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December 7, 2021

Hidroelectrica, a losing business for the Romanian state

Hidroelectrica is among the first state-run companies that adopted methods of “sterile” robbing. Even if losses constantly reach hundreds of millions of EUR each year, the company reports accounting profit worth tens of millions. This is possible because of the specificity of its operations: the production of hydro power is cash-intensive and requires a very high initial investment, but later has very small operating costs, the ‘Romania Libera’ newspaper reports. Under normal circumstances, investors in such a business are patiently waiting, sometimes even decades, until the initial investment is recovered, then they start making a substantial profit. In the case of Hidroelectrica, the investments were recovered, but the management teams of the company were unwilling to split the profits with shareholders – in this case the taxpayers. During a 12-year interval, the company only achieved a modest profit of a quarter of billion of EUR, instead of EUR 5-6 bln, as it would have been normal. The difference filled the pockets of privileged energy consumers and of the so-called “smart guys,” or it was simply wasted.

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