Hidroelectrica is having problems, said Videanu. How is this possible?

“The smart guys,” namely those clients receiving energy below the market price, could be the problem, Hidroelectrica’s General Manager, Mihai David, said. Hidroelectrica signs firm delivery contracts, but when there is a drought, it is forced to buy the promised energy at three times higher prices. This is why it is already experiencing temporary liquidity problems. David said that 35-40 percent of the state company’s production goes to the population, and the remainder to bilateral contracts, most of which are signed with “the smart guys.”

“What I actually said was that it is necessary to establish two national energy companies, which would have flexibility in terms of production. I cited Hidroelectrica as an example, which would have problems if there were a severe drought for five years in a row, and would then would find it helpful to have the production of several companies to honour its contracts,” said Videanu.

“Large European producers, Électricité de France (EDF), E.ON, Enel, have a certain flexibility in the structure of production, so they have fragmented the hydroelectric production, the renewable [energy] production, and the coal production. Practically speaking, this is what we have to do in the near future, as concerns the production of electricity,” added the Minister.

David told Business Standard that the company has unpaid invoices dating back “perhaps one or two months,” but indicated that this is a general phenomenon in the economy. “What are some arrears worth RON 70 million [some €16 mln] considering we have a cash flow of RON 1 bln [0.23 bln] and an investment budget worth RON 1.4 bln [€0.33 bln],” asked David. He explained that the company has indeed had a “rupture in cash flow, which means problems with investments and the payment of current bills,” but this is exactly why the company is still negotiating loans.

Videanu said that Hidroelectrica now has debts worth some RON 70 mln to various suppliers, but the company is able to pay these without problems.

Hidroelectrica covered 26 percent of production last year. In the first seven months of this year, according to data provided by the Romanian Energy Regulatory Authority (ANRE), Hidroelectrica covered 32 percent of domestic consumption.