Electrica resumes "natural" loss-making trend

Electrica, one of the largest companies on the domestic market has resumed its loss-making trend again last year after having actually posted profit in 2002. The drought-induced crisis last summer forced the company to buy more expensive energy from the market, which caused it to lose some 250-300bn ROL (about 7 million euro, projected accounting value).

Profit has eluded the state-run energy distribution company in its four years since becoming a separate entity, except 2002, when the consolidated gross profit reached 400bn ROL (13.4 million euros) in spite of the constant increase in energy price.

“It is too soon to be talking about the final figures for 2003, considering the auditor has yet to state its point. Our consolidated loss may be upwards of 100bn ROL, given the provisions made for clients. The loss was due to those months of shortage in the system, when we bought more expensive energy from the market; at any rate, we did just fine, under the circumstances. Had it not been for the shortage, we would have made 1,200-1,500bn ROL (32-40 million euro) profit,” Lucian Silviu Boghiu, Electrica general manager commented for Ziarul Financiar.

The preliminary results show the turnover of the company to have gone down 4% in euros to approximately 1.9bn euros (about 73,000bn ROL) last year. At the same time, Electrica slightly outperformed Petrom (72,476bn ROL) in terms of turnover. The drought in the summer of 2003, the most severe in 160 years, sidelined the only profitable energy producers, Nuclearelectrica and Hidroelectrica, leaving Termoelectrica and the high-cost power plants to cover the demand.

“I don’t think we’ll be turning a profit this year. Electrical power tariffs are now debated by ANRE (the National Electrical and Thermal Power Regulating Authority). If the rule to raise them is maintained, we could end 2004 with consolidated profit,” Boghiu said. The tariff used to be tied to the ROL/USD rate until January 1, 2004, and the energy companies suffered a great deal due to the strong euro growth against the dollar. The electrical power tariff is to follow the ROL/EUR rate trend closely as of this year.

Electrica’s investments amounted to about 95 million euros last year, primarily directed to the replacement of old meters, to improving the security of the metering systems and of the electrical power network or to upgrading certain stations.

The low utility tariffs and the uncollected bills in the last few years were the main factors that led to the about $2bn in arrears piling up in the energy sector by 2002, according to World Bank officials.