State owned Hidroelectrica, Romania’s largest electricity producer, made a gross profit of EUR 162 million (RON 719 mln) in the first eight months of this year, 12% higher compared to the same period of 2013.

“The production of at least 17 TWh which will be obtained by the end of this year, the implementing of efficient sale strategies for the whole quantity of energy produced, the opening of trading offices in Hungary and Serbia and the revision of the company’s banking loan portfolio are elements that will help generate a record profit of over RON 1 billion (EUR 225 million – e.n.) in 2014,” said Remus Borza, Hidroelectrica’s legal administrator.

The company produced 12.3 TWh of electricity in the first eight months, which is 88.5% of the whole output estimated for this year. This is why the new forecast for this year sees an output of at least 17 TWh, 3.1 TWh higher compared to the budgeted level.

The higher production brought higher revenues for the company, in spite of lower sale prices. The price at which the company sells electricity on the regulated market, which is set by the state energy regulator ANRE, was reduced by 8%, from RON 125/MWh to RON 115/MWh. The average price on the free market for large contracts also declined by 18% compared to last year.

“If Hidroelectrica didn’t pay RON 396 million (EUR 90 mln) on technological water, which is the highest level of this tax in the EU, if Hidroelectrica didn’t pay a RON 150 million (EUR 34 mln) pole tax, if Hidroelectrica didn’t lose RON 220 million (EUR 50 mln) on the electricity it sells on the regulated market, then the company would make at least RON 1.8 billion (EUR 407 mln) profit, which would allow it to finance all investments necessary for the refurbishment of its production capacities and for creating new capacities,” Borza said.

Hidroelectrica reentered insolvency at the beginning of this year, due to legal problems related to the first insolvency procedure. The company is currently 80% controlled by the state, while Romanian investment fund Fondul Proprietatea holds 20% of its shares. The state plans to list the company on the Bucharest Stock Exchange next year.

Andrei Chirileasa, andrei@romania-insider.com