Romania's Constanta refinery up for "administrative liquidation" or privatisation

Apr 18, 1997 02:00 AM

Romania will keep the vast Petromidia SA oil refinery near the Black Sea port of Constanta on the list of loss-making firms earmarked for "administrative liquidation" or privatisation, an official said. "We decided that Petromidia will stay on the list," the official said. Last week, the government included Petromidia on a list of 10 companies whose losses accounted for 7.4 percent of the total recorded by Romanian state industry last year. The decision seals the refinery's fate and ends a dispute between reformist authorities determined to uproot loss-making industries, and leftist politicians who argued that such a move could have serious economic and social costs. The official said administrative liquidation did not necessarily mean immediate closure for the 10 companies. "This doesn't mean that we will put a lock on their gates and send people home tomorrow," he said. "Those companies will be allowed to honour their current contracts but will not get new contracts or money for investments. Their activity will gradually diminish and eventually they will be prepared for privatisation." Staff made redundant would get compensation amounting to the equivalent of up to 12 months' wages, the official said. Closing the refinery would not affect Romania's oil sector as the Balkan country has a processing capacity of 34 million tonnes a year, far exceeding its needs.
On Thursday, the chief of the State Ownership Fund, which owns 70 % of Petromidia, said the refinery's financial situation was grim. "Petromidia has a capital of 800 billion lei but its losses amount to 1.1 trillion. It's some sort of financial tragedy," Sorin Dimitriu told.
Petromidia was built in the 1980s, with good access to export markets via the Black Sea. It operates a single train of 70,000 bpd and can produce a full range of products and coking coal. It also has a petrochemical plant. It underwent a $ 50 mm modernisation in 1993 to improve performance. But debts mounted so dramatically that the refinery found it difficult to meet its obligations.

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