Bogdan Badea, Chairman of the Hidroelectrica Directorate, announced the withdrawal of the 5-years investment plan worth more than 5 billion lei, prepared in 2018. The reason is the GEO 114 adopted in 2018 and the necessity to analyze the impact that legislative and tax changes will have on the company.

“Many things depend on how the GEO 114 will be transposed into ANRE regulations,” insisted Bogdan Badea, at an event organized by www.banii.net and Frames. “We could be a situation with minimal profit or no profit at all”, in the worst case scenario, Bogdan Badea added, who said that Hidroelectrica does not agree with the methodology proposed by ANRE. “We have expressed our dissatisfaction with this form of the Methodology in relation to elements we consider to be non-compliant with the principles of a free market economy, especially as we have a competitive market in the generation sector…” Hidroelectrica would be forced to sell 65% of its electricity production at a regulated price that “unfortunately, would apply to cost-plus, in other words we have been sanctioned, through this methodology, that we have made internal restructuring and that we have become more cost- efficient, “explained Bogdan Badea.

“In my opinion, there is much to be done to fully transpose the principles of the GEO 114, because it writes that there should be an effort made by all producers, not just by some. These are things that have to be clarified,” said Badea.

2018, when the liberalization of the electricity market was completed, was a record year for Hidroelectrica from a financial standpoint, said Bogdan Badea, who mentioned an anticipated profit of 2 billion lei.

For 2019, the main concern of the company’s management is the reintroduction of the regulated prices for household consumers, but also some other relevant provisions of GEO 114/2018. “The impact on 2019 will be lower than that anticipated for the next years, since Hidroelectrica has already contracted for this year significant volumes from the energy it can produce. However, the investment plan for 2019 may also be affected, depending on the electricity volumes the company would be required to sell to household consumers, as well as on the level of regulated price to which it would be obliged to conclude these contracts.

Hidroelectrica will not give up its planned refurbishing programs, Bogdan Badea assured, but new investments will be affected. On the one hand, as a result of the estimated income reduction, after the 2% increase in the money contribution due to ANRE, but also because of the introduction of a minimum gross salary of ROL 3,000 in construction sector, which leads to significant increases in investment costs (CAPEX): “It is a huge workload because it involves the review and change of general estimates for all investments”, Badea said.

At the same time, Badea said, there is a risk of significantly increased pressure on the company’s cash flow, a situation that Hidroelectrica has not encountered anymore for many years.