Societe Generale will grant a 122 million-euro loan to Electrocentrale Bucharest, Romania’s largest electrical and thermal power producer, for the construction of an energy group at CET Vest.
“The lending contract will be signed over the following weeks because Electrocentrale will have to fulfill certain formalities first, also at the level of the Competition Council, considering the guarantees offered by the Finance Ministry for this financing. Societe Generale is also working on other large financing projects. So far, our exposure in Romania has reached about 1.8 billion euros,” Patrick Gelin, president and CEO of BRD-Groupe Societe Generale told Ziarul Financiar.
Sources close to the transaction state that the loan secured by the Finance Ministry will be paid back within 15 years, with the grace period amounting to about two and a half years.
The company needs the money to build an energy group with a power of about 182 MW at CET Vest Bucharest, a project that will be developed by the Austrian group Va Tech. The total value of the project will revolve around 144 million euros, with the rest of the funds to be obtained by Electrocentrale Bucharest from its own resources.
CET Vest owns two power groups with a total power of 250 MW. The expansion of CET Vest, which will add another power group, was announced last year.
According to certain estimates, the new group is supposed to produce power toward the end of the year 2007, at a price that will be 20% lower as compared to prices of the other groups of CET Vest. As soon as the investment is recovered, the price gap is likely to reach 40%.
Electrocentrale Bucharest is the largest and most important of Termoelectrica SA branches, having however a separate accounting balance. The company operates on the Romanian power market as a distinct entity.
According to the latest report filed with the Finance Ministry (2003), Electrocentrale Bucharest registered net profit standing at 528,000 euros against turnover worth 601.2 million euros. The company broke even in 2003, as the drought and the ensuing power crisis caused losses to Hidroelectrica and Nuclearelectrica, the producers of the cheapest electrical power on the market.
The electricity producer was granted another loan at the end of last year. The funding is worth 60 million dollars (48.3 million euros) and was granted by the consortium including Bank Austria Creditanstalt (BA-CA), a member of German financial group HVB Bank, and Greek bank Alpha Bank. The loan was also secured by the State and was aimed at the acquisition of energy resources for the winter period.