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Vol. 8, No. 4, May 2012

The magazine for informed internationals

Malls: checking in or out? While some local shopping centers closed shop, others have expansion in store

politics

economics

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Vol. 8, no. 4, May 2012

The president of the European Council, Herman van Rompuy, met with Prime Minister Mihai Razvan Ungureanu. The EC President said Romania had played its role in the EU and remained united with other member states. In line with European treaties, the euro would become Romania’s currency, added van Rompuy. He applauded the country’s progress on border control and police cooperation aimed at increasing confidence in advance of the Schengen accession decision. The EC president also described the immediate ratification of the Fiscal Treaty by Romania as “crucial”.

34

Fuel gauge A high-powered awards ceremony took the pulse of the energy sector

19

Funding farms Romania’s overlooked agricultural sector is now reaping results

46

Mall story AFI Europe’s CEO outlines the developer’s priority projects

5. State of war

10. Dirty business

7. Euro cash

13. Forthcoming factory

8. Closing time

11. Impractical solution

9. Four play

14. Driving down costs

The USL files a motion of censure against the government Romania still harbors hopes of adopting the single currency Around 4,400 companies went out of business in Q1 A quartet of companies are in the race for chemical plant Oltchim

The Competition Council is investigating rigged tenders US manufacturer Plexus will build a plant in Oradea Praktiker’s boss opposes the sale of regional assets

Operational leasing players are picking up budget-conscious clients 


editorial

Like rats from a sinking ship... Calea Mosilor Nr. 306, Bl. 56, Scara A, Etaj 2, Apt. 7, Sector 2, Bucuresti, Romania www.thediplomat.ro Publishers Adrian Ion adrian.ion@thediplomat.ro

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The Diplomat May 2012

W

ith the elections knocking on Romania’s door, the ruling party is taking all the aces it has been keeping up its sleeve and putting them on the table with a flourish. More than once, increases in public sector salaries have been trumpeted. President Traian Basescu, after meeting with the European Council president, Herman van Rompuy, said recently that it was the government’s intention to put the salaries of state employees back up to where they were before the 25 percent reduction that formed one plank of the state’s austerity measures. This will be done, he said, by mid-year, in order to put some extra money into people’s wallets and stimulate consumption. Despite the frequently rehearsed arguments that Romania cannot afford its public sector wage bill, the lawsuits, the public discontent and the protests, Basescu told van Rompuy that, anyway, the salary reductions were a “temporary measure”. After having their pay slashed by a quarter in July 2010, state employees were given a 15 percent salary hike last year, and their pay packets would have to swell by about 16 percent for them to be back where they were to start with. Which invites the question: was it worth it? And yet the promises made by the Democrat Liberal Party (PDL) and the president do not seem credible – even to members of the party itself. Let us not forget that in April, one of the most prominent figures in the PDL, Florin Frunzaverde, announced that he was defecting to the opposition. Not only did Frunzaverde turn his back on the party in which he had been active for the past 22 years, but he now occupies a leading position in the National Liberal

Party (PNL), namely vice-president. He was elected to the post at the PNL congress by a large majority, with just four votes against and nine abstentions. He explained his decision by saying, “One cannot continue with the PDL.” The departure of Frunzaverde sparked further flight from the PDL. Several senators and deputies subsequently announced that they were leaving the ship. In response to the exodus, top party officials said that the Democrat Liberals and the electorate will only benefit from the departures of traitors. Recently, the Social Democrat Party leader, Victor Ponta, announced that the Social Liberal Union (USL) currently has 224 MPs enrolled in its parliamentary groups, and added that all of them will vote in favor of the motion of censure put forward by the opposition. This current state of the Romanian political scene raises several questions. Is it fair that the USL should welcome into its fold politicians that were blamed by the public for not fighting for their rights, and who now, with new elections pending, are searching for an easy way out like rats deserting a sinking ship? Does this stance belie the promises made to the USL’s supporters? And does any of this politicking help Romania deal with the economic worries – job insecurity, euro zone uncertainty and rising prices – that face its citizens every day?

“The departure of Frunzaverde sparked further flight from the PDL. Several senators and deputies subsequently announced that they were leaving the ship.”


politics Dutch ambassador: Four fifths of Parliament believe Schengen approval depends on MCV The ambassador of the Netherlands, Matthijs van Bonzel, has said that four fifths of the MPs in The Hague consider two consecutive reports on the Co-operation and Verification Mechanism (MCV) necessary to indicate that Romania and Bulgaria are ready for accession to Schengen. Asked how he responded to Romanian officials who attributed the Dutch government’s opposition to the Balkan duo’s accession to the internal political situation in the Netherlands, the diplomat said: “If you look at the situation in Parliament, we have a large majority supporting this line, that we need a positive MCV report to be able to say yes to Romania and Bulgaria’s accession to Schengen. There is a large majority of lawmakers – I believe that four fifths of MPs support the government’s position

in this case, namely that two consecutive reports on the MCV are needed to indicate that Romania and Bulgaria are ready to join Schengen. So it is not only a matter of support from the government coalition, it is beyond the coalition. We must, as a government, convince ourselves and then go to Parliament and persuade Parliament.” The ambassador also explained the procedure to be followed in The Hague to establish a position on the issue. “We have the MCV report in July. On this basis, the government will draw up a written position that we will present to Parliament. Our Parliament gives our government a mandate before the JAI Council in September and therefore our government will be supported by our Parliament when it goes to Brussels and says yes or no,” he said. ■

USL files censure motion

Basescu calls on government to debate new health law soon

President Traian Basescu has urged the government quickly to publically debate the new health law, warning of the risk that the current health system could collapse in the meantime. He made the statement during the signing-in ceremony of the new environment minister, Attila Korodi. The new health law could be drawn up and put up for public debate by the end of April, said the minister of health, Ladislas Ritli.

Attila Korodi replaces Laszlo Borbely at helm of Environment Ministry

President Traian Basescu has signed a decree appointing MP Attila Korodi environment minister. Korodi was nominated by the UDMR for the role, left vacant after the resignation of UDMR deputy Laszlo Borbely. The Legal Committee of the Chamber of Deputies has approved an indictment request for Borbely with ten votes “for” and three “against”. Chairman Daniel Buda said that the proceedings were attended by ten deputies.

Cezar Preda: 12 mayors have quit PDL The Social-Liberal Union (USL) has filed a motion of censure against the Mihai Razvan Ungureanu government. The document, submitted to the permanent bureaus of the Chamber of Deputies, was signed by 116 MPs, the minimum number necessary to initiate the action. It covers three topics and has 15 pages. Under Article 113 of the Constitution, the Chamber of Deputies and Senate, in joint session, can withdraw confidence from the government by adopting a motion of

censure by a majority vote of deputies and senators. The motion must be initiated by at least a quarter of the total number of deputies and senators and is communicated to the government at the submission date. The motion shall be debated three days after its presentation to the joint sitting of both Chambers. If the motion is rejected, the MPs and senators who have signed it may not submit a new motion of censure in the same session, unless the government assumes responsibility, under the law. ■

The president of PDL Buzau, deputy Cezar Preda, has announced that his party has lost 12 mayors, six of whom have defected to the PNL, three to the PSD, while the others are undecided. Preda said in a press conference that 12 of the 24 mayors that the PDL got into office in the 2008 elections as well as Pogoanele’s city mayor – elected as a PNG representative but always close to the PDL – have decided to leave the party.




politics Basescu urges decisions on Rosia Montana, Rosia Poieni and shale gas

President Traian Basescu has asked the new minister of environment, Attila Korodi, and the Mihai Razvan Ungureanu government to quickly analyze and come to a decision on investment in Rosia Montana, Rosia Poieni and shale gas. President Basescu called for a quick announcement by the Romanian authorities on these matters of foreign investment in natural resources. Basescu called for final decisions on whether to approve or reject the projects for the sake of the waiting investors.

PSD senator: Constitution can’t be changed before elections

PSD senator Toni Grebla, chairman of the Legal Committee, believes that amending the Constitution is not feasible before the elections, because the government coalition has not reached agreement on the topic. Also, Toni Grebla believes that constitutional change should be discussed in the parliamentary election campaign this year, and that changing the legislation should be a priority of the new cabinet from 2012 to 2016.

Orban: June deadline to avoid operational program suspension The European affairs minister, Leonard Orban, has said that the authorities have until the end of June to prevent the suspension of five operational programs – POS Mediu, POS Transport, POR, POS CCE and POSDRU. “As you know, the payments for POSDRU have resumed, but we have a deadline of late June to act in order to avoid the suspension of operational programs. In principle there are five programs where such action should be taken,” said Orban. He added that the threat involved programs that adjust the value of certain financial indicators: environment, transport, POR, the program of growth of economic competitiveness and POSDRU. “Things are progressing, the commitments we have made are in advanced stages of completion and we hope that the risk of suspension will be averted,” added Orban. ■

PSD, PNL and PC congress adopts resolutions

Bulgaria and Romania no closer to Schengen after Dutch PM’s resignation

Bulgaria and Romania’s chances of getting a green light for their accession to the Schengen zone in advance of Romania’s elections this fall have taken a knock after the Dutch prime minister stepped down, according to a Dutch representative. Adriaan Schout, deputy director of the Netherlands Institute for International Relations, quoted by the media agency, said that the parties that are key to changing the Dutch stance on the Balkan duo’s Schengen entry have firm opinions on the issue. The expert believes that the Dutch Parliament may support Bulgaria and Romania’s Schengen accession if it sees a positive Co-operation and Verification Mechanism report on the two countries in July. The Netherlands is currently the only EU member state blocking the two Balkan countries’ bids to join the passport-free zone.



The Diplomat May 2012

A meeting between the PSD, PNL and PC has resulted in the adoption of resolutions on non-collaboration with the PDL and Traian Basescu and approving the candidacy of Victor Ponta for premier and Crin Antonescu for president for this election year. Ponta’s mandate is “USL program implementation, starting with a set of measures for economic recovery, so that Romania might resume growth and become a state with a stable and competitive economy in Europe”. Antonescu’s mandate is “transforming the presidential institution into a

force for meditation, balance and national cohesion, and depoliticizing the role”. Ponta expressed hope his partners in the USL would repay the PSD’s confidence and that the USL would not return to “electoral defeat and divisions”. Delegates at the PSD congress also agreed to put up common candidates with the USL in local elections, for county councils and county municipalities, as well as parliamentary elections, and that the common candidates for prime minister and presidential elections would come under the banner of the USL.■


economics Romania still hopes to adopt euro in 2015

Romania maintains its goal of joining the euro zone in 2015 by joining the ERM II mechanism in 2013 or 2014, after which it must reduce the structural deficit to under 0.7 percent of GDP in 2014, according to the Convergence Program for 2012, adopted by the government. This reduction illustrates Romania’s ability to meet the medium-term budgetary objective set by the Stability Pact from 2013. Over 2013-2015, the convergence program proposes a macro-economic forecast framework that puts GDP growth between 3.1 percent and 3.9 percent, about one point above potential, due to the contribution of

investment and funds from Europe. This year, domestic demand is predicted to be the main engine of economic growth. Inflation is expected to reach about 3.5 percent at the end of the year. On the medium term, Romania should gradually reduce its budget deficit to 2.3 percent of GDP in 2012, 1.5 percent of GDP in 2013, 1.2 percent in 2014 and 0.9 percent in 2015, with figures calculated according to ESA methodology. The convergence program aims to achieve improvements in investment policies, continue reduction policies, prevent arrears and improve corporate governance. ■

Exports frozen by February snow

Novartis to consider new local investments

Prospects in Romania are better than those in Western Europe, said Elena Mitov, general manager of Novartis in Romania, adding that she is considering new investments on the local market. Novartis Group had local sales of USD 188.6 million last year through its four divisions: Pharmaceutical (innovative medicines protected by patents), Alcon (surgical and ophthalmic products), Sandoz (the generic division) and OTC (products that can be obtained without prescription).

Romania ‘needs at least 800 new mobile antenna in a few months’

The design spectrum auction conducted by the telecom authority will require at least one of the two largest mobile operators in the market – Orange and Vodafone – to install over 800 new antennas in a few months in order to not to disconnect some customers, according to ANCOM. The authority expects a response from operators within a few weeks, after which it will determine the final specifications.

Agriculture Ministry gets EU green light for financing

Year-on-year exports fell 0.4 percent in euros to EUR 3.5 billion in February, hit both by weather conditions and the decline in demand in the euro area, the main market for Romanian goods, according to the National Institute of Statistics. In February, half the economy was blocked due to snow and frost. In 2011, exports rose 20.5 percent. Deliveries of goods abroad have shown signs of fragility since the last three months of last year. In December, exports dipped after two years of uninterrupted double-digit growth.

In January 2012 exports grew by 1.4 percent over the same month in 2011, before falling again in February. Annual inflation decreased after the first quarter to a new historic low of 2.5 percent, but is set to surge to 3.5 percent, according to the Association of Financial-Banking Analysts in Romania (AAFBR) in an internal survey. Estimates for annual inflation at end-March vary between 2.2 and 2.8 percent. AAFBR analysts expected the annual inflation rate to reach 2.5 percent from February. ■

The Ministry of Agriculture has received the green light from the European authorities to amend the National Rural Development Prog ram me (PN DR), th rough which Romania has about EUR 10 billion available over 2007-2013 for investment in agriculture. The change is the seventh such move made by the authorities in Bucharest in the last five years. As a result, young people who submit project proposals to become farmers will receive EUR 40,000, up 60 percent from the former provisions of the so-called 112 measures for young farmers.




economics Continental, Autoliv, Schaeffler and Yazaki to hire over 1,700 this year

Some of the largest manufacturers of automotive components on the local market, Continental, Autoliv, Yazaki and Schaeffler, have announced new programs to increase their number of employees in 2012. The companies have announced that they will create at least 1,700 new jobs. The move comes as Ford Craiova will start production this year and Dacia continues to produce at full capacity at its Pitesti factory and automotive industry companies with operations on the local market have registered a consistent progress in the past years.

Communications Ministry still analyzing Romtelecom’s listing

The Communications Ministry is still analyzing the state’s options for the listing of Romtelecom, in which it holds a 46 percent stake, according to the minister, Razvan Mustea. The contract has an estimated value of EUR 200,000, excluding VAT, and a period of six months, with completion due no later than May 30, 2012. Romtelecom is the largest local fixed telecom operator and has as shareholders OTE, which holds 54.01 percent, and the Ministry of Communications, with the other 45.99 percent.

Ungureanu: Rosia Montana remains a priority

The Rosia Montana project remains a government priority because it will create jobs, and the project is being challenged for political, not environmental, reasons, claims the prime minister, Mihai Razvan Ungureanu. He said that no measure had been taken on this project, so far. Rosia Montana, in Alba County, is home to the biggest gold deposit in Romania. Valued at approximately 300 tons of gold and 1,600 tons of silver, it has been leased for exploitation by Rosia Montana Gold Corporation. The company is controlled by Canadian firm Gabriel Resources, which owns 80.46 percent of the share capital. The state, through Minvest Deva, has a 19.31 percent stake in Rosia Montana Gold Corporation.



The Diplomat May 2012

Some 4,400 companies go bust in Q1

About 4,400 firms went into insolvency in the first three months of this year, down 13 percent from the same period of last year, according to data from the National Trade Register Office (ONRC). As in the first quarter of last year, most companies that went bust were active in construction (756), manufacturing (577) and trade (1,264), which are the areas worst hit by the crisis, indicates the same source. In Bucharest 385 companies entered into insolvency, the largest number in the country, followed by Arges, Arad, Cluj and Suceava, with over 300 insolvencies in each county, according to the ONRC. One big-name casualty was Mic.ro, the retail chain owned by businessman Dinu Patriciu, whose demise came after it accumulated debts amounting to EUR 160 million.

