Sept. 30 (Bloomberg) -- Romania plans to merge power plants and mines, scrapping an initial plan to form two larger holdings, after unions and a minority shareholder opposed merging unprofitable assets with money-making enterprises.
The Economy Ministry wants to merge three power plants and mines under one entity called Oltenia SA and two thermal power plants and coal mines under a second company called Hunedoara SA, according to a law draft on the ministry’s website today.
Romania scrapped a plan to merge its hydropower and hard coal holdings into one company called Hidroenergetica SA and coal-fired and hydropower plants and two nuclear reactors under a second holding called Electra SA, after unions and Fondul Proprietatea SA sued the government to block it.
“Romania needs to form integrated companies, which will have enough market share to become regional leaders in a competitive market to successfully ensure safety and network access for energy consumers,” the ministry said.
The International Monetary Fund and the European gave Romania a combined 5 billion-euro ($6.7 billion) precautionary agreement over the next two years and urged it to improve the way the state-owned companies are run. They also want private management to help cut the budget gap below 3 percent of gross domestic product by next year from 6.5 percent of GDP in 2010.
The government also plans to “sometimes next year” sell 10 percent stakes in its hydro-power generator Hidroelectrica SA and in Nuclearelectrica SA atomic-power company, which were both included in the initial merger plan, through initial public offerings, Victor Cazana, an economy ministry official, said on July 26.
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