Romania: Government considering merging Hidroelectrica and EC Oltenia

, SEE Energy News

The Romanian Government is considering the merge of lignite-powered plants of Energy Complex (EC) Oltenia and the hard coal plants of EC Hunedoara with hydro-based electricity producer Hidroelectrica, in case the European Commission does not approve the state aid envisaged for EC Oltenia. Upon the merger, the resulted entity would supply some 50 % of the country’s electricity.

This was suggested by the State Secretary Doru Visan, who heads the Ministry of Energy in the absence of a Minister, who resigned after his party left the ruling coalition. He confirmed that the consolidating of electricity generation sector is a long-term goal, but it won’t be pursued if the EC approves the recovery plan for EC Oltenia.

However, the merger of Hidroelectrica with coalfired power plants that meet the environmental standards will most likely be opposed by investment fund Fondul Proprietatea, a minority shareholder in both Hidroelectrica and EC Oltenia. Under these circumstances, the state will have to compensate FP for its stakes held in Hidroelectrica and the coal and power companies, prior to the merger.

Regarding the recovery plan for EC Oltenia, the Ministry envisages three stages: an emergency aid for the payment of last year’s CO2 emission certificates, a longer-term state aid scheme, which will be paid by consumers, and a mechanism to help the company operate independently by building coal stocks during the summer season, possibly financed by the state.

Last month, CEO of EC Oltenia Sorin Boza said that the company has drafted the documents for a state aid scheme aimed at helping the company pay for the CO2 certificates and intends to send them to the European Commission. The company has to pay around 340 million euros this year on the account of the CO2 certificates calculated based on the coal consumed by its units, compared to 304 million euros paid last year. This year, the cost of CO2 certificates represents 51 % of the company’s turnover. The money paid each year would have been enough to build a gas-fired unit involving less CO2 emission therefore smaller expenditures related to the CO2 certificates. In fact, Boza mentioned that EC Oltenia considers renewable energy alternatives as well as gas-fired units, in order to diminish the emissions and the related expenditures.

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