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March 6, 2021

Fondul Proprietatea recommends: Gov’t should refrain from getting involved in the management of the companies where it is shareholder . How does the Minister of Economy respond?

Fondul Proprietatea (hereinafter “The Fund”) reacts to recent declaration of the Minister of Economy, Energy, and Business Environment, according to which Hidroelectrica could supply energy directly to the population for a much lower price, as being an incautious violation of GEO 109/ 2011 on corporate governance in SOEs. The law prohibits direct involvement of the state as a shareholder in the management of the company, a press release informs.

Concerned on the violation of corporate governance law in Hidroelectrica, Johan Meyer (photo), CEO of Franklin Templeton Investments and Portfolio Manager of Fondul Proprietatea stated: “It is unacceptable to see the same practices that, years ago, have led Hidorelectrica into insolvency. The Government members should only observe and assure the legal frame in which business operations securely take place, without interfering with management decisions. Romania has a history with politicians influencing day to day business decisions of state-owned companies with serious negative consequences for their financial results. We trust this situation will not become a precedent and Government will understand and apply corporate governance principles which secure SOEs a transparent frame for business so that they remain efficient and profitable for the benefit of economy and all citizens.”

In the past, lack of corporate governance code implementation led to negative outcomes for many SOEs. Such an example is the case of Hidroelectrica when the company entered into detrimental long-term energy contracts or when it was forced to buy electricity from other producers which were more expensive. These poor decisions along with many others led to Hidroelectrica’s insolvency in 2012 and it took five years for the company to overcome the negative consequences. Other more recent well-known examples are Romgaz when it was decided for the company to offer discounts to certain clients or the case of CE Oltenia which continued to supply lignite to clients that were not able or willing to observe their commercial obligations.

“Hidroelectrica is a highly valuable company and a unique asset not only in Romania, but also in in Europe, with significant profitability margins and a sustainable business model that is focused on clean energy production”.

Hence, the Fund recommends the Romanian Government as majority shareholder to focus on creating the grounds for the most strategic business objective for Hidroelectrica: a successful listing in the first semester of the next year, as it is planned. Hidroelectrica’s listing would be a hugely important landmark for the local capital market and the entire economy, especially in the current context.


Also, to ensure GEO 109/2011 on corporate governance is implemented in Hidroelectrica and other SOEs, the Fund further recommends the measures such as:


  • Protect the management of state -owned companies from political influence and encourage professionalism and high ethical business standards This will decrease corruption-related risks, as integrity and reputation are key criteria in the selection and evaluation processes for management bodies;
  • Establish and observe clear processes and responsibilities regarding decision making, which will create predictability and increase transparency in the company. On the long term, it will strengthen the responsibility of the management towards employees, shareholders and the company;
  • Set performance criteria for management bodies, thus ensuring the overall performance of the company;


As a conclusion, Fondul Proprietatea urges the Ministry of Economy, Energy, and Business Environment, as majority shareholder of Hidroelectrica, to take into account all these considerations and respect its role as a majority shareholder and stay involved without micromanagement of SOEs.


Minister of Energy: Fondul Proprietatea wants to prevent Hidroelectrica from delivering energy to population at low prices


Fondul Proprietatea wants to prevent Hidroelectrica from delivering energy to domestic customers, at low prices, and wants to keep the company captive to big suppliers, the Minister of Economy, Energy and Business Environment Virgil Popescu wrote on Facebook on Thursday.

“Romanians’ interest comes first! I asked Hidroelectrica to communicate the volume of investments made in recent years, when they had high prices for electricity, given that they used this excuse. I would therefore like to address a question to the director of Hidroelectrica, to the representatives of Fondul Proprietatea and to the representatives of the Romanian state in the Supervisory Board of Hidroelectrica: where is that volume of investments? Should I take it that it’s a good thing that they didn’t make investments to make big profits and pay dividends? Totally wrong, this type of policy is failed in the long run, and the interest of the Romanian state and of the Romanians is to have a strong company in the long run!” wrote Popescu.

The minister further claims that Hidroelectrica has a wrong sales policy and that, in fact, it should deliver energy directly to the population and reminded that there is the possibility of a cumulative vote that allows changing the entire management of a company at the request of a shareholder.

“And also, as long as I am the Minister of Economy, Energy and Business Environment, I will exercise the quality of shareholder for the benefit of Romanians and I will not allow any shareholder to censor my words!” the minister added.

He further accused Fondul Proprietatea of paying for articles in the press to make its message known. Attached to the minister’s post there is a print screen with an article published by Hotnews, titled “Pizza is ready, it looks good, but not yet in the oven. Hidroelectrica and the stock market flotation,” where the publication specifies that it is an article supported by Fondul Proprietatea.

He concludes his post by writing, in capital letters, that he supports the flotation of Hidroelectrica, with a share of 10% or 15%, this being one of the objectives he assumed as Minister of Economy, Energy and Business Environment.

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