Does your Secretary of State deal with air, land and sea transport?
In fact we have a minister of transports, Mr. Traian Basescu, and two Secretaries of State. Each Secretary of State is responsible of a special activity in the sector of transports. My activities deal with aviation and maritime traffic. My colleague, Mr. Marinescu deals with land transport. We have to know everything about the general policy of the Ministry of Transports in Romania but each one of us focalizes in our sub-sectors. In many occasions I am in the position to discuss about the railways or the roads because Mr. Basescu is busy and I have to take his place in some meetings. We both know about each other's fields, and we can give you some general information about our policies.
Can you tell us how is the restructuring process of Tarom coming along as well as how will the privatization take place?
We have just started the privatization process for Tarom, our national air carrier. In 1997we started a restructuring program for them because at that time they were in a pretty bad situation. In 1997 the company lost US$ 82 million. After our restructuring program in 1999 they lost only US$ 17-18 million and we expect it for the year 2000 to have zero losses or even some profits. The restructuring was a very good one. We have a very good management team in Tarom now.
Since the state is not always a very good manager we want to privatize the company. We have started two parallel exercises. One is with the World Bank, working directly on the privatization, and the other one is with the European Commission in order to prepare the company for privatization. I think that the privatization exercise we are carrying out with the World Bank is more interesting. We have chosen a consulting partner, ABN-Amro Bank, actually it is a consortium formed by Price Waterhouse & Coopers, ABN-Amro Bank, SHNT from the USA and a local company of lawyers, Musat & Associates. With them we have signed a 7 month program which we divided it in two:
A first phase lasting 13 weeks in order to prepare the strategy, evaluate the company, collect all the figures and to prepare a final report regarding the strategy. When we have this report we will need the approval of the Government and we will continue with the second phase.
A period of 15 weeks during which we will have to find the strategic investor who, we hope, it will be from Europe. This is of course open for companies from all over the world, but it is very important for us to find a partner from a large group from Europe. In Europe there are already four big groups. When we are be part of the European Union (hopefully in a few years) and the market will be completely open, Tarom will have to be part of a solid partner.
For the first phase we have paid the consortium for the activities they are carrying out for Tarom. For the second phase we have agreed on continuing the procedure with a success fee. If we find a good partner and the amount is, let us say US$ 300 million, they will collect 1% of that amount. If the quantity is bigger they will have a larger profit, so they should be interested to find the best possible partner.
We have just started this process. We started on February 7th, 2000, and in September 2000 we will finalize everything with ABN-Amro. I hope they will find a good partner at the end of this entire process.
What are the requirements for the investors you are looking for to take over Tarom? Is this search is done through the Ministry of Transports or by Tarom itself?
Everything is done through the Ministry of Transports. We coordinate the company up to privatization. As I have told you, in 1997 we started a very serious restructuring program with Tarom and now Tarom has a completely new look. We have the newest fleet in Europe. The oldest aircraft in the company is the Airbus 310. We do not have too many aircraft in our fleet but we have very good destinations. For a strategic investor in Europe we are interesting because we have a lot of historical destinations, good connections with the Middle East and Asia. Romania's geopolitical position is also very interesting as well as the infrastructure that we have in the airport. Last year we just finalized the first phase of the new airport development and this year in October 2000 we will finalize the second phase, the new arrival terminal. They have very good infrastructure with 2 runways, 3.5 kilometers, that means that the Otopeni airport could become an important hub in the area. There are also a lot of other advantages to think about Tarom. When analyzing it I think it could be very attractive for some strategic investors in Europe.
We do not want to make the privatization because it is a fashion today. We want it to be a success for Romania. We are not in a hurry and we want to do something professional. For that reason we have waited 3 years until now. First we have started to prepare the company to look nice and then we will sell it.
The port of Constanta is actually the exit door of Romania especially for heavy cargo and the access to the Black Sea. What efforts is the Ministry doing in order to improve and upgrade the services and to bring it up to international standards?
When the Minister of Transports, Mr. Basescu, and myself started to work together in the Ministry of Transports we established some priorities, and one of them is the Constanta port. We believe in the future development of the market in that area. Constanta is the second port in Europe after Rotterdam regarding the infrastructure. During Ceausescu's regime there were a lot of huge investments in the port area - ships, yachts. Because it is really a priority we have invested some money in its development.
Like in all our projects we have a master plan for its development. The Ministry of Transports approved the master plan and when we will have the money will start to develop it piece by piece. We started a very important project with the Japanese Government - a cargo terminal. I cannot give you the dimensions right now but it is a very huge one and we hope to finish it three years from now.
