Review of the sectors transport, infrastructure and communications in romania

conclusions

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  Romania’s economy in the 1980’s was affected by economic policies under which resources were misdirected and maintenance was delayed and deferred. The economy was rigidly planned and centralised, with emphasis on maximising exports and minimising imports. Romania managed to settle its external debt, but the burden that fell on the nation was tremendous.
  

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  Currently, Romania is working to overcome the difficulties faced ever since the events of December 1989. The economy is moving towards a market economy. Some of the key elements of the reform process have been development of the private economic sector.
  

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  Foreign investment has been considered a key economic factor since 1990 when the Romanian economy started the change towards a market economy. Romania offers many comparative advantages such as:
  

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  a large domestic market (almost 23 million consumers), the second largest in Central Europe;
  

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  A good location at the cross-roads of traditional commercial routes, allowing access to over 200 million consumers in a 1000 kilometre radius; Romania is also located at the junction of three prospective European transportation corridors.
  

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  well located to offer competitive prices for goods transiting between the Caspian Sea, the Black Sea and the Western Europe;
  
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  available facilities offered by the Free Zones;
  
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  extensive maritime and river navigation facilities.
  

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  Networks of mobile telecommunications in GSM and NMT/LEMS systems;
  

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  a skilled, relatively low cost labour force, well trained particularly in technology and engineering;
  

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  A wide range of natural resources, including fertile agricultural land, oil and gas and a significant tourist potential;
  

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  a liberal investment legislation, based on free, non-discriminatory access to markets and economic sectors;
  

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  Subject to the legislation in force, investment is allowed in almost all economic sectors, including natural resources, agriculture, manufacturing, telecommunications, construction, scientific research, trade, tourism, banking and insurance.
  
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  The volume of foreign direct investment recorded by Romania between December 1990- April 2000, was about 4.6 billion USD.
  

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  The Netherlands is among the top five investors in Romania. Main investors are e.g. active in: the banking sector, production and wholesale of convenience goods (soaps, detergents), ship building, electrical and electronic equipment, and automotive sector.
  

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  Starting with the last months of 1998, Romania has been speeding up the restructuring process and, by consequence, several large-scale privatisation operations were completed. Among them: ROMTELECOM, DACIA and BANCPOST.
  

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  Even if the present level of foreign investment is below the Romanian economy potential, mainly due to slower start of the privatisation process, foreign investment has already an important impact in several industrial branches. (Car industry, Ship and machine building, Oil and chemical sector, telecommunication and electronics and infrastructure and construction).
  

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  In 2000, one of the major targets was the accomplishment of PSAL provisions negotiated by the Romanian Government with the World Bank. The Private Structural Adjustment Loan (PSAL) is a loan agreement worth USD 300 million which includes major objectives regarding the privatisation, workout and liquidation of state owned companies, bank’s privatisation, state bonds and titles market, business environment improvement and the attenuation of the related social implications. Under the PSAL agreement, 63 Romanian State owned companies are to be privatised by privatisation agents.
  

1. Transport, Infrastructure and communication

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  The Romanian road network is in a deteriorated stage due to the low quality of the road construction works and the enormous backlog in repair and maintenance.
  

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  rehabilitation of the main international routes, in a three phase programme with external and state budget financing;
  
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  modernisation of the existing national roads; and
  
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  Motorway construction programme with priority on east-west connections (Bucharest-Pitesti and Bucharest-Constanta) with financial support from the EBRD and the Japan Bank for International Co-operation (JBIC).
  

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  The development of the transport infrastructure will continue to feature among the principal aims of the Romanian Government. In this respect, the Government has drawn up a bill of law on modernising the country’s overland, air and maritime transports.
  

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  It is projected that 13 highways are to be built covering 3,000 Km, as well as 1,200 Km of new railway lines, new bridges over the Danube and the Prut river and 4 new airports at Brasov, Galati, Alba – Iulia and Bistrita. The existing railways will be upgraded to suit high – speed trains. The territory of Romania will be crossed by several pan-European corridors: the Danube connected to the Rhine-Maine –Danube Canal, a lot of main railway lines, the highway and the Bucharest-Chisinau-Kiev road.
  
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  The report specifies the development of transport means and facilities planned for the period 2001-2004 and emphasising quality of services, traffic safety and transport security.
  

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  The state railways’ company, SNCFR, has been split into five separate companies. New train operators are also to be given access to the network.
  

while the second stage will focus on modernisation of the railway lines in order to increase speed.

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  The river Danube, which flows 1,075 kilometres through Romania, is an important
  

The main problem of inland waterway transport over the Danube is the fact that the river still has to be cleaned nearby Novi Sad by removing remaining parts of the destroyed bridges. This operation is planned to be completed by the end of 2001. Further problems concern the need for dredging on several places. The Romanian dredging industry is still not privatised.

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  About 60% of the Romania’s imports and exports pass through the port of Constanta, the most important maritime port of the country. A new port, Constanta-Sud, has been recently built at Agigea, on the Black Sea.
  

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  Romania plans to sell a maximum stake of 66 per cent of the Tarom airline, with the state keeping a 34 per cent controlling share. Tarom, whose privatisation has been delayed for years, is on a list of 59 big state-owned firms to be sold off under a World Bank US$ 300 million Private Sector Adjustment Loan (PSAL) programme.
  

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  The strategy of telecommunication development was drawn up as a priority field of the country’s macroeconomic infrastructure. A long term Development Program was devised, with strategic objectives: the use of top world technology; expansion and improvement of the quality of services.
  

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  Mobile telephony evolves very fast. In only three years it reached an average penetration rate of 10%. Around 2.5 million Romanians own a GSM mobile phone. In comparison, Romtelecom, the fixed telephony network and active for decades, has an average penetration rate of 17%.
  

