2012 month by month in Romania – September: The Great Oltchim Privatization Fiasco

The Oltchim privatization dominated the headlines in the latter half of September, overshadowing the arguably more important auction of spectrum licenses to mobile phone operators, which went off without a hitch. Elsewhere, the summer’s political events provided the inspiration for a lively discussion in the EU Parliament.

At the beginning of September, the date for parliamentary elections was set definitively for December 9, although a December 2 date had previously been mentioned. The reason given for putting the elections a week later was to avoid the holidays around December 1.

Government sets Romania’s general election for December 9

A Romanian world record holder decided to start a museum with his record breaking collection of letters. Gabriel Antoniu Lavrincic from Transylvania started writing letters to pen friends in what was then the USSR. Initially his intention was primarily to practice his Russian, but he caught the communication bug and years before Facebook and social media, he received millions of letters from pen friends. “Only” around 22,000 of those he kept met the strict Guinness Book of Records standards, but that was more than enough. “A letter written by hand has more emotional power, the message is stronger and expression is higher,” said Gabriel.

Romanian holding world record for letters received by post wants to create National Museum of Letters

What was to become the Oltchim privatization fiasco started to warm up at the beginning of September. Employees went on strike and 17 managers resigned. The PM Victor Ponta went to meet the protestors and begged them not to scare off potential investors. During the Oltchim saga, the situation of the workers was often overlooked as the media concentrated on the attempts to find investors and agree a deal. They went for months without pay and without any real guarantee of their future at the plant.

Privatization of Oltchim causes strikes and management resignations

2012 will surely go down as a bad year for the Democratic Liberal Party (PDL), ousted from government and battered in local and national elections. In an attempt to pull together a viable opposition, the PDL joined a coalition with other center right parties, including former PM Ungureanu’s new Forta Civica party. The political coalition called itself the Right Romania Alliance. It lasted slightly longer than Ungureanu’s government as the disastrous election results in December triggered the break up of the group.

Romania’s center right political platform names itself the Right Romania Alliance

The public tender of frequency spectra for mobile phone operators got into full swing in September. It was a big test for Romania’s Communications Authority (ANCOM); licenses for up to 15 years to be sold and a target of EUR 700 million for the sale. Greater than expected demand prompted ANCOM to extend the first round of bidding.

Romania extends primary auction rounds as demand from telecom companies exceeds spectra offer

Romania’s Cultural Institute got a new leader in September, which marked the end of one of the stranger chapters in the Basescu vs Ponta battle. The Cultural Institute had been under presidential auspices, but the government decided to bring it under parliamentary patronage. Funding was cut and the Institute accused of lacking transparency and having some kind of political agenda. The previous head had resigned in protest, as did the boss of the New York branch of the Institute later in September.

Former External Affairs Minister Marga wins vote to lead Romania’s Cultural Institute

Head of Romanian Cultural Institute in New York resigns in protest against government’s interference

Insolvency seemed to be suiting Hidroelectrica. In September, a court ruling wrote off many of the energy company’s debts to unscrupulous contract holders who had reportedly been ripping off Hidroelectrica for years.

Administrator of Romanian Hidroelectrica accepts claims worth EUR 78 million, rejects EUR 261 million

Romanian politics got its day in the European Parliament when the political situation was discussed in the chamber. Scheduled to run for 40 minutes, the discussion between MEPs lasted an hour and a half with some fairly colorful language along the way. The expression “banana republic” came up a few times and Romanian MEPs on either side didn’t miss the opportunity to attack one another, with allegations of vote rigging and even secret CIA interference bandied about.

European Parliament to debate Romanian political situation in Strasbourg today

Debate on Romanian politics in European Parliament: “Political soap opera”, “banana republic”, “rigged elections”, “American colony”

Team Romania won a gold medal at the European Women’s Rowing Championships. Held on Lake Varese in the picture post card perfect foothills of the Italian Alps, the Romanian 8 + 1 team beat off the hosts and the UK team to take the gold.

Romania’s women win gold in European Rowing Championships

Deadlines for bids in the Oltchim privatization, which the International Monetary Fund had repeatedly urged the Romanian government to hurry along, came along in the second half of September. Before the final bidders were confirmed there had been an extension of the deadline, reportedly to allow Russian energy giant Gazprom the chance to bid. Court action was also initiated by some of the bidders. In the end, Gazprom decided against joining in and three local companies submitted offers for the state owned chemical factory. Media mogul and leader of the Popular Party Dan Diaconescu won the bid, but the privatization soon descended into a farce after the end of the public tender. Low lights included Dan Diaconescu turning up at the factory with bags of money to pay workers the wages they were owed. He waved money around for the media but didn’t actually get to handing any out. Next, Diaconescu started to squirm over signing the privatization contract, saying it contained inconsistencies. Finally, and seemingly because Diaconescu simply couldn’t come up with the money he’d offered, the privatization was canceled.

Romania hopes for three final offers in Oltchim privatization, would prefer Russian bidder

Romania’s Oltchim privatization deadline delayed, after businessman goes to court over debt included in privatization

Close to end of privatization process, Romania hopes to re-start Oltchim plant in maximum one month

Romanian media mogul Dan Diaconescu wins Oltchim privatization auction

New owner of Romania’s Oltchim wants to sign privatization contract today

Investor refuses to sign Romanian Oltchim contract due to alleged inconsistencies

Romanian PM: If auction winner does not pay, privatization will re-start for Oltchim in six months

Plot thickens around Romania’s Oltchim takeover: buyer asks state for more measures, media suggests he’s looking for financing

Romanian Oltchim privatization gets weirder still, cash in bags to be delivered to factory, rocking out to AC/DC in negotiations

Update: Winner of Oltchim auction brings cash bags to Economy Ministry before new negotiations round

Romania’s Oltchim privatization canceled, PM announces

The other big public tender in September, however, worked like a charm. ANCOM raised some EUR 680 million in the sell off of spectrum licenses to Romanian mobile operators. The five companies that bought licenses – Cosmote, Orange, Vodafone, RCS&RDS and 2K Telecom – all seemed reasonably happy with the auction and ended up with the bandwidths they wanted.

Romanian mobile spectra tender finishes, over EUR 680 million raised by auction

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