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Alpiq reviews Romania plans as electricity supply deals cancelled

24 Jul 2012 14:52:09 | edem

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Swiss energy trader and service provider Alpiq is to restructure operations in Romania after the country's Hidroelectrica decided to cancel its two 384MW long-term supply contracts from 1 August, Alpiq said on Tuesday.

Hidroelectrica cancelled the delivery contracts with Alpiq's two Romanian subsidiaries Alpiq RomIndustries and Alpiq RomEnergie with effect from 1 August. The former had been renewed last year until 2019, while the latter was supposed to run until 2018.

The company explained that the premature cancellation of the two deals would have a negative impact on its 2012 results. "The book values of the contracts... amount to around Swfr80m, with EBITDA [earnings before interest, tax, depreciation and amortisation] at around Swfr20m," the statement read.

Legal action considered

A spokesman said the company was assessing the legal status, but could not clarify whether any action would involve a legal case brought against the state-owned hydro producer. He pointed out that the company had been active in the country since 2001 and had an important portfolio of around 200 industrial clients. Alpiq supplies nearly 70% of Romania's cement industry.

"This decision by Hidroelectrica has broken off the ongoing negotiations despite Alpiq acting in good faith to reach a mutually satisfactory conclusion," Alpiq said. "Alpiq has launched a legal assessment of the situation. Due to the changed circumstances, the company now intends to review its business in Romania."

Earlier this month, Hidroelectrica cancelled its contracts with EFT Romania and EFT Switzerland. The generator has been under intense media scrutiny with an investigation from the European Commission and the International Monetary Fund after concluding a raft of long-term deals with a number of customers at prices well below the official market value (see 27 September 2012).

The company hit severe headwinds last September when it had to declare force majeure following a lengthy period of drought. The saga took a further unexpected turn in June when the company declared its insolvency, raising serious doubts about its chances of listing a minority stake as initially expected. AS

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