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Main electricity provider Hidroelectrica asks for insolvency

The national power producer and supplier, state-owned Hidroelectrica, asked for insolvency late last week, sending a shock wave in the economy and taking by surprise the authorities, local press informs today (Mon). The announcement was made by the Ministry of Economy, that holds 80.05 percent stake in Hidroelectrica, who provides over 34 percent of the domestic electricity production. Hidroelectrica representatives will support their request in Court on Wednesday, when a first hearing is scheduled. The insolvency announcement took many by surprise, as the company was considered so far one of the crown jewels of the Romanian economy. Last December, the former right-wing government announced the privatization of ten percent in the power supplier, with the intention to boost the national budget revenues. According to a communiqué sent today by the Economy Ministry, the insolvency was decided by the Board of the company and the Ministry cannot overturn the decision. The representatives of Hidroelectrica were not available for statements following the announcement. The decision took aback the economic adviser of the Prime Minister Victor Ponta. Former liberal minister Daniel Daianu, now an economc aide to the PM, said that he cannot find an explanation for Hidroelectrica’s insolvency request. "I cannot find a sound reason for such a decision, there’s no way Hidroelectrica enters insolvency", a stunned Daianu told Hotnews agency. Two weeks after he was appointed the head of the government, Victor Ponta ordered an investigation into Hidroelectrica’s financial situation, suspecting dodgy deals on the back of the public money. Soon after, the new Minister of economy started to re-negotiate all contracts concluded by the former administration with private companies (known as’smart guys’) who used to get cheap electricity while the end consumer was supporting the price difference.

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