The Romanian authorities have secured a decisive victory in the Rompetrol dispute with Kazakhstan having forced National Welfare Fund Samruk-Kazyna and KazMunaiGas to pay additional 150 $ mil. Kz.experts’ analysts have assessed the total size of the direct losses for the county.
On October 26, 2018, KazMunaiGas NC’s affiliated company KMG International (former Rompetrol) announced the establishment of the Kazakh — Romanian Energy Investment Fund. Here is the press-release (text in bold by kz.expert).
«26 October 2018 KazMunayGas International (KMGI, 100% affiliated company of KazMunaiGas JSC NC) and Societatea de Administrare a Participaţiilor în Energie (SAPE) which is owned by the Ministry of Energy have signed the association agreement for the establishment of The Kazakh — Romanian Energy Investment Fund, in accordance with the provisions of the Memorandum of Understanding signed between the Romanian State and KMGI (former Rompetrol Group).
The Kazakh — Romanian fund is estimated to reach 1 $bn in investments over a period of 7 years. KMGI’s contribution to the fund is 150$ mil. With that, the financing of the project will be conducted exclusively via KMGI’s own funds and borrowed capital. The projects implementation does not require any additional investment or attraction of KMG NC’s resources. The Fund prioritizes the energy projects positively contributing to the development of the local energy sector as well as the further strengthening of KMGI’s presence on the Romanian market.
The shareholder structure of the investment fund which will conduct investments in the energy sector is: KMGI — 80% and the Romanian State — 20%.
«The establishment of the Kazakh — Romanian Investment Fund is not only an opportunity for the Romanian energy sector to attract additional investments, but also a clear signal that we can actively contribute to the development of our national industry. The investments which will be generated by the creation of this fund will create new job opportunities in Romania, while the national energy sector will benefit from an increased production capacity», said Constantin Văduva, SAPE President of the Executive Board.
One of the projects which is considered for the joint investment fund refers to the construction of a cogeneration plant on the Petromidia platform, in partnership with Uzina Termoelectrică Midia. The cogeneration plant (combined production of electric power and heat) will have the capacity to provide energy for both Năvodari city and the Petromidia refinery. The value of the investment will reach 120$ mil…
Another project refers to the expansion of the local gas stations network with approximately 80 new locations. The new gas stations will be developed through greenfield investments, the total budget allocated to this expansion is in excess of 100$ mil».
So, the press-release shows that National Welfare Fund Samruk-Kazyna and its affiliated company KazMunaiGas have suffered yet another devastating defeat in the Romanian project dispute and will now have to spend yet another 150 $ mil of their own money.
The financing of the new company and its projects «exclusively via KMGI’s own funds and borrowed capital» means the following. First, the guaranteed absence of the dividends from the Romanian company for at least a decade; second, the necessity to collateralize its property in the case of borrowing money from European banks which means rising the risk of losing this asset.
Thus, according to our assessment, the total amount of Kazakhstan’s direct losses caused by Timur Kulibayev’s Romanian gamble* is approaching 5 $ mil. *See our publications Timur Kulibayev's Affront, KMG Ends Rompetrol Saga, Fight for the Romanian Inheritance in which we present the outlook of Timur Kulibayev’s Romanian venture. Timur Kulibayev is the former Head of Samruk-Kazyna and the current Chief of National Entrepreneurs Chamber Atamaken.
And this is not counting the hidden losses caused by delivering cheap oil to KMGI refineries, providing free financial aid, etc.
As for the Romanians, we should congratulate them on the big success. Not only have the Romanian authorities been able to defend an important asset having legally disputed Rompetrol’s privatization and having succeeded in transferring a part of its shares to the state but also created an instrument to invest in their energy sector.
The recent visit of State Secretary at the Romanian Energy Ministry Robert Todarache to Kazakhstan was the key step in the operation. In his words, the Romanian Energy Ministry and KMGI had activated the collaboration process having significantly advanced in the implementation of the first part of the Memorandum of Understanding between KMGI and the Romanian State.
By the looks of it, Mr. Tudorache’s visit to Kazakhstan and the subsequent trip of Samruk-Kazyna Deputy Chairman Alik Aydarbayev to Romania had put a period to the five-year-long process. The fact that the state holding and its affiliated company were no longer able to postpone the signing of the Fund establishment (otherwise, KMG could have lost if not entire Romanian asset then its major part) is another matter.
When KMG NC failed to sell KMGI to China Energy Company Limited due to the latter’s problems on the local market, it became clear in what way the events were to unfold. You can easily follow the whole story just by reading the press-releases on KMGI website.
Photo from ibirzha.kz
