Floods put Hidroelectrica"s profit back on track

Hidroelectrica, the electrical power producer last year derived net income standing at approximately 17 million euros, after about 55.5 million euros from the company”s profit was redirected to cover the record losses posted in 2003.

Three years ago, the company registered losses of above 98 million euros due to the drought in the summer months, which threw the Romanian power system into a crisis.

Hidroelectrica is going to offset the deficits suffered in 2003 from profit derived as late as 2006.

“We estimate profit for the year 2005 will be around 260 million RON (72.2 million euros), of which 200 million RON (55.5 million euros) will be used to cover overdue debts,” stated Traian Oprea, Hidroelectrica”s general manager.

Thus, the net profit Hidroelectrica will be left with from the 2005 financial year stands at around 60 million RON (16.7 million euros).

In 2004, the company registered gross income of approximately 73.7 million RON (18.1 million euros), of which 70 million RON (17.2 million euros) were used to cover the losses of 2003. Gross income registered by the company is not subject to taxation during the period when it is still coping with losses.

Compared with 2004, the company”s turnover took a jump by about 67%, reaching a level of 2,111 million RON (586.6 million euros).

The figures registered last year were about 24% higher than the company”s own estimates.

“Among the main factors that triggered this increase were the heavy rains, which generated a record high output of hydroelectric power,” added Oprea. “We managed to produce about 20,103 GWh, covering about 34% of the total consumption,” Hidroelectrica manager also specified.

Last July, when the heaviest rains were recorded, Hidroelectrica announced the company”s electricity production had come to account for half of the quantity of electricity produced nationwide, but the situation was temporary, created by the meteorological conditions of the respective period.

Though rains are the main source of profit for Hidroelectrica, the company”s representatives specified that the firm also registered losses and not only profits in the wake of the respective events, since the floods harmed constructions such as channels, banks and access roads.

The tariff increase resulted from the move made by the National Energy Regulation Authority (ANRE) to align tariffs to costs on the various segments – producers, transmission company, distributors, considerably sustained the company”s turnover growth.

The company also managed to benefit from the liberalisation of the power market. In this context, any industrial consumer can become an eligible consumer, a status enabling it to negotiate prices and quantities with any supplier or producer on the free market. roxana.petrescu@zf.ro