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June - 2005



Knowing me, knowing EU

The European Union has taken a chance on Romania, but Swedish ambassador Svante Kilander hopes the Balkan country will be a winner that takes it all

Svante Kilander first came to Romania as a second secretary at the Embassy in the 1980s, when Ceausescu's Socialist Republic was passing through its poorest and most oppressive era.
“When people woke up in the morning, the future was that evening: how will we manage to buy food or medicine?” he says. “But no individual could have a strategic plan. When I came back in 2001, people were talking about what 2004 would mean and about 2007.”
According to the diplomat, the change in perspective is helped by the forward-looking idea of European integration which is now entering the local mentality.
“Romania will, with no doubt, manage,” the diplomat adds. “Romania knows what has to be done and everyone knows Romania will do it.”
Sweden sees Romania as “a classmate” in the European Union, according to the ambassador and there is a strong dialogue between ministers and parliamentarians from the two countries. A Swedish parliamentary delegation will arrive in Romania this year to establish contacts with their Romanian counter-parts, pre-empting their collaboration after the accession date.
In 2007 Romania and Bulgaria will find themselves in the spotlight, as older citizens of the Union will become curious about these new kids on the block.
“In the EU and in Sweden, everyone knows when there is a big enlargement [as in 2004] and I sometimes have the feeling that people in Sweden think that everyone who should have joined, joined then,” says Kilander. “But now there will be a focus on Romania. It will be good PR for Romania. It will emphasise that here is a new member that is not that well known in Sweden.”
In bilateral trade, Sweden is fertile in fields such as telecommunications, energy, household products, transpor-tation, forestry and environment protection. The tradition of wooden handicrafts in Romania holds much appeal to a Swede. “When we go to a Christmas fair we buy a lot of [wooden handicraft items such as] Christmas presents for Sweden. Wood has a living quality,” says Kilander.
Expertise in wood production has meant that furniture firm Ikea has set up manufacturing operations in Sighet in furniture and ceramics. It has become so famed, that King Carl Gustaf XVI and Queen Silvia of Sweden visited the facility on their last trip to Romania. So, the inevitable question: when will the stores come?
“When I speak to Romanians, everyone will sooner or later ask me when I think Ikea will come to Romania. It is up to the company, when they find the right moment they will do it.”
Swedish firms have registered an encouraging presence in Romania, but due to geography they are more evident in the Baltics and Poland. One disincentive to Swedish business is the lack of a direct flight to Romania. It takes 45 minutes to travel from Stockholm to Tallinn, compared to five or six hours from the Swedish capital to Bucharest.
Despite these transport compli-cations between the capitals, two media events have made the distance seem much shorter.
Swedish authorities arrested and deported refugee from justice Gregorian Bivolaru, accused of sexual perversions and leader of a Yoga cult with an alleged sideline in pornographic movies. The second was the 'Swedish bribe' story, where Peter Fallenius, a former manager of Elektro Invest Romania, a division of Swiss-Swedish group ABB, disclosed that he had bribed five Romanian officials, including the former mayor of Bucharest Viorel Lis, to accelerate Romania's return of debts to Sweden. Fallenius has been convicted and is appealing against the decision. “The Swedish process is independent of any involvement, but we will see, the case is not finished,” says Kilander. After the appeal, Fallenius could also take his case to the supreme Swedish court.
In the last year of his term, it seems Kilander will miss picturesque cities such as the German-looking Sibiu, Sighisoara and Bucharest, where he enjoys restaurants like Cocosatul (The Hunchback) for its relaxed atmosphere. A favourite meal of his is the succulent minced delicacy of mititei, a distant relative of Swedish meatballs.
“In the 1980s it was quite difficult to get mititei, however the Carul cu Bere (The Beer Wagon) served them,” says Kilander. “Of course, they were much smaller then.”



