Bucharest district heating company on verge of bankruptcy

Bucharest's General Council (CGMB) has on its agenda for the February 26 meeting three draft resolutions aimed at saving the centralized heating system in the capital city, as the Court might declare the bankruptcy of municipal heating provider RADET on February 27.

The municipality wants to split the existing municipal company Energetica into Termoenergetica and Energetica Servicii, with the aim of taking over separate activities carried by RADET, local Profit.ro reported. Termoenergetica will take over the heat generation and transport activities, while Energetica Servicii will carry upgrade work on the outdated transport system, partly financed with a EUR 170 million grant from the European Union.

Furthermore, the municipality is ready to purchase electricity and heat producer ELCEN at liquidation price, according to the municipality’s documents quoted by Profit.ro.

The major weak point of the plan is that it needs to be legalized by two-thirds of the members in the City Council, which is highly unlikely given the recent developments. The Court has just invalidated the municipal companies (including Energetica) promoted by mayor Gabriela Firea, who has also lost the support of the senior ruling party, the Social Democratic Party (PSD). The municipal companies were set up with a simple majority by the CGMB, while the law specifies two-third majority is needed for such decisions.

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