Romania to overhaul state defence firms to boost production-minister

BUCHAREST, Dec 14 (Reuters) - Romania aims to overhaul its state defence industry by investing in new technologies to boost output and exports in the region, its economy minister said on Wednesday, outlining plans for a sector whose turnover has jumped during the war in Ukraine.

State-owned ROMARM controls 15 companies making weapons and ammunition, from gunpowder and armoured transporters to infantry shells and guided missiles.

In the nine months since Russia invaded neighbouring Ukraine, ROMARM has seen its turnover rise six times from 2021's 131.6 million lei ($28.48 million), with exports accounting for most of it, minister Florin Spataru said.

But high energy costs and outdated technology mean the company is struggling to keep pace with private defence firms.

"What we see is that high energy prices and a low technological base have led to a lower than expected production level," Spataru told Reuters in an interview.

"We need investment in new technologies to fix this competitiveness problem. We aim to boost production to suit the needs of relevant ministries, but we are also looking at exports and covering regional demand."

Eastern Europe's arms industry has kicked up production this year as governments in the region lead efforts to aid Ukraine in its fight against Russia.

Unlike other countries in the region, Romania, which shares a 650 km (400 mile) border with Ukraine, has declined to comment about the military aid it was providing, but NATO Secretary General Jens Stoltenberg said in November it was "significant."

A NATO member since 2004, Romania will raise its defence spending to 2.5% of gross domestic product next year from 2% at present.

Spataru said state defence firms had ongoing acquisition procedures for new production lines and equipment worth 600 million lei ($129.83 million), with another 200 million lei allotted for next year.

In 2023, Electromecanica Ploiesti, a ROMARM subsidiary, will start a three-year investment programme to build SkyCeptor missile interceptors in partnership with U.S. Raytheon, with first missiles expected in 2026, Spataru said. ($1 = 4.6215 lei) (Reporting by Luiza Ilie, Editing by William Maclean)