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  The quality of the fixed telecommunication infrastructure is below standards and the future for the fixed telecommunications network is very uncertain because of the increasing competition from the mobile operators. Companies will be reluctant to invest huge amounts of money in updating the fixed telecommunication infrastructure.
  

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  The penetration rate of Internet is still low: less than 1%. The number of billed accounts are around 180,000 of which 60% corporate users and 40% home users. The real number of Internet users is estimated at 800,000. In this field there still is a large potential for growth.
  

1. Investments priorities in the sectors transport, infrastructure and telecommunication

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  There is an extensive list of investment priorities and covers all transport modes. A distinction has been made between investment priorities in the sectors transport, infrastructure and water by the public sector (listed in the report) and those as indicated by the Romanian Chamber of Commerce and Industry (CCIR). The latter are not priorities for investment, but should be considered as business opportunities.
  

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  The extensive list of projects as identified by the Chamber of Commerce and Industry of Romania and Bucharest can be found on the CD-ROM, which accompanies this report. Most of the projects are in the water sector (supply of drinking water and wastewater). Few projects have been offered in the field of transport and communication.
  

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  The Chamber of Commerce and Industry of Romania and Bucharest is promoting a new product called the Centre of Investment Partnership in Romania – PART-INVEST.
  

1. Donors and Financing

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  The Accession Partnership continues to provide the single framework through which the priority areas for further work are identified regarding progress to be made by Romania towards membership of the European Union, the financial means available to implement these priorities and the conditions which will apply to that assistance. The 1999 Accession Partnership with Romania was adopted by the Council in December 1999 and remained the framework on which the programming for the year 2001 has been based.
  

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  Indicative allocations for Romania in 2001 are as follows (in million EURO):
  

ISPA: 243.9 (mid-point of range)

SAPARD: 153.6

Total: 696.2

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  The Phare programme has been providing support to the countries of Central Europe since 1989, helping them through a period of massive economic restructuring and political change.
  

The institution building priorities identified for Phare support under the 2001 programme for Romania (which will represent about 30 % of the total Phare budget) indicate for transport: The adoption of EC norms as regards driving/resting hours for road transport and the implementation of maritime safety acquis as regards State Flag Control.

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  ISPA: For Romania, Community aid in the framework of ISPA will be between 20% and 26% of the total allocation. The average mid-range allocation is € 243.9 million a year (at 1999 prices), equivalent to € 1,674 million for the 2000‑2006 period. Guidance is that half of the support - € 121.9 million a year - will be used to finance transport infrastructure projects, the other half for environment projects.
  

Strategic Objectives in the field of transport are stemming from serious weaknesses in its network of roads, railways and waterways.

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  Romania’s indicative allocation for SAPARD for 2001 is € 153.6 million (at 2000 prices) to support agricultural restructuring and rural development.
  

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  The EBRD’s pipeline of projects is concentrating on:
  

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  large-scale privatisation and restructuring with strategic investors;
  
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  private sector investment in either local private or joint-venture projects;
  
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  SME financing, banking and non-banking financial sector;
  

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  National and municipal infrastructure privatisation and public-private
  

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  Since 1991 the World Bank has built up a portfolio of 29 IBRD-financed projects, of which 22 are currently active, and two Global Environmental Facility (GEF) projects, of which one is currently active. Since 1991, World Bank commitments to Romania total over US$3 billion. The lending programme of the World Bank aims to help Romania address its challenges by: strengthening the social safety net; increasing investments in health, education, and rural development; strengthening the business environment; supporting structural reforms in the financial, utilities, and enterprise sectors; enhancing effectiveness of Government services; and building capacity for environmental protection. Priority is given to advice and financing for EU accession-related programmes.
  

4. Business opportunities for Dutch enterprises

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  Onboard computers for trucks and buses including digital tachograph devise and navigation system.
  
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  Harmonisation of rules and regulations in public transport in Romania with EC rules and regulations (PSO pre-accession).
  
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  Supply and effective use of rescue equipment for fire brigade/traffic police;
  
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  Improvement of roads and bridges construction technologies, materials and equipment.
  
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  Improvement conditions for inland shipping over the Danube.
  
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  Setting up a rail shuttle service between Constanta and Rotterdam.
  
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  Disinfecting station; plants to divide petroleum products from rainwater; pyrolytic incinerator for Bucharest Otopeni International Airport.
  
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  Noise monitoring systems and solid water incinerator for Bucharest Baneasa International Airport.
  
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  Bus production plant in Timisoara.
  
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  Manufacturing of steel components for the ship building industry, including components for dredging vessels.
  
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  Construction of rescue boats for the port of Constanta and small fishing boats (shrimps vessels) of 50 tonnes.
  
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  Establishing an off shore company with tugboats in Constanta.
  
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  Public works projects at the municipality of Pitesti.
  
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  Co-operation with S.C. International Transport S.A., Pitesti.
  
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  Enhancing quality levels in manufacturing of components for the automotive industry at Trian S.A. in Pitesti and S.C. Giramex SRL in Mioveni – Arges.
  
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  Co-operation in special transport (extra dimensional or heavy transport).
  
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  Mobile repair and maintenance service unit.
  
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  Co-operation in the design and manufacturing of trailers.
  

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  Development of integrated postal services.
  

1. 
   Investor's Business Guide Romania; Romanian Development Agency; 2000.
   
2. 
   2000 Country Investment Profile Romania; EBRD.
   
3. 
   Pre-Accession Status Romania - November 2000; Transport policy and Telecommunications and Information Technologies.
   
4. 
   List of Proposed Project Investments as indicated by the Chamber of Commerce and Industry in Romania.
   
5. 
   List of Romanian Consulting Companies.
   
6. 
   List of Dutch/Romanian Companies active in Romania.