In February 2014, Hidroelectrica became insolvent, being on the brink of bankruptcy. Within three years, it managed to escape the restraining straps of the ‘smart guys’, turning into one of Romania’s leading companies. At the end of 2016, it reported a net profit of RON 1.22bn, amount that placed it second among the most profitable companies in the country. These are only some of the milestones that have marked the trajectory of the electricity producer Hidroelectrica in recent years.
Currently, the company has an ambitious investment plan, of over EUR 1bn, and is preparing to conduct what could be one of the most successful operation carried out by a Romanian company: stock exchange listing.
The Ministry of Energy has already prepared the draft law under which it plans to list a 10% stake in Hidroelectrica. “I believe it is a success of the Ministry of Energy and of the Government of Romania to bring back to discussion Hidroelectrica’s stock exchange listing. It is a signal for investors and for the capital market of Romania that the Government is focused on transparency and performance in relation to state-owned companies”, Energy Minister Toma Petcu says. Thus, an “initial public offering will be launched, which will be carried out by offering for subscription a package of newly issued shares, accounting for 10% of the share capital existing before the capital increase”. Pre-emption right for company’s existing private shareholders, at the selling price of the newly issued shares within the IPO, shall be granted for a package of newly issued shares accounting for 2.49% of the existing share capital, on a pro-rata basis, depending on the stake held before the capital increase, the explanatory memorandum of the draft legislation mentions. In the initial version, the company’s share capital increase was to be carried out with a package of newly issued shares of 18.74% of the share capital.
A new hydropower plant
Hidroelectrica commissioned in December a new production capacity, Bretea hydropower plant, within the Strei River Hydropower Development. The hydropower plant has an installed power of 12MW and the investment amounted to EUR 58mln. In terms of the retrofitting program, company’s management says all the important production capacities will start this process in the coming years, so as to secure electricity production. After in 2017 it signed the contract for the upgrade of Group 1 from Călimăneşti hydropower plant – worth RON 23.69mln, Group 1 of Slatina hydropower plant will start the retrofitting program in the coming period.
The giant contract for Vidraru, put up for tender
One of the company’s most important projects, given its size, is retrofitting the Vidraru hydropower plant, an investment worth over EUR 80mln. In late May 2016, the project was put up for tender for the first time, but in April last year the tender was cancelled, Hidroelectrica invoking at the time that it had received only inacceptable bids or bids non-compliant with the specifications of the tender book. The first hydroelectric development of the hydropower plant was commissioned in 1966 and since then no major interventions have been operated at this unit.
Specifically, the investment plan of the company for the coming years provides for the allocation of EUR 300mln for upgrades, EUR 300mln for repairs and other EUR 250mln to complete the investments at four new hydropower plants: Bretea (already commissioned), Rastolnita, Racovita and Siriu-Surduc. Also, regarding the development strategy, Hidroelectrica plans to expand abroad, according to Management Board’s Chairman, Bogdan Badea. The procurement plan of the company also includes the purchase of wind and photovoltaic farms, even abroad. Another option considered for the extension of company’s portfolio is also the takeover of activities from UCM Reşita, one of the traditional partners of Hidroelectrica, and which is currently insolvent.
Hidroelectrica of the Future
‘Hidroelectrica of the Future’ is a social responsibility action through which the company aims to make known to young people the reference hydropower objectives, the history of the company, the technological flow, the equipment and the hydrotechnical constructions in administration. Beneficiaries of the project are students from vocational and technical education who are preparing for the specific fields of hydropower developments. The program is organized by Hidroelectrica in partnership with the Ministry of National Education and reached the second edition. Young people who took part in this program in 2017 have received promotional and informative materials and have been backed throughout the program by specialists from Hidroelectrica. The attendants, together with the employees from the visited objectives – heads of departments, heads of power plants, operating personnel, presented the hydropower objectives and answered the questions asked by the students.
The ‘Hidroelectrica of the Future’ program is part of company’s effort to train and attract specialists in the energy sector. Amid the acute lack of specialized personnel faced by players in the national energy system, Hidroelectrica acts in a pro-active manner, planning medium and long-term actions to ensure an increased interest in the field, especially among young people. It is thus aimed to widen the recruitment base and organizationally integrate the meritorious young people who can bring added value to the company.