The Competition Council announced on Monday that is has issued a RON 166.8 M (around EUR 37 M) fine against Hidroelectrica and ten of its contract partners for reaching anticompetitive agreements on the electricity market.
“Such a decision proves that these contracts are deemed illegal, so they cannot represent legal grounds. The slick guys asked for damages of over EUR 600 M when we cancelled our contracts with them, in 2012, and the Competition Council’s decision basically cancels any chances they would ever see any money from Hidroelectrica,” Remus Borza, representative of Euro Insol, Hidroelectrica’s trustee in bankruptcy, stated.
According to him, of the 75 legal challenges initially filed against Hidroelectrica, nine are still on the roll.
Borza pointed out that this decision eases the faster settlement of litigations with the “slick guys,” so that Hidroelectrica could become solvent by June 20, 2016, the deadline for her restructuring. Failure to meet the deadline could result in bankruptcy. He argued that these long-term contracts were the main cause behind Hidroelectria’s insolvency, since they caused a damage of over EUR 1 bln from 2003 to 2012, representing the difference between market prices and the very small prices stipulated in the contracts. Borza pointed out that in some contracts the price was even lower than production costs.
As part of its investigation, the Competition Council analyzed the long-term contracts that Hidroelectica concluded with some electricity suppliers and eligible consumers from the wholesale electricity market. The Council ascertained that these contracts blocked other electricity suppliers, producers and eligible consumers from the market, thus slowing down the market development process during the market liberalization period.
The contracts, concluded preferentially, without an objective selection process and in the absence of transparent electricity sale procedures, entailed the sale of a quantity of electricity higher than what Hidroelectrica could have produced (95-175 per cent of the quantity of electricity it produced). Consequently, a quantity representing 42-60 per cent of the electricity sold by producers on the competitive market was rendered unavailable on a yearly basis for a period of 10-14 years.