Romania’s hydropower company Hidroelectrica ready to suspend IPO plans

“I am not sure whether we will go further with the IPO,” CEO of Romania’s state-controlled hydropower company Hidroelectrica, Bogdan Badea, announced at an energy conference, visibly irritated by the recent orders issued by the energy market regulator ANRE.

He blamed ANRE for “keeping in force the emergency ordinance (OUG) 114/2018,” a situation that will allegedly result in “donating the energy to the new smart guys” - a hint to the contracts detrimental to company’s financials that resulted in the company’s insolvency, Ziarul Financiar reported. If the Government wants dividends from the company, it should allow the company to sell its energy at the highest possible price and make a profit, Badea more or less openly explained.

By its order, ANRE compelled Hidroelectrica (and Nuclearelectrica) to sell up to 65% of its electricity at production cost plus a 5% profit margin, for a limited period of time. The two producers should contribute to a basket of electricity for residential users, under a one-year re-liberalisation process aimed to reverse the effects of the OUG 114/2018.

In separate comments, Hidroelectrica’s CEO blamed OUG 114/2018 for the deadlock faced by the company in its investment projects. After the minimum wage in the sector of construction was set at a higher level under OUG 114, the constructors have increased their prices at a level that makes the investments inefficient, Badea explained. Hidroelectrica has inherited most of its production units from the energy monopoly developed during the communist regime and boasts net profit margins of 40%-50%.

(Photo source: Facebook/Hidroelectrica)