No historical debts towards the Romanian state

Rompetrol had no historical debts towards the Romanian state at the date of negotiating and signing the Memorandum of understanding in 2013, wrote on Facebook Gabriel Dumitrascu, former head of OPSPI. In an ample post, he explains the situation at the moment the memorandum was signed and the considerations behind the signing.

He wrote: “As responsible and signatory of the Memorandum of understanding with KazMunayGas International (KMGI) in February 2013, I feel compelled to explain and correct the information appeared in the public space, considering that only truth and arguments can lead to a correct judgement.

  1. Rompetrol had no historical debts towards the Romanian state at the date of negotiating and signing the Memorandum. All debts were compensated by buying off part of the obligations issued to cover the debt and the difference of remaining obligations were converted into shares in 2010 according to legal provisions. Thus, the Romanian state once more became a shareholder with 44.7% share in Rompetrol Rafinare (the state owned 0 shares before).                                                                                                                                                                 
  2. Because of political changes which are not to be mentioned, Rompetrol was at the brink of closing its activity and firing all employees. Notices regarding termination of labor agreements affecting over 3000 employees were issued.                                                                                              
  3. The main objective of the negotiations was to maintain Rompetrol operational for the following reasons:                                                                                                                                                                                                                                                                                      a. Contribution to the energetic security: Rompetrol had a share of 40% of the fuel production that could have been replaced only through imports.                                                                                                                                                                                                                      
    b. Rompetrol was one of the large taxpayers with over 1 billion USD every year.                                                                                                     
    c. Closing Rompetrol would have created a series of crises for the users of petrochemical and asphalt products. The activities of many companies with over 20.000 employees would have been affected as well as the stability of the state budget.                                                                                                                                                                                                   d. Trust in the Romanian investment climate would have been affected.

4. The negotiations’ results favor the Romanian state. We made no concession. Based on Constanta Court decision, we recognized that the conversion of obligation into shares in 2010 was done legally and correctly. As a result came the governmental decision from 2012 when the administration of shares (converted obligations) in Rompetrol was transferred from the Ministry of Finance to the Ministry of Economy. 

The approval of the memorandum by law and not by governmental decision was an excessively prudent option of the Government, motivated by former political interests in the artificial dispute.

6. The state’s main source of financing are taxes collected from economic agents. The more the taxable amount grows, the richer the state becomes and has the resources to finance public expenses: healthcare, education, infrastructure, defense, etc. The proposal to establish the Investment Fund followed the principle that an investor, the more anchored in the national economy, the more he is integrated and interested in the wellbeing of the economic environment.
Moreover, the Romanian state will not come with a direct contribution but will receive 20% from the revenues. The forecasted investments of 1 billion euro would ensure a yearly surplus of taxes and would generate horizontal development and vertical integration. The Fund invests in projects more profitable than the oil refining sector.


7. The state participation of 44.7% in Rompetrol Rafinare (less the commercial part) only means capital immobilization without the possibility of receiving dividends. Only refineries with a capacity over 10 million tons/year generate a constant profit without being highly influenced by the volatility of the oil price. After signing the Memorandum and an investment program of over 1.5 billion USD, Rompetrol Rafinare reached a capacity of 5.5 million tons/year.

8. The minimum price offered by KMGI - 200 million USD for 26% of the Romanian state shares is at least 70 million USD which is more than the shares costed then and cost now (see RRC quotation on the stock exchange).

9. At the end of 2014 all necessary documents for the establishment of the Fund were ready, so the investments with the highest economic impact were identified and prioritized.

10. Performing the Memorandum in good faith would have allowed for other agreements with the Republic of Kazakhstan regarding the collaboration in the oil and gas field and exploitation of uranium ore, with a significant impact on the energetic security of Romania.

11. Does anyone want to calculate how much the Romanian state lost because of delaying the implementation of the Memorandum?

12. During the negotiations, I was several times suggested to block the discussions and better close Rompetrol. Then and now, there are two more large refineries that were closed in Romania without a chance to be restarted.

13. From the signing of the Memorandum in February 2013, I was never invited to any institution regarding any investigation on this matter.