Romanian electricity traders doubt Hidroelectrica will cancel force majeure
Romanian traders are sceptical whether state-owned hydro producer Hidroelectrica will lift the force majeure on its delivery contracts from 1 December, despite healthier hydro levels in the region year on year.
Hidroelectrica declared force majeure at the beginning of August on all its 23 bilateral contracts, as well as on six contracts concluded as part of a tender held on the OPCOM power exchange in July, slashing its August production to a historical minimum after extensive draught and very high temperatures (see EDEM 6 August 2012).
One Romanian trader said that Hidroelectrica initially planned to come out of force majeure from 26 November, but was waiting for the paperwork to come through. "I guess that hasn't happened yet," the trader added.
Hidroelectrica could not be reached for comment as ICIS went to press, despite repeated attempts.
Hydro levels questioned
"I heard rumours about [Hidroelectrica] but there is no water to support this [force majeure]," another Romanian trader said.
"Personally I don't think they'll lift it from December, maybe from January. Hydro is quite okay actually - reservoirs are full at 65%, a lot more than last year. But they are not really being used, they are keeping them in case of a cold spell," a third source told ICIS, adding that Hidroelectrica could still use the run-of-river production.
A third market participant said that it did make sense for the force majeure to be cancelled soon, because Hidroelectrica needed cash. "Hydro production increased significantly during the last weeks," the source added.
"I think hydro is not great but surely not as bad as last year," a fifth Romanian trader said.
Impact on market
Traders agreed that even if the force majeure is lifted soon, there should not be much impact on the market because the biggest contracts have already been cancelled permanently.
In July Hidroelectrica decided to cancel six long-term contracts that were renewed last year with a number of customers at prices nearly half the official market price (see EDEM 24 July 2012 and EDEM 19 July 2012).
One trader pointed out that the hydro producer would reinstate contracts with Electromagnetica and Tinmar, although the 10MW Baseload was not seen as a large quantity.
"They don't have many contracts left. It'll be mainly for the regulated market," another source agreed.
Another trader said if there is any impact at all, it would be bearish.
Last week, the company said it earned €30m from electricity sales on OPCOM's bilateral market between the beginning of July and 20 November. These volumes are the largest sold by Hidroelectrica to date because without production tied into long-term contracts, the company has more available. The sales over this period represent 8.5% of Hidroelectrica's yearly production (see EDEM 21 November 2012). IP
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