In 2009 and 2010, respectively, Hidroelectrica and ArcelorMittal Galati, a unit of steel giant ArcelorMittal, have signed two contracts for the delivery of electricity at prices below market rates, the Commission said in a document published in the Official Journal of the European Union.
“It appears that by engaging in the 2009 and 2010 contracts with ArcelorMittal Galați, Hidroelectrica sold electricity to this industrial client at prices apparently below what could have been obtained by accepting one of the parallel ‘buy’ offers available on OPCOM (Romania’s electricity exchange – e.n.) at the time for higher maximum prices,” the document noted.
Given that Hidroelectrica is state-owned, the Commission believes that the 2009 and 2010 contracts involve a loss of revenue for the Romanian state, it added.
Moreover, as ArcelorMittal Galati was licensed to purchase electricity not only in view of own consumption but also for supplying to other members of the ArcelorMittal Group in Romania, it seems that the other units could have also derived an undue advantage in the form of being supplied electricity at prices below market levels, the Commission said.
“The Commission preliminary concludes that Hidroelectrica could probably have made a higher profit by accepting one of the comparable ‘buy’ offers available in parallel on OPCOM, or by making its own ‘sale’ offers with minimum prices, rather than by entering into the 2009 and 2010 contracts with ArcelorMittal Galati,” the document showed.
The Romanian authorities, through Hidroelectrica, may have provided a selective advantage to ArcelorMittal Galați and possibly also to the other members of the ArcelorMittal group in Romania, able to distort competition and affect intra-EU trade, the Commission said.
Hidroelectrica is 80.06%-owned by the Economy Ministry. In June, the power producer filed for insolvency, citing financial difficulties due to a prolonged drought. Market analysts said the insolvency filing was Hidrolectrica’s loophole to break free from unprofitable bilateral contracts signed with a batch of corporate clients.