Lower debt and an investor test will be the pre-requisites for Romania selling off its rail freight company CFR Marfa, with the privatization process set to start today (February 6 ). Both of them need to be first approved by the European Commission. The country's Superior Defense Council (CSAT) gave a green light to the privatization process on Tuesday (February 5 ), while Romania is currently in talks with the European Commission to cancel some of the debts CFR Marfa has to the state budget and turn them into shares. 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.

Recently, 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. “We cannot talk about estimations, as long as we don't know today exactly what we're going to sell,” said Fenechiu.

The actual size of the stake in CFR Marfa to be sold will be decided together with the privatization consultants. “My wish is to sell as little as possible, as close to 50 percent as possible […]. If the company is indeed bought by a strong private company, which will build this state company, we will get a much higher price for the rest of the package,” said Fenechiu.

The guarantee required from the investors interested in taking part in the bid – which will most likely be announced in March 2013, will be of EUR 10 million. The target will be to avoid situations like the one at Oltchim's failed privatization, where the winning investor, media owner Dan Diaconescu failed to pay for the company .

An investor test – approved by the European Commission, about which the Government did not release many details, will come first, before the market value of the company is established.

Romania pledged with the International Monetary Fund (IMF) to publish the privatization announcement for CFR Marfa in March this year, and sign the contract in May.

editor@romania-insider.com

(photo source: CFR)