Romania last year embarked on an ambitious plan to sell stakes in energy and transport companies but has since seemed to get cold feet and delayed most of the deals, losing billions of euros in potential revenue.
The transactions, sanctioned by the EU and IMF, were expected to bring in some 3.5 billion euros ($4.45 billion), but have been bogged down by a lack of resolve, cronyism, and a newly emerging suspicion of foreign investment, observers said.
On Tuesday IMF auditors arrived in Romania to review progress on reforms and prospects for the economy and the stalled privatisations are sure carry weight in a final report to be published after a general election on December 9.
The cash-strapped Balkan country had pledged to float 10 to 15 percent stakes in nuclear energy company Nuclearelectrica, hydro-electric power company Hidroelectrica, electricity transporter Transelectrica, gas transporter Transgaz and gas producer Romgaz.
Majority privatisations of the national air carrier Tarom, railway freight company CFR Marfa and chemical giant Oltchim were also part of a deal concluded in March 2011 with the International Monetary Fund and the European Union in return for a 5.0 billion euro credit line that followed an even bigger 2009 rescue package.
But apart from the sale of a 15-percent stake in Transelectrica for $50 million in March the sell-off plans have come to nothing.
A bid to sell Oltchim failed in September after populist party leader and TV mogul Dan Diaconescu could not prove he had the 45 million euros promised for a 55-percent stake.
Analysts say the privatisation office (OPSPI) should have barred individuals without experience in the field from bidding for Oltchim, the second-biggest producer of chemicals and plastics in eastern Europe.
A public offering for a Transgaz stake due in June has been delayed repeatedly. The deal is now threatened by the government's wish to impose a high price analysts say will drive investors away.
With the any remaining sell-offs postponed until 2013, Victor Ponta's centre-left government has little to show when it meets the joint mission of the IMF and the EU.
"I know that the government only took over in May and that elections are due in December but there has not been great progress compared to what we would like to see or to what was agreed with the IMF," Grzegorz Konieczny, Romania CEO of Franklin Templeton Investment Management, told AFP.
Franklin Templeton manages a multi-billion-dollar fund, Proprietatea, set up by the state in 2005 to compensate Romanian owners whose properties were seized by the Communist regime.
While he said that some of the delays were due to "relatively objective" causes, Konieczny believed officials in the economy ministry and the OPSPI "are afraid to take decisions" while managers of state-owned enterprises "do not understand the benefits of listing a company".
"People say 'now it's not a good time to sell', but I say this is a much better time than it will be in six months," he said.
"The longer a company stays under state control the lower its value will be."
Economic analyst Cristian Grosu said Romania missed the opportunity to sell before the onset of the crisis, when prices were high, and is now pressured to take steps that could prove detrimental to its interests.
"What Romania needs is determination, courage and a plan. But it is obvious that it has no plan, it only acts under constraint," he told AFP.
With general elections due on December 9, the anti-privatisation rhetoric that was raging in the 1990s, when Romania emerged from the communist regime, is gaining ground again, analysts stress.
After dozens of botched sales, with major companies closed down shortly after they were bought by questionable private investors, many Romanians assimilate privatisation with fraud.
"Most plans to sell a company in a transparent way, on the stock exchange, have been abandoned under the propagandistic pretext that 'foreigners are going to steal our country'," Mihai Chisu, a broker for IFB Finwest, told Ziarul Financiar daily.
"Politicians often say 'we have to control this company because it's a question of national security', but this does not make sense, the government has tools to control the company through regulations," Konieczny said.
Sources close to the negotiations with international lenders said the IMF was not convinced by the government's excuses for not selling state-owned assets: "The IMF wants to see more progress."
The US ambassador in Bucharest Mark Gitenstein, a staunch supporter of privatisation, in a recent speech said that "Romania could once again be the energy hub of Europe ...if it could attract the $10 billion necessary to modernise energy infrastructure and build new power plants."
"But these assets are under the control of state-owned enterprises and (often) managed by individuals chosen more for their political connections than for their professional competence," he said.
Konieczny too said cronyism was a big problem: "We started here two years ago, during the first two or three months every day we had another shock seeing what was happening inside those companies, we did not expect things to be that bad."
As some analysts call into question Romania's expertise in privatisation, Konieczny said: "It's actually a question of will, not of expertise."