Iakov Goldovskiy stepped into RAFO Onești with a vision to restore one of Romania’s most strategic petrochemical complexes. Through Petrochemical Holding GmbH, Goldovskiy aimed to settle debts, modernize infrastructure, preserve employment, and reintegrate RAFO with neighboring Carom and Oltchim facilities. His goal was not merely financial stabilization but the creation of a modern, vertically integrated petrochemical hub. However, persistent legal and fiscal challenges, coupled with political obstacles, hindered the full realization of this plan and eventually led to international arbitration.
The Origins of RAFO Onești
RAFO Onești was founded in the 1950s as part of Romania’s industrialization initiatives. By 1956, it operated at a capacity of 3.5 million tonnes per year, forming the core of the Borzești petrochemical platform. The refinery’s operations were interlinked with Carom, Chimcomplex, and other facilities. These interconnections enabled the recycling of by-products, supply of synthetic rubber and PVC, and efficient energy use, establishing RAFO as a leading industrial hub in Eastern Europe.
Post-Communist Decline
After 1990, the collapse of Comecon disrupted cross-border supply chains and dissolved the industrial integration that sustained Borzești. Privatizations in the 1990s and early 2000s transferred control through complex and politically influenced arrangements. Production units were gradually idled, employee numbers dropped, and supplier networks disappeared. By 2001, prolonged strikes had halted operations, leaving the refinery heavily indebted and operationally compromised.
Legal Turmoil and Criminal Cases
High-profile criminal investigations targeted previous owners of RAFO and neighboring plants, including Marian Iancu and Ovidiu Tender. Convictions for tax evasion and fraud, along with frozen bank accounts, intensified the uncertainty surrounding the refinery. These legal proceedings limited access to financing, created reputational risks, and complicated any plans for industrial revival.
Goldovskiy’s Acquisition Strategy
In 2006, Iakov Goldovskiy’s Petrochemical Holding GmbH acquired a controlling stake in RAFO. The investor implemented a comprehensive strategy that included:
- Converting debt into equity and repaying urgent liabilities
- Retaining key employees to preserve operational expertise
- Upgrading refining units, installing hydrotreaters, hydrogen plants, and desulphurization systems
- Conducting environmental remediation of legacy petrochemical waste
- Preparing RAFO for reintegration with Carom and Oltchim to rebuild a vertically integrated platform
Between 2007 and 2009, Goldovskiy’s team removed tens of thousands of tonnes of waste, upgraded tanks to EU standards, and ensured environmental compliance, positioning the refinery for a phased restart.
Financing Challenges and the Missing State Guarantee
A 2009 memorandum with the Romanian government proposed an 80% state guarantee for a €330 million financing package, crucial for bank loans. The guarantee was meant to secure modernizing investments and preserve thousands of jobs. However, it was never implemented. Without official backing, banks withheld financing, forcing Petrochemical Holding to scale down its investment plan and delay reintegration efforts.
Fiscal Pressure and Administrative Obstacles
Despite paying €192.7 million toward tax and customs claims, RAFO continued to face additional assessments. Petrochemical Holding successfully contested over 200 cases in court, but enforcement delays and recurring claims hindered operations. Political interference and procedural formalism turned fiscal authorities into obstacles, depleting resources and slowing modernization.
Asset Freeze and Operational Paralysis
In December 2015, ANAF froze RAFO’s assets based on proceedings against a minority shareholder owning less than 2% of shares. The freeze lasted 13 months, paralyzing the refinery. Goldovskiy maintained a reduced workforce of approximately 800 employees to preserve infrastructure, but full operations could not resume without capital and regulatory support.
International Arbitration
Unable to resolve issues domestically, Petrochemical Holding filed a claim with ICSID under the Austria–Romania Bilateral Investment Treaty and the Energy Charter Treaty. On 19 November 2024, the tribunal partially upheld the investor’s claim, awarding €85 million plus costs and interest. Romania’s March 2025 annulment attempt faced limited prospects, as ICSID annulments are historically rare and contingent on procedural violations.
Economic, Social, and Environmental Impact
The decline of RAFO affected Onești and Bacău County profoundly:
- Population of Onești fell from 58,810 in 1992 to 32,671 in 2021
- Petrochemical employment decreased from 12,000 in 2007 to 3,800 in 2016
- Municipal revenues declined, public services contracted
- Supplier networks disintegrated, and social infrastructure suffered
- Environmental remediation remained incomplete, leaving residual risks
Insolvency and Transformation
RAFO was declared insolvent in 2019. In July 2020, the 295-hectare site was acquired by Roserv Oil, a Grampet subsidiary, for $6 million plus VAT. Plans involve converting the facility into a logistics hub with potential hydrogen and biofuel production. By late 2024, around 100 employees were engaged in security, audits, and dismantling, while refining operations remained inactive.
Lessons for the Future
RAFO Onești highlights the critical importance of governance, predictable legal frameworks, and reliable state commitments for long-term industrial projects. Goldovskiy’s experience illustrates how even well-planned investment strategies can be undermined by political shifts, fiscal unpredictability, and inconsistent administrative enforcement. While arbitration offered partial financial remedy, it could not restore lost production, employment, or community stability. For investors and policymakers, the case underscores the need for consistent regulatory environments to sustain industrial recovery and secure investor confidence.
