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Ministry of Energy puts plans worth billions on paper

The Ministry of Energy estimates to collect this year RON 1.073bn from the implementation of privatization strategies at the companies Rompetrol Rafinare and Electrocentrale Bucharest, according to the note substantiating the revenue and expenditure budget of the privatization activity carried out by the Ministry of Energy. Also, RON 1.5bn would reach ministry’s budget in the form of dividends from companies carrying out their activity under its subordination. The ministry’s list of priorities includes the listing of companies Hidroelectrica and Oltenia Energy Complex, as well as the recruitment of private managers for 10 companies subordinated to it.

 

Hidroelectrica’s listing could be delayed again in 2018

According to the amendments to the privatization strategy of Hidroelectrica, approved by Government Decision in 2013, a 10% stake would be listed, after initially it was planned to list 15% of the shares.

Although the authorities seem optimistic on the completion of this action, the representatives of Fondul Proprietatea have an entirely different opinion and say the listing will not take place this year.

“We don’t expect Hidroelectrica’s listing to take place. We are actively engaged in this process, but for certain reasons listing did not take place and such a process requires a strong political will at the highest level to move forward. Of course, certain conditions must be fulfilled, one of them being the election of a Supervisory Board with full mandate,” Johan Meyer, CEO Franklin Templeton Investments, said during a meeting with the press for the presentation of fund’s results for 2017. He claimed a potential listing wouldn’t be affected by the current market conditions, this being an appealing asset for investors.

 

Oltenia Energy Complex, environmental issues

Regarding the listing of Oltenia Energy Complex, it has no clear deadline announced for completion, after last spring the Intermediation Union proposed an analysis of the opportunity to launch an IPO in H1/2018.

The financial situation of the complex does not seem very good, and the representatives of Fondul Proprietatea claim the largest energy producer in the country is in an extremely difficult situation.

“Of all companies in which we are shareholders, we are very concerned of the situation at Oltenia Energy Complex. We have seen that high energy prices from last year have helped, but they are at the limit of surviving or not as company,” Greg Konieczny, Manager of Fondul Proprietatea, said during a meeting with the press.

EC Oltenia estimates for 2017 a gross profit of RON 186.4 million, after in 2016 it posted losses of RON 139.8 million.

The situation at Oltenia Energy Complex could become even more complicated in the future, when the company could be forced to decommission a production capacity with an installed power of 1,500MW for retrofitting. The measure could be imposed as a result of harsher environmental conditions, after the European Commission adopted last summer an Implementing Decision on best available techniques for large combustion plants, under the European Directive on industrial emissions.

The Decision, which was published in the Official Journal of the European Union on 17 August 2017, will come into force four years from publication.

The new provisions establish very strict limit values for emissions of nitrogen oxides, sulphur dioxide and particulate matter, as well as maximum mercury emissions. Monitoring requirements for carbon monoxide, hydrochloric acid and hydrogen fluoride have also been imposed. Under these circumstances, the energy complex will have to replace 84 coal dust burners related to 14 energy boilers. Also, non-catalytic nitrogen emission reduction installations will have to be installed.

“The implementation of these installations in all respects (contractual, technical, installation, commissioning) until August 17th, 2021 in addition to being virtually impossible to complete, regardless of the financial effort that the Oltenia Energy Complex would be willing to do, will have a considerable impact on the electricity supply of the National Energy System consisting of unavailability, during 2020 – 2021, of a installed power of at least 1,000 MW and maximum 1,500 MW over the entire period (minimum 3 energy groups of 330 MW switched off simultaneously),” reads a document developed by Oltenia Energy Complex.

In order to avoid this situation, the document mentions that it is necessary to request a new transition plan from the European authorities, granting an additional period for compliance with the respective legislation, of three years, until 2024.

“This would ensure the time necessary to implement the above mentioned measures, by permanently switching off for the mentioned period of a single energy group of 330 MW, compared to 1,000 – 1,500 MW in the version of compliance by 2021, with a period of at least six months, by rotation, in order to technically realize the necessary works, without substantially affecting the electricity production capacity of EC Oltenia and, respectively, the amount of electricity necessary for the National Energy System,” the document also mentions.

During 2018 – 2020, EC Oltenia aims to carry out an investment program worth a total of RON 2.4bn.

 

ELCEN increased its gross profit by 78%

Electrocentrale Bucharest (ELCEN), the main thermal energy producer of the Capital, in insolvency, estimates for 2017 a gross profit of around RON 65.5mln, up 78% compared to the profit posted din 2016, when it amounted to RON 36.8mln.

According to company estimates, ELCEN revenues increased by over 9% last year, to RON 1.862bn, while expenses fell by 1.25%, to RON 1.647bn.

Compared to the budget approved for 2017, ELCEN revenues were higher by almost 5%, and expenses were lower by almost 11%.

In January this year, the General Council of Bucharest Municipality (CGMB) approved the merger by acquisition with ELCEN Bucharest.

 

Production records at Rompetrol Rafinare

Rompetrol Rafinare reported for 2017 a consolidated net result of approximately USD 22 million, amid historical production records realized by both Petromidia Navodari refinery and Vega Ploiesti refinery.

Consolidated EBITDA last year amounted to over USD 210 million, increasing by 13% compared to 2016, and the gross turnover of the company exceeded the value of USD 4 billion (+16%).

The Romanian state currently owns in Rompetrol Rafinare, through the Ministry of Energy, a 44.69% stake.

Government approved in May 2013, by draft law, the Memorandum of Understanding between the Romanian state and The Rompetrol Group N.V. (TRG), signed in Bucharest on 15 February the same year, according to which TRG would purchase from the Office for State Ownership and Privatization in Industry (OPSPI) 26.6969% of the shares issued by Rompetrol Rafinare in exchange for USD 200 million.

Of this amount, USD 175mln represents the price of the shares put up for sale, and USD 25mln the premium agreed by the parties for TRG to acquire the absolute voting majority in RRC (Rompetrol Rafinare Petromidia – Ed.).

 

Seeking private managers for state-owned companies

A new procedure to recruit and select professional managers for 10 energy companies has been started recently.

Nuclearelectrica, National Uranium Company, Hidroelectrica, Electrocentrale Group, Autonomous Administration for Nuclear Energy Technologies (RATEN) Mioveni, Midia Power Plant, Electrocentrale Constanta, Hunedoara Energy Complex, Jiu Valley Mine Closure National Company, CONPET are the companies that will implement the provisions of GEO no. 109/2011, according to the document prepared by the Ministry of Energy.

Thus, the Ministry of Energy provided the amount of RON 2.5mln for services contracted with an independent expert, natural or legal person specializing in the recruitment of human resources.

 

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