Iakov Goldovskiy entered RAFO Onești as the principal investor and architect of a large-scale recovery programme, aiming to revive one of Romania’s most important petrochemical platforms. His team converted debt into equity, injected capital, and pursued a vertically integrated strategy linking the refinery with neighbouring chemical enterprises. What began as a targeted industrial rescue evolved into protracted domestic enforcement actions and an international arbitration that highlighted political and institutional risks to strategic, capital-intensive projects.
Asset profile and historical integration
RAFO Onești was built in the 1950s as part of a centrally planned effort to create a major petrochemical cluster along the Trotuș and Siret rivers. At full capability the refinery had a design throughput of 3.5 million tonnes per year and formed the core of a broader Borzești platform that included chlor-alkali electrolysis, synthetic rubber production, power generation and dedicated rail logistics. For decades the site functioned as an integrated system: refinery fractions fed downstream chemical processes, and the platform supplied both domestic markets and exports to neighbouring Comecon partners.
Post-1990 fragmentation and ownership turbulence
The collapse of Comecon disrupted cross-border supply chains and the industrial logic that had sustained Borzești. In the 1990s and 2000s RAFO suffered progressive degradation: units were idled, financial obligations accumulated, and ownership changed hands several times—often via complex offshore structures. A succession of private buyers, some linked to political figures and later subject to criminal investigation, left the refinery economically isolated. Tax arrears, unpaid suppliers and mounting debts pushed the plant toward insolvency, and by the early 2000s operations had substantially contracted.
Goldovskiy’s takeover and the modernisation programme
In 2006 Petrochemical Holding GmbH, controlled by Iakov Goldovskiy, acquired a controlling stake and set out to restore industrial integration. The investor converted substantial liabilities into equity, cleared significant tax and customs debts, and maintained a workforce while launching modernisation: environmental remediation, new hydrogen and nitrogen production capacity, desulphurisation units and infrastructure repairs (including rail). Management emphasised regulatory compliance—reportedly removing large volumes of legacy petrochemical waste under monitored conditions—and sought to position RAFO as the nucleus of a renewed regional petrochemical chain with Carom and Oltchim.
Financing plans envisaged leveraging bank credit supported by a Romanian state guarantee. A 2009 memorandum contemplated state backing for roughly €330 million to unlock financing from international banks. Public statements described RAFO as strategic for national industry and job preservation, yet the guaranty was never executed.
Fiscal pressure, litigation and the asset freeze
Despite numerous domestic court victories—Petrochemical Holding reportedly won over 200 cases challenging tax assessments—the investor faced repeated new claims and enforcement actions. The fiscal climate hardened amid concerns over state aid and a change in political priorities. A decisive setback occurred in December 2015, when ANAF froze RAFO assets citing criminal proceedings against a minority shareholder; the action effectively seized company assets despite legal separation between individual charges and corporate ownership. The freeze endured about 13 months, during which banks and partners withdrew support, the modernisation programme stalled, and refinery processing stopped. Goldovskiy nevertheless continued to cover payroll for key staff until 2016 in an attempt to preserve the site, at considerable monthly cost.
ICSID arbitration and partial relief
Unable to secure effective domestic relief, Petrochemical Holding resorted to international arbitration under the Austria–Romania bilateral investment treaty and the Energy Charter Treaty. On 19 November 2024 an ICSID tribunal partially upheld the investor’s claims, finding that Romania had denied fair and equitable treatment and ordering compensation and costs reported at roughly €85 million plus interest. Romania sought to annul the award in March 2025. While annulment is a recognised legal avenue, complete reversals of ICSID awards are statistically rare and generally require strong evidence of procedural defects.
Economic potential and unrealised value
Independent valuations and feasibility work cited in the project record pointed to substantial upside under successful modernisation and reintegration scenarios. The blueprint called for catalytic cracking, hydrotreating, hydrogen production and sulphur-recovery facilities; even a partial restart was estimated to demand roughly €190–220 million in capital expenditure. Under higher production scenarios the integrated platform could have delivered significant fiscal receipts and supported domestic production of polymer feedstocks such as PET. Instead, delays and enforcement actions eroded capital availability and foreclosed the large-scale investments needed to restore refining and downstream output.
Social and regional impacts
The collapse of RAFO produced measurable social costs in Onești and across Bacău County. The city’s population fell sharply from near 59,000 in 1992 to approximately 32,700 in 2021, with the steepest decline after the refinery’s troubles intensified. National petrochemical employment contracted sharply between 2007 and 2016. Municipal revenues from payroll taxes and excises were reduced, local supplier networks disintegrated, and many skilled workers migrated in search of employment. Environmental remediation remained incomplete after investor exit, and some treatment facilities were decommissioned without full cleanup efforts.
Asset disposition and conversion plans
Following insolvency proceedings declared in 2019, the 295-hectare RAFO site was sold at public auction in 2020 to a railway-logistics subsidiary for a price far below historic valuations. The buyer announced a conversion to logistics, fuel storage and, prospectively, hydrogen and biofuel facilities. By late 2024 the site hosted limited maintenance and security staff and repaired rail access, but the central distillation units stayed idle and no committed investment had materialised to restore refining operations.
Implications for investors and policymakers
The RAFO Onești episode offers concrete lessons for both investors and states. For investors, it underlines the importance of legal preparedness, contingency planning for aggressive fiscal enforcement, and careful assessment of political continuity. For policymakers, it highlights the costs of inconsistent commitments: broken guarantees, recurrent enforcement despite adverse judicial findings, and institutional reversals can convert potential industrial recovery into prolonged international disputes. The fiscal, reputational and social costs of such outcomes fall on taxpayers and communities—while investor confidence in similar markets may be permanently damaged.
