A pre-privatisation transaction to support the restructuring and facilitate ultimate privatisation of SNP Petrom, the vertically integrated national oil and gas company in Romania. It will partly finance the refinery and retail modernisation programme of the Company.
The use of proceeds is still to be finalised, with the objective to partly finance the SNP Petrom refinery modernisation programme for the next 3 years, with a strong environmental impact and convergence with EU standards. Modernisation will include projects such as: three projects associated with Fluid Catalytic Cracking (FCC) unit, modernisation of the refinery process control systems and incineration of toxic waste from the acrylonitrile unit.
The proposed transaction is consistent with the Bank’s strategy for Romania, which promotes the Bank’s support for restructuring and privatisation of state-owned companies, in particular in the energy sector. The project is also consistent with the Natural Resources Operations Policy as it supports the restructuring of state oil and gas companies to make them more competitive and compliant with the EU quality and environmental standards prior to EU accession.
Since SNP Petrom is moving towards privatisation, its operational and managerial restructuring, as well as its potential environmental liabilities, have become even more important for a successful privatisation. As the project would also facilitate compliance of one of the major industries in Romania with EU quality and environmental standards, it would have a positive impact on the country’s move towards integration into the EU. The milestones and timetable agreed with the government and the company for its restructuring and privatisation objectives will have a strong transition impact.
SNP Petrom S.A. is around 93 per cent state-owned and is the vertically integrated national oil and gas company in Romania. The new government has confirmed its intention to continue the privatisation of the company and is retaining an international advisor to develop the optimal strategy for privatisation. The company’s modernisation programme over the next three to four years focuses on restructuring and modernisation of refining, production and retail business segments.
US$ 150 million debt investment consisting of a non-sovereign guaranteed, pre-privatisation loan, against privatisation and restructuring milestones. The transaction consists of (a) a Tranche 1 loan of US$ 50 million; (b) a Tranche 2A loan of US$ 50 million, pro-rata with the (c) Tranche 2B loan of US$ 50 million, of which Black Sea Trade and Development Bank US$ 10 million as parallel loan and the rest as B loans to commercial banks.
US$ 150 million (€150 million).
The project was screened B/1, requiring an environmental analysis and audit. The proposed transaction involves an extensive revamping programme of Petrom’s existing facilities at SNP Petrom’s refineries. Some of the proposed projects provide significant environmental and safety benefits in addition to improvements in yields and process upgrades. The environmental improvements include the reduction of sulphur content in the produced gasoline in order to bring the product in line with EU requirements. On the basis of the findings of the environmental audit and analysis carried out by an independent environmental consultant, an Environmental Action Plan will be developed and agreed with the company.
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