markets if Romania is to fully develop its energy resources. I understand the concern about the impact on individual consumers, especially those below the poverty level. But you can deal with this the way we do in the U.S., with effective regulation, and as in the U.S. and your neighbor Hungary, through targeted social subsidies for the poorest among you,” Gitenstein went on in his speech.
He also mentioned the Fondul Proprietatea listing among the positive things on the Romanian market.