Commercial banks in Romania have lent Hidroelectrica about EUR500 million so far.
What seemed like an attempt of the new management of Hidroelectrica and of the new government to put an end to the preferential contracts (enabling certain traders to buy power below the market price), which have been causing lost revenue of at least EUR100 million a year, is turning into a huge problem for the banking system and for Romania’s Finance Ministry.
Hidroelectrica’s lenders and the banking groups they are part of also finance the state budget by buying government paper.
The Economy Ministry and Hidroelectrica representatives had initially discussed provision of governmental guarantees for the loans taken by the company, so as to give lenders the necessary peace of mind that the insolvency would not entail renegotiation of the loans or a potential haircut.
“Lenders have a constructive attitude, they understood the reasons and are behind us. Tomorrow (Monday i.e.) we will have a meeting with deputy governor Bogdan Olteanu at the BNR to discuss the situation. Banks do not have to provision the entire amount, just 10%. We will probably also discuss potential governmental guarantees,” said Remus Borza, the court-appointed administrator of Hidroelectrica.
“The Finance Ministry will not provide any guarantees for Hidroelectrica via any of the entities over which it has influence,” official Finance Ministry sources said yesterday.
On the other hand, Hidroelectrica’s insolvency will not be included on the agenda of Monday’s meeting of Romania’s Supreme Defense Council (CSAT), either, even though the security of 25% of the country’s energy system is at stake.
“As the government of Romania did not want to include the insolvency of Hidroelectrica on the CSAT meeting agenda, the Presidential Administration does not have the official information about this operation and therefore is unable to comment on the issue. We should add that the government of Romania took upon itself the decision about Hidroelectrica’s insolvency without bringing it up for debate by CSAT, and thus assuming the decision and its consequences,” said the representatives of the Presidential Administration in response to ZF’s questions about Hidroelectrica’s situation and whether the issue should have been debated by the Supreme Defense Council or not.
Still, the law says the Supreme Defense Council is called by the country’s President, who is also its chairman (and the prime minister serves as vice chairman) or by one third of its members. The chairman sets the agenda of the day after consulting with the vice chairman, according to the law.
(English version by Loredana Fratila-Cristescu)