The network, which at its peak consisted of around 850 stores, was closed down after failing to find a buyer. Shelves in its outlet had sat empty since the autumn, with suppliers refusing to deliver goods as they had not been paid. Last year the number of insolvencies amounted to about 19,700 around the country, almost 10 percent fewer than the previous year, according to data from the ONRC. In late March this year there were about 960,000 active companies, with just over 43,000 having been registered in Q1, 30 percent up on last year. Most companies registered in the first quarter are in agriculture, where the number increased by 437 percent to 15,500. At the same time, a 102 percent increase was posted in registrations in the fields of cultural, entertainment and recreation. ■

February FDI figures are mixed Foreign direct investment totaled EUR 253 million in the first two months, down 22 percent from the same period last year, while the foreign flow capital attracted in Romania increased significantly from January, according to the National Bank (BNR). In February FDI was about EUR 230 million, well above the level in January, when the bank reported only EUR 23 million. Over January and February 2011, foreign investments amounted to EUR 325 million. According to data published by BNR, equity to capital consolidated with net loss totaled EUR 410 billion, while intra-group loans accounted for a net amount of EUR 157 million. Foreign direct investment financed 38.1 percent of the current account deficit during January-February 2012, or EUR 663 million. Last year, FDI decreased by 13.6 percent on 2010 to EUR 1.917 billion, a low over the last nine years. ■


energy Valhalla Resources joins Roman Copper consortium to take over Cupru Min Canadian company Valhalla Resources has joined the consortium with Roman Copper trying to buy Cupru Min Abrud, and has commented that the consortium is having difficulties in negotiations with the Romanian government. The company says it paid USD 750,000 upon entry into the consortium, to partially finance the bid guarantee submitted for Cupru Min. Valhalla Resources, registered in Vancouver, is a mineral exploration company, which aims to discover and develop opportunities in the area of base and precious metals in Turkey and Romania. Locally, Valhalla is exploring Bratosin Hill (Hunedoara and Arad county) through Transylvania Minerals, a company controlled by Valhalla Cyprus. Barrick Gold, the world’s largest mining company, which is focused exclusively on gold, is exploring the perimeter in partnership with Valhalla. Roman Copper, registered in

Toronto, won the auction for Cupru Min in late March for EUR 200.8 million, over 3.5 times higher than the starting price of EUR 57.3 million. The tender guarantee was approximately EUR 1.1 million, equivalent to about USD 1.5 million. Roman Copper was established in November last year by investment bank Bayfront Capital Partners in Toronto, as a special vehicle to bid for Cupru Min.■

Transelectrica wants to insure managers for civil liability with RON 6.2 mln Transelectrica wants to take out liability insurance for company directors and administrators, the policy value being estimated at RON 6.2 million, for three years. Liability insurance is intended to cover damage caused by third parties, where the policy holder is declared legally liable. Bidders must submit a tender guarantee of RON 62,000. The performance bond will be 10 percent of the contract price. In 2011, subscribed premiums of general

liability insurance increased by 84.1 percent, to RON 267.36 million, while the share of total insurance subscriptions rose from 2.19 percent to 4.31 percent, according to Insurance Supervisory Commission data (CSA). Last year, the general and life insurance market decreased by 4.3 percent to RON 7.95 billion, due to the 6.5 percent reduction in income from general policies to RON 6.21 billion, according to the CSA.■

State receives four offers for Oltchim The race to acquire the largest chemical plant in Romania, Oltchim Ramnicu Valcea, is currently between the German Petro Carbo Chem (PCC), the company’s main minority shareholder, the Russians from Tise, who are behind Gazprom, but also two Romanian companies that were not initially on the state’s list of companies interested in Oltchim. These are Pegamont Ploiesti and Aisa Invest, who also submitted preliminary non-binding offers to participate in the privatization of the chemical plant. Aisa Invest is a consulting firm that is part of Romanian Commercial Services (CRS), controlled by businessman Stefan Vuza. SCR also has a chemical plant, Chim-

complex Borzesti of Onesti, and has operations in various industrial and construction sectors. Pegamont Ploiesti is a construction company controlled by individuals. The largest shareholder is Mircea Apostolescu, also general manager, who holds a 70 percent stake, according to available official data. Its turnover in 2010 was RON 34.7 million. According to an official document obtained by press agency Mediafax, written in mid-March, four companies from Romania, Russia, the UAE and Germany had expressed interest in Oltchim. Assessments made by the state found Oltchim’s value to be zero, but evaluated that with Arpechim services the figure reaches EUR 300 million. ■

Government: negotiations over revaluation of energy contracts are final

Negotiations over the revaluation of bilateral contracts energy supply signed by Hidroelectrica are completed, and the result will probably be announced “sometime after Easter,” said government spokesman Dan Suciu. The authorities began to renegotiate Hidroelectrica’s contracts late last year, asking recipients to accept a decrease of energy quantities and duration of each agreement and increase in Hidroelectrica’s energy prices.

Alumil seeks shareholder approval for EUR 8 million of loans

Alumil Rom Industry Bucharest, the manufacturer of aluminum systems, proposes to borrow EUR 5 million for investment and EUR 3 million for working capital, according to an announcement made to the stock exchange. Shareholders expected to discuss Alumil’s proposals in a future assembly, according to a report. The company also announced it has signed a contract with Egnatia Rom for the execution of works for production and storage warehouses, part of a project to build an aluminum processing plant for a total of RON 10.7 million (EUR 2.4 million).

Itochu-Hyundai, Metka and Siemens in talks over construction of Tulcea power plant

Vimetco, Alro Slatina’s owner, has selected three candidates for the final phase of negotiations to build a power plant in Tulcea, Itochu: a Hyundai consortium, Metka and Siemens Group, with the final decision to be announced by the end of May. Vimetco Group, registered in the Netherlands, wants to build a cogeneration plant with a capacity of 250 MW, to serve the Alum Tulcea alumina refinery. The EUR 276 million project could be financed by the European Bank for Reconstruction and Development and several commercial banks.




infrastructure Deloitte-MusatSystra consortium to advise state over CFR Marfa privatization

The Ministry of Transport has selected a consortium formed by Deloitte, Musat & Associates and Systra to provide consulting services for the privatization of CFR Marfa, which should be completed by the end of October and could involve the EBRD and IFC. Other bidders were Boston Consulting Group, Horvath & Partners and Bostina & Associates SPRL, Roland Berger with Nestor Nestor Diculescu Kingston Petersen (NNDKP) plus two individual offers from PwC and Ernst & Young.

Alitalia brings low-cost division to Romania

Air One, the low-cost division of Alitalia, will enter the Romanian market in July, the second budget Italian operator to do so after Air Vallée. The entry of new players comes after the economic crisis saw the demise of low-cost operators My Air and Sky Europe, and Hungary’s national airline, Malev. Air One will have twice weekly flights on the Bucharest-Venice route from early July, according to the airline website. Air One merged with Alitalia in January 2009.

Ministry of Communications: Posta Romana privatization to be finished by year end

The privatization of Posta Romana will be finished later this year or in early 2013, not June 2012 as agreed in discussions with the IMF as this deadline is unrealistic, said the minister of communications, Razvan Mustea, in a press conference. The Romanian Post is the country’s largest employer and a very important company for the Romanian state, which owns 75 percent of the capital. Its other shareholder is the Property Fund, with 25 percent.

10 The Diplomat May 2012

Romanian Railway Group interested in Greek railway companies

Romanian Railway Group (GFR) has expressed interest in taking over freight operations in Greece, in competition with the French group SNCF and national railway company in Russia. The three European rail companies are interested in buying all or part of the Greek state rail, in the privatization program undertaken by the government in Athens in exchange for a bailout from the European Commission and International Monetary Fund (IMF).

Russia wants to buy the whole rail network in Greece and its operator, Trainose, while GFR, the largest private rail operator in Romania, has expressed interest in freight operations, said two senior Greek officials, according to Reuters. GFR is the second largest rail freight operator in Romania, after state-owned CFR Marfa, and in 2010 recorded a turnover of EUR 125 million. It is part of Grampet, owned by businessman Gruia Stoica. ■

Three rigged road auctions investigated by the Competition Council The Competition Council has begun three investigations into possible collusion between firms suspected of making rigged bids in tenders organized by county councils in Teleorman and Ilfov, plus the Roads and Bridges Department in Craiova, awarding contracts to modernize roads. The first inquiry concerns possible agreement between 14 companies to make rigged bids, individually and in combination, at two auctions held by Teleorman County Council in 2009 and 2010, awarding contracts for road rehabilitation. The auctions were won by Tel Drum SA, with the total contract value being RON 137.6 million, VAT excluded (about EUR 32 million). The sources of financing were the European Regional Development Fund, the state budget and Teleorman County Council budget. The second investigation concerns a possible deal between seven companies to make rigged bids at three auctions held by Ilfov County in 2009 and 2010, awarding work contracts to modernize the road. Two tenders were won by Tehnologica Radion and the third by Apolodor Comimpex, the

total value of the contracts being RON 183.5 million, VAT excluded (EUR 42.6 million), from structural funds (POR Axis 2) and Ilfov County budget. Regarding the third investigation, the Competition Council has evidence that 10 companies colluded over formal bids in auctions organized in 2008 by the Regional Roads and Bridges Department in Craiova under the Framework Agreement for Works and Multi-annual Maintenance Services winter-summer 2008-2011, simulating competition, for contracts to be awarded by rotation.■


real estate Praktiker chief opposes sale of Eastern European operations The general manager of Praktiker, Thomas Fox, is opposing calls from the German company’s two largest shareholders to sell its operations in Eastern Europe, according to German newspaper Handelsblatt. Fox said that attracting investors to buy Praktiker assets in countries such as Greece, Romania, Hungary and Poland would be difficult given the economic climate. “We have announced that we are evaluating the portfolio. But we should show feasibility before it is desirable. Now it’s difficult to find someone who wants to invest there,” said Fox. Austrian investment company Maseltov, which owns a 10 percent stake in Praktiker, and Austrian private banking institution Semper Constantia, which holds 5 percent of the shares, want the group to withdraw from Eastern Europe. Meanwhile, Interex, a French supermarket chain, one of the most low-profile retailers on the local market, has put up for sale the 12 stores it owns in Romania

after a decade of operations. The French firm failed to sell the package chain, which had sales of EUR 58 million in 2010, so has decided to try to sell each store individually, according to market sources. Among those interested is Belgian retailer Mega Image, which has expanded aggressively in recent years. ■

Cushman & Wakefield: real estate transactions reach EUR 99 million in Q1, activity still low

Ministry of Justice wants restitution in kind or full compensation over long term

The Ministry of Justice is supporting the return in kind of nationalized properties with a very long period of financial claims, and has totally rejected the initial proposal of the Ministry of Finance, which wanted to limit compensation to 5 percent of the value. It has called the final decision, which capped claims at 15 percent, a political one. The Ministry of Justice argued that restitution in kind at 5 percent of the value of cash compensation would be clear discrimination. Its solution is cash compensation, under an irrevocable decision, to be paid in installments over a long term, so as not to burden the state budget.

Luxury hotel drops a star to secure medical congresses

Five-star hotel Crowne Plaza in Bucharest, owned by businessman George Copos, has downgraded to four stars, which allows the hosting of events by players in pharma, according to market sources. Events organized by pharmaceutical companies for physicians, which provide substantial revenue for hotels, cannot be held in five star luxury hotels according to regulatory framework. Officially, the hotel management said that the decision was taken to reposition. The Athenee Palace Hilton, the other property owned by Ana Hotels, remains a five-star unit.

Dedeman owners to enter DIY markets in Bulgaria, Greece and Turkey Real estate transactions in Romania amounted to EUR 99 million in the first quarter of this year, the highest in the last 12 months, according to Cushman & Wakefield, which found however that activity remained modest. Retail investors continue to dominate the market with 47 percent of the total, followed by office and industrial, on 40 percent and 12 percent respectively, according to a report by the real estate consultancy firm. For the full year 2012, analysts at Cushman & Wakefield estimate transactions of

EUR 350 million, up from 2010 when the company had a transaction inventory of EUR 327 million. Romania has attracted over 10 percent of total transactions in Central Europe, defined as Poland, Czech Republic, Slovakia and Hungary, worth EUR 847 million. Cushman & Wakefield estimates a trading volume of EUR 4.75 billion in the countries surveyed for this year, compared to EUR 6.1 billion in 2011. In the first quarter Poland remained the region’s leader, with a EUR 728 million transaction volume. ■

Dedeman Bacau, the local DIY market leader with about a EUR 476 million business last year, intends to enter other markets in the region next year, in search of new sources of growth. Dragos Paval, general manager and majority shareholder of the company, says that he has to solve a series of issues regarding the local expansion of Dedeman in the coming months, after which the firm will focus attention on the region. Dedeman currently has a network of 27 stores nationally, set to exceed 30 by yearend.

11


appointments RAZVAN COPOIU 36, has been appointed vice-president of the industry division at Schneider Electric Romania. He will coordinate the company’s commercial strategy on the Romanian and Moldavian markets. He brings 13 years of expertise in the energy and industrial segments, gained from management responsibilities for companies such as Q-Power, RTC Group, Siemens Romania and Alstom Romania. ONNO ROMBOUTS will take up his mandate as the newly appointed GM of brewer Heineken Romania on June 1. He will replace Jan Derck van Karnebeek, who was promoted to regional president of Heineken in Central Europe. Rombouts has 20 years of experience at Heineken. Previously, he held several managing positions in the soft drinks division Vrumona and served as country manager in the Dominican Republic.

RAZVAN BOTEZATU has been appointed strategic account operations and services director for Central Europe, Israel and Turkey (CIT) at Xerox. He will manage the direct sales and marketing for document management activities. Botezatu joined Xerox in 2000 and held several positions in sales, services, operations and management. In 2011, he became strategic account operations director after heading up the document management externalization services division. ION CAPDEFIER has joined the tax practice of Tuca Zbarcea & Asociatii Tax, a company affiliated with the law firm Tuca Zbarcea & Asociatii, as fiscal consultant. Capdefier will serve as of-counsel advisor. He has 35 years of economics experience including over 20 years in tax, as GM at the Ministry of Finance and ANAF.

PAOLO MARIANI is the new general manager of Italo Romena, replacing Giulio Simonelli, whose mandate in this position ended in March this year. Before taking over at the helm of the Italian bank, Mariani was general manager of Italian lender Carifac, a member of Veneto Banca group which also includes Banca Italo Romena. Mariani, 51, is a law graduate of the University of Macerata in Italy. IOANA ENACHE is the new GM of Amway Romania. Her wide professional experience is drawn from 19 years in sales, marketing and communication at companies such as GlaxoSmithKline, A&D Pharma and Petrom. In the last five years, she has coordinated large projects such as The Parks of the Future and Environmental Branding Petrom City as senior consultant.

VREM MAI MULT DE LA NOI ÎNȘINE. Primul program și aparat DAVID de recuperare medicală a coloanei vertebrale, unic în România Prima policlinică într-un mall - Policlinica Sun Plaza Prima bancă acreditată să stocheze în România țesut de cordon ombilical - Banca Centrală de Celule Stem Prima maternitate privată din România care gestionează nașteri premature de 30 de săptămâni

EXCELENȚA NE PROVOACĂ

www.reginamaria.ro Call Center: 021 9268

12 The Diplomat May 2012


investments France

Auchan buys Tractorul Brasov from Flavus Investitii

Germany

E.ON Gaz Distributie to invest in modernization works for Cluj-Napoca network

French retailer Auchan, which launched its local real estate arm Immochan, has acquired most of the assets of the real estate project Coresi Brasov from Flavus Investitii, an investment company managed by Centerra Capital Partners and Cheyne Capital. The transaction is estimated at several tens of millions of Euro, and also comprises a retail project of over 80,000 sqm to be developed on the Tractorul Brasov site. Flavus Investitii acquired the Tractorul assets in 2007, in a transaction estimated at EUR 77 million.

E.ON Gaz Distributie will invest EUR 20 million in modernization works in Cluj-Napoca over the next three years, targeting 160 km of distribution network. Around EUR 3.8 million will be secured from EU funds. In recent years, the company has replaced some 130 km of the 650 km that makes up the overall gas distribution network. In addition, the firm stated that it had modernized seven measuring stations in Cluj-Napoca and upgraded 32 km of the network in 2011, following an investment of almost EUR 2.4 million.

Romania

Germans from Anzag acquire another 20 percent of Farmexpert

Independenta to build EUR 17 million industrial park in Craiova

Romanian construction equipment producer Independenta will develop a EUR 17 million industrial park in Craiova. Business Park Craiova will be built on nine hectares near the Ford plant, and the company’s representatives estimate the completion date at mid-2013. The park will deliver business space of 52,700 sqm, while the office buildings and the production halls will cover over 30,000 sqm.

