EFT Switzerland to sue Hidroelectrica over termination of electricity export contracts

Newsroom 29/09/2014 | 13:11

Electricity trader EFT Switzerland said it will sue Hidroelectrica, the state-owned hydroelectricity producer, over the cancellation of export contracts in 2012, asking EUR 80 million in compensation for long term contracts signed in 2003-2004.

The trader, which is part of UK-group EFT, has sued the Romanian energy company at the Court of Arbitrage in Bern. The trader bought energy worth EUR 32.3 million from Hidroelectrica in 2011, according to Mediafax newswire.

“The annulment of contracts by Hidroelectrica has generated significant financial losses for EFT Switzerland, given that based on them, the company had firm obligations on external markets, which were guaranteed through bank guarantee letters, and were honored by EFT Switzerland,” said the company in a statement.

EFT added that the the amounts and prices of electricity it acquired were established on an annual basis by Hidroelectrica, based on the regulated prices proposed by energy regulator ANRE for the state-owned company.

“The prices regulated by ANRE cover the production costs and ensure a profit margin. The prices of export contracts closed by EFT Switzerland were almost double compared to the regulated prices of Hidroelectrica. The exported energy was fully acquired, through down payments, before the start of export delivery,” explained EFT.

Hidroelectrica terminated the contract with EFT when in first went into administration. The trader sued Euro Insol, the insolvency administration firm, shortly after this decision.

According to a report of Euro Insol, the company has lost EUR 1.1 billion between 2006-2012 because of cheap electricity supply contracts singed with traders, which are also called the “wise guys” of the energy sector.

Hidroelectrica, meanwhile, went back into administration, this February, after exiting this procedure for the first time in June 2013.

The EFT group reported a turnover of EUR 800 million in 2013, trading energy in center and southeastern Europe.

Ovidiu Posirca

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