On the other side, the population and small energy consumers will have to pay two times more for green certificates to offset the aid received by large consumers, which will translate into higher energy prices.
“This aid granted to the steel and aluminum industry is small compared with the costs the state has forced these companies to bear since 2008 until present in the account of renewable energy support,” says Petru Ianc, general manager at Societatea Romana de Metalurgie and former manager of the industrial policy department of the Economy Ministry.
The state accounts for the release of this aid for large consumers by the fact that, being industries with intensive electricity consumptions, they can no longer pay for green certificates, so that large complexes, with thousands of employees, may close down. Hence, the population and small consumers will bear the brunt of green certificate payments.
State representatives estimated the partial exemption, for a ten-year period, of large industrial consumers from purchases of green certificates will lead to around 1% higher bills for regulated consumers, individuals or SMEs, annually, until 2024.
At the moment of privatization, in 2001, ArcelorMittal Galati had around 27,600 employees and in 2013 its headcount had dropped to 7,100, namely four times less. Overall, around 20,500 people left the complex in 12 years.
During the same period, the steelmaker’s output shrank more than twice, from 3.6 million tons to around 1.5 million tons last year as the company was hurt by the crisis and falling demand on steel market.
In the case of Alro Slatina, though the company had managed to increase its number of employees until 2007, the trend reversed and the smelter started making employees redundant, now having 33% fewer employees than at the moment of privatization.
On the other hand, the smelter’s output increased, hitting some 210,000 tons of aluminum last year, 12.5% higher than at the moment of privatization.
In 2013, Alro had a consumption of around 3 TWh, while ArcelorMittal used 1.1 TWh of energy. Almost half of the energy consumption of the energy intensive industry is covered by the two companies.
Normally, for this consumption, Alro and ArcelorMittal should have paid EUR28.4 million, taking into account the quota of 0.237 certificates/MWh and the price of EUR29.28, but costs are likely to climb to EUR47 million is the cost/certificate goes up to EUR50.
With the 85% discount they were granted, the two companies will have to buy just 15% of certificates and pay around EUR4.3 million, yielding savings of EUR24.1-40 million per annum.
The higher the weight of energy costs in a company’s total costs, the higher the exemption.
The support scheme has a 10-year validity term and will be applied starting August 1, 2014, pending European Commission’s approval. Around 300 companies are expected to benefit from these subsidies, with their total amount revolving around EUR750 million.
Both Alro and ArcelorMittal have posted losses in the past two years.
In 2013, ArcelorMittal Galati saw its losses triple, from RON231 million in 2012 to RON741.6 million and revenue dropped by 31% to RON3.7 billion.
Alro posted losses of RON150 million in 2012 and of RON120 million in 2013 and the plant’s revenue registered a slight decline last year, to almost RON2 billion. The company accounted for the losses by the high energy and green certificate costs.
(English version by Catalina Apostoiu)