German drug wholesaler Anzag has bought a further 20 percent stake in Farmexpert from businessman Eugen Banciu, the company’s founder, increasing its participation to 80 percent. This is the second deal between Anzag and Banciu, after the German group bought a 60 percent stake in 2006. At that time, Farmexpert had a market share of 9 percent, and was the third largest pharmaceutical retailer in Romania, supplying the Romanian market via six branches.

USA

Plexus to put USD 40 million into Oradea factory

US telecom equipment manufacturer Plexus will build a factory in Oradea, with an investment of USD 40 million, which should begin operating in a year with 500 employees, over double the 245 currently working on the company’s operations in Romania. The new facility will be built in Eurobusiness Industrial Park in Oradea and will have a floor area of 280,000 sqm.

China

EUR 15 million Constanta factory is first brick in the wall for Chinese investors

Chinese companies’ only local greenfield investment in production, a EUR 12-15 million brick factory in Constanta county, should reach completion this year. The company developing the plant is Golden Way Development BV, and the firm that will handle the investment performance in Romania is Long Wall Brick. The Chinese investor leased 35,000 sqm near the railway for the project. The park will deliver business space of 52,700 sqm, while the office buildings and the production halls will cover over 30,000 sqm.

13


operational leasing

Operational leasing players capitalize on economy drive Around 43,000 vehicles are estimated to make up the operational leasing market in 2012, representing a growth of 15-20 percent over last year. The sector is expanding each year, as companies both large and small seek to outsource their fleet management and meet cost efficiency targets. There are six large companies competing in the premier league of this segment, which split an 89 percent market share. The Diplomat – Bucharest talked to their representatives to find out where 2012 stands in terms of supply and demand. By Magda Purice

O

ver the last two years around 5,000 new vehicles have come onto the operational leasing market, including small-capacity commercial vehicles, registered in new contracts inked by operational leasing companies. ASLO, the operational leasing companies’ association, estimates that the local operational leasing market might see an increase of 15-20 percent this year, after y-o-y growth was estimated at 17 percent 14 The Diplomat May 2012

in 2011. Meanwhile, according to association data, the fleet managed by companies operating in this field totaled 37,397 units, up from 31,923 in 2010. For 2012, Bogdan Apahidean, ASLO president and manager of operational leasing company LeasePlan, predicts a 15 percent growth in the field, to reach 43,000 vehicles. According to the association data, the top five operational leasing companies, ranked by the size of their managed

Operational leasing market moves up a gear Year

No. of vehicles

2010

31,923

2011

37,397

2012 (expected)

43,000 SOURCE: Companies


operational leasing

“This year, we’ve won several auctions to provide operational leasing services to new clients, such as Vodafone, Petrom and Heineken,” Alexander Nekolar, CEO of Porsche Finance Group

fleets, account for 89 percent of the local market. As most of these companies are part of larger financial groups operating worldwide, their targets for new customers are also multinational companies, with large fleets and a similar financial background. The top firms that are also members of ASLO are ALD Automotive, with an 18 percent market share and a fleet of 6,705 vehicles; LeasePlan Romania, on 17 percent and 6,267 units; Porsche Mobility, 16 percent and 5,888 vehicles; Arval Romania, 12 percent, 4,362 units; and FMS, with a 6 percent market share and 2,412 vehicles. Although 2012 is not expected to bring a significant boost in any economic segment, with companies mostly struggling to compete on the same market segments and addressing a limited number of companies willing to invest in new services, pundits say operational leasing is a service that exactly addresses companies’ pressing cost-cutting needs. According to Apahidean, against expected overall economic growth of 1 percent this year and stagnation on the automotive market, operational leasing results should post an increase as companies aim to cut costs through outsourcing fleet management services. ASLO figures

put the full operational leasing service, including financing and fleet management, at 70.8 percent of the market, with a 3.2 percent increase in 2011 over 2010, while fleet management alone makes up 20.3 percent and financing services 9.5 percent, the latter having registered a slight decrease since 2010. In addition, in 2011, car registration through operational leasing accounted for almost 9,945 vehicles, or 12 percent of the overall registration of cars and small-capacity commercial vehicles, 17 percent up on 2010. In addition, since the operational leasing market is directly linked to the health of the automotive segment, which has suffered a significant decline in recent years, companies that manage large fleets are struggling to cut costs. Shane Dowling, general manager of ALD Automotive, says, “Although the car market in Romania has seen a significant decline in new car registrations year on year since 2008, this has mainly been due to retail sales and consumer loans. The corporate sector itself has seen the opposite effect, where company cars are still required but the method of funding has seen a radical change.” The GM, whose company was market leader based on 2011 numbers, added, “2011 in particular has seen a substantial rise in operational leasing as a form of funding. This is due to various reasons, primarily liquidity shortage and fleet cost optimization. For this year, these will remain the main triggers of market growth. Furthermore, local companies seem to be becoming more aware of the benefits of the operational leasing products, and international companies, accustomed to this type of vehicle financing, are mandating this solution more on the Romanian market.”

Race is on for new clients

Recently, LeasePlan Romania, part of the Dutch operational leasing and fleet management group LeasePlan, signed a three-year operational leasing contract with power distribution company E.ON Moldova for 445 cars, the deal being estimated at EUR 9.5 million. The contract was awarded to LeasePlan Romania following an auction held by E.ON, in which another two companies also participated. LeasePlan Romania posted a turnover of EUR 30.9 million in 2011, 21 percent up on the previous year. The company had a market share of 17 percent in 2011 and a fleet of 6,267 vehicles. The local operational leasing market grew 17 percent in 2011 on 2010, to reach 37,397 vehicles registered in operational leasing contracts, compared with 31,923 vehicles in 2010. For this year, the company plans EUR 30 million of investments in the acquisition of new vehicles (cars and light commercial vehicles, with a maximum capacity of 3.5 tons). General manager Bogdan Apahidean says, “Lately, expectations have increased a lot. People want more for the same money. They expect 100 percent accurate invoicing, great account managers and understanding of clients’ specific needs. The challenge is to deliver greater service at

“Expectations have increased a lot. People want 100 percent accurate invoicing, great account managers and clients’ needs to be understood,” Bogdan Apahidean, general manager of LeasePlan Romania 15


operational leasing

“In the first quarter, ALD Automotive added 11 new clients to its portfolio, to reach a potential fleet of 187 vehicles,” Shane Dowling, general manager of ALD Automotive

a reduced cost.” In order to deliver all this, LeasePlan and other firms are considering all the options and variables, such as TCO (total cost of ownership) and operational processes. “[Companies are] debating the brand of cars, multiple suppliers and paper-based work practices,” added Apahidean. In addition, Dan Boiangiu, commercial director of Arval Romania, told The Diplomat – Bucharest that the practice of visiting clients and making a simple “ratecard services” offer no longer happens and in fact never did in this business. A customized offer and understanding of customers’ needs to ensure the correct price for both parties is essential, and confidence brings positive awareness on a market which, in Romania, has a large potential but so far has only reached a fraction of the value of other business segments. Apahidean states that clients have three major objectives, known as the “3Ps”: profit, resulting from cost reduction solutions; people, meaning ways to address employee motivation and safety; and the planet, representing the environmental aspects. This year has also brought several new contracts for Porsche Mobility, the operational leasing and fleet management arm

of Porsche Finance Group. The company plans to increase the volume of new contracts by 16 percent by yearend. According to company data, it secured 19 percent of market share in 2011, counting the new contracts. In Q1 of 2012, the firm had a fleet of 6,670 vehicles, compared with 5,888 at the end of 2011. “This year, Porsche Finance Group has won several auctions to provide operational leasing services through Porsche Mobility to new clients operating in telecom, pharma and oil & gas, such as Vodafone, Petrom and Heineken,” says Alexander Nekolar, CEO of Porsche Finance Group. The group has been present in Romania since 1999 and comprises five divisions, Porsche Leasing, Bank, Broker de Asigurare, Mobility and Asigurari. Since the beginning of this year, Arval Romania, one of the largest operational leasing companies on the local market, has consolidated its portfolio with 22 new clients. “Last year was a good period for our company. We consolidated and grew faster than the operational market level,” Dan Boiangiu, commercial director of Arval Romania, told The Diplomat – Bucharest. In addition, according to the manager, the first months of 2012 are estimated to have brought an advance over the same period of 2011. Arval won approximately 22 new clients in Q1 of 2012 and reached a total fleet of 4,300 vehicles. The total number of customers in the company’s portfolio is estimated at 260 clients. The company puts the volume of a managed fleet at a maximum 250 cars. “Customers plan their car fleet acquisitions in operational leasing contracts in stages: they start with 40 cars and the figure can reach, depending on their

“Last year was a good period for our company; we consolidated and grew faster than the operational market level,” Dan Boiangiu, commercial director of Arval Romania 16 The Diplomat May 2012

operations, as much as 250, for instance,” says Boiangiu. For this year, Arval expects a 25 percent business growth. As part of BNP Paribas Group, it benefits from the group’s operational synergy but wins its clients locally, says Boiangiu, also addressing multinational groups or, at least, companies with solid finances. Meanwhile, LeasePlan Romania has a portfolio of over 160 companies operating in energy, financial services, FMCG, IT&C and pharma, such as OMV Petrom, CEZ Romania, Ursus Breweries, Bancpost, Coca-Cola HBC Romania, Metro Cash & Carry Romania, Silcotub and IBM Romania.

Staying fleetfooted in a crisis

The business of the “oldest” local f leet management and operational leasing company, Fleet Management Services (FMS), has fared much better in 2011 than in 2010, the company’s executive director, Daniel Ivan, told The Diplomat – Bucharest. Its turnover rose an estimated 20 percent in 2011, according to the budgeted value, and the company increased its client portfolio to 83 customers, mostly multinational companies, in this period, from a total of 67 in 2011.


operational leasing The company’s largest client remains A&D Pharma, which accounts for almost a third of the total value of f leet management, around 7,000 vehicles, but the firm also has clients from other industries such as IT, construction, industry and agriculture. Still, due to the financial turmoil faced by clients, it has been impacted by contractual challenges and, according to Ivan, FMS is currently in preliminary discussions with two companies from the courier services industry and the media over their problems with operational leasing contracts. “For us, 2011 was a better year than 2010 and we kept our budgeted increase,” says Ivan. Even so, the company yearly has to renegotiate with suppliers and find solutions for client retention and new business generation. It plans a 20 percent boost in turnover in 2012, and a 25 percent hike in its managed f leet which now accounts for 2,400 vehicles, including commercial cars. Last year, the company registered a turnover of EUR 3 million, 20 percent more than in 2010, and an operational

Evolution of top companies* Company

Market Fleet Fleet Turnover 2011 share (2011) (April (mln EUR) (%) 2012) (2011)

ALD Automotive

18

6,705

6,781

29.2

LeasePlan Romania

17

6,267

7,400

30.9

Porsche Mobility

16

5,888

6,670

n/a

Arval Romania

12

3,500

4,500

21 (end of 2010)

Fleet Management Services

6

2,100

2,412

3

DiRENT Group

N/A

630

N/A

4.3 (end of 2010)

Hertz Lease

N/A

1,875

N/A

7.9 (end of 2010)

UniCredit Leasing Fleet Management

4

1336

1584

6.47

Other ASLO members: Alexandros Long Term Rental, BT Finop Leasing, RCI Finantare Romania, UniCredit Leasing Fleet Management and associated members such as Autonom rent a car, Marsh Broker de Asigurare-Reasigurare, EurotaxGlass’s Romania and SGS Romania

profit of over EUR 500,000, 40 percent up on the year before. In 2011, FMS had a market share of 6 percent, which it plans to take to 7 percent by yearend. Of the company’s entire turnover, operational leasing represents 85 percent while the other 15 percent comes from f leet management services.

*June 2011 / April 2012 SOURCE: Companies

Changing customer behavior

“Customers’ behavior has changed due to the difficult economic period we are going through. As a result, they are now focusing more on the TCO (total cost of ownership) of the vehicle, which not only encompasses the leasing and maintenance

17


operational leasing Operational leasing market companies: the key figures LeasePlan Turnover (estimated) 2012: EUR 37 mln Turnover 2011: EUR 31 mln Fleet 2012 (Q1): 7,400 vehicles Fleet 2011: 6,267 vehicles Number of employees 2012: 57 Number of employees 2011: 50 Market share 2012: 17.5% Market share 2011: 17% ALD Automotive Turnover (estimated) 2012: EUR 34 mln Turnover 2011: EUR 29.2 mln Fleet 2012 (Q1): 6,781 vehicles Fleet 2011: 6,705 vehicles Number of employees 2012: 63 Number of employees 2011: 62 Market share 2011: 18% Porsche Mobility Fleet 2011: 5,888 Fleet 2012 (Q1): 6,670 Number of employees 2011: 13 Number of employees 2012: 13 Market share 2011: 19% Fleet Management Services (FMS) Fleet 2011: 2,412 Fleet 2012: 3,000 (targeted) Market share 2012: 7% (targeted) Number of employees 2011: N/A Number of employees 2012: 32 Arval Romania Fleet 2011: 3,500 Fleet 2012 (Q1): 4,500 Number of employees 2011: 35 Number of employees 2012: 42 UniCredit Leasing Fleet Management Turnover 2011: EUR 6.47 mln Turnover (estimated) 2012: EUR 9.1 mln Fleet 2011: 1336 Fleet 2012 (Q1): 1584 Number of employees 2011: 10 Number of employees 2012: 12 Market share 2011: 4 percent Market share 2012: 6 percent Sixt New Kopel Romania Turnover 2010: EUR 25 mln Turnover 2011: expected EUR 32.5 mln Fleet 2011: 5.800 Fleet 2012: 6.100 SOURCE: Companies

18 The Diplomat May 2012

costs of the vehicle but all other ancillary costs,” says Shane Dowling, general manager of ALD Automotive. The aforementioned word “planet” also counts within customers’ expectations, representing the environmental aspects, and the ALD manager has observed more and more international companies mandating company car policies based on lower CO2 emissions and harmonized car specifications. This has led to a significant mentality change as to how the company car is offered to the employee, with the focus now switching to the car as a tool rather than a perk, Dowling says. Operational leasing and fleet management company ALD Automotive plans to consolidate its managed fleet, the company’s representative told The Diplomat – Bucharest. “The business plans for 2012 include an increase of at least 15 percent in fleet size, which will result in a yearend fleet in excess of 7,700 vehicles, confirming ALD Automotive as one of the leading operational leasing players on the market,” says Dowling. This year, the company plans to post a turnover of EUR 34 million, up from EUR 29.2 million in 2011. In Q1, ALD Automotive added 11 new clients to its portfolio, to reach a potential fleet of 187 vehicles, from industries such as management consultancy, retail, food, textiles and renewable energy. The firm has no fleet size limitations, with volumes of up to 10 vehicles and also fleets starting from 500 or even 1,500 vehicles. One of the most important indicators that sustain a business is client retention and the extension of the existing contracts. “Considering the general savings trend and the change in customers’ behavior when selecting vehicles, we have advised our customers and they have opted to extend their operational leasing contracts. This way they have gained a reduction in monthly rates and, at the same time, the average contract duration has increased from 41 to 44 months. This year we’ll see the same evolution of the contract duration and maybe an increase in the mileage or more efficient usage of the fleet from the companies that decide to carry out staff or fleet reductions,” predicts the ALD Automotive manager. In addition, he says, at request, operational leasing companies can sell the cars at the end of the contract to employees of the firm that signed the contract. Depending on the company policy, drivers can request to purchase the vehicles

they have used during the operational leasing contract. “Our remarketing strategy is focused on selling used cars to vehicle dealers and traders, but we offer drivers the possibility to purchase the used vehicles. In the first quarter of 2012, 1.8 percent of the vehicles returned at the end of the contract were purchased by the drivers,” says Dowling. In addition, Alexander Nekolar, CEO of Porsche Finance Group, says, “Under legislation, it is illegal to sell the cars to the former users but they can be sold to the employees of the companies. This is the main difference between operational and financial leasing services.”

