Romanian state-owned rail-freight company CFR Marfa expects to double losses in 2013

cfr marfaState-owned rail-freight company CFR Marfa expects to post losses of around EUR 47 million in 2013, more than double the loss last year. Last year, CFR Marfa’s budgeted income last year was a little over RON 1.22 billion while outgoings were estimated in May 2012 to nearly RON 1.32 billion (EUR 274.2 million against EUR 288.8 million). This left just over a EUR 20 million (RON 95 million) shortfall.

The last time CFR Marfa recorded an annual profit was in 2007. Between 2008 and 2011, the rail-freight company has posted cumulative losses of RON 1.1 billion (some EUR 270 million).

The overall number of employees is expected to fall in 2013, from 9,162 at end-2012 to 9,053 at the end of this year, according to reports in the local media.

In light of the approaching privatization of CFR Marfa, the government announced a new technocrat management team for the rail company around a month ago. The new team comprises economist and banker Aysun Mustafa, who will be the president of the board, while legal counsel Alexandru Dragoş Drăghici will be the general manager. The other administrators are Liviu Radu (engineer), Bogdan Constantinescu (economist), Dan Constantinescu (engineer), Ionuţ Georgescu (legal counsel) and Dan Belcea (economist). Transport Minister Relu Fenechiu said at the time that they would have to fix what could be fixed, but added that they would not be directly involved in the privatization process.

The management team could could stay in place until July or slightly longer, with the deadline for announcing winners in the CFR Marfa privatization set for June 20, but with chances of delay in the transfer of ownership.

By end-February, seven – eight companies had shown interest in the privatization of CFR Marfa, the minister said at the time, without disclosing more details.

Lower debt and an investor test will be the prerequisites for Romania selling off its rail freight company CFR Marfa, with the privatization process which started in the beginning of February. Both of them need to be first approved by the European Commission.

CFR Marfa’s debt end-2011 was some EUR 420 million, and over EUR 280 million of it was to the state budget or public institutions.

The Transport Ministry estimated that the state should get some EUR 61.5 million from the sale of its 51 percent package in CFR Marfa, after paying all the legal privatization expenses. But Transport Minister Relu Fenechiu recently said the sum is “somebody’s incorrect interpretation,” which is based on revenues from previous privatizations.

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