The overall financial effort for the restructuring of the Oltenia Energy Complex (CE Oltenia) is estimated at about 3.5 billion euros in the next 5 years. The completion of feasibility studies and the approval of the restructuring plan by the European Commission will allow the launch of tenders for new investments in generating capacity, but not earlier than the first part of next year.
In February 2020, the company received emergency aid worth 1.2 billion lei from the Romanian state, provided it submitted a restructuring plan within six months, with two alternative options: return the aid or liquidate. Few days ago, the Ministry of Economy, Energy and Business Environment, together with the Competition Council have made this document available to the EC.
It is a favorable moment for the transformation of the CE Oltenia, which is based on an extensive restructuring and decarbonisation program. “Several support mechanisms at European level are now closing their start: the modernization fund, the fund for a just transition, and also the funds for the recovery of the European economy affected by the Covid-19 pandemic”, said to Energynomics Lăcrămioara Diaconu-Pințea, member of the Board of Directors of CE Oltenia.
CE Oltenia aims to finance the restructuring program from its own sources and attracted sources, with a share of about 50% for own sources, keeping the logic of the restructuring state aid mechanism.
About 2 billion euros will be allocated for investments and 1.5 billion euros for organizational and managerial actions, to comply with environmental legislation, but also to optimize non-core activities.
Part of the company’s revenues in the next years will come from selling the electricity generated, either on centralized markets or through PPAs (power purchase agreements). At the end of the restructuring process, CE Oltenia will only rely on coal for about 40% of the electricity generated, while the rest will be covered by solar resources and combined cycle units based on natural gas. The restructuring and decarbonization plan envisages new production units with a cumulative installed capacity of approximately 2,000 MW. Of this, the photovoltaic segment will represent about 700 MW, in eight generation parks. “They will be built on land owned by the complex, either in tailings dumps in quarries or in slag and ash depots,” says Lăcrămioara Diaconu-Pințea.
The plan is that by 2026, CE Oltenia will put into operation about 1,300 MW capacities in gas-fired units – “hydrogen ready”, which means ready to integrate hydrogen in the energy value chain.
About 500 million euros will be invested in existing assets, mainly modernizations at existing power plants (such as the group 5 Rovinari) and mining (work fronts, quarries, modernizations of technological lines, etc.).
The restructuring plan includes four types of actions. Besides investments, there are also organizational and managerial measures, including the introduction of an integrated IT system and an integrated management system, but also measures of operational excellence based on Lean Management principles. “They are mainly addressed to the productive sector, in mining and in coal-fired power plants; it is a matter of identifying the potential for efficiency at each job and in each entity, but also of mandatory implementation of automation and digitization systems”, explained Lăcrămioara Diaconu-Pințea.
Of the current 12,000 employees, it is anticipated that around 4,000 will retire in the coming years. Money will also be provided for voluntary departures, but also for the training and retraining of employees.
Another direction of action is the one related to compliance with environmental protection legislation and the cost associated with carbon emissions, the most important element that has affected the financial performance of CE Oltenia in recent years.
Finally, the fourth type of action is the one related to those financial measures meant to reduce the company’s exposure to activities that are not related to the main object of activity. Thus, “we have identified a list of non-core and social assets that we will seek to monetize or donate to local authorities, thus making a positive impact on the company’s cash flow,” said Lăcrămioara Diaconu- Pințea, who is convinced that at the end of the implementation period of the restructuring actions, CE Oltenia will become a viable company once again, with a profitability comparable to that of the other players in the market.