Looking towards growth

Last year, Dudy Perry, CEO of Sixt New Kopel, the operational leasing division of New Kopel Group Romania, stated that the Romanian operational leasing market still has at least 15 percent to catch up with the level of this segment recorded in Central and Eastern Europe countries. “While in Romania, the share of operational leasing is around 12 percent of the leasing market, in other countries in Central and Eastern Europe it reaches 30 percent and even more in the West (60-70 percent); therefore we are confident there is a lot more growth to come,” stated Dudy Perry, CEO of Sixt New Kopel Group. For this year, the company plans to increase the car fleet by 15 percent, by renewing and expanding the current managed fleet and by achieving new clients. “Our strategy is to deliver customized services to our clients by a higher implication within the overall operational leasing process, starting with the delivery and providing assistance all through the contract and ending with the return of the car at the end of the contract or with the potential acquisition by the user, though our division, AAA New Kopel,” Madalina Tofan operational leasing manager told The Diplomat – Bucharest. According to the manager, the focus for 2012 is on the middle sized companies, financially stable, besides the large clients. The f leet management is also an important services for Sixt New Kopel this year. The company signed 30 new clients in the first quarter, while their operational activities are in different sectors as industrial, pharma, real estate, IT&C, constructions. The company delivered fleet management services and operational leasing services for 5,800 vehicles in 2011, while this year, the fleet volume value increased at 6,100 companies. ■


financing agriculture

Seed money cultivates Romania’s agricultural sector

After a period in which financing for Romanian agriculture hardly existed and most banks saw it as a risky sector, in recent years things have changed and lending in this segment has spectacularly sprouted. The Diplomat – Bucharest canvassed authorities and banks active in this field who outlined the current state of financing in the farming sector. By Roxana Cristea

“A

griculture is a vital economic sector for Romania. Due to weather conditions and higher than the European average arable area, Romania has excellent primary agricultural resources, but to achieve performance like farms in other European countries we need major investments in upgrading and modernization,” Andreea Enache, director of the corporate division at ProCredit bank, told The Diplomat – Bucharest. Enache added that farms need financing to acquire high-performing agricultural equipment and to meet working capital needs for optimal crop establishment. On the same theme, Remus Nica, senior lending products manager at Intesa Sanpaolo Bank, said that agricultural financing in Romania is currently at an incipient level, but is on a positive trend as more banks have expressed interest in this segment. In addition, it is expected that some “non-banking” clients (small and very small farms) will join forces to form stronger entities which should improve their standing in the eyes of financing companies. “It’s about the merging process, much discussed lately and that will inevitably soar in the coming years,” added Nica. Meanwhile, Dan Petre, commercial officer for the agricultural market commercial pole network at BRD-Groupe Societe Generale, agrees that modern agriculture is realized through credit. “If I were to describe in three words the financing system in agriculture, it would be essential for development, for both farmers and financial institutions,” outlined Petre. The agricultural sector has a high capacity to absorb new funds and to develop further 19


financing agriculture

“There is great appetite for banks to award agricultural grants, but not every bank will have access to subsidies if it is not involved,” Stelian Fuia, minister of agriculture

and longer than in any other field. The support of the European Union through grants is an advantage for those who wish to invest, without having a significant financial contribution of their own to make.

Eye on EU funds

“This year we have an aggressive target for European funds of EUR 2.5 billion, or 40 percent of the EUR 6 billion assumed by the government. In the first quarter, we will make payments of EUR 1 billion and we are very close to this level,” said Stelian Fuia, minister of agriculture, at a seminar. Romanian agricultural companies have so far accessed a total of EUR 3.7 billion in European funds, which corresponds to an absorption rate of 37 percent of the money available to Romania over 2007-2013. In this period, local farmers can access about EUR 10 billion from European funds through investment projects in agriculture. Of this money, EUR 8 billion is “clean” money from the European Union, with the rest coming from the state budget. Although agriculture has one of the highest rates of absorption of European funds, Fuia argued that the rhythm could be accelerated. “One of the problems is lack of priorities. At the time of negotiations with the European Union, we did not have clear priorities. In the coming period, we will redeploy EUR 750 million of European funding

programs with less demand to those where there are many applications. We will open deposit sessions (when those who want EU funds may submit projects) worth EUR 1.5 billion,” said Fuia. The main difficulties encountered in obtaining EU subsidies are excessive red tape, paperwork, the lack of a well developed information system and receiving subsidies after sowing campaigns, in installments. The minister commented that Romania is doing well with money from the EU, but that it could do better. However, he reassured the public that the country will not have problems in accessing funds and the amounts contracted by 2013 will be well deployed. In addition to this, the minister said that another major problem facing Romania today is financing, particularly in the private sector. “There is great appetite for banks to award agricultural grants, as this is the most important sector for Romania. Not every bank will have access to subsidies if it is not involved,” added Fuia.

Urban-rural divide

“The development of agriculture has been negatively influenced, among other factors, by banks’ reluctance to finance farmers, while interest on loans is higher than in other countries,” noted Stelian Fuia. The minister said that this unwillingness has prevented local agriculture from achieving all that it might have. “Banking policy stops out of town. I agree that today it is much easier to borrow from the state than to finance agricultural investments,” added the minister, saying that agriculture is a sector that has prospered during the economic crisis though it is clear that Romanian farmers take out loans at higher costs, as interest rates are higher than in other European countries. Fuia also criticized the activity of credit institutions, saying that some banks sell com-

“We are anchored in lending and supporting so-called subsistence farming. The Guarantee Fund underwrites many of these loans,” Radu Gratian Ghetea, president of CEC Bank 20 The Diplomat May 2012

fort letters for European projects. “Comfort letters to attract European funds are obtained too easily and some banks are even selling these documents to farmers. The Ministry of Agriculture will not accept letters of comfort from all credit institutions,” said Fuia. By a comfort letter, a lender expresses its intention to give a company the necessary funds to support its project, on the condition it is accepted by the management authority responsible for managing European funds.

A bountiful spring

“Next week we will make payments of about EUR 277 million, so by April 10 about 98.5 percent of total payments are expected to be completed to ensure farmers money in spring, not just in fall,” said Florin Marius Faur, general manager of APIA, at the end of March. “In addition, in early April APIA teams visited 500 localities in Romania where communities had over the years seen major problems of overlapping and overstatement. They went with farmers from block to block to make sure they were positioned correctly. It was not a genuine inspection – that begins after submission on June 11,” said Faur. The APIA chief added that this action was aimed at strengthening the land register. The official said that last year, after centralizing all application deposits, 1.6 million overlaps were identified. The agency representative noted that currently, with 33


financing agriculture percent of the applications received, there are 100,000 overlaps, fewer than last year. In early March APIA launched a campaign to encourage applications for payment schemes or support for 2012. Over January 2011-February 2012, it authorized and made payments of EUR 2.9 billion to beneficiaries’ accounts, of which EUR 1.93 billion was from European funds. The sums targeted campaigns of area payments in 2010 and 2011, payments for market research and state aid. Total payments of EU funds secured by APIA between 2007 and February 2012 came to about EUR 5 billion. Over 2007-2013 total EU funds of about EUR 8.2 billion are available.

Farmers move online

Last year over 97 percent of farmers submitted applications electronically, an option launched in 2010. “It is encouraging that only 35 farmers out of Romania’s 353,000 farmers who have applied so far have chosen to make the applications in the conventional way,” said Faur of this year’s campaign, which started on March 1. The APIA chief pointed out that farmers have understood the concept, and the quality of applications has increased. “We reached a rate of receiv-

3.7bln

is the value of EU funds accessed by Romanian agricultural firms so far, representing 37 percent of the money available to Romania over 2007-2013 ing almost 21,000 applications daily,” he said, adding that 80 percent of farmers are currently listed with a mobile phone in the APIA contact database. Under these circumstances, the minister of agriculture, Stelian Fuia, said that APIA no longer needs all 5,500 employees. “If only 1 percent of farmers have made a traditional application and the rest have submitted theirs electronically, it means that we do not need 5,500 employees at APIA. It’s a positive sign,” said the minister, later adding that

APIA should hand over some of its activities to professional associations. Fuia gave the example of France, where the equivalent institution has 2,200 employees and makes payments of EUR 20 billion. ”We should get there too,” urged the minister.

Many banks, many financing programs

The majority of financing in agriculture is done through banks, whether it takes the form of a grant, EU funds or a loan. For example, CEC Bank granted farmers over 20,000 loans, worth EUR 80 million, last year, while so far this year the number of loans has exceeded 10,000 and the value is about EUR 20 million, according to Radu Gratian Ghetea, president of CEC Bank. “I can give you an interesting statistic – 30 percent of our lending activity goes to finance agriculture. Last year, for loans with so-called subsidies and through a very good cooperation we have with the Rural Credit Guarantee Fund and APIA, we issued 20,600 credits,” said Ghetea. He added that in the first three months of this year the state bank has already provided 10,294 loans. “We are anchored in lending and supporting so-called subsistence farming. The

21


financing agriculture

“The agricultural sector is a niche with potential for financiers, in terms of the effective management of costs and risks,” Bogdan Speteanu, CEO of BCR Leasing IFN

Guarantee Fund underwrites many of these loans, supported by APIA certificates for families or family associations, or small farmers that have developed their farms. Many loans were also granted during this period to the owners of large or not quite so large farms. There are many situations in which we credit large agriculture, be it projects using European funds or simply agricultural projects,” said Ghetea. The CEC chairman said that only 6 percent of the bank’s non-performing loans are in agriculture, which is an impressive performance because the average in the banking system is about 14 percent. “Credits that we have given for projects co-financed by European funds had a 0.71 non-performing rate,” said the general manager of CEC bank. He also noted that the bank he manages provides loans for start-ups, especially when a group of companies dealing with agriculture forms a new company. Elsewhere, Ramona Ivan, director of financial institutions at Romanian Commercial Bank (BCR), told The Diplomat – Bucharest that BCR granted the most loans between 2010 and 2011, worth RON 3 billion. “Since mid-2010 we have had many projects based on EU funds, implementation of which did not begin because the beneficiaries had problems, as they had not considered how to ensure their own contribution of money,” said Ivan, adding that a beneficiary who

wants to apply for EU funds should talk to the bank to secure his or her contribution and ensure that the project lasts beyond the funding. “The securing of financing is the minimum threshold in the implementation process. The beneficiary should be very alert to any expense incurred. BCR has developed a specialized team for projects,” said Ivan. The BCR director of financial institutions added that in agriculture and rural development there are two broad categories of customers: small businesses that need a lot of information and large farmers. “I believe in agriculture and in its funding, but anyone who enters this area risks a lot, because agriculture is dependent on weather conditions and is quite fragmented. Some companies in rural areas obtain financing in vain if they do not have conditions to develop. We should focus on larger projects, so the business develops more,” argued Ivan. Another lender providing financing for agriculture, ProCredit Bank, finished last year with a total of more than 4,700 loans and a volume of about 40 million loans in progress, an increase of 16 percent from 2010. “ProCredit Bank currently has 30 percent of the total loan portfolio in agriculture. We intend to keep this weight stable or to increase the percentage slightly during 2012, as happened from the beginning of last year when agricultural loans represented 27 percent of funding granted by ProCredit Bank,” said Andreea Enache. According to her, more than 50 percent of the agricultural loan portfolio is credit destined partly or fully for investments (including loans to support projects co-financed by EU funds). The rest is working capital loans to finance the immediate business needs of agricultural companies. In addition, out of the total loans in foreclosure, 15 percent involve businesses in agriculture.

“We believe that agriculture has a significant growth potential due to the small number of machines owned by farmers,” Vorles Morlot, general manager of BRD Sogelease 22 The Diplomat May 2012

“The agricultural sector has been slightly less hit by the crisis than other sectors of the economy. In this respect, at ProCredit Bank we have not experienced a decrease in the agricultural loan portfolio quality and what we propose for the coming years is to maintain this quality and cover a larger part of those working in the field,” added Enache, saying that the highest sum ProCredit Bank has granted to a single customer was EUR 1.57 million to finance a project from European funds. At the bank, for the very small companies segment (individual farmers, IF, PFA, II), the average loan in progress is of about EUR 4,000, while for SMEs, the figure is around EUR 62,000. In the case of Intesa Sanpaolo Bank, in 2011, agricultural loans represented about 15 percent of the volume of new loans granted to the small business and SME segment. “It’s difficult to make a very accurate estimate of the number of credits granted because we cannot strictly identify all agricultural loans granted, but only the standard,” said Remus Nica. In 2011, Intesa Sanpaolo granted about 300 special loans for agriculture, plus “general” credits that farmers accessed, but that cannot be quantified precisely, Nica told The Diplomat – Bucharest. The bank does not generally address customers who practice subsistence agriculture, but rather operators of medium and large farms. Credit values,


financing agriculture depending on the type of financing, can be about EUR 90,000 for credit lines to finance crops, EUR 110,000 for investment loans and approximately EUR 250,000 for cofinancing loans for projects from structural instruments in agriculture. “The percentage of non-performing loans in agriculture is considerably lower than the bank average, on the one hand due to diminished exposure by collecting as default funds or subsidies from farmers – who are funding sources for credit – and on the other because farmers usually have a better payment behavior than most customers,” said Nica. At BRD-Groupe Societe Generale, the percentage of credit going to agriculture and related sectors, such as the food industry, in its total loan portfolio has increased in recent years, reaching almost 10 percent. “The component of loans for projects co-financed by the EU makes up half of this figure. Both the products exclusively dedicated to financing agriculture and the product range to support projects co-financed by the EU (EuroBRD) address a broad range of beneficiaries, and conditions vary depending on the category of targeted farmers,” said Dan Petre, adding that recent years have seen a steady increase in bank interest in supporting two areas

that are intertwined: agriculture and European funds. BRD-Groupe Societe Generale has worked in this segment since 2006, the year when its first product designed for and dedicated to agriculture was launched. Subsequently, each year, agricultural finance had upped its weight in the bank’s portfolio. Furthermore, the product range now features over ten types of dedicated funding. This includes working capital loans, investment loans, loans for European projects and prefinancing loan subsidies.

Special conditions

“To get agricultural credit, conditions are the same as for a ‘normal’ loan. For special loans, there may be some additional conditions, such as presentation of certificates from APIA, project/contract funding – in the case of loans for co-financing structural funds – and business plans/feasibility studies for investment projects. Otherwise, there are no special requirements for agricultural loans,” said Nica. At Intesa Sanpaolo Bank, loans to finance crops are aimed at farmers with some experience in rearing crops that require funding, who cultivate at least 80-100 hect-

ares and have a history of good relations with business partners and banks. “For European funding projects, we analyze project viability first, but also the quality and economic and financial performance of the applicant. We also finance start-ups, if they belong to a group active in the field or possess the appropriate knowledge, experience or other assets for people setting up new enterprises. We do not address those who have heard that agriculture is an area that is ‘going well’ and want to engage, without having any connection to this area or any specialized knowledge,” said Nica. His opinion is shared by many other bankers, although views on what constitutes the necessary time and experience in agriculture are different. Andreea Enache says that ProCredit Bank requires anyone seeking financing to have experienced at least one season in the field of activity. “The conditions of access to agricultural credit vary depending on many factors, such as the organization, experience and turnover,” added Enache, saying that ProCredit bank has adapted to the peculiarities of agriculture, both by way of analysis, and the products and services. “For example, we have loans that allow a seasonal repayment plan,

23


financing agriculture

“The agricultural sector was slightly less hit by the crisis. More than 50 percent of our agricultural loan are destined for investments,” Andreea Enache, director of the corporate division at ProCredit Bank

which means that a customer does not pay rates other than during the harvest or may choose to pay higher rates when it collects revenue,” explains Enache.

