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EC starts in-depth investigations on preferential tariffs for electricity granted by Hidroelectrica
The European Commission announced on Wednesday that they are going to initiate five separate in-depth investigations to assess whether Hidroelectrica company, the Romanian state-owned power producer, has purchased or sold electrical power at preferential prices to several power traders, industrial clients and power producers.
The purpose of these alleged actions undertaken by Hidroelectrica might have been to grant favours to the beneficiaries by cutting the operating costs, by boosting their revenues or a combination of both, breaching the EU norms regarding the government aids.
Initiating an in-depth investigation by the European Commission allows some interested third parties to come up with observations on those measures, without anticipating the final conclusions of the investigations.
'The indirect subsidies that contribute to cutting the normal operation expenses for plants can harm competition in a manner no less severe as the direct subsidies. We must make sure the preferential tariffs granted by Hidroelectrica favoured the clients who benefited from them in comparison with their competitors on the local market,' said EC Vice-President and European Commissioner for Competition Joaquin Almunia.
Virtually, the community executive wants to check whether Hidroelectrica indirectly granted subsidies to clients selling them power at prices below the market or purchasing from them for prices much above the market, as there are some clues that the Romanian government might have got involved in the decisions to sign these contracts under the aforementioned circumstances.
On December 2009 and December 2010, following the public tender offers on OPCOM, the wholesale electricity market of Romania, Hidroelectrica signed two bilateral contracts with the steel-producer ArcelorMittal, each contract for the supply of 1.75 TWh of power a year, at a price that seems to be below the market.
ALRO Slatina has a long-term contract running with Hidroelectrica for the supply of three TWh of power a year, at a price very close to the production price of Hidroelectrica, a price that is to be annually modified according to the aluminium quotation on the London Metal Exchange.
The contracts between Hidroelectrica and eight power traders, some of which date back in 2004, as well as the contracts between Hidroelectrica and two industrial producers were signed for prices which seem to be below the market price.
On the other hand, in two contracts signed with two energy producers, Hidroelectrica bought power for prices which seem to be higher than the prices on the market. Thus, by supplying funds that can go to the state for good, all these contracts seem to be to the benefit of the other parties, whereas the competitors had to pay the market prices.
Part of the contracts were signed before Romania joined the EU. Nevertheless, based on the special orders in the Annex V of Romania's Treaty of Accession, the European Commission has the competence to investigate the price for electricity which were set in these contracts,Agerpres correspondent in Brussels informs.