Romania’s largest electricity producer Hidroelectrica will invest some EUR 75 million for the refurbishment of the Stejaru power plant, which is situated on the Bicaz river in Neamt county.

All six hydro aggregates of the plant, which have a cumulated installed capacity of 210 megawatts (MW) will be modernized. This will take seven years from the moment the contract will be signed, which should be in October 2014, the company announced.

The Stejaru power plant, which has been operating for over 50 years, is one of the oldest hydro power plants in Romania and its equipment is outdated. It is powered by the Izvorul Muntelui lake, which is the second water accumulation in Romania after Portile de Fier I (Iron Gates) on the Danube. The plant produces 435 GWh of energy every year, which is some 3 percent of Hidroelectrica’s total production in 2013, of 14,822 GWh.

In March 2013, Hidroelectrica’s legal administrator, Euro Insol, cancelled the financing contract with EBRD for the Stejaru project because the international financer delayed the payments for this investment. Hidroelectrica now plans to finance the investment from its own funds and says that the estimated budget for this project is EUR 35 million lower than in 2012 when the contract with EBRD was signed.

“The price difference is the result of cost optimization measures implemented by the legal administrator and of a correct estimation of the investment,” Remus Borza, Hidroelectrica’s legal administrator said. He mentioned that before the company went into insolvency for the first time, in June 2012, investment projects were based on prices three to eight times higher than normal market prices.

Borza also said that he negotiated a EUR 200 million loan from the World Bank for the refurbishment program for Vidraru, Mariselu and Raul Mare Retezat power plants.

Hidroelectrica posted EUR 724 million in sales and a gross profit or EUR 203 million for 2013. However, the company re-entered insolvency at the beginning of this year, due to legal actions from former clients, whose contracts were cancelled by the company.

Andrei Chirileasa, andrei@romania-insider.com