Former judicial administrator of Hidroelectrica during the company’s insolvency Remus Borza said that the listing of 15 % stake in state-owned electricity producer will bring almost 220 million euros to the Ministry of Finance, an amount that will allow the Government to fall in the 3 % budget deficit target assumed for 2017.
According to current methodology, funds generated from the initial public offering (IPO) remain in the company’s budget, but if the methodology is changed, the money will go to the state budget. Borza’s statement came after the Bucharest Court of Appeal approved the final closing of Hidroelectrica’s insolvency, five years since the procedure opening.
He said that the disastrous of Hidroelectrica at the moment of applying for opening the insolvency procedure, with cumulative losses of over 170 million euros in 2012, debts of 1.1 billion euros and a negative net flow of around 172 million euros, was due to a series of factors that were revealed by the judicial administrator in the report on the causes and circumstances of Hidroelectrica’s insolvency.
When the insolvency procedure was opened, Hidroelectrica had 11 ongoing bilateral contracts for electricity supply at prices considered damaging to the company. They couldn’t be terminated by the producer due to unfavorable terms. The company went through judicial reorganization from June 2012 until June 2016, but in two phases. The judicial administrator had denounced all the damaging contracts for Hidroelectrica by June 2013, when the insolvency procedure was first closed.
Hidroelectrica posted an estimated gross profit of 332.2 million euros in 2016, which is the company’s record and the highest profit announced so far by any company in Romania in 2016, said the company’s General Manager Ovidiu Agliceru in February. The company’s turnover increased by almost 65 million euros in 2016 compared to the previous year, while electricity production reached 17.2 TWh, compared to last year’s 15.9 TWh. In 2015, the company recorded a gross profit in the amount of 246 million euros. As a comparison, in 2012, the year in which Hidroelectrica entered insolvency for the first time, it has recorded a loss in the amount of 112.5 million euros.
Agliceru also announced that the company has planned investments in the amount of some 244 million euros in the next five years, mainly for upgrades and retrofitting, but for the construction of new hydropower plants as well. He added that the company may also be listed in 2017, but only if it solves the problem with unprofitable investments in the amount of 2 billion euros.
