The Government approved the allocation of 12.5 million lei from the state budget, during the today's meeting, June 8, for increasing the share capital of the Glass Factory in Chisinau, even if in the last two years the enterprise has been proposed for privatization, and the buildings and land were mortgaged at Victoriabank.
Taking into account that no investor showed interest in the plant, the Government decided to help the factory, allocating 12.5 million lei, which would be the equivalent of the taxes that the company has to pay. The project on money allocation, proposed by the Ministry of Economy, was approved without any discussion.
In the Informative Note of the project, the Ministry of Economy, which is the founder of the factory, says it has decided to "help" the company after it ceased operations in August of 2016 due to an accident at the glass melting furnace.
The authors also argue that the company is facing a strong competitive environment and needs investment to resume production and repair the machine. In the Informative Note, the Government also mentions that the main competitor of the Chisinau Glass Factory is the "Glass Container Company" State Enterprise. About 31% of the capital of this company would have been awarded in the privatization round earlier this year, for about 29 million lei.
Another argument of the Executive is that, if the company is not helped with the rebuilding of the furnace, employees will lose their jobs. Moreover, the company has already signed a contract with a company that will carry out reconstruction work on the furnace, and it provides for penalties in case of non-fulfillment.
The government promises that in return for the 12.5 million lei aid, in the state budget, only in 2017, revenues will reach 18 million lei from the activity of the Factory.
The government has no plans, but "hopes"
According to the project's authors (Ministry of Economy), the increase in the share capital of enterprises in difficult situations is not an exception and is a practice widely used by private-equity enterprises. In this context, the authors say they have opted for this solution "in the hope" that the enterprise fully realizes the Investment Plan.
The last investment plan (business) of the Glass Factory was approved in 2016 and is scheduled for 2016-2020. According to him, the company is to make investments of 3.5 million euros in loans, 1 million euros from the founder (Ministry of Economy) and 533 thousand euros, 10 thousand dollars and over 9 million lei on their own.
The money is provided for the purchase and repair of the equipment, as well as for import duties.
3.5 million euros credit from Victoriabank
The Glass Factory has contracted a $ 3.5 million loan from Victoriabank. The money would be needed to repair the same oven, damaged in August of 2016. The cost of the repair would be 2.95 million euros and the taxes for their import of 0.59 mln euros. These costs would be covered by state money.
The company undertaking the repair would have already been contracted, but the Factory page does not mention what the company is about. The information does not appear on the Public Procurement Agency's website either.
In the description of the Factory Infrastructure on the Public Property Agency website, it is indicated that the building and land of the factory would be mortgaged at Victoriabank until December 2018.
The information also appears in another document.
Put on the market twice, with a difference of 2 million lei
In 2015 and 2016, the state enterprise Glassworks in Chisinau was privatized. In 2015, the buildings located on Transnistria Street in Chisinau were proposed to potential investors for 245 million lei. A year later, the price was reduced by 2 mln, the enterprise being proposed for privatization by 243 mln lei.