In January to June, the gross profit of Romania’s largest energy producer stood at just 51.9 million lei (EUR12.2 million), compared to RON197.5 million in the similar period of last year.
“In the first six months of 2011, Hidroelectrica posted a gross turnover of RON1.64 billion and a gross profit of RON51.9 million … The difference is explained through the low rainfall in 2011 and the 16% increase in water costs,” Hidroelectrica representatives said.
2010 was a very good year for Hidroelectrica both in terms of energy production and in terms of financial results. The company ended 2010 with a profit of almost EUR70 million, six times higher than in 2009.
In December 2010, however, one of the major challenges facing the energy producer was the increase in water costs. At the time, the royalties that Hidroelectrica paid for the water it used went up 4.23 times from RON0.26 per thousand cubic meters to RON1.1 per thousand cubic meters. This factor combined with a decline in energy production in the first six months of 2011 against the year-earlier period.
“In the first half of 2010, the energy production amounted to 9,510 GWh while in the first half of 2011 it amounted to 9,220 GWh. The difference between the two values is explained by the difference in the amount of water available between 2010 and 2011,” according to company data.
Thus, Hidroelectrica says it has already started negotiations to increase prices with five companies to which it sells power, although that this is normally done at the beginning of the year, and the negotiated prices remain unchanged throughout the year.
“Despite this, considering that in 2011 water costs rose 400% and that the year is unfavorable from a hydrological point of view, we have started negotiations with five contract partners, which are ongoing,” Hidroelectrica representatives added.
According to company data, last year over 70% of the energy produced by Hidroelectrica went to direct contracts sealed with companies such as Alro, Mittal Steel Galati, which are the biggest energy consumers in Romania, as well as with suppliers such as Energy Holding and companies controlled by Swiss-held Alpiq. (EUR1=4.2445)
(English version by Daniela Stoican, Editing by Loredana Fratila-Cristescu)