Energy supply to population results in EUR 30 M loss for Hidroelectrica

As of next year, the population will receive only hydro- and nuclear energy, but fees stay the same, says the energy regulator.

ANRE (the National Agency for Energy Regulation)’s decision to supply the population with hydro- and nuclear energy as of next year will result in a EUR 30 million loss for Hidroelectrica because the company will be selling below its production cost, Remus Borza, former Chairman of the company’s Supervisory Council, stated Friday. “Hidroelectrica has a production cost of RON 160 per MWh, but ANRE will only accept RON 114 in fees,” Borza explained. He pointed out Hidroelectrica will lose another EUR 40 million due to fee per pole, while the processed water tax will bring EUR 80 million in annual costs.
Borza stated further that Hidroelectrica concluded “an historical agreement” with unions on Friday, according to which the company will earn EUR 23 million as a result of cutbacks in the average wage per employee and other bonuses. At present, the net average wage is RON 4,600, lower than when the company went into insolvency in June last year, namely RON 5,200, Remus Borza added.
When the company went into insolvency, the company had 5,239 employees, whereas the current number is 4,200. According to Borza, the number will continue to drop in the coming year to ensure Hidroelectrica reaches target costs. Employees who will be laid off will receive no more than 24 compensatory wages. Hidroelectrica is expected to report a profit of over RON 900 million this year, which is equal to overall earnings in the last eleven years. 80.05 per cent of the company’s share capital is owned by the state and 19.95 per cent is owned by Proprietatea Fund.
A press release issued by ANRE shows the population will receive energy based on a regulated system as of next year and the energy will be produced by Nuclearelectrica and Hidroelectrica alone, thus excluding thermal power plants and renewable power plants. “Energy demand based on regulated contracts will be purchased from Hidroelectrica and Nuclearelectrica, so as to ensure reasonable electricity prices for households.” “Hidroelectrica and Nuclearelectrica qualified for this position based on specific methodology. If a thermal or renewable power producer had had better prices than these two companies, they would have qualified too,” Emil Calota, Vice-President of ANRE, stated Friday. According to him, the regulated market will account for 11 TWh of energy, 8 TWh of which will be supplied by Hidroelectrica and Nuclearelectrica.
Moreover, industrial consumers will purchase energy on a free market as of next year, as mentioned in the deregulation schedule agreed upon by the Government and the International Monetary Fund. Regulated energy prices will no longer exist in 2017, according to the deregulation schedule.
Hidroelectrica selects intermediary for sale of 15 per cent of shares through public offer
Hidroelectrica will select a new intermediary for the stock exchange listing, after the Government raised the investor shares package from 10 to 15 per cent. Interested companies can submit offers by January 20, 2014, when the offer is open. The tender book price has been reduced from EUR 8,000 plus VAT to EUR 2,000 VAT non-included, an announcement made by Hidroelectrica notes. The bid bond has also dropped from EUR 25,000 to EUR 5,000.
In spring last year, Hidroelectrica chose the BRD – Citigroup – Societe Generale – Intercapital Corporation for the stock exchange listing, but the contract was never signed.
The company’s listing on the capital market was agreed upon between the Government and IMF, European Commission, and World Bank, but it has been postponed several times.

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