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Romania renews talk of Petrom contract review

Banking

Romania has renewed threats to review the privatization contract of local oil company Petrom in a pricing row that has cast a shadow over the sale of the company to Austria’s OMV in recent years.

Finance and Economy Ministry Varujan Vosganian said Romania may look into the level of taxes paid by Petrom on the use of the country’s oil reserves. “It’s not normal to give a company all of the oil reserves, to accept that it pays a tax smaller than half of the EU and then to not set any conditions concerning prices,” Vosganian told the Money Channel late on Wednesday. “The one thing that could be done if things continue as they have, would be to see to what extent this (sell-off) contract fits European legislation, because a tax half the size as in other states could be seen as a type of state aid for Petrom.”

The Petrom privatization has been plagued by controversy in Romania, which joined the European Union last year, since the leftist government that sold the company lost power in 2004. Centrist politicians, including President Traian Basescu, have criticized the sale for giving away too much control over Romania’s natural resources. Tax levels were also an issue.

At one point parliament had discussed canceling the sale. Vosganian has said in the past this was not on the cards, but he has criticized the pricing policy of Romania’s energy companies. Soaring global energy costs are a sensitive issue in Romania, where many people cannot afford heating in the winter months. (Reuters)

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