Alro and Hidroelectrica, preferential agreement worth over 100m euros/year

Aluminium producer Alro Slatina, controlled by Vimetco group held by Russian investors, has signed an acquisition contract with Hidroelectrica for 3TWh/year until 2018 at the end of last week at a price of around 31-37 euros/MWh, 25% higher than last year. At this cost, the value of the nine-year contract could be worth between 850 million euros and 1 billion euros. 1 Terrawatt (TWh) equals one million Megawatts (MWH).

The amount contracted by Alro on a yearly basis amounts to around 5.5% of Romania’s energy consumption in 2009, of 55 TWh, with Alro being the biggest industrial energy consumer in Romania.

The two parties rushed to sign the new contract before the two energy giants – Electra and Hidroenergetica – set up by the Romanian Government in January – start operating. Mihai David, general manager of Hidroelectrica, said at the end of last year that it would no longer sell electricity at prices of around 25 euros per MWh, but at a cost of over 44 euros per MWh, the estimated production cost of the two giant companies. However, according to estimates, the new contract with Alro has been sealed at less than 44 euros/MWh. Alro representatives did not wish to reveal the price at which they would be buying electricity, but last year the company was buying energy for 25-30 euros/MWh, according to market information.