Ambassador: Mr. Svante Kilander
Age: 54
Posted to Romania: 2001
Educated: Law, Modern History, German and Chinese Language at Uppsala University and MA at Uppsala University
Previous postings:
Second secretary in Bucharest (1982 -1984), second and first secretary in Indonesia, first secretary in Vietnam, counsellor and minister in Beijing, China, minister and charge d'affaires in Pyongyang, DPR of Korea
Extra-Curricular interests: Music, literature, history, playing the piano

Energy boost

More fairness and cheaper energy is the ambition of new minister of economy and commerce Ioan Codrut Seres, as he maps out the plan for energetic privatisation

Many of the major deals in the energy field are due to close this year, with a selection of distributors and producers in the gas and electricity sectors poised to leave the public sector.
“The Ministry of Economy and Commerce will open the energy market to around 83 per cent starting 1 July 2005,” says minister of economy and commerce Ioan Codrut-Seres. “This will bring more fairness on the market, will encourage competition and will facilitate the acquisition of cheaper energy than in today's monopoly conditions.”
So far this year has seen the opening of the market to international firms interested in the energy sector.
The beginning of the year saw the signing of privatisations in the distribution of energy. Electrica Banat and Dobrogea went to Italian firm Enel for 112 million Euro and 100 million Euro in debt coverage, Electrica Oltenia to Czech company CEZ and Electrica Moldova to E.ON Ruhrgas. In the gas field new owners settled in, with E.ON Ruhrgas buying distributors Distrigaz Nord and Gaz de France's purchase of 51 per cent in Distrigaz Sud for 311 million Euro.
As Minister Seres points out, there are 141 companies in the Ministry's portfolio which are in different stages of the privatisation process.
“Our aim is to find strategic investors that can prove real managerial and financial commitment both before and after the actual privatisation,” he adds. “We are looking to this entire process and have in mind the future liberalisation of the energy markets as well as the EU integration of Romania.”
This year, the calendar shows that the jewel in the crown, Electrica Muntenia Sud will go to private hands. The most attractive branch of electric distributors Electrica has 8.5 million clients and a turnover of two billion Euro. Transnational European energy firms are already readying on the market for this key sale.
In the transportation of energy, privatisation is also due.
“For [electric transport firm] Transelectrica we have decided to list on the Bucharest Stock Exchange ten per cent of the share capital in the first phase,” says Seres. The process of privatising its branches will also start this year.
The electricity field will see a major investment in the third unit at Cernavoda power plant, with an estimated investment value of around one billion Euro. The state has selected seven investors to partner in this project: LNM Holding (one of the biggest energy consumers in Romania in the Mittal steel factory in Galati), Atomic Energy of Canada Limited, Ansaldo, Enel, Association of Nuclear Equipment Supliers, Korea Hidro and Nuclear Power, Enel and Cem Demir from Turkey. The consultants are Deloitte and the Institute for Studies and Energy Projects.
“Our investment plans are in the range of billions of Euros in finalising power plants, restructuring projects and greenfield plans,” says Codrut-Seres.
What the minister sees as priorities to sell are the branches of Electrica and the thermoelectric producers in Turceni, Rovinari and Craiova, the producer of natural gas Romgaz Medias and some coal mines.
The problems faced by Termoelectrica are related to its lack of performance. The debts will force some thermo power plants to close or be sold. The options are only few, ranging from shutting down some plants to renegotiating payment terms with suppliers or signing contracts with Hidroelectrica for keeping at their disposal the thermoelectric production facilities for the dry season.
Still, companies like Washington Group, Enercom and Siemens are interested in participating in their privatisation and buying coal mines. Czech company CEZ has also shown an interest in developing a production facility at Doicesti power plant.
The gas sector is also an interesting field, as Romgaz Medias is now on sale, looking for an investor by the end of the year. A company with important production facilities and activity in the upstream sector, it is estimating a profit of over 100 million Euro for 2005 and a turnover of 650 million Euro, up by more than 40 per cent to 2004.
Companies like E.ON Ruhrgas, Gaz de France, Wintershall and Gazprom as well as some oil companies are interested in acquiring the ten per cent package that will be on sale.
The Romanian energy market is in a growth mode. Attractive opportunities are rising, as is the interest of the major international players. This, combined with the future liberalisation of the energy market, is making Romania a pitch for the big league.