State-owned companies listing blocked by Parliament

Yesterday, the Chamber of Deputies adopted, as the decision-making body, the draft law initiated by the PSD that blocks the sale of minority stakes in state-owned companies, including stock market listings, until December 31, 2027. This concerns profitable state-owned companies, in the case of those that have been losing money for several years or are insolvent, the central authorities may resort to the sale of assets or shares. A qualified majority of 166 votes was needed for adoption, and the project passed with 178 votes, including support from AUR. Previously, the legislative initiative had also passed the Senate and will now go to President Nicuşor Dan for promulgation, if the law is not challenged at the Constitutional Court of Romania.

Immediately after the adoption of the bill, deputy Bogdan Ivan (PSD), former Minister of Energy in the Bolojan government, declared: "Extremely important project that protects the Romanian state's participation in strategic companies, especially in energy, but also in transport and banking. From this point of view, I want to be very clear: we are talking about companies that are profitable. We are talking about a principle that does not block the listing of companies with a majority state participation on the stock exchange, which is an extremely good thing, but rather limits the sale of shares of state companies that are currently profitable and have no problems financing themselves. I will give you a very clear example: Romgaz, Hidroelectrica or Electrica. The moment we talk about a reduced state participation, from 80% to 60%, it does not automatically mean that it will be a company that will be better managed, especially in the context in which Hidroelectrica is currently investing heavily in new facilities electricity production. Secondly, in the context in which Romgaz is about to start exploiting the resources from the Neptun Deep project, which will automatically lead to an extremely high increase in the stock market value starting next year, it is a downright incomprehensible decision to talk about profitable companies, which are doing very well, but which are subject to pressure from the government so that important blocks of shares are sold through direct negotiation, without transparency, in a form that I personally do not understand. I had, as Minister of Energy, a very clear proposal for certain companies to be listed, restructured and reorganized. Neither Hidroelectrica, nor Romgaz, nor Nuclearelectrica are among these companies that really needed to be listed on the stock exchange. What was done today through this initiative of the Social Democratic Party and my colleague, Senator Daniel Zamfir, represents a normality through which, until December 31, 2027, the sale of packages of strategic state companies in the form proposed by Deputy Prime Minister Oana Gheorghiu. (...) The sale of shares represents a flagrant violation of the national interest, given that all developed countries invest in the capitalization of energy, transport and banking companies. (...) Protecting the majority stake of the Romanian state in strategic companies, in this complicated international moment, is mandatory. Through this project, we have ensured that no one, regardless of the future government situation, will touch the state capital in energy and transport companies. The way in which the idea of the sale was presented by the Deputy Prime Minister, without a prior discussion with the relevant ministers and without a solid basis, represents zero transparency. I agree that the procedures should be as transparent as possible and that companies should be listed on the stock exchange where appropriate, but you must oppose an accelerated procedure of direct negotiation, without transparency. I believe that it is in Romania's interest to oppose such initiatives. At the same time time, the government or companies can resort to transparent procedures, such as an SPO (Secondary Public Offering), to issue shares.”

In response, liberal deputy Robert Sighiartău stated: "There is a new majority in the Romanian Parliament, in the Chamber of Deputies, between the Social Democratic Party and the AUR Party, together with the other satellites: PACE, POT and SOS. Today this majority has united under the motto and slogan reinvented from the time of Iliescu, "we are not selling our country". Under this slogan, the biggest cannons have been fired throughout time, throughout the 35 years in Romania. Therefore, Senator Daniel Zamfir, with the others from AUR, have come up with a project that, they say, wants to protect Romania's national interest and blocks the sale of minority stakes in state-owned companies. The National Liberal Party says clearly and distinctly: this is not about protecting state interests. On the contrary, it is about protecting the political interests that the Social Democratic Party has them in these companies. When you list a company on the free market, on the stock exchange, and we are talking about minority stakes, transparency increases. There is greater attention from investors to everything that happens in those state-owned companies and then they can no longer "screw up" and do the stupid things they have done over time. This is also the reason why, of the 1,200 state-owned companies, many - hundreds of companies - have been losing money for decades, but the Social Democratic Party has kept them there because it systematically ticks them off, because it collects money, because it collects rents for its members. So, the National Liberal Party voted against, and we, already in opposition to this parliamentary majority, will be vigilant and will draw attention to all the things that ultimately take us back to the 90s, to that complicated period when the privileged of the state were getting rich, and the market economy was inhibited precisely so that we could not prosper as a nation. Therefore, the PNL voted against this bill, which is toxic”.

He drew attention to the fact that this bill may not pass the constitutionality review that President Nicuşor Dan may request.

Robert Sighiartău pointed out: "We are waiting to see how President Nicuşor Dan positions himself regarding this bill, which is against the market economy. The PNL, as a right-wing party, has always said that the state is the worst administrator. Therefore, the state should not monopolize and should not politically control, as has happened over time, these state companies which, as I told you, were populated by party people who, in turn, only ticked off that system. We are waiting to see the opinion of the President of Romania and then we will further address all the necessary levers to support our cause. We will see if the President will return it to Parliament or attack it at the Constitutional Court”.

USR immediately launched a harsh attack on the PSD-AUR alliance, accusing it of not defending Romania's interests, but "the sycophants who have been screwed into office for many years,” and warning that the regulatory act risks being declared unconstitutional. USR deputy Alexandru Dimitriu compared PSD's current discourse to the rhetoric of the 1990s and the slogan "we are not selling our country,” arguing that blocking stock market listings is an attempt to preserve political control over state-owned companies and to impede transparency. USR argues that the law directly impacts the capital market and the ability of state-owned companies to attract investment funding.

The criticisms of PNL and USR deputies are also supported by the negative opinion issued by the Economic and Social Council, which warned that the law establishes a general and undifferentiated ban on state participation, without taking into account the economic specifics of the companies and the need for efficient administration. CES also drew attention to the fact that the suspension of all ongoing privatization operations may expose the Romanian state to patrimonial risks and litigation generated by commitments already assumed contractually. In addition, the institution warns that the law that passed the Chamber of Deputies yesterday deliberately confuses listing on the stock exchange with "selling the country", blocks a well-established mechanism of corporate discipline and conflicts with both the public policy regarding the private property of the state and the milestones assumed by Romania through the PNRR. At the same time, CES believes that the law sends "a devastating signal regarding the predictability and credibility of Romania as an investment destination".