1. Sorin Ionita - Politici locale
Curs 1
SOEs in Romania
State of the play and some lessons
Sorin Ioniţă
Bucharest, Feb 2016

2. Sorin Ionita - Politici locale
Curs 1
Legacies
In 1989 everything in the economy in ECE was SOE (almost, depending on country)
Disinvestment of state: rapid, uneven, various institutional legacies (mechanisms, corporate culture)
Effects today: (i) still larger SOE sector than EU average; (ii) special category of “leftovers” – privatization tried and failed

3. Sorin Ionita - Politici locale
Curs 1
Legacies

4. Sorin Ionita - Politici locale
Curs 1
Legacies
SOEs employment, % in total

5. Sorin Ionita - Politici locale
Curs 1
Romanian SOEs
About 1400 SOEs, out of which majority owned by CG; the rest by LGs
employees (about 25% of the public sector)
Up to 10% SOEs are régies autonomes, i.e. not under general company law
Among the largest employers: Posta Romana, almost 25,000 jobs

6. Sorin Ionita - Politici locale
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Sectors

7. Sorin Ionita - Politici locale
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Romania
Dominated by energy, mining and transportation
Large SOEs with very heterogeneous performance: some profitable, some black holes
On average, SOE sector = low profitability; high arrears to state budget; failed to invest in network infrastructure (one stated reason for their existence)

8. Sorin Ionita - Politici locale
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Romania

9. Sorin Ionita - Politici locale
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Inefficiency
Why is that?
Legacies (path dependence)?
Less enforcement in tax collection in SOE sector (social=political concerns)?
Poor definition of social service obligations in contracts (so non-payment = compensation of sorts)?
(However the biggest non-payers do not seem to have social service obligations: coal mines, CFR Marfa)

10. Sorin Ionita - Politici locale
Curs 1
Inefficiency
Progress in past years: a few SOEs in energy sector (gas, hidro, nuclear) make profits; mostly market liberalization (EU)  rational behaviour
The rest, still loses. Biggest losers: mining (coal), CFR (3), airline (Tarom)
Conflict of interest in line ministries: (i) owners; (ii) regulators, sectoral strategies, privatizations. Weak basis for good corporate governance

11. Sorin Ionita - Politici locale
Curs 1
Policy reform
OUG 109/2011
Professionalization of board / management selection; separation ownership / policy making; clarity in public service obligations; transparency in operation and minority shld protection
Inconsistent implementation: only about 30 SOEs, procedures were undermined in practice