The Tug-of-War Over Romania’s State-Owned Giants: Listing vs. Privatization
A critical debate is unfolding in the Romanian political landscape that could redefine the country’s economic trajectory. At the heart of the conflict is a fundamental disagreement between the government, led by Prime Minister Ilie Bolojan, and the PSD, headed by Sorin Grindeanu, regarding how to handle profitable state-owned enterprises (SOEs).
The government is pushing for stock exchange listings, while the PSD is advocating for laws that would ban the privatization of profitable companies. However, industry experts argue that these two concepts are often intentionally confused in political discourse.
The Financial Stakes: 11 Billion Lei on the Line
The push for listings is not merely a matter of policy but a financial necessity. According to government documents, the state could potentially raise 11 billion lei through strategic moves on the capital market. The “maximum priority” is the secondary listing of Hidroelectrica, where selling a 10% stake could inject approximately 6.7 billion lei into the budget.
Other high-value targets include:
- Romgaz: A 5-7% listing could bring in between 2.2 and 3.1 billion lei.
- CEC Bank: A new listing is estimated to be worth 5.4 billion lei.
- Aeroporturi București: Valued at approximately 5.5 billion lei, though legal disputes with the Property Fund currently delay this move.
Financial analyst Adrian Negrescu suggests that the state needs between two and five billion euros annually from privatizations, asset sales, and listings for several years to reduce the budget deficit to below 3% of GDP by 2030-2032.
PNRR Milestones: The ticking clock for EU Funds
The pressure to implement these reforms is intensified by the National Recovery and Resilience Plan (PNRR). Romania has committed to specific obligations regarding the management of state companies to unlock European funds. Failure to meet these milestones by August 31 risks the loss of significant funding, which would further strain the national budget.
Beyond the money, the EU has frequently criticized the appointment of “political” figures to lead SOEs. The PNRR requires the introduction of professional management to replace political appointees—a goal that has yet to be fully realized.
The “Political Risk” and the Battle Against Corruption
Even within government documents, the state acknowledges the existence of “political risk.” Economics professor Bogdan Glăvan points out the irony of the state admitting it is its own biggest risk. He argues that the real issue is not whether a company is listed, but how it is managed.
The term “rats” (sobolani) has been used by Prime Minister Ilie Bolojan to describe those plundering the state budget. Glăvan asserts that these “rats” exist across the entire political spectrum, from left to right. He suggests that the only way to stop this is to remove the resources they exploit.
According to Adrian Negrescu, listing companies on the stock exchange is a “healthy method” to solve two problems at once: it provides immediate cash for the budget and forces companies into a predictable economic trajectory. This transparency helps eliminate “sinecuras” and “contracts with dedication” often granted to those with political pedigrees.
Future Outlook for Other State Assets
While the primary focus remains on energy and banking, several other assets are under evaluation for future waves of listings or strategic partnerships:
- Port Constanța: Valued at 1.45 billion lei.
- CupruMin: Home to Europe’s largest copper deposit at Roșia Poieni; the state is seeking a strategic partner rather than a listing.
- Poșta Română: Valued at 697 million lei, with potential for success based on European precedents like Deutsche Post.
- Uzina Mecanică Cugir: A potential listing in 2027-2028, contingent on legislative changes regarding pension fund investments in the defense industry.
Frequently Asked Questions (FAQ)
Will the state lose control of companies like Hidroelectrica?
No. Under the proposed listing strategy, the state intends to keep over 51% of the shares, remaining the majority shareholder and maintaining control.
Why is the PNRR deadline so important?
The PNRR has strict milestones that must be met by August 31. Failure to do so can lead to the loss of billions of euros in EU grants and loans.
How does a stock listing reduce corruption?
Publicly listed companies must adhere to strict transparency and reporting standards. This makes it harder to hide “dedicated contracts” or inefficient spending, as shareholders and regulators monitor performance.
What is the difference between the PSD and Government positions?
The government views listings as a tool for budget stability and PNRR compliance. The PSD opposes these moves, framing them as “privatizations” of profitable assets.
Do you think listing state companies is the right move for Romania’s economy, or should the state maintain 100% ownership? Let us know in the comments below or subscribe to our newsletter for more deep dives into the Romanian economy!
