History has lost the respect its deserves. The oldest refinery in Romania is being sold on a classified ads website for EUR 10 million. Its financial problems started 10 years ago and today only ruins are left of what used to be a source of national pride. Built in 1895, the Steaua Romana refinery made it through the American bombardments during World War II but got smashed by the cruel rules of capitalism and the state’s incompetence. What CITR Group, the private owner and the seller is hiding from potential buyers is the fact that the asking price is 10 times below the minimum mandatory environmental investments that have to be made at Steaua Romana.

In July 2010 in Campina, a town in Romania less than 100 km away from Bucharest, the 334 employees of Steaua Romana heard the siren announcing the day shift change. It was literally the end of a century-long business. All 334 employees got their layoff notification that day. During its best years, the refinery used to employ 1.200 people.

Its downfall started in 2008 when, because of a cash flow crisis caused by the Fiscal Agency’s (ANAF) failure pay a RON 40 million VAT reimbursement, the crude oil supply was cut off. Years later, after a painful lawsuit, the refinery defeated ANAF in court and got its RON 40 million, but it was already too late. The production had already been shut down for good since 2009.

History for sale, piece by piece

The seller is asking for EUR 10.3 million for the 49.6-hectare refinery. But the old oil processing factory from Campina has other issues that makes it almost impossible to exploit.

In April this year, the National Environmental Protection Agency issued a document including a list of 5 requirements that need to be solved in three years.

According to refinery officials, the most important thing is the historical pollution.

“After over 100 years of operation, due to the technologies of the times, a historical pollution was localized in the three warehouses of the company’s patrimony: Turnatorie Acid Tar lake, with a surface area of ​​3.3 hectares and a volume of 70,000 cubic meters, the Bucea Acid Tar lake with an area of ​​5.7 hectares and a volume of 80.000 cubic meters, the oil-field lake with an area of ​​0.5 hectares and an estimated volume of 27,000 cubic meters. In the same location there is the Pestelui lake, used up to now as the natural biological water treatment step, which has an area of ​​5 hectares and an estimated volume of 46,000 cubic meters”, refinery officials stated on the company website.

At least EUR 100 million

According to information from 2011, the required investment is around EUR 100 million. Back then, the former president of the Prahova County Council and MP Florin Anghel launched the idea that maybe the local authorities could take over at least a part of the tar lakes and rehabilitate them with EU funds.

“Through the privatization contract, the owners also took over the environmental issues, including those of tar lakes. Nothing has been done. From my point of view, I think we will leave these problems to our descendants. I am thinking maybe the local administration could take over  some acid tar lakes and rehabilitate them with European funds”, Florin Anghel stated in 2011.

More recently, in April last year, a decision was made during a General Meeting of the Shareholders of Steaua Romana, that the company’s reorganization plan include the participation of the refinery with the historical polluted assets at the formation of an entity with a distinct activity for rehabilitation and redistribution to the civil circuit of these actives.

The deal with the authorities didn’t happen. Not yet, thinks Gheorghe Sandu, the former leader of Rafinorul Union of the refinery.

“There were a lot of problems with the refinery. Some of them we managed to solve, but some were too complicated. Even the reimbursed VAT from Fiscal Agency was resolved. Now, they are selling assets of the refinery. If people are interested, they can either buy parts or the whole thing. It is hard to tell whether the value is correct. It probably is. Anyway, the scrap metal has its value, but in has its costs as well”, Sandu states.

The former union leader thinks that the environmental rehabilitation is a problem that will remain attached to the administrator and the most important shareholder, Omnimpex. That is why the refinery is being sold piece by piece – nobody wants a EUR 100 million weight on their neck.

“I think that the best solution is the involvement of the authorities. They are the only ones who can get EU funds for rehabilitation. In fact, in the past one of the acid tar lakes wasn’t included in the refinery portfolio, and as a result it stayed at the City Hall and it has been cleaned up. This is the way to go for all of them”, concluded Sandu.

The post BR Exclusive! Steaua Romana’s mess hidden under the rug: Whoever buys the 100-year old refinery will discover a EUR 100 million environment bomb appeared first on Business Review.