Romania’s leading power generator, state-owned Hidroelectrica, has squashed a claim filed by a local subsidiary of Swiss firm Alpiq related to the axing of a supply contract.
Alpiq RomIndustries was one of several traders that bought electricity from Hidroelectrica at below market prices, causing the producer to accrue US$1.4 billion in losses over six years. This and severe droughts in Romania led the Bucharest-based company to file for insolvency in 2012. Soon after being taken over by a court-appointed manager, Hidroelectrica rescinded its supply contracts with traders and promptly began turning profits.
The traders then retaliated by filing lawsuits.
Last week, however, Romania’s Court of Appeal reported it had turned down Alpiq’s claim against Hidroelectrica and Euro Insol, the judicial manager during its insolvency. The Swiss distributor had been seeking over 205 million euros (US$221 million) from Hidroelectrica for abandoning the contract, which would have remained in force until the start of 2020. According to Euro Insol, however, Hidroelectrica lost almost half this amount, nearly 100 million euros (US$107 million), between 2006 and May 2012 from selling power to Alpiq at a price below its production costs.
“Hidroelectrica made extra revenues of 220 million (US$52.4 million) from selling the electricity available after denouncing this contract, between August 2012 and December 2015,” said Euro Insol’s manager, Remus Borza.
After fending off several other lawsuits from traders in the summer, things are looking up for Hidroelectric, which overtook OMV Petrom as Romania’s most valuable company this year. The company saw profits climb by 29% to 3 billion Romanian lei (US$710 million) in the first nine months of 2016. This was on the back of a 533 million euro (US$571 million) turnover during the period.
Hidroelectrica’s output rose to 13.28 million MWh, up from 12.49 million MWh between January and September of 2015.
The company, which is 80% owned by the Romanian Energy Ministry, is looking to launch an initial public offering (IPO) of its shares, most likely next year. Local investment fund Fondul Propretatea holds the remaining 20% of the energy company’s stock.