Romania’s defense industry had orders worth of USD 252mln in 2014

Romania’s defense industry had orders worth of USD 252mln in 2014

Bucharest, December 16, 2014/ Independent Balkan News Agency

By Daniel Stroe

The Romanian industry has this closing year received orders amounting to USD 252 million, of which it has so far supplied arms worth of USD 91 million, Economy minister Constantin Nita today revealed, reviewing his office following a Government reshuffle which took him out of the executive team.

“I do believe there is the chance the Romanian defense industry produces for the international market”, Nita said in a press conference. In May, the Romanian Government decided to erase all the debts of state owned defense companies in order to revive the sector amid tensions in neighboring which also prompted the Romanian authorities to supplement the defense budget weeks before.

“I want by means of measures permitted by the European legislation to also support the defense industry by erasing historic debts that they will never be able to pay anyway” Ponta said during a government meeting. Writing off this debt which amounts to about 1 billion lei (about 225 million Euros) is an old project which has resurfaced amid the Ukrainian crisis. The measure concerns 15 companies which are subordinated to the Ministry of Economy, such as Romarm, Uzina Mecanica Orastie, Santierul Naval Mangalia, Avioane Craiova, IAR Brasov, Metrom Brasov, IOR Bucuresti, Romaero, Pirochim Victoria and Constructii Aeronautice. Ponta pointed out that, but for this measure, these companies would have been condemned to bankruptcy.

Apart from writing off the debt, the Romanian Government supplemented orders to companies in the defense industry, following the surge in the Ukrainian crisis. At the same time, a governmental document released in November showed the Romanian authorities had given up privatizing these companies altogether, keeping instead at least 50 per cent of the shares in these companies, while opening the rest of the shares to private investors.

If a company is sold to a private investor, the latter had to keep the company’s defense profile for five years. After that, the investor has to ensure a minimum 50 per cent production capacity of defense services, compared to the level found when the company was acquired. Any change in the production profile has to be OKed by the country’s Supreme Defense Council.

Previous discussions, before the Ukrainian crisis erupted, were aiming for a mere 20 per cent of shares to be retained by the Romanian state. But the change in strategy stems from the new approach on open conflicts in the region.

Constantin Nita also said two companies in the field, Romaero and Avioane Craiova, have seen their turnout rise, but are still on a negative balance sheet. He added the state had rejected calls for privatization of Romaero, especially since the company owns valuable plots of land around Bucharest, which makes it a prey for real estate companies.