Agricultural leasing takes root

“The fragmented structure of the Romanian agricultural market affects the access to finance. It is important to note that the top 50 largest agriculture holdings in Romania are working less than 5 percent of the arable land in Romania. Under these circumstances leasing companies must seek communication channels so small producers can find, understand and enjoy the benefits of financing leasing,” said Bogdan Speteanu, general manager at BCR Leasing IFN. According to the manager, leasing companies must adapt their risk policies to Romanian agricultural market conditions. This means signing buy-back/support in resale contracts with producers, concluding tripartite buy-sell agreements with producers and users, along with the application of quarterly or half-yearly repayment schemes, depending on the seasonality of agricultural production. In addition, leasing companies must be flexible enough to adapt the financing conditions to anticipated opportunities of repayment by the farm beneficiary, which

are linked to the performance of the agricultural year/years. According to the Financial Companies Association in Romania (ALB), the percentage of financial leasing for agriculture in the total leasing market has increased markedly in the last two-three years, from under 4 percent in 2009 and 2010 to 5.5 percent in 2011, and the share of funding equipment leasing has increased from under 10 percent in 2009 and 2010 to 22 percent in 2011. ”2011 brought a recovery in this segment of funding, due mainly to special offers launched by major leasing companies on the market. We believe that agriculture has a significant growth potential due to the small number of machines owned by farmers,” said Vorles Morlot, general manager of BRD Sogelease. Any SME or micro-enterprise whose main activity is agriculture, with a minimum of five years continuous experience in this field, is considered eligible to access financing of the financial leasing type for agriculture at BRD Sogelease. Applicants must have a minimum area of 400 hectares exploited and show positive operating results, according to the latest annual balance sheet. The amount of financing is done based on turnover and the seasonal specifics of the activity. “Basically, we finance companies performing seasonal activity, enabling them to repay in equal installments quarterly or half-yearly,” added Morlot. Speteanu thinks that the agricultural sector is a niche with potential for financiers, in terms of the effective management of costs and risks. The company that he manages provides financing for agricultural projects, for companies, agricultural associations and authorized individuals, under individual financing conditions. Contracts require

“If I were to describe in three words the financing system in agriculture, it would be essential for development, for both farmers and financial institutions,” Roxana Cosmescu, commercial network pole, BRD-Groupe Societe Generale 24 The Diplomat May 2012

a minimum threshold of EUR 4,500, which ensures access to financing for any company or association with a real prospect of agricultural development, and users do not have to provide guarantees. Generally, the contract period is up to 60 months, and the minimum advance deposit is 15 percent of the value, VAT excluded. “Among the customers who have access to agricultural leasing products are famous producers and processors, and rural agricultural companies interested in purchasing specific equipment or equipment for processing. We have adapted the offer so it can be accessed by more small manufacturers,” added Speteanu. Meanwhile, although it does not have a portfolio of leasing products, earlier this year ProCredit Bank Romania brought out a new banking product that addresses those who wish to purchase equipment, with the possibility of providing guarantees with the purchased equipment. “The credit ProEchipamente is granted for up to seven years, without mortgage. The bank may also finance the purchase of used equipment. With co-financed projects by the European Agricultural Fund for Rural Development (EAFRD), the client will not pay an advance. The repayment plan caters to specific agricultural activities – customers can choose to pay seasonal rates,” added Andreea Enache. ■


presents

Romanian Forum 2012 Gold Partners Investment in agriculture is an emerging asset class for private and institutional investors, and Romania is one of the European countries with the highest potential for development of this field. The Diplomat – Bucharest, the leading English-language magazine in Romania, is organizing in May, 2012 the second annual conference for decision-making agricultural professionals to network, do business and learn about Romania’s agribusiness potential. This will be a major event providing business opportunities in Romanian agriculture, where the key players in this sector will debate the challenges and opportunities of investing in this dynamic sector. To find out more or to participate, contact us at: 004 021 210 1336 or sales@thediplomat.ro www.thediplomat.ro


malls

F

Mall that glitters is not gold Over EUR 1.5 billion is set to be spent on eight malls and commercial center projects in Bucharest alone, with deliveries estimated mostly for 2012 and 2013. The capital is home to one third of Romania’s overall current stock of shopping centers. Managers and CEOs of the main mall projects and shopping center developments in Romania gave The Diplomat – Bucharest their views on whether there is any more room for such projects on the market, and if so where, of what size and under what market conditions. By Magda Purice 26 The Diplomat May 2012

or those taking an evening walk towards IOR Park in Titan, eastern Bucharest, the peaceful atmosphere may become less so in the near future, as the empty field bordering the park will see a large mall development at the end of 2013, called ParkLake Plaza. Meanwhile, across town, drivers leaving Bucharest by the north-west exit will, also by the end of 2013, be passing “the largest European mall”, Colloseum, totaling 190,000 sqm of area and 480 shops. And there is more to come – at least on paper – according to developers’ announcements. Bucharest is currently awaiting eight announced mall and commercial centers projects, some of them expected to start this year and to be completed next year, totaling around 400,000 sqm of retail area and over EUR 1.5 billion of investment. If all of these projects are realized, the capital will be home to over 20 shopping centers, including malls, retail parks and commercial centers, in the next few years, as many of the announced projects have delivery times estimated for 2013. So far, names in the frame include ParkLake Plaza from Irish company Caelum Development; Mega Mall in Pantelimon, to be developed by Austrian company Real 4 You; the Belgians from BelRom who have secured land on the former Helitube facility in Colentina; the NEPI, Benevo and CD Capital association developing a shopping center on the former land of Textila Dacia facility; the Austrians of Raiffeisen Evolution who are expected to start their announced project Promenada Shopping Center in north Bucharest’s Floreasca area; and AFI Palace B.Noi, a project by Israeli company AFI Europe in the Bucurestii Noi area of the capital. According to David Hay, CEO of AFI Europe Romania, the 30,000-sqm shopping center in Bucurestii Noi will have a Real supermarket as anchor, with the first building stage scheduled for May and the opening of the first stage, for Q1 of 2013. And that is not to forget about the Colosseum mall to be developed by Nova Imobiliare, controlled by Greek businessman Panico Panayi. Meanwhile, French retailer Auchan has acquired land in Bucharest, on the former sites of Tricodava and Grantmetal, where it plans to develop retail parks through its real estate division, Immochan. The shopping center projects announced for Bucharest have chosen different retailers to anchor their first development stages, such as Cora for Parklake Plaza, Carrefour for Real4You’s project in Pantelimon and Auchan for Helitube’s platform in Colentina. In the land plots expected to host these projects, their developers have so far invested an estimated total of EUR 350 million in recent years. When the issue of supply and demand is raised, most managers at the helm of large


malls

“Comparing Bucharest with Prague or Budapest in terms of shopping space supply is not an appropriate indicator for local demand,” Ali Ergun Ergen, CEO of Anchor Grup

mall projects in Bucharest and outside say that neither a comparison between Bucharest and other Romanian cities nor other European capitals is relevant. For instance, one manager who has “built” three malls in Bucharest (two of which were the first ones to appear in the capital – Bucuresti Mall and Plaza Romania from Anchor Grup – and the latest, Baneasa Shopping City by Baneasa Developments), Ali Ergun Ergen, now back as CEO of Anchor Grup, told The Diplomat – Bucharest that “comparing Bucharest with Prague or Budapest in terms of shopping space supply is not an appropriate indicator for local demand.”

Mall encompassing

The latest studies by real estate consultants suggest that Bucharest and Romania’s overall growth potential for malls and commercial developments still has no limit. For instance, according to DTZ, Bucharest’s shopping center stock is half the European average. The total stock in Europe is about 150 million sqm, with an average of 382 sqm per thousand inhabitants, while Bucharest has an average stock of 186 sqm per thousand inhabitants, three times higher than the country average of 56 sqm. Their conclusion is that the opportunities that exist across Europe for mall development are good news for retailers looking to expand. Retailers will continue to focus on prime centers, where there is a

greater guarantee of success. This gives shopping center developers who are redeveloping existing facilities, or building new schemes, the potential to attract new brands and, subsequently, new customers. According to Cushman & Wakefield, Romania ranks eighth of 34 European countries in terms of the total area of shopping centers due for delivery in 2012 and 2013, with a total stock of around 400,000 sqm, while in Europe, malls totaling 10.9 million sqm are due to be built. The largest deliveries for 2012 and 2013 are Palas Iasi, and the 55,000-sqm Ploiesti Shopping City, developed by South African investment fund NEPI. Meanwhile, the 25,000-sqm AFI Palace Ploiesti is already 70 percent preleased, according to Hay, with a Cora hypermarket as anchor. The opening of the mall is scheduled for the end of 2013. Other projects in developers’ pipeline countrywide and quoted by the real estate consultant are the 40,000-sqm Coral Constanta and the recently announced 25,000-sqm Coresi Shopping Center Brasov.

Malls stall

The lack of financing and banks’ caution over handing out loans for projects have been common knowledge among real estate developers in recent years. Israeli company Plaza Centers, known for its largest local project, Casa Radio, announced this year that none of its five announced malls on the local market will see the start of construction this year. In the meantime, the market value of the five projects has dropped significantly, according to the company’s latest financial statements. Its malls, slated to start in 2011 and 2012 in Timisoara, Iasi, Slatina, Hunedoara Tirgu-Mures and Constanta, under the brand “Plaza”, have had the start of construction postponed until next year or even 2013. So far, there have been three major bankruptcies of malls and commercial centers in

“The mall market in Bucharest shows a clear consolidation trend. But the boom of 2008 will not be experienced again,” Michael Richard, general manager of EMCT 28 The Diplomat May 2012

Romania, with the latest casualty being commercial center Armonia in Braila, developed by Red Project Three, part of Red Group. The project was put up for auction in April, for EUR 25.03 million, its main creditor being Volksbank, which is owed EUR 28 million. Armonia was declared bankrupt at the end of 2011, after filing for insolvency in November 2010, two years after its launch. The developer had invested EUR 45 million in the project but the mall went on to run up debts of EUR 35 million to 33 creditors, according to the judicial administrator, Casa de Insolventa Transilvania. Nobody showed interest in investing in the mall at the first auction, so the judicial administrator has organized another, with the same starting price of EUR 25 million. Under the hammer is almost 200,000 sqm of land, the mall, which delivers close to 30,000 sqm, and several other buildings. This is the third mall to face bankruptcy in Romania, after Tiago Mall Oradea, now Oradea Shopping City, and the several attempts to auction off City Mall in Bucharest. Both commercial centers have now been sold. Tiago Mall was bought for EUR 30.5 million by Shopping Center Holding, a company owned by Karias Trading Limited, which is registered in Cyprus, and Romanian businessman Dumitru Ciocoiu, known for his involvement in projects such as Baneasa Business & Technology Park. And last year


malls

“There isn’t much difference in terms of mall type when we compare Ramnicu Valcea to cities in Germany or Spain with 100,000 people,” Ingo Nissen, managing director of Sonae Sierra Romania

City Mall was re-sold for EUR 17.3 million to a Greek investor who had owned it in 2006. It was then bought by Australian property fund APN European Retail Trust. Another mall in Bucharest, Liberty Center, owned by Irish company Mivan and the Awdi family, is facing tenant problems, after losing major names such as Marks & Spencer, Forever 18 and fast food firm Burger King this year alone, who joined an exodus that also included Starbucks and Diverta. Currently, the mall’s tenant portfolio includes Billa, Altex, Hervis, Next, Sprider Stores, Reserved and The Light cinema.

Developers get real

The most recent move on the large retail project scene involved French retailer Auchan, which acquired, through its real estate arm Immochan, the assets of the real estate project Coresi Brasov, which was planned to be developed by Flavus Investitii, an investment company managed by Centerra Capital Partners and the Romanian partner of the UK investment fund Cheyne Capital. Victor Vadaneaux, managing partner and founder of Centerra Capital Partners, told The Diplomat – Bucharest that Centerra Partners is no longer managing real estate properties in Romania. The value of the transaction, which comprises a retail project of over 80,000 sqm to be developed on the former industrial site of

Tractorul in Brasov, is estimated at several tens of millions of Euro. Flavus Investitii acquired the former Tractorul site in 2007, in a transaction estimated at EUR 77 million .The investment company announced that it planned to develop a mixed project, of office, retail and residential, estimated at an approximate EUR 1.5 billion investment, on the site within 10 years. The Tractorul project, launched in 2010, included an Auchan hypermarket of around 16,000 sqm, planned to be completed in 2011, after an investment of EUR 20 million. Immochan will also develop two commercial projects, one in the Giulesti area, on the former site of the Grantmetal plant, and the other in Ghencea, on the Tricodava industrial platform. In Ghencea, Immochan will develop the first Auchan City hypermarket, with a sales area of 5,000 sqm and a commercial gallery of 2,000 sqm. The second project to be built on the Tricodava site will have a commercial gallery of around 100 shops and will also comprise an Auchan hypermarket of 11,200 sqm. Another project, this time located in Bucharest, comes from the Irish Investment group, Caelum Development, which has announced it has started construction works at the ParkLake Plaza project in Titan, in east Bucharest. The project, whose construction phase is expected to last two and a half years, comprises a lettable area of 67,000 sqm, which will host a Cora hypermarket on 15,500 sqm, a Cinema City multiplex, 200 shops, an entertainment and sports area and a food court with 20 units.

malls developed around the country, 14 are located in the capital, according to estimations. The managers and CEOs of the highestprofile malls in Bucharest diverge on whether Bucharest still has the potential to absorb more projects, or whether regions outside Bucharest hold the remaining potential. According to Michael Richard, general manager of Euro Mediterranee Consulting (EMCT), the key words for the market are “evolution and natural selection”. He is in broad agreement with the opinion espoused by AFI Europe Romania, another major name on the Bucharest mall scene. “Only the best and the most suited to the market conditions will survive,” Richard argues, but his apocalyptic pronouncement contains a more pragmatic meaning. “The mall market in Bucharest shows a clear consolidation trend. There are indeed projects which are scheduled to be finished this year, but the boom of 2008 will not be experienced again,” Richard tells The Diplomat – Bucharest. According to the manager, a current trend is “the recycling and reinvention” of already existing spaces. “Location, location, location” remains the golden rule when drafting plans for a mall, all the managers agree. “Everything rests in the proximity. The retail mix, the entertainment offer and the food court should address their target in that location,” urges Richard. Sun Plaza Mall opened in 2010 following an investment of EUR 200 million by EMCT and

Evolution, reinvention and natural selection

Romania’s overall stock of shopping centers is put at over 1.2 million sqm, of which, 420,000 sqm is in Bucharest. From an approximate 50 commercial centers, retail parks and

“In 2011, the tenant change rate was under 10 percent, with the departures coming from local retailers, while this year we’re seeing a consolidation,” Oana Diaconescu, senior leasing manager of Iulius Group 29


malls

Malls and commercial centers aro City

Mall

GLA

Developer

Arad

Armonia Center

43,000

Red Management

Atrium Center

29,500

Atrium Centers

Galleria

33,000

GTC

MM

SM

BN

Baia Mare

Gold Plaza

30,000

Futureal, Immofinanz

Cluj-Napoca

Iulius Mall Cluj

42,700

Iulian Dascalu

Polus Center Cluj

63,000

Trigranit

Tg. Mures

Mures Mall

10,000

Timisoara

Iulius Mall Timisoara

67,000

Iulian Dascalu

Bega Shopping Center

12,000

BegaGrup

SJ BH CJ MS AR AB

City

Mall

GLA

Alba Iulia

Alba Mall

21,034

Brasov

Unirea Shopping Center Brasov

19,000

Mall Eliana

17,000

Macromall Brasov Oradea

Developer

TM

SB

HD

Dan Adamescu

CS

Cyprus-registered investor

Lotus Center

40,150

Era Shopping Park

62,740

Argo Real Estate Opportunities Fund

Oradea Plaza

30,000

Portico Investments,

Sibiu

Shopping City Sibiu

80,000

Argo Real Estate Opportunities Fund

Ramnicu Valcea

River Plaza Mall

11,555

Sonae Sierra

GJ

VL

DJ

OT

Real4You

City

Mall

Craiova

Mallul Electroputere

Bel Rom

Giurgiu

Family Center

Real4You

Pitesti

Euromall Pitesti

18,000

Immofinanz

Iris Shopping Center Pitesti

43,000

DEGI

Ploiesti

Winmarkt Grand Center

14,330

Buzau

Aurora Shopping Mall

18,000

Cometex Altex

Galleria Buzau

14,000

GTC

City Park Mall

23,000

Neocity

Tomis Mall

18,800

Plaza Centers

TOM Shopping Center

32,000

Plaza Centers

Constanta

Maritimo Shopping Center

30 The Diplomat May 2012

AG

MH

Winmarkt Mall Family Center

BV

GLA

Developer

Immofinanz

TR


malls

around Romania in 2012 SOURCE: Real estate consultants, companies, market ; GLA given in square meters

