Bulgaria's Plama oil refinery in tangles for re-start

Apr 16, 1998 02:00 AM

A senior government official has said that Bulgaria would like to have a deal finalised between a local owner and a foreign buyer which would allow the country's second biggest oil refinery to resume operation.
"The state is interested in Plama restarting as this is the only way to ensure work for its employees and to enable the plant pay its debts," Deputy Industry Minister Stephan Stavrev told.
International Equities Inc (IE), part of the Canada-based Stellar Global group, agreed with local oil trader Euroenergy Holding in February to buy the company as a whole and its 75 % stake in Plama but the transaction has not been closed yet.
The Industry Ministry manages the state's minority stake of less than 1 %. The remaining stake is held by the refinery employees.
The Pleven-based plant, which supplied 80 % of the local lubricants market until 1995, has been mostly idle for more than two years due to lack of funds to buy crude. Some installations are running to keep production atminimum.
There are no fresh figures available but the refinery produced 80,000 tonnes of lubricants per month in better days.
The privatisation deal with Euroenergy for the loss-making refinery, carried out by the then socialist government in August 1996, was criticised because the price of 62 million levs (then about $ 300,000) was seen as too low.
Stavrev said the completion of the deal had been delayed because Canadian lawyers needed "technological time" to study Euroenergy's condition.
Plama has also been hit by workers' protests and legal wrangling with creditor banks.
Plama's 2200 employees staged a series of protests, including blockades of a major railway in northern Bulgaria. They accused Euroenergy of mismanagement and demanded payment of backlog wages.
IE has said it had already paid 300 mm levs in cash to settle the wages bill. (1,795 Bulgarian Levs - $)
Plama's total debt is $ 119 mm, of which $ 29 mm is owed to Euroenergy itself which had been supplying the refinery with crude and selling its production.
The remaining debt is to 11 local banks, 6 of which have been declared insolvent by court last year.
Three banks have filed insolvency suits against Plama but a local court had suspended them for at least 6 months to look into a counter-suit filed by the refinery.
Other creditors have said they were ready to wait and negotiate with the new owner.
The IE has said it would seek an agreement with the creditor banks on restructuring Plama's debt after sealing the deal with Euroenergy.

Source: not available
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