The effects of the lack of rain we have seen lately are starting to reverberate throughout the economy like in a game of domino. Danube’s flow has reached the last 160 years’ low, which impacts on the output of the hydropower plants and implicitly on their financials.
The decline in the hydropower plants’ output has led to an increase in the output of the plants running on coal. The output of the latter, however, is more expensive, which will induce a rise in tariffs. In addition, the wheat crop has been compromised 35%, so that the authorities decided to cease all exports effective tomorrow. And the weather forecast does not look too good, either.
Hidroelectrica yesterday announced it had posted 133bn ROL (3.5 million euro) losses in the first half, given that the severe drought of late has caused the company to lose approximately 600bn ROL (16.1 million euros) somehow compensated for by the profit made in the first few months of the year.
“The 2003 losses are more than Hidroelectrica can bear,” Eugen Pena, Hidroelectrica general manager said.
Danube’s flow was at its lowest in 160 years, he added.
Pena explained that the impossibility of the company to honour its contracts due to the severe Danube and river flow decline, was forcing Hidroelectrica to buy electrical power from other producers, Termoelectrica especially, at $30-$39/MWh and sell it at a regulated tariff of $4/MWh.
“Last year (yet another year of drought i.e.) this financial game caused us to lose 850bn ROL,” Pena was quoted as saying by Mediafax.
In order to prevent this from happening in 2003, the company concluded contracts that allow it to resell the energy bought from other producers in times of drought at prices closer to those it paid for it if the weather conditions are good enough for Hidroelectrica to produce more energy than contracted by the end of the year.
Which means at least some of the losses incurred during the drought might be recovered, if the Danube and the river flows got back to normal, Pena explained.
At the same time, the National Energy Regulating Authority (ANRE) cut the amount of energy Hidroelectrica is bound to supply to the national energy system in 2003 by one billion kWh (about one fiftieth of Romania’s annual consumption).
As for the agricultural sector, more than 35% of the plots of land planted with wheat had been damaged by the poor weather conditions to various extents by early in July. The cold in the winter hit approximately 240,000 ha of wheat, out of the 2.1 million total. The excessive heat hurt another 317,000 ha. The Agriculture Ministry estimates show the cold hurt a total of 545,000 ha, compromising various crops such as wheat, barley, two-row barley and rape.
Under the circumstances, the Government decided to cease all wheat exports until July 1, 2004 to cover the necessary amount for domestic consumption, a prohibition that becomes effective on August 2, 2003. miruna.lebedencu@zf.ro