BT SV IS

City

Mall

GLA

Developer

Bacau

Arena Mall

19,500

Ovidiu Budeanu

Botosani

Uvertura Mall Botosani Family Center

Iasi

25,400

Moldova Mall

VS

BC

CV

Iulian Dascalu George Teleman

Era Shopping Park Iasi

40,000

Argo Real Estate Opportunities Fund

Palas Mall

47,500

Iulius Grup, Iulian Dascalu

Piatra Neamt

Galleria Piatra Neamt

15,000

GTC

Suceava

Iulius Mall Suceava

49,800

Iulian Dascalu

Suceava Shopping City

47,100

Argo Real Estate Opportunities Fund

Galleria Suceava

10,800

GTC

GL

VN

BV

AG

Real4You

Iulius Mall Iasi

NT

HR

Moldova Universal

BZ PH

TL

BR

DB IF

B

IL

In the pipeline

CL

CT

GR

TR

City

Mall

GLA

Developer

Bucharest

Colosseum

137,500

Nova Imobiliare

ParkLake Plaza Craiova

Adora Mall

Constanta

Corall Mall

80,000

Cora Romania

Trident Plaza

120,000

RED Management Capital

Plaza Centers

15,000

Plaza Centers

AFI Ploiesti

100,000

AFI Europe

Ploiesti Shopping City

55,000

NEPI, Carrefour Property

Oradea

Prima Shopping Center

24,000

Oasis Development

Botosani

Uvertura Mall

15,000

Moldova Universal

City

Mall

GLA

Developer

Bucharest

AFI Palace Cotroceni

79,500

AFI Europe

Baneasa Shopping City

105,000

Baneasa Investments

Hunedoara

Bucuresti Mall

39,600

Anchor Grup

Ploiesti

City Mall

19,000

Ioannis Papalekas

Grand Arena

50,000

Euroinvest Intermed

Iris Shopping Center

48,000

DEGI

Liberty Center Mall

25,000

Mivan

Plaza Romania

48,000

Anchor Grup

Sun Plaza

81,000

EMCT Romania, S IMMO AG

Unirea Shopping Center

43,760

Dan Adamescu

Vitantis Shopping Center

34,000

George Teleman

Caelum Development Sonae Sierra

31


malls Sparkassen Immobilien, the real estate division of Erste group. Sun Plaza, with 210,000 sqm of GLA, improved visitor traffic by 10 percent last year, compared with 2010, says Richard. On the rejuvenation theme, Anchor Grup’s second “pearl” in Bucharest, Plaza Romania, is preparing for a facelift. Recently returned to Anchor Grup as CEO, after spending the last seven years and “a very demanding period” at Baneasa Developments, Ali Ergun Ergen is busy right now on the refurbishment plans for Plaza Romania, which, according to the manager, will reshape the tenant mix, in fashion and leisure, bring new entries and involve new anchors on new niches. His return to Anchor will present a challenge to “reposition and consolidate the group’s identity in the premium area of the market, whether it is about the shopping centers, the office buildings or the

mall delivers 46,880 sqm of GLA, after an investment of EUR 63 million.

Keeping it in-house

David Hay, CEO of AFI Europe Romania, takes a similar view. Location is the key word, which the developer’s latest projects reflect. Priorities for 2012 include starting construction of the two shopping malls planned for Ploiesti and Bucuresti Noi in the capital. AFI Ploiesti, which will deliver 25,000 sqm, is already 70 percent preleased, according to Hay, with a Cora hypermarket as anchor. The opening of the mall is scheduled for the end of 2013. Meanwhile, the 30,000-sqm shopping center in Bucuresti Noi will be anchored by a Real supermarket, with building of the first stage scheduled for May and the opening of that stage for Q1 of 2013. The mall in Bucurestii Noi, AFI Palace B.Noi, will be a “proximity mall”, a concept to be mirrored, says the manager, within the entire retail mix. Regarding AFI Business Park Cotroceni, the manager is pleased with the numbers and describes the performance posted in the first

mall and the office buildings.” The mall’s management (which is always selected inhouse) decided to replace up to 30 percent of the tenants, by cancelling contracts and reshaping the mall’s retail mix. Besides the fashion retail names already announced as entrants to the mall, David Hay says that he is expecting further newcomers to fill the remaining retail space, which represents around 3 percent of the total GLA. Space in the office building to be completed by August this year has already been 50 percent preleased with demand coming mostly from IT companies, due to the location of the mall, near Politehnica, says Hay. The total investment in the new building is estimated at over EUR 20 million, with EUR 13.4 million coming from a loan taken out from UniCredit Bank.

Bucharest vs. outside Bucharest

One mall for a city such as Brasov, Iasi, Constanta, Cluj or Timisoara is enough, says Richard of EMCT. “The market of commercial centers outside Bucharest has a totally

“In Romania, there is still room for developments. There are areas with an oversupply, but also ‘white’ spots on the map, like Brasov and Timisoara,” Eduard Zehetner, chairman of the executive board of Immofinanz Group

collateral projects among the group’s developments”. According to Ergun, comparing Bucharest and countrywide shopping center developments with other cities in Europe is not useful. “Many such projects developed outside Romania now post large vacancy rates and the comparison can be misleading if it is only based on volumes and calculations regarding the sqm offer and does not take into consideration the demand and the quality of the project,” he tells The Diplomat – Bucharest. The reshaping of a shopping mall into a “life center”, targeting consumer behavior and creating welcoming spaces is the philosophy on which the future strategy will be built. According to Ergun, the traffic of the mall has been stable in the last few years, partly because of the existing 12-level office building Anchor Plaza, which has 25,000 sqm of rentable space. Opened in 2004, the 32 The Diplomat May 2012

months of this year, given the poor weather, as surprising but welcome. As Hay told The Diplomat – Bucharest, after returning from the construction site of the first out of five office buildings that will make up AFI Business Park Cotroceni, “It was strange to register such large traffic in a month with weather as harsh as February.” In fact, according to the CEO, since the launch of the mall, the retailer’s sales have increased y-o-y, with approximately EUR 105 million of sales registered in 2010 and EUR 182 million posted last year. For this year, the estimations look good, says the CEO, but he remains cautious over revenue expectations for the mall, “due to the local and regional lack of economic predictability”. In the last two years, the mall’s revenues from rental activities were estimated at around EUR 23.8 million. Hay outlines the main measures the company has taken so far to underpin its performance against falling consumption. “First, we improved the tenant mix, by terminating contracts with non-performing tenants, and we are focusing on the synergy between the

different dynamic compared with the market in Bucharest, and one such project can saturate demand. The market outside Bucharest is calmer and more sedate, meaning the competition is less keen,” he adds. Still, Hay’s list currently includes two projects outside Bucharest, one closer, in Ploiesti, and a remote one in Arad, where there is space to be filled. In Arad, AFI Europe is in discussions with a DIY firm over a 30,000-sqm retail park, work on which is planned to start this year or in 2012. Eduard Zehetner, chairman of the executive board at Immofinanz Group, says, “In Romania, there is still room for developments, of course depending on the region: there are areas with an oversupply, but there are also completely ‘white’ spots on the map, for example Brasov and Timisoara. The latter especially have enormous capacity and are actually hunted by developers trying to be first. Immofinanz Group plans to enhance its development activities, above all in Eastern Europe – and Romania is among those countries where we are preparing and realizing new projects,” Zehetner tells The Diplomat


malls – Bucharest. The manager has found that the success of projects in Bucharest and other cities around Romania is defined by different factors, such as purchasing power, catchment area, requirements of tenants and cons. Purchasing power has definitely been increasing across the entire CEE region, according to Zehetner, whose investment company launched Maritimo Shopping Center in Constanta last year, following an investment of EUR 100 million, including the Auchan hypermarket investment which anchors the shopping center. “Last year, the region saw household purchasing power rise by EUR 400 on average – and there is still potential. By now, Romania has reached 23.7 percent of the Austrian level. If you have a look at Romanian purchasing power and compare the counties, the Constanta region ranks eighth. This fact, along with a strong mall like Maritimo, is the ideal combination for a successful shopping center. At Maritimo, visitors mainly focus on the shopping area – the food court and the entertainment zone are the perfect complement to this coherent offer,” Zehetner tells The Diplomat – Bucharest.

of shops and services tailored to the catchment area’s inhabitants,” the Sonae Sierra manager says. “Whether in Ramnicu Valcea or in other small European cities, the trend will be to develop or refurbish a modern, safe and comfortable area to revive the city center as a main destination. Definitely, this should provide an offer adapted to the public with shops, restaurants and services.” The River Plaza mall, the Portuguese developer’s flagship local project, was launched in 2006 in Ramnicu Valcea, with a lettable area of 11,555 sqm, and delivers a commercial area with 92 shops and 205 parking spaces. “Bucharest is a special case due to its existing quality range, mixed with great spaces for neighborhood center development and even for another large development. In Bucharest we see the need of some older shopping centers for refurbishment and adaptation to more modern formats, and especially improvement in proactive and professional management with customized leasing solutions based on market studies specifying customer demand from the location, operational management efficiency and integrated asset

Local vision

The malls developed by Iulius Group, located in Timisoara, Suceava and Cluj, all posted higher traffic in 2011 than in previous years, according to Diaconescu, , showing that the Romanian consumer’s purchasing power is starting to recover from the tribulations of recent years. The leasing manager’s commercial center map can be summed up as “hypermarket, food court and leisure”. She estimates that the food court and leisure areas draw around 30-40 percent of the visitors. Palas Iasi, the group’s most recent project, an investment exceeding EUR 260 million, was slated to be launched at the end of this month, after several successive postponements. The mall will deliver 47,500 sqm of rentable spaces and 132 shops, while the Palas Shopping Street commercial gal-

“We improved the tenant mix, by ending non-performing contracts, and now we focus on the synergy between the mall and the office buildings,” David Hay, CEO of AFI Europe Romania According to company information, the mall is fully tenanted, and the cinema is expected to begin operating this month. “Since Maritimo Shopping Center only opened its doors in autumn 2011, the cinema has not yet started operations. The opening is planned for May 2012. We estimate that approximately 10 percent of the daily visitors will target this location within the mall,” said Zehetner. Meanwhile, setting aside indicators such as purchasing power, a city such as Ramnicu Valcea can be comparable with a similarly sized European city, Ingo Nissen, managing director of Sonae Sierra Romania, tells The Diplomat – Bucharest. “We do not see much difference in terms of mall type when we compare Ramnicu Valcea to other cities in Germany, Italy or Spain with around 100,000 inhabitants. There is certainly an income difference, which you find even between cities in the same country, but the mall type should be a proximity shopping center, in the heart of the city, revitalizing the area and establishing itself as the main cultural and leisure destination, combined with a range

management,” Nissen adds. In other Romanian cities, the same needs apply, only differing by the GLA per inhabitant combined with the development’s modernity. “Several cities still have interesting development opportunities; others are more in need of refurbishment and some only require integrated management or asset and daily property management professional care (for operations, leasing and marketing) to improve their attractiveness and performance,” adds the MD. Adjusting the retail mix is the ABC of any developer and leasing manager. Both Ergun of Anchor and Hay of AFI Palace Cotroceni say that new entries of brands into the retail mix, whether leisure, fashion or food court, is essential to revive the offer and to boost traffic. According to a representative of the largest Romanian mall developer, Oana Diaconescu, senior leasing manager of Iulius Group, “This year, compared with the previous one, there is a certain trend to consolidate retailers’ portfolios. In 2011, the tenant change rate was under 10 percent, with the departures coming from local retailers.”

lery will offer a supplementary 6,600 sqm of shopping space within 35 shops. Besides, the mall traffic will also be sustained by the synergy of the three office buildings within United Business Center, and delivering over 20,000 sqm of rentable space. Meanwhile, the group, managed by Romanian businessman Iulian Dascalu, has invested EUR 2.5 million in the public garden Palas. Last month, the project, which is the single private-public partnership in mall development that seems to be succeeding (unlike another PPP project, Dambovita Center project in Bucharest), won the vote of local councilors who regulate the legal status of the land on which the Palas compound was developed. According to company officials, the local council remedied a procedural error, as the land had been classified as public area by the Appeal Court in Oradea. ■ 33


energy awards gala

Gala Awards celebrate dynamism of Romania’s power players Excellence and professionalism in the Romanian energy sector were celebrated at the Romanian Energy Awards 2012 Gala, a prestigious event organized by The Diplomat – Bucharest, marking a first in acknowledging the performance of this sector and its players in Romania. By Magda Purice

I

t has been the most dynamic sector in the Romanian economy in the last few years, seeing the largest developments and most dynamic projects; and the best practices, managers and projects in the energy sector were duly recognized at the first Romanian Energy Awards, organized by The Diplomat – Bucharest at the beginning of April, shaping an illustrious gala hosted by Crowne Plaza Hotel in Bucharest. The key companies and authorities in the energy sector joined the event, lending their expertise, counseling and presence to the Gala, organized under the auspices of the Ministry of Economy, Trade and Business Environment (MECMA). Gold partners for the event were Vestas and Wolf Theiss, while the Silver partner was Nuclearelectrica. Monsson Group and Hydro Engineering joined as supporting partners. The event also enjoyed the support of the Romanian Energy Regu34 The Diplomat May 2012

latory Authority (ANRE), Transelectrica, the Association of Companies for Energy Utilities (ACUE), Association of Electricity Suppliers in Romania (AFEER), World Energy Council (WEC), Romanian Wind Energy Association (RWEA) and the Romanian Photovoltaic Industry Association (RPIA). The Romanian Energy Awards 2012 brought together a Who’s Who of the Romanian energy sector and the gala was attended by more than 150 top managers and inf luencers on the local energy market, representing leading companies, providers and distributors, government officials and regulatory authorities. The best managers, practices and projects were awarded within 14 categories by the judging panel, formed of six prominent names in the energy field, companies and authorities: Alex-

andru Sandulescu, director in the Ministry of Economy, Trade and Business Environment (MECMA); Zoltan NagyBege, director, Romanian Energy Regulator (ANRE); Octavian Lohan, general manager of Transelectrica; Iulian Iancu, president of the Industry Commission of Romania’s Chamber of Deputies and Romanian Parliament; Silvia Vlasceanu, executive director of the Association of Companies for Energy Utilities (ACUE); and Alexandru Valeriu Binig, director of financial advisory services for energy & resources and corporate finance at Deloitte Consultanta. The opening speech of the Gala was given by Alexandru Sandulescu, director in the Ministry of Economy, Trade and Business Environment (MECMA). The official greeted the initiative by he Diplomat – Bucharest as an innovative


energy awards gala

Operational Energy Awards

Operational Energy Awards

Winner: Transelectrica Pictured: Octavian Lohan, general manager of Transelectrica

Winner: Petrom – Brazi Project Pictured: Razvan Nicolescu, public affairs and regulating manager at Petrom

Conventional Energy Company of the Year

and top-level event and underlined the challenge that faced the jury in their mission to select the most efficient projects, inf luential managers and large companies, performing on the most dynamic industry at this time. Each of the 14 categories analyzed by the members of the jury, organized in four sections, ref lected the outstanding success of firms and individuals in special projects and areas of business as well as overall input in the development of the business climate in Romania in the last year.

