Fixed price of the contracts with Hidroelectrica, eliminated

The Economy Minister Daniel Chiţoiu states that negotiations on the contracts theme are still running, but the interest of the Economy Ministry is to transfer all the traded energy through direct contracts on the competitive market, where the prices are much smaller.

The minister had promised at his investiture that in 10 days the respective contracts will be modified.

The problem of contracts concluded by the so-called “smart guys” with Hidroelectrica is old for almost 10 years and it was continued by all governments that have succeeded to power.

The company sells almost 70 percent from the energy that produces through these bilateral agreements at prices much below the market average, reason for the European Committee to start many investigations in order to assess if Hidroelectrica violated the community regulations according the state aid, after the community executive has shown that there are clues according to which the state had influenced the company to conclude buying and selling contracts of energy at preferential prices.

Currently, the contracts concluded by Hidroelectrica with ten operators are investigated both by the European Commission in terms of a possible state aid and the Competition Council for possible anticompetitive practices by blocking the access to the electricity market.

The first conclusions concerning the renegotiation of contracts concluded by Hidroelectrica were presented today by the Minister of Economy , Daniel Chiţoiu.

"We managed to eliminate the fixed price of these contracts and have established the competitive market price, of course adjusted by a correction mechanism," said Daniel Chiţoiu.

The executives, politically appointed, will be dismissed

The chief of the International Monetary Fund mission, Jeffrey Franks, said last week that the companies which have preferential contracts with Hidroelectrica could pay fines and reimburse any amount they have received if the European Commission’s investigation determines that such contracts were state aid.

He said that some of these companies have agreed to renegotiate the contracts, but there are some who refuse to sign the new terms.

Bilateral energy sales contracts were concluded by Hidroelectrica in 2001 and 2003 and expire in 2014, 2015 or 2018.

The company sells about 70 percent of the energy that produces through these bilateral agreements at prices below the market average.

Daniel Chiţoiu also said that the law on taxation of companies’ profits , in the sectors of energy, oil and gas , will be approved by the end of this year and is likely to come into force in 2013.

"We have assumed that by the end of the year to form a ministerial group to develop a package of fiscal measures both on taxation of revenue windfalls resulting from liberalization of gas prices, taxes which will go into a special fund which will address to vulnerable consumers, "said Daniel Chiţoiu.

The directors of state companies who were politically appointed will be replaced with new managers based on performance - said the Minister of Economy , Daniel Chiţoiu, in a press conference today.

Translated by Alexandra-Diana Mircea
MTTLC, Bucharest University