The proposed project consist of subscription of up to 5% ordinary shares of SNP Petrom, SA, Romania through a capital increase , alongside 51% of the Strategic Investor in the process of on-going privatisation.
The transaction will require conversion of part or whole of the Bank’s outstanding amount of US$ 73 million under the existing SNP Petrom Pre-Privatisation Loan (OPID 4410).
The rationale for the Bank's participation is to support the privatisation and liberalisation of oil and gas sector in Romania. The Bank’s participation in the transaction directly supports the following:
More widespread private ownership
The possible equity presence of the Bank, as an international financial institution with experience in the sector and regional privatisation market, will contribute to the successful completion of one of largest privatisation in the region and at the end of this first phase of the privatisation, more than 60% of Petrom’s ownership will be in private hands.
Setting standards of corporate governance and business conduct
The Bank’s participation is expected to increase standards through ensuring: the quality and transparency of the privatisation process and protection for minority shareholders rights.
In addition, as a result of the Bank’s participation, the proposed transaction will carry some other transition impact potential including; (a) transfer of skills to the Romanian oil and gas industry; (b) the demonstration effect arising from a successful flagship privatisation conducted according to best international practice and (c) market expansion.
SNP Petrom SA is the national integrated oil and gas company of Romania. It is producing approx 6 m tons of crude oil and 6 bln cubic meters of natural gas per year. Its two refineries process a combined about 8m tons per year and also the firm has a network of around 700 petrol stations which gives a market share of about 40%.
Up to US$ 73 million equity financing, through conversion of part or whole outstanding amount under the existing SNP Petrom Pre-Privatisation Loan (OPID 4410).
To be confirmed upon finalisation of the privatisation process.
C/1 screened project. Environmental due diligence on the existing loan revealed various environmental issues at Arpechim and Petrobrazi and an Environmental Action Plan is being implemented to address these issues. The main components of this USD 108 million EAP are the following: (i) volatile organic vapour recovery system at the gasoline loading facility; (ii) installation of acrylonitril incinerator; (iii) ammonia and propane vapour recovery; (iv) refurbishment of the Carbon Black Plant; (v) refurbishment of vacuum distillate hydro-treating in order to reduce SO2 emissions; (vi) installation of low NOX burners; (vii) installation of secondary seals on floating roof tanks and vapour recovery units on fixed roof tanks; (viii) installation of a sludge incinerator; (ix) upgrading of waste water treatment, including biological treatment of phenol, sour water stripping and membrane-based aeration system; (x) installation of a new gas recovery compressor and new flare heads; (xi) installation of Sulphur Recovery Unit and Tail Gas Unit; (xii) building a cogeneration plant; (xiii) upgrading environmental monitoring systems. Petrom has published an Environmental Policy statement and is committed to implementing an ISO 14,001 certified Environmental Management System for all its activities. At present two of its sites are ISO 14,001 certified. Petrom is committed to continue the implementation of its Environmental Compliance Programme for 2003-2007. This will bring Petrom’s operations into compliance with present Romanian standards. Further environmental investigations will be conducted in order to determine needs for environmental investments and structural changes in order to bring Petrom into compliance with EU IPPC standards. A specific investment programme and EAP will then be identified. It should be noted that the EAP for the two refineries remain in place.
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