Hidroelectrica exits insolvency

Romania’s Hidroelectrica, the hydroelectricity generator, has exited insolvency after 371 days in which the trustee rid the company of the loss-making power supply contracts with the “wise guys” in the energy sector.

Remus Borza, the insolvency trustee, said that Hidroelectrica’s filing for insolvency on June 20 2012 proved to be a “wise choice”.

Daniel Chitoiu, finance minister, added the company reported losses of around EUR 1 billion in May 2012, because of the bilateral supply contracts.

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Hidroelectrica’s insolvency opened a path to other companies that want to restructure and to increase their economic efficiency”, said Borza, owner of Euro Insol, the insolvency firm. “State-controlled companies can’t operate effectively with oversized and overpaid personnel schemes characterized by too much compleancy and indifference.”

The state-owned company recorded a gross profit of RON 399 million (EUR 90 million) in the first five months of the year, from a loss of RON 190 million (EUR 42 million) in the same period of last year. Meanwhile, the turnover gained 22 percent to RON 1.2 billion (EUR 270 million) in the same period.

Hidroelectrica’s insolvency represented a shock for the banking sector, which has an exposure close to EUR 500 million in the company.

Since August 2012, the company paid EUR 1 million on a monthly basis for a loan taken out from RBS Romania. It paid USD 4 million on quarterly basis for a loan taken out from Citibank, since the third quarter of 2012. Hidroelectrica has also kicked off payments for loans granted by BRD and ING Bank.  

Constantin Nita, energy delegate-minister, said: “The company has to work under conditions of economic efficiency, and this will be set as an objective for the professional management we aim to implement in Hidroelectrica. On the medium term, we will start procedures for listing a minority stake (e.n. in the company).”   

During the insolvency period, the number of employees was slashed by 16.8 percent to 4,359.

The Ministry of Economy has an 80 percent stake in Hidroelectrica, while the Property Fund holds 19.5 percent of the shares.

Ovidiu Posirca