Hidroelectrica, largest energy producer in Romania ends restructuring: merged subsidiaries, office space to be sold, EUR 6 mln salary cost cuts

Romania's largest energy producer, the state – owned Hidrolectrica, which is currently insolvent but due to soon exit this process, has been restructured. Out of its 13 subsidiaries, only 13 are left, and the restructuring process will axe 300 jobs and save some EUR 6 million in salary costs, according to the company. The restructuring strategy proposed by judiciary administrator EuroInsol was approved by the shareholders at the end of May. Several subsidiaries were turned into plants and integrated in other subsidiaries, which is expected to bring a higher competitiveness and guarantee increased profitability even if the price of a megawatt on the local market decreased, as energy production went up but consumption went down, according to the company. Hidroelectrica saw its number of subsidiaries going up from 9 in 1989 to 13, and, according to the current administrator, this is purely based on political reasons, not economical or technical. The energy producer will also give up on certain office areas, which were much larger compared to the personnel need, and sell these spaces, hoping to generate some EUR 20 million. Hidroelectrica will end up having 4,400 employees, compared to 4,550 in May this year. When it started the insolvency process in June last year, the company had 5,200 employees, some of them were axed, others retired. The energy producer will exit the insolvency procedure on July 1 this year, according to the Minister Delegate for Energy, Constantin Niţă. “We will promote professional management as it has been done for all the state - owned companies, then we will list 10 percent on the stock exchange. We will set a list of priorities because there are a lot of investments that were started. We have to go back to what we’ve always said, namely to efficiency,” said the Romanian Minister, quoted by local news agency Mediafax. Constantin Niţă also added that even if Hidroelectrica exits the insolvency procedures, the company will remain with debts, which will be paid in installments. Hidroelectrica entered the insolvency process on June 20, 2012, in order to be re-organized. EuroINSOL was appointed as the judicial administrator. In the first quarter of 2013, the company reported a profit of EUR 32.8 million and a turnover of around EUR 150 million. Hidroelectrica announced earlier in May that it will sell, through public auction, 88 of its small hydro-power plants. editor@romania-insider.com