Hidroelectrica lost EUR 1.3 billion since 2006 due to “smart guys”

Newsroom 20/07/2012 | 13:57

State-owned hydropower generator Hidroelectrica has lost RON 4.5 billion (EUR 1.3 billion) since 2006 to May 2012 due to underpriced bilateral supply contracts with the “smart guys” in the electricity business and is now trying to renegotiate or terminate these deals, according to the Supreme Council of National Defense (CSAT).

Hidroelectrica entered insolvency one month ago, but the power generator was facing insolvency from the end of 2010, said a note from the Ministry of Economy that was presented during the CSAT meeting held on Tuesday.

The Economy ministry Daniel Chitoiu said on Friday that the company has carried out negotiations with all the beneficiaries of bilateral contracts, but only two accepted the negotiation terms. The rest refused a hike in electricity prices and a trimming of electricity quantities.

“Three contracts have been terminated, one with Europec, and two with EFT. It is expected that a deal will not be struck with the traders, so these contracts will be terminated as well,” said Chitoiu quoted by Agerpres newswire.

The ultimate goal of this measure is to allow Hidroelectrica to sell electricity at market prices, through OPCOM. This is one of the objectives agreed by Romania under a EUR 5 billion stand-by agreement with the IMF, World Bank and European Commission.

Romania also has to appoint private managers and independent boards in key state-owned companies (SOEs) in order to increase their economic efficiency and to make them more transparent.

Chitoiu said the selection process of private managers for 48 SOEs will be finalized this year.

Hidroelectrica should have listed on the Bucharest Stock Exchange this October. Market specialists say this could be done in the second half of next year, when the company is expected to exit insolvency.

Ovidiu Posirca

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