A number of topics will shape Romania in 2012, and we picked the 12 of the most important. Pay attention to these developments through this year.

Planned Stock Exchange listings

Several planned International Public Offerings (IPO) and secondary stock exchange listings are planned for 2012 on the Bucharest Stock Exchange. These could revive the market and attract more foreign investors to the local stock market.

Investors could take advantage of the planned Romgaz Initial Public Offering (IPO), as well as Transelectica and Transgaz’ listings.

Romgaz’ listing will be the most important event of the year, analysts predict, "with the 15 percent stake to be sold worth over EUR 300 million, making this IPO the largest launched so far on the Bucharest Stock Exchange (BSE),” according to a recent Erste report.

The sale of a 15 percent stake in Transelectrica should happen end-February, while the Transgaz sale, in March or April. On the other hand, analysts don’t believe that Hidroelectrica and Nuclearelectrica will be ready for 2012 listing. The Romanian Government also plans to list telecom company Romtelecom and airline Tarom, but analysts see the chances of either happening earlier than 2013 as slim.

New healthcare legislation

The Romanian government is trying to push new legislation that will create a shift in the country's healthcare provision. Now under public debate, the legislation has already caused controversy on the public front. It also triggered the resignation in protest of Raed Arafat as Secretary of State in Romania’s Health Ministry, after he openly condemned the draft law’s changes on emergency medical care. The main provisions include the right to have private emergency medical services with their own ambulance service, as an alternative to the public system. The alternative emergency services would, however, be free for all those insured. The draft law will be up for debate until January 28.

Local and parliamentary elections

The event of the year on the political scene will be the local and parliamentary elections this year in Romania. The Government wants to adopt a draft law proposing that the local and parliamentary elections are held at the same time in 2012.

As for Bucharest City Hall, the incumbent Mayor Sorin Oprescu plans to run again for City Hall in this year’s elections, while Romanian businessman Irinel Columbeanu also wants to run in 2012 as an independent candidate- more about it here.

Private CEOs for state companies

As agreed with the International Monetary Fund (IMF), several state companies will have private management, according to the Romanian Ministry of Economy. The recruiting firm Pedersen & Partners, consulting firm Roland Berger and law firm Nestor Nestor Diculescu Kingston Pedersen (NNDKP) have been chosen to create the documents that will lay the foundation for choosing the recruiting firm to place private CEOs at the helm of state companies. That contract was worth some EUR 600,000 over a year. Read more on the subject here and here.

Tender for mobile telephony spectra

Romania's radio frequency bands that are now used by mobile phone operators Orange, Vodafone and Cosmote will be tendered in 2012, as existing contracts will expire.

The Romanian National Authority for Management and Regulation in Communications (ANCOM) announced in November 2011 that they will organize a bid to sell the entire frequency spectrum for the 900 MHz and 1,800 MHz bands, which now partially belong to telecom operators Orange, Vodafone and Cosmote, as their licenses were to expire at the end of 2011 and in 2012 - in the case of Cosmote. More here.

However, the Government announced at the end of December 2011 that it will extend the mobile telephony licenses for operators Orange and Vodafone by one year. Each of the companies will have to pay EUR 6.4 million for 2012, according to the Government. Read more here.

Romania’s Schengen area accession

Romania and Bulgaria were expected to join the Schengen area in the spring of 2011, but several European countries opposed the move, saying the country still needs to fulfill some criteria. The decision on Romania’s accession to the Schengen area has been further delayed after discussions in September 2011. This year was set as the term for a decision on this issue.

The Danish ambassador to Romania Michael Sternberg recently said that “Denmark acknowledges the sustained efforts of Romania and Bulgaria in meeting Schengen criteria and we are ready to welcome Romania and Bulgaria as members of the Schengen space.” Denmark took over the EU presidency on January 1, 2012. Read more about the ambassador’s statement here.

Privatization of chemical producer Oltchim

Romania must privatize chemicals producer Oltchim to satisfy the demands of the International Monetary Fund. In December last year, Romania’s Ministry of Economy signed a contract with PricewaterhouseCoopers (PwC) for consultancy services in preparation and implementation of Oltchim’s privatization. More here.

The main shareholder in Oltchim is the Romanian state, with 54.8 percent of shares, while investment fund PCC owns a 17.5 percent stake. PCC previously stated interest in becoming majority shareholder in Oltchim.

Privatization of state-owned airline Tarom 

Tarom is Romania's state-owned airline, set up in 1954. The company posted losses in previous years under state management, which is why the country pledged to privatize it through a listing on the Bucharest Stock Exchange. The Romanian Government approved in August last year the privatization strategy for the National Society of Romanian Air Transport “Tarom SA”. The privatization will involve selling a 20 percent stake in the company’s share capital in accordance with commitments made to international financial institutions.

In December 2011, a consortium of Carpatica Invest and Swiss Capital was chosen to intermediate Tarom’s listing on BVB. Romania’s state-owned airline Tarom recorded total revenues of EUR 305 million for 2010, up 15 percent compared to 2009, while the company’s net turnover was EUR 218 million, up 13 percent from 2009. It posted a loss of EUR 78.9 million in 2010, higher than the EUR 55 million loss in 2009. Read more here.

Territorial re-organization

The Democratic Liberal Party in Romania, which runs the Government in the country hopes to move a step forward towards re-organizing Romania in 2012. Initiated in 2011 but failed after a lack of consensus between PDL and governing partner the Democratic Alliance of Hungarians in Romania (UDMR), Romania's territorial re-organization was pushed to 2012. Pesident Traian Basescu made an offer to the UDMR to form eight large regions plus the two current counties, Harghita and Covasna, where the party has the bulk of its ethnic base. This offer was made after UDMR threatened to leave the governing coalition in Romania if the country goes ahead with its current administrative reorganization plan, from the existing counties into regions, without taking into account the ethnic minority’s requests. The reorganization proposal from 41 counties to eight regions was motivated by the need to meet the requirements of EU funds absorption.

Highway inaugurations

Hardly among the champions on highway openings in the Central and Eastern European region, Romania hopes to inaugurate two highways this year, with a one – year delay: the Bucharest – Ploiesti and Bucharest – Constanta highways. A new segment of the Transylvania highway should also be completed this year: a 64-km portion connecting Suplacu de Barcau and Bors. Constanta and Arad cities should also get new bypasses.

In 2011, Romania opened 53 kilometers of new highway. The country's Transport Ministry is currently working on over 400 km of highways.

Car pollution tax

Romania plans to change the car pollution tax in 2012. A new form of this tax got the Parliament's green light in December last year but it is yet uncertain when it will be enforced. The new tax features a 25 percent reduction compared to the amount paid in previous years and for cars registered before 2007, it will be paid by the buyer at the first registration of the car under the new owner. The way the new tax is applied will have an impact on car sales in the country.

International Financing Reporting System (IFRS)

Banks in Romania will for the first time apply the International Financing Reporting System (IFRS) in 2012. The accounting system was introduced on the first banking day of the year – January 4, based on the agreement with the International Monetary Fund (IMF) in 2010.

This will allow foreign banks that are active in Romania to do similar financial reporting in Romania as abroad, after working on the Romanian accounting standards -RAS- for years. According to experts, the IFRS reporting will have an impact on the level of provisions, the level of a bank’s own funds and the solvability indicator.

 editor@romania-insider.com