Fondul Proprietatea Sheds Light On Hidroelectrica’s Secret Contracts

07.26.2011 By Roxana Petrescu

Hidroelectrica’s energy contracts for 2010 show the company has walked away from over EUR90 million because it preferred to sell electricity directly, instead of using the energy exchange.

After a decade-long secrecy about Hidroelectrica's direct contracts, Fondul Proprietatea (FP.RO), who owns minority stakes in almost all "energy jewels" on the local market, agreed to disclose the financial statements of the top 20 companies in its portfolio, including Hidroelectrica, Romgaz and Nuclearelectrica.

Informing the public on the companies' results has never been a priority for the Economy Ministry, majority shareholder in all these strategic companies, which are not compelled to publish quarterly reports like bourse-listed companies.

One of the most striking aspects of the newly disclosed data on Hidroelectrica's activity regards its sales contracts for 2010. The company, Romania's largest power producer and one of the government's most valuable assets, lost over EUR90 million because it chose to sell its energy via direct contracts instead of trading it on the energy exchange OPCOM.

"The contracts have always been made available to the relevant authorities. If Fondul Proprietatea decided to publish these confidential data, then it must take legal responsibility for this decision," says Constantin Trihenea, general manager of Hidroelectrica.

Trihenea said the EUR90 million Hidroelectrica supposedly lost is a hypothetical figure.

"It would have been ideal to get the maximum price, but these contracts were negotiated in 2001-2002 at low prices and now we are trying to narrow this gap. To a large degree, we have succeeded."

The bulk of these contracts were signed in the early 2000s, at prices considered very advantageous for companies such as Energy Holding, established by Bogdan Buzaianu, the godson of former Industry Minister Dan Ioan Popescu. The prices were, however, disadvantageous for the company. Despite controversies surrounding this topic, half of Hidroelectrica's direct contracts last year were extended until 2018.

Data from the 2010 Hidroelectrica reports published by Fondul Proprietatea show that over 66% of all energy delivered by the company was sold through direct contracts to major consumers and suppliers of electricity.

In all, Hidroelectrica supplied 14.9 TWh worth a total of RON1.8 billion (EUR433.7 million).

(English version by Daniela Stoican)