Bogdan Tudorache

While the Government has urged the state energy companies to distribute additional dividends to the shareholders, the Ministry of Energy has launched a new attack on Fondul Proprietatea, which it accuses of focusing on “maximizing profits on the short term, at the expense of a natural, centered approach on increasing the value of the companies on the long-term, on increasing their competitiveness and their market share”.

In the extraordinary general meeting of Hidroelectrica on Wednesday, the shareholders – the Romanian state through the Ministry of Energy, which owns about 80% of the company and Fondul Proprietatea (FP), with almost 20% of the shares – approved new early dividends of 655 million lei (approx. 144 million euros). Similar decisions were taken by the authorities for all major profitable energy companies in the portfolio, including Romgaz, Conpet, Transgaz, Transelectrica, Nuclearelectrica and Hidroelectrica.

“Hidroelectrica recorded in the first seven months of 2017 a gross profit of 971.880.647 lei, compared to a turnover of 1.948.564 thousand lei. Gross profit increased by 6% over the same period in 2016, while the net profit margin increased from 38% at 43%. The results were achieved on a significantly lower energy output compared to the same period of the previous year due to weather conditions”, explains the Ministry of Energy in a press release.

“In order to continue the company’s financial performance and to ensure the national energy system, taking into account the current market situation and the need for new production capacities, the company needs to start the investment process on the basis of cost-effectiveness analyzes, a process ceased during the period 2012-June 2016, when the company was in insolvency”, said the ministry.

Maximizing the short-term profits

The management of the Ministry of Energy also announces that it has analyzed the shares of Fondul Proprietatea from the last period, in the leadership of the companies active in the energy industry, correlated with the positions expressed in the press regarding the activity of these companies.” According to the ministry, publicly expressed actions and positions reflect “a double misunderstanding by the current administrators of the FP, both of the reason for which it was created and of the place and role of the energy industry in Romania’s development strategy, as formulated and implemented by the Government of Romania”.

“We have seen the orientation of the FP representatives in the Supervisory Boards of the energy sector companies, regardless of their subordination, towards the maximization of the short-term profits, at the expense of a natural approach centered on increasing the value of the long-term companies, on increasing the competitiveness and the segment of their market”, reads the press release of the ME. Finally, the leadership of the Ministry of Energy is worried and suggests that the “FP administrator’s actions are in disagreement with the mandate that has been entrusted to them by the significant shareholders of FP.”