Conventional Energy Project of the Year

Overall Energy Awards

Operational Energy Awards

Renewable Energy Company of the Year Winner: Monsson Invest Group Pictured: Andrei Muntmark, commercial manager at Monsson Group

In the first section, Overall Energy Awards, the “Deal of the Year” award recognized the impact on the energy sector and/or the energy business community brought by a local transaction. The prize was won by Enel Green Power, for the acquisition of Elcomex EOL, a 119.6 MW project. The jury also nominated Pantelimon Wind Farm, of 150 MW, and Alpiq Eco Power for the acquisition of Sabloal Energie Eoliana in this category. As he handed the prize to Franceso Lazzeri, the newly appointed GM of Enel Green Power, jury member Zoltan Nagy said: “This was one of the hardest

categories to judge. In the last year, especially since the recent EU regulations on the energy sector, the local energy market has seen a very dynamic evolution, with investors increasingly voicing their interest in local projects, especially in renewable energy.” The “Energy Company of the Year” award went to Nuclearelectrica, for its development, delivery and innovation within the Romanian energy sector. The list of nominees also recognized projects developed by Transelectrica and E.ON. Ionel Bucur, general manager of CNE Cernavoda, received the award,

Operational Energy Awards

Overall Energy Awards

Overall Energy Awards

Winner: CEZ – Cogealac and Fantanele Pictured: Adrian Borotea, corporate affairs manager at CEZ

Winner: Nuclearelectrica Pictured: Ionel Bucur, manager at CNE Cernavoda

Renewable Energy Project of the Year

36 The Diplomat May 2012

Energy Company of the Year

Energy Manager of the Year

Winner: Octavian Lohan - Transelectrica Pictured: Octavian Lohan, general manager of Transelectrica


energy awards gala

Overall Energy Awards

Overall Energy Awards

Winner: Enel Green Power for the acquisition of the 119.6 MW Elcomex EOL project Pictured: Francesco Lazzeri, general manager at Enel Green Power

Winner: Ambassador Mihnea Constantinescu Pictured: Ambassador Mihnea Constantinescu

Deal of the Year

and underlined the challenges involved. “It is not easy to start nuclear and general energy projects but it is even more difficult to keep such projects posting a good performance.” In the third category of this section, Octavian Lohan, general manager of Transelectrica, was named “Energy Manager of the Year”. The award recognized the achievements of the manager who has demonstrated leadership and commitment to the energy sector, creating a positive impact for the business. It was presented by Alexandru Valeriu Binig, director of financial advisory for services and energy and resources and corporate finance at Deloitte Consulting. “Transelectrica managed to preside over 1,000 MW installed in renewable energy production facilities, without major incident. The Romanian energy system managed to overcome a harsh winter, with massive drought and very low temperatures which act as a very hard test for Romanian plants, but the local production exceeded 10,400 MW this winter. These achievements are due to the National Power Dispatcher led by Octavian Lohan, who proved his skills as specialist and efficient manager,” said Binig. The jury selected the winner of this category from an impressive list of managers that included Ioan Folescu, general manager of Electrica, and Dragos Zachia Slatea, general manager of Hidroelectrica. Lohan was appointed recently at the helm of the company to which he brings 40 years’ experience in the energy 38 The Diplomat May 2012

Energy Personality of the Year

system, 35 of which have been spent at Transelectrica. The “Energy Personality of the Year” award recognized the support for sustaining energy projects and private companies’ endeavors and awarded Ambassador Mihnea Constantinescu, who specialized in energy as a profession. The need to support energy projects and lobby key inf luencers is paramount in this segment, and so the list of nominees also acknowledged the support and business commitment of the board of Fondul Proprietatea and HE Mark Gitenstein, US Ambassador. “I have followed, within the Ministry of Foreign Affairs, the diplomacy of energy,” said Constantinescu at the ceremony. “Human capital should be included in the business plan of all companies with activities in energy sector, and the energy profession in Romania should take a more specialized path, of schooling energy professionals.” The prize was presented by Silvia Vlasceanu, who acknowledged the Ambassador’s value as the “man behind” many powerful businesspeople in Romania and also a specialist in nuclear power plants.

Operational Energy Awards

The “Operational Energy Awards” joined the two main energy segments, conventional and renewable. The awards in this section acknowledged good performance and innovative business endeavors within the energy sector. The prize for “Conven-

Business Services Suppliers

Energy Law firm of the Year

Winner: Wolf Theiss Pictured: Ciprian Glodeanu, partner at Wolf Theiss

tional Energy Company of the Year” went to Transelectrica, which in April started the successful and long-discussed sale offer for a 15 percent share package of the company on the BSE. Petrom and Dalkia were also nominees. Meanwhile, the “Conventional Energy Project of the Year” gong was claimed by Petrom, for the Brazi project. The project competed against Dalkia’s Proiect Brazi. The Petrom project is part of a EUR 750 million modernization program to increase the capacity of the refinery to 4.2mtpa, by 2014. Moving to the most dynamic energy segment, the “Renewable Energy Company of the Year” was Monsson Invest Group, which has a EUR 250 million investment to develop a 150 MW wind park in the northern part of Constanta county in the pipeline. Alexandru Binig from Deloitte, handing over the award, stated: “A family business started a few years ago became a leader on the wind energy projects distinguished though financial performance and supported by strategic investors. The group has developed the largest wind power projects portfolio and has been involved in the most visible deals on the local market. It also diversified the portfolio of operations, practically covering any service needed for this sector. The company also inked strategic partnerships with international prestigious consultants”. Monsson was selected from the competition, represented by other large companies that have established significant


energy awards gala

Outstanding Programs

Outstanding Programs

Winner: ANRE/Competition Council – the authorization of the E-RES scheme Pictured: Valentin Mircea, Competition Council VP (left) and Zoltan NagyBege, GM of the regulating energy efficiency department of ANRE (right)

Winner: Hermina Albert, first female chief dispatcher in the Romanian energy sector Pictured: Hermina Albert

Green Energy Initiative of the Year

energy projects in Romania, CEZ and Enel Green Power. The judges awarded the title of “Renewable Energy Project of the Year” to projects developed by CEZ in Cogealac and Fantanele. Cernavoda PowerEDP and Enel Green Power were also finalists. According to Vlasceanu, who presented the prize for the category, CEZ started out on the Romanian market even while the secondary legislation had not yet been put into force.

Business Services Suppliers

The “Business Services Suppliers” section awarded three large companies that distinguished themselves last year through outstanding contribution to the energy segment and also through successful track records of deals and projects in this sector. Wolf Theiss was pronounced “Energy Law firm of the Year” and Ciprian Glodeanu, partner and head of real estate and renewable energy practice at the firm, said: “2011 was a year defined by legislative uncertainty but a spectacular year in terms of projects and dynamic happenings in the energy segment.” The “most wanted” prize of this section was given by Alexandru Binig from Deloitte who, as jury member, underlined the difficult task of the jury in selecting from among the most professional law experts. “The vital role played by the law consultants in the energy segment made this award a favorite of the section. Due to the generous supporting scheme for renew-

Lifetime Achievement Award

able energy projects, the deals of this segment caught the attention of the business investors more than the back-office efforts run by the legal advisers and consultants. Wolf Theiss distinguished itself through its permanent involvement in spectacular transactions and its prestigious clients as well as its lawyers’ dynamic participation in debates,” said Binig. Wolf Theiss competed with other high-profile law firms known for their achievements on successful energy deals, Musat & Asociatii and Tuca & Asociatii. One of the most hotly contested awards of this section underlined the achievements of individuals who used innovative contracting methods and proved their excellence in providing consultancy for an agency/organization or private energy company. The “Energy Lawyer of the Year” was Cristina Filip, partner at law firm PeliFilip, for providing outstanding advice on energy projects. Filip has specialized in the energy field since 2000. According to Alexandru Binig, member of the jury, “The lawyer built a solid reputation and successful practice in energy segment, assisting high-end clients. She is also a key-note speaker, regularly invited to specialized conferences, due to her logical and consistent way of explaining the twists and turns of the legal nuances and regulatory laws in energy”. The nominees list for this award also acknowledged the merits of experts in

Outstanding Programs

The Diplomat Award for Excellence in Energy Winner: Vestas – for commitment to Romania’s wind energy sector Pictured: Catalina Dragomir, sales director/country manager Romania at Vestas Romania

legal consultancy, Ciprian Glodeanu from Wolf Theiss and Miruna Suciu of Musat & Asociatii. The “Technology Provider of the Year” award recognized a new technology or design that results in significant resource savings, new approaches in energy practice and innovative change in energy management. As the energy sector relies on equipment and knowledge, because technology is the key in achieving energy performance, the committee awarded the “Technology Provider of the Year” prize to General Electric. Schneider Electric and Vestas were nominees for their projects committed to bring innovation and improved performance on resource-saving energy projects.

Outstanding Programs

The “Outstanding Programs” section encompassed the most remarkable programs, initiatives and one-of-a-kind achievements in the energy field. The “Energy Efficiency Program of the Year” prize went to EnergoBit’s ESCO project, from a list of nominees that featured Pirelli for its energy efficiency project and CIGRE, for its electric charging station scheme program, e-Mobility. EnergoBit has been involved in developing energyefficiency programs, mainly targeting the public sector in Romania, and secured EUR 10 million of financing from the EBRD and EIB in 2011. The company was also the first to carry out a study on energy efficiency in Romania. The second category in this section, 39


energy awards gala

Business Services Suppliers

Energy Lawyer of the Year

Business Services Suppliers

Technology Provider of the Year

Winner: Cristina Filip – PeliFilip Pictured: Cristina Filip, partner at PeliFilip

Winner: General Electric Pictured: Carmen Neagu, GE Energy region executive SEE

“Green Energy Initiative of the Year” awarded ANRE/Competition Council, for the authorization of the E-RES scheme – Law 220/2008, competing with other two other associations, the RWEA and SUN-E. Valentin Mircea, vice-president of the Competition Council (CC) who received the award for the CC, stated “It is the first time when the CC has received such a recognition, as usually, the Competition Council is the one that fines the companies.” The section comprised a special prize, the “Lifetime Achievement Award” that was bestowed upon Hermina Albert, the first chief-dispatcher in the Romanian energy sector. With over 63 years of experience, Hermina Albert is currently main counselor of the Institute for Studies and Power Engineering (ISPE) as which she coordinates projects on energy power quality, the integration of energy equipment within the energy system and the evaluation of energy drips in the system. The section also nominated two other distinguished representatives from the energy field: Anca Popescu and Gheorghe Balan. The Diplomat – Bucharest celebrated Vestas, the world leader in developing wind parks, for its commitment to Romania’s wind energy sector, through “The Diplomat Award for Excellence in Energy”. The company is involved locally in significant projects, such as the Pantelimon wind park near Constanta, where the company installed 50 turbines of 50 MW, within the first EPC (Erection, Procurement, Construction) project in Romania. The company is both

worldwide and local number one player in wind energy, with a global market share of 12.7 percent and a local market share of 43 percent, through 16 projects. It has installed a total capacity of 488 MW delivered by 192 turbines.

40 The Diplomat May 2012

Special Diplomas

The Romanian Energy Awards 2012 Gala handed over three special diplomas which acknowledged the commitment and contribution of companies and associations to the evolution of Romanian energy projects and services, either though lobbying or through developing innovative projects in this segment. The “Recognizing the Lobbying Support of the Romanian Energy Sector” diploma was awarded to the professional association of Romanian Energy Center (CRE). Stelian Gal, president of the CRE, said that the newly created association, with offices in Bucharest and Brussels, plans to lobby the European Institutions in order to support local projects and companies in the energy sector and to represent them in their relations with European institutions. “We aim to promote the participation of Romanian state-owned and private energy companies and institutions in the European decision-making process and to support the establishing of strategic partnerships within the financing programs run by European institutions,” Gal said. The second diploma of this category, the “Innovative Financial Solutions for the Renewable Energy Sector” was awarded to UniCredit Leasing, as financing is a key element for the implementation of energy projects and thus

Outstanding Programs

Energy Efficiency Program of the Year Winner: EnergoBit – ESCO project Pictured: Tudor Socea, executive manager EnergoBit – ESCO

for the sustainable development of the sector. As this is challenging financial environment where access to funding is not easy, it is rewarding to see large projects financed by a few large financial institutions, but this should be a regular practice, say pundits. That is why this category of special recognitions sought to acknowledge and reward a first mover financial institution that targeted, with a professional, creative and resourceful approach, small to medium sized projects, delivering solid results and proving that confidence in the market combined with an efficient, hands-on approach pays off: UniCredit Leasing, 23 MW wind power projects financed and commissioned in 2011. Dan Constantinescu, managing director CSO at UniCredit Leasing, said that, starting last year, UniCredit began offering locally an important service, financing solutions customized for wind power investments. He also announced it was providing EUR 19 million of financing for two wind power projects with estimated total investments of EUR 31 million. Also, for “Recognizing Progress in Implementing Energy Efficiency Projects”, the Gala awarded e-Mobility, the project developed by the Association of Romanian National Committee of CIGRE, the International Council on Large Electric Systems. The professional association is led by Ciprian Diaconu, the current deputy general manager of the technical division of Transelectrica. He delivers more than 25 years of experience in the energy segment and coor-


energy awards gala

Special Diploma

Special Diploma

Special Diploma

Winner: Romanian Energy Center Pictured: Stelian Gal, president Romanian Energy Center

Winner: UniCredit Leasing Pictured: Dan Constantinescu, managing director CSO at UniCredit Leasing

Winner: e-Mobility by CIGRE Pictured: Ciprian Gheorghe Diaconu, president at CIGRE

dinates the maintenance, exploitation, planning and connection to the energy transport infrastructure. The e-Mobility project has been designed to install the

first charging station for electric vehicles in Romania and this “pilot-project” was meant to act as a start of the smart-grid scheme, widely promoted at European

level and also in Romania. The prize acknowledged the endeavor and the vision of the 100 percent Romanian project. ■

Recognizing the Lobbying Support of the Romanian Energy Sector

Innovative Financial Solutions for the Renewable Energy Sector

Recognizing Progress in Implementing Energy Efficiency Projects

41


energy awards gala

42 The Diplomat May 2012


energy awards gala

www.Irina Sarbu .ro Pe o scenă sufocată de oferte sclipitoare, agresive şi ademenitoare, apariţia unui artist lipsit de ostentaţie care nu aduce drept argumente decât vocea, ochii, zâmbetul şi sinceritatea trăirilor ar putea părea lipsită de orice şansă de supravieţuire. Şi totuși actriţa şi cântăreaţa Irina Sârbu şi-a asumat riscul de a fi…altfel, de a nu ceda modei şi de a rămâne credincioasă unui “aşa sunt eu” care, în final, a impus-o atenţiei publicului.

Profesionistă până la obsesie, Irina Sârbu iubeşte în egală măsură atât scena de teatru cât şi pe cea de concert. Aceasta din urmă s-a dovedit însă mai generoasă, în consecinţă Irina s-a concentrat pe un repertoriu vocal care a inclus, pe rând şi la fel de bine, muzica de jazz, melodii interbelice, samba, bossa nova, tango argentinian, muzica populară românească… Îi are alături pe cei mai buni dintre cei buni. A crescut

împreună cu ei, clădind pas cu pas, o carieră reală de aproape 10 ani ce se sprijină solid pe o educaţie muzicală clasică la care a adăugat experienţa abordării pe viu a melodiilor alese în principal după un criteriu considerat esenţial – să spună o poveste. O poveste pe care Irina o cântă cu drag, sensibil şi sincer şi în care se regăsesc parcă toţi cei care vin să o asculte. (Mai multe despre Irina Sârbu găsiți pe www.irinasarbu.ro).

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Moving up on the car ladder T

he 3 series from BMW is one of the best loved car models by tuning enthusiasts, with a whole culture developed around it. The German manufacturer therefore put a lot of effort into getting the best stuff they have into this mid-sized segment car. BMW has launched the sixth generation of this money-making model, and the carmaker certainly played a winning card. The car is simply good. The tested model was the best-selling 320 version fitted with a diesel engine and the brilliant automatic eight-speed gear box. This is a good-looking car, the test vehicle being the Sport line version with 18 inch wheels, black shiny grille and window trims, and in my opinion a real improvement in terms of design on the outgoing model.

The Diplomat May 2012

With 184 hp, the engine is strong enough for most situations, but it’s not what you would call cultivated. It suffers from the handicap of having only four cylinders and the sound it makes has the specific diesel rattle. The eight-speed automatic is a state-ofthe-art transmission with smooth changes in Comfort mode. For sports enthusiasts the Sport and Sport Plus driving modes are available, offering stiffer suspension setting and a quicker gear change at higher revs, reacting the instant you pull the steering wheelmounted paddles. The interior quality has improved again, in terms of design and functionality as well as the quality of the materials. The interior design theme matches the exterior, the Sport line version I test drove having red accents, matching the exterior color.

