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Nine main reasons leading to Hidroelectrica insolvency
The bilateral contracts with the so-called 'smart-guys,' but also the deficient management, the collective agreement and the non-performing investments were among the nine main reasons leading to the entrance in the insolvency procedure of Hidroelectrica company, according to the report of legal administrator Euro Insolv, presented in a press conference, at the end of last week.
Other factors mentioned in the report are the prolonged draught, the energy sales on the regulated market, the costs with the processed water, the energy procurements from thirds and the Hidroserv branches.
'Many expected these 10 contracts with the so-called 'smart-guys' to represent an exclusive reason for the insolvency. They are not the only responsible, there are others,' Euro Insolv representative Remus Borza said.
He added that the report represented a 'black book' of Hidroelectrica, a company which, however, remained a reference company of the Romanian economy and which would have a spectacular evolution in the future.
Hidroelectrica losses, 1.1 billion euros over past six years
The losses incurred by Hidroelectrica following the disastrous contracts signed with the 'smart guys' amounted to 1.1 billion euros over 2006-2012 said Remus Borza, representative of Euro Insol, Hidroelectrica legal administrator, during a press conference held on Friday.
'There are ten bilateral contracts signed in 2002, 2003 and 2004 over ten years and most of them were extended in 2009 till 2018 and even January-February 2019. If these contracts were beneficial to Hidroelectrica at the start, and we must admit this aspect as well, as the price of these contracts in 2003 and 2004 was much higher than that on the regulated market which ranged around 5 to 7 dollars per MW at the time, we cannot say the same for 2005 and especially 2006. If we take into account only the period between 2006 and 2012, period for which we have price examples and the two major markets, the competitive market of the bilateral contracts and the day-ahead market, then we can say for sure that these contracts incurred losses in amount of 1.1 billion euros to Hidroelectrica only for the past six years,' said Borza.
According to him, denouncing and renegotiating the ten bilateral contracts led to extra revenues of 94 million lei to the company over the first seven months of 2012.
'Terminating six contracts out of ten, we made available 7.5 million MW or 7.5 TW which we capitalized on the free market, either on the market of bilateral contracts or the day-ahead market, for an average price of 150 RON per MW. I will not take for comparison the price of today which is obviously a contextual price, atypical and far from healthy for the Romanian economy and industry and which is not sustainable for the smattering of economy we got left, I mean 300 lei per MW on the day-ahead market and 400 RON per MW on the balancing market. ... Terminating these six bilateral contracts was a just, necessary and fair measure. The renegotiation of the other four also led to significantly higher prices and brought Hidroelectrica extra revenues only for the first seven months of 2012, in amount of 94 million lei,' explained Hidroelectrica legal administrator.
He presents on Friday the report on the causes and the context which led to insolvency at Hidroelectrica. The report has 479 pages and was registered at Bucharest Tribunal on August 16, 2012.
Hidroelectrica asked for insolvency on June 15, 2012.