Hidroelectrica is having problems, said Videanu. How is this possible?

Publish date: 12-11-2009
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If the drought persists for five years, Hidroelectrica, Romania's largest electricity producer, will go bankrupt, according to a statement by the Minister of Economy, Adriean Videanu, which he later tried to soften, by adding: the producer must merge with Termoelectrica, to better balance its costs. But why does a producer with very low costs need the help of one that produces expensive electricity?

"The smart guys," namely those clients receiving energy below the market price, could be the problem, Hidroelectrica's General Manager, Mihai David, said. Hidroelectrica signs firm delivery contracts, but when there is a drought, it is forced to buy the promised energy at three times higher prices. This is why it is already experiencing temporary liquidity problems. David said that 35-40 percent of the state company's production goes to the population, and the remainder to bilateral contracts, most of which are signed with "the smart guys."

"What I actually said was that it is necessary to establish two national energy companies, which would have flexibility in terms of production. I cited Hidroelectrica as an example, which would have problems if there were a severe drought for five years in a row, and would then would find it helpful to have the production of several companies to honour its contracts," said Videanu.

"Large European producers, electricite de France (EDF), E.ON, Enel, have a certain flexibility in the structure of production, so they have fragmented the hydroelectric production, the renewable [energy] production, and the coal production. Practically speaking, this is what we have to do in the near future, as concerns the production of electricity," added the Minister.


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