The 3 Series is a longer and larger car than before. This is beneficial for the inside of the car, where there is now 15mm more knee room and 8mm extra headroom for back seat passengers. Combined with larger side windows, this makes the car feel far more spacious and comfortable than its predecessor. The boot has grown by 20 liters to 480, making it the same size as a front-wheel drive Audi A4 luggage compartment. In terms of electronic gadgetry, the 3 Series has it all and more, from Active Steering and Dynamic Drive to surround-view cameras and head-up display to specially developed APPS for the iPhone that will offer a whole new internet experience in the auto world. Trim levels include Modern, Sport, Luxury and M Sport versions, each with individual characteristics to suit the personal taste of the motorist. The BMW 3 Series is a car for drivers. It handles better than anything else in its class, and the electronic settings will make it either the most conformable or one of the stiffest in the compact segment. â– 


Take your “lunch break“ at

World Class America House! For World Class Romania it has become an ongoing concern to keep building ever better clubs for each targeted audience, suited to the location. Recently, World Class Romania opened World Class Fitness Center America House, the seventh club in Bucharest and ninth in the country. Sports enthusiasts can enjoy an express workout in their break from the office, a fun fitness experience in the center of the town – Piata Victoriei (Victoriei Square), America House Building, 1st floor. America House is the largest business centre in Piata Victoriei with a total leasable area of 27,000 sqm and brings together in one point the most diverse and relevant mix of tenants: Deloitte, Mastercard, McDonald’s, Starbucks etc. The club is a health sanctuary, a new World Class location with a fresh look. “This club is a little bit different from the others because we have the latest equipment in the field of fitness. We are targeting people who work in the area, but also those who live nearby. We created two special programs for lunch and breakfast combined with 30 minutes of gym,” says Mikael Fredholm, CEO of World Class International. The opening of the new club came as a result of both corporate and private sector demand in the area, where the concept of a “lunch break” has advanced from ordinary lunch to “fitness and lunch break”. No wonder World Class Romania is the “third place where you should be after home and office”.

“We worked together with Jones Lang LaSalle in bringing World Class into our building, and now they are exclusive leasing agent for our office spaces. The choice of World Class was made due to their strong recognition within the gym industry and their high standards fitting with the image and profile of our building. Accommodating a gym centre in an office building has several advantages: a gym activity improves employees happiness and their working performances and also it is a place of interaction where people can network -develop business opportunities” says Isabelle Clerc Head of Asset Management for AEW Europe in Central Europe. World Class America House is a club of over 900 sqm that will provide its members with Gym & Cardio, Functional Training, Open Space cycling and aerobics classes, as well as wet and dry sauna. The entire club breathes through color and energy, with the fitness experience being a motivational and entertaining one. World Class Fitness Center America House brings the latest technologies and trends in the fitness industry worldwide, such as Functional Training.

Such moves are climbing stairs, pushing and carrying various weights, jumping, dragging and climbing. Unlike traditional strength training (machines, weights), which focuses on training isolated muscle groups, functional training involves the simultaneous use of multiple muscles and joints. Specific exercises for this type of training require simultaneous coordination, balance, motion control and muscle contractions identical to the motion it imitates and for what it was created. Only in America House can sports enthusiasts find an area of ​​Open Space cycling – a cycling workout in the middle of the gym, for members who are not familiar with this type of training. Members will therefore be motivated to try new things and to overcome their limitations. As in other clubs, World Class America House will provide the latest equipment: cardio and strength from Nautilus, Schwinn bikes and Stair Master machines. The total investment in the club was EUR 900,000, funded jointly by World Class and the owners of America House, of which EUR 200,000 was invested in fitness equipment. The club’s capacity is around 1,500 people.

The program involves performing exercises specifically designed to improve performance in daily activities, those movements performed in everyday life at home, work and even at the gym/fitness class. Sketch, gym Marriott, 110517


business leader

AFI hopes to make Hay while the sun shines Bucharest currently has six large shopping centers in the pipeline, totaling over 300,000 sqm, each of them in different stages. Playing a prominent part in this is Israeli group AFI Europe Romania. CEO David Hay tells The Diplomat – Bucharest about the company’s ongoing projects and future local agenda. By Magda Purice

“I

Who is David Hay? David Hay is the company’s regional director for CEE. Before joining AFI Europe in early 2006, he served as vice-president of Hail Holdings. Hay has over 20 years of experience in international real estate development and marketing. He graduated from Buckingham University with an LLM.

46 The Diplomat May 2012

t’s crazy outside,” says David Hay, CEO of AFI Europe Romania, referring to the pouring rain, as he enters his cozy office at AFI Palace Cotroceni. He is just returning from the construction site of the first out of five office buildings that will make up AFI Business Park Cotroceni. The workers are giving the final touches to the finishings of the first building, due for completion in August this year. The manager’s busy schedule is understandable because work on the second building of the compound is also due to start, as most of the tenants, who have already preleased 50 percent of the office space, have asked for additional spaces in the second block. For the first building, AFI Europe is working with general contractor Danya Cebus Rom, but the Israeli company has not yet made a decision regarding the construction company that will be selected for the second. The thunder and torrential rain seem in keeping with the unpredictability of the European economic forecast, with its direct impact on consumers’ wallets and therefore the expectations of retail developers – and the weather itself doesn’t help, convincing shoppers to stay at home. Hay tells The Diplomat – Bucharest that this year brought a nice surprise in AFI Cotroceni’s data on its traffic and retail operations, even though the CEO is prudent when it comes to the mall’s revenue expec-

tations for this year. “There will be growth, that is for sure,” Hay affirms, while studying the numbers on his computer.

Synergizing office and mall

With registered traffic of 51,000 visitors in the first quarter of this year, the 300 rented spaces of the mall posted a sales increase of 24 percent in the first two months of 2012. Says Hay, “It was strange to register such large traffic in a month with weather as harsh as February.” In fact, according to the CEO, since the launch of the mall, retailers’ sales have increased y-o-y, with approximately EUR 105 million of sales registered in 2010 and EUR 182 million posted last year. For the first two months of 2012, retailers in the mall reported estimated total sales of around EUR 15 million, compared with EUR 11 million in the same period of 2011. The synergy between the shopping center and the office building tenants will be reflected in sustained traffic for the mall, says Hay. On a land plot of 15,000 sqm, adjacent to the AFI Palace Cotroceni shopping mall in Bucharest, AFI Europe will develop an office complex consisting of four office buildings and a hotel. According to the plans put forward by the company, each building will comprise 11 floors and will connect directly to the shopping mall. In addition, each building will have 170 underground parking spaces. The first


business leader block will consist of 11,000 rentable sqm. For this year, the estimations look good, says the CEO, but he remains cautious over revenue expectations for the mall, “due to the local and regional lack of economic predictability”. In the last two years, the mall’s revenues from rental activities were estimated at around EUR 23.8 million.

Managing it all in-house

Hay outlines the main measures the company has taken so far to underpin its performance against falling consumption. “First, we improved the tenant mix, by terminating contracts with non-performing tenants, and we are focusing on the synergy between the mall and the office buildings.” The mall’s management (which is always selected inhouse) decided to replace up to 30 percent of the tenants, by cancelling contracts and reshaping the mall’s retail mix. Currently, the AFI Europe Romania team consists of 45 people. Besides the fashion retail names already announced as entrants to the mall, David Hay says that he is expecting further newcomers to fill the remaining retail space, which represents around 3 percent of the

182mln

sales posted by retailers in AFI Cotroceni in 2011 total GLA. Space in the office building to be completed by August this year has already been 50 percent pre-leased with demand coming mostly from IT companies, due to the location of the mall, near Politehnica, says Hay. The total investment in the new building is estimated at over EUR 20 million, with EUR 13.4 million coming from a loan taken out from UniCredit Bank. In addition, according to the CEO, some of the tenants have asked to expand their rented spaces, prompting the Israeli company to press ahead with work on the second office building. The first is already leased, at a price of EUR 15 per sqm. “The prices are calculated according to the area. I do not agree with studies claiming that office space prices have dropped to a similar level as industrial spaces. Of course, there are areas with problems, due

to infrastructure or location, but inner Bucharest areas do not meet this description,” Hay argues.

Future projects

“We do not play the wait-and-see game with our projects, because for this year we are already ahead with several buildings,” says the CEO. Priorities for 2012 include starting construction of the two shopping malls planned for Ploiesti and Bucuresti Noi in the capital. AFI Ploiesti, which will deliver 25,000 sqm, is already 70 percent preleased according to Hay, with a Cora hypermarket as anchor. The opening of the mall is scheduled for the end of 2013. Meanwhile, the 40,000-sqm shopping center in Bucurestii Noi will be anchored by a Real supermarket, with building of the first stage scheduled for May and the opening of that stage for Q1 of 2013. The project, called AFI Palace B. Noi, involves an investment of around EUR 60 million and will comprise the mall and four independent buildings that will form a retail park. In Arad, AFI Europe is in discussions with a DIY firm over a 30,000-sqm retail park, work on which is planned to start this year or in 2012. ■

47


events Home help: Habitat for Humanity Romania started the program Protect Your Home, Prepare Your Community, which aims to identify, analyze and eliminate risks facing communities in seven counties with the highest risk of natural disaster. The program will run from April to September. The main partner will be the General Inspectorate for Emergency Situations (GIES), and the advisory partner is the National Institute of Hydrology and Water Management. Banking on youth: Raiffeisen Bank and Junior Achievement Romania organized at Lucian Blaga High School in Constanta a competition for budding entrepreneurs, Creativity & Innovation Challenge, in which 84 students from 11 high schools and seven volunteer consultants from Raiffeisen Bank participated. With the help of the consultants, the students formed teams to work on the theme, which required them to find entrepreneurial solutions for how a bank for young people should work

Ambassadorial occasion: His Excellency, Mark Gitenstein, US Ambassador

in Romania, visited the local headquarters of Hewlett Packard (HP), one of the biggest American investors in Romania, and Global e-Business Operation Centre (GeBOC), the company’s shared service center and one of the largest local employers. He met with top leaders and managers of all HP Romania business units, in order to highlight the US company’s contribution to the development of economic relations between the two countries.

Pulling together: The Rompetrol Group launched

the fourth edition of the national social responsibility program Together for Everyone, aimed at developing local communities. Over 2009-2011, the group supported the implementation of 55 projects related to health or the environment, which had approximately 200,000 people as direct or indirect beneficiaries. The winners of the contest will be chosen by public online vote (with Facebook votes accounting for a 25 percent share) and a panel of representatives from environmental NGOs and specialists from Rompetrol (the other 75 percent).

Actor honored: The Romanian actor Stefan Iordache posthumously received a star on the Alley of Fame in Bucharest for his extraordinary career in the theater. His sister, Ileana Iordache, unveiled the tribute. The late actor was also honored with a gold star by Sabion Jewelry, the official jeweler of the event, and a Plaque of Bucharest City, in gratitude for his lifetime of achievement.

48 The Diplomat May 2012

Book value: The Institute of Management and Sustainable Development supported national campaign You Have an Extra Book, Pass It On, run by the Zurli troupe, who staged the show Tiribam Tiribum in all county municipalities. Entry will be based on books that will later be donated to kindergartens in villages that still do not have a library.


events

Brand driver: Forza Rossa, Lotus’s official representative in Romania, Serbia, Montenegro and Moldova, was present at SIAMB, where it exhibited its complete current range of cars. The last generation model of the Lotus Elise, the brand’s best selling sports car, was on view at the event. So too was the Lotus Exige S, a sporty vehicle with 220 horsepower. One of the stars was the Lotus Evora S, the car used by Romania’s Police Force, which was on show to visitors at the front door.

French connection: Foreign Business Minister Cristian Diaconescu

received a visit from Philippe Gustin, French ambassador to Romania. The meeting highlighted the strong political will of both countries to enhance bilateral cooperation in the broad and structured Strategic Partnership, with emphasis on the need to update its Road Map in the sectorial areas of common interest and concentration of the two sides on specific and achievable projects.

Under the hammer: Two nights of Artmark events held at Athenee Palace Hilton in April included six themed auctions, which attracted hundreds of participants and generated total sales of EUR 850,000. The Auction of Masterpieces of Important Collections brought the highest total for the session, over EUR 300,000, the Postmodernism and Contemporary auction saw the most lots sold, 98, and the Auction of Art Nouveau, Romanticism and Biedermeier contained the most expensive item sold, the Stefan Luchian painting, After the Bath, which went for EUR 85,000.

Fashionable face: Agatha Ruíz de la Prada exhibited part of her pret-aporter collection for autumn-winter 2012-2013 in the Romanian Designers Gallery in Cocor Store between 10 and 12 April. The Spanish designer was guest of honor on the Fashion Start podium, an annual event held by the top students from the National University of Arts Bucharest. On the occasion, Ruíz de la Prada revealed to the students some of the secrets of her rise to fame and outlined this year’s trends. 49


city life Carreras careers back to Bucharest stage

Pink Martini to shake and stir local audience Orchestra Pink Martini returns to Bucharest on May 26 to perform at the Palace Hall, in a tour to promote the album A Retrospective, organized by Events. With a sound that combines influences ranging from Cuban jazz and chamber music to Brazilian marches and film noir soundtracks, the 12 members of the orchestra, which originated in Portland, Oregon, have brought their multilingual repertoire to worldwide stages. Their vintage music, sophisticated

and cosmopolitan, has been described as a nocturnal walk through the major ports and cities of the world, with their stories and their fragrance. Following the release of A Retrospective, the May 26 concert will be a review of Pink Martini’s 16-year career and include the orchestra’s most popular songs: Una Notte a Napoli, Hang on Little Tomato, ¿Donde estas Yolanda?, Hey Eugene, Sympathique (Je ne veux pas travailler), Lilly, Que Sera Sera and Amado Mio.■

Paul Young set to lay his hat in Romania again Tenor Jose Carreras will play the Palace Hall in Bucharest on May 25, when fans can expect to enjoy La Donna e Mobile and Nessun Dorma among other hits. Carreras’s career includes over 60 major roles on the world music scene, and duets with Diana Ross, Klaus Meine, Charles Aznavour and Sarah Brightman. Tracks such as La Donna e Mobile, Nessun Dorma and Core Ngrato, interpreted by Carreras, make the public to want to stay in the world created by the unique voice of the master. Ticket prices range from RON 200 to RON 1,000. ■

Some 18 years after appearing at the festival Cerbul de Aur, singer Paul Young will perform again in Romania, at the Palace Hall in Bucharest. The show starts at 8 pm on May 20. Young’s debut album, No Parlez, came out in 1983, and featured the No.1 single Wherever I Lay My Hat, which topped the charts throughout the summer, and Come Back and Stay, which also enjoyed chart success. His second album, The Secret of Association and the popularity of the song Every Time You Go Away confirmed Young’s star status. Tickets, which are on sale in six price categories between RON 50 and RON 300, can be brought through www.eventim.ro

and associated locations: the Palace Hall box office, Vodafone, Orange, Domo, Germanos, Humanitas bookstores and cardAvantaj. The event is being organized by 24 Company and Creative Prom’Art. ■

Kiev Swan Lake to swim into town The ballet ensemble of the Municipal Theatre of Opera and Ballet in Kiev brings its performance of Swan Lake to the Palace Hall on May 17. The troupe was founded in 1980 by the famous choreographer from the former USSR, Vahtang Vronskii, under the name Classic Ballet in Kiev. Over 1989-2005 it was led by the great master of Ukrainian ballet Covtun Valery (1944-

50 The Diplomat May 2012

2005). Since 2005 the ballet master has been Victor Litvinov. The troupe works to popularize and preserve the most famous classical ballets and create new productions. Its repertoire has included more than 30 ballets and concert pieces, such as Swan Lake (the V. Kovtun master version), The Nutcracker, Sleeping Beauty (Tchaikovsky), Giselle (Adam), The Baiyadere, Don Quix-

ote (Minkus), Cinderella, Romeo and Juliet (Prokofiev), Bolero (Ravel), Spartacus (Haciaturean), Carmen (Bizet), Carnival of the Animals (Saint-Saens) and Maugli (Gradski). The troupe includes more than 60 dancers, graduates of ballet schools in Kiev, Moscow, Saint Petersburg and other cities. ■



The Diplomat-Bucharest