We also have some projects regarding the environment in the port and some protection dams. The container terminal is the biggest project and we will start at the end of this year a LPG terminal - Liquid Propane Gas. | From the juridical point of view we want to transform the port in a porto-franco like the one in Hamburg. We already have a free-zone but only a small part of the port is a free-zone in Constanta. We hope in two or three months to prepare all the governmental decisions to transform it into a porto-franco.
Is it Giurgiu the free zone you are talking about?
No. We have a departament in the Ministry of Transports which is coordinating all the free zones in Romania. We have five free zones in Romania: Giurgiu, Constanta, Braila, Galati and Arad. They started in 1996 with some difficulties, but now some of them are in a very good financial position. A lot of investors started to build some factories inside because they have a lot of financial facilities. These free zones are independent but we coordinate the activity at the national level.
Giurgiu free zone is going to be doubled and we have a very smart general director there who wants to build something like a pleasure area with Casinos and other things. It is an island in the Danube and it is easy to keep it free because it is not necessary to build fences around and building something for pleasure could be very interesting. Las Vegas started in the same way in the desert.
Can you comment on the dispute with Bulgaria regarding the second bridge over the Danube?
It is very important for the Bulgarian side. This bridge would open a new way to Sofia and new traffic crossing the whole Bulgaria until Salonica. It was a dispute between us from the technical point of view. When you want to build a bridge you have to make some calculations and see if it is necessary or not, if it is a priority or not. Comparing with the traffic over the Danube in that area, mathematically speaking, it is not necessary to build it. GIBB from England made a feasibility study and they said the traffic would require a bridge in the year 2015, so it was a dispute in the technical way. Finally we said that we are not against it if the Bulgarians want to build it, but we do not have money to invest, so if they find the money they can do everything they want. However, for Romania it is not a number one priority. They agreed, and they found the money. We have already signed a document and it was decided also the exact location of the future bridge (791 ± 1), after the experts from both countries met.
We have other two bridges in that area: in Turnu Severin and in Portile de Fier II - 100 km to the west. The Danube is not very favorable for that kind of construction in that area.
Does that mean that Romanian are not going to go over the bridge or that they will have to pay extra money?
If Romania carriers will find necessary they will use this bridge paying the same money as the rest of the carriers.
Finally we have agreed on the construction of this bridge so that nobody will be able to say from now on that Romania is against development. We are not against it, but we just do not have the money and it is not really a priority. Everybody agreed that from the technical point of view it is not necessary since we have other two bridges in that area. Basically they want t to build another one just because the border with Yugoslavia is 20 kilometers in the west and there are some problems other there. The thing is that that is the situation now, but my opinion is that in ten years there will be no problems and there will be no borders.
Why has the National Railway Company been divided into nine smaller companies and how are they expected to perform?
Regarding the railway, I do not know about the rest of the world, but in Europe for sure it is very difficult to find an efficient company in the railway business. In Romania we do not have major problems with the cargo transports but we have big problems with the passengers. From the Ministry of Transports in Bucharest we do not know exactly where the losses come, so we have decided to keep under control only the international trains and long distance ones and create another company to manage the regional traffic in each area. So when a long distance trains crosses a region, they have to pay to the local administration what is necessary. Our major problem was the local transportation - short distance transportation: the workers coming to work in the morning and going back home in the evening. They did not always want to pay the tickets by tipping controllers. Of course, the company cannot support all these things and decided to involve the local administration in this business. If they pay we will keep the transport but if they do not pay we will cancel it, that is why we have involved the local administration in all the areas. For that reason we have nine companies in nine different regions in Romania for the transport of passangers. The important trains are still coordinated by the Ministry of Transports.
We are doing the same thing with the airports because in Romania we have 17 airports. All of them were before coordinated by the Ministry of Transports. From my position I do not know what is necessary in Arad or in Iasi so we have transferred them to the local administration and we kept only the 4 largest under our control. At the beginning local authorities were against, but now they are happy and they started to invest a lot of money. They are proud of having an airport there. There is one example when five regions have invested together money in one airport. They have started to understand that an airport is a very important asset for the economical development of the area. When everything is under only one roof that is not possible. We have some money from the state budget and we started to divide it equally by 17, but they know better than us about what is necessary, and they are able to find other solutions or private investors. It is very important to involve the local administration in the management.
Do you have a final message for our readers?
I want to invite them to come to Romania and see the reality because it is very different from what they have watched on TV so many times. We are all the same, we are in Europe and we are very open. We understand that business is a benefit for both sides. This is the way we want to start the relations with different partners from all over the world. |
MINISTRY OF TRANSPORTS