BUCHAREST'S WARM WATER SUPPLY WON'T BE SUSPENDED, AT LEAST FOR SEVEN DAYS Romgaz keeps cool

Bucharest's warm water supply won't be cut off in the next seven days, because ELCEN has found the funds it needs to pay the gas supplied by Romgaz, Corina Popescu, state secretary in the Ministry of Energy said yesterday, after an emergency meeting with the management of Romgaz and ELCEN.

The seven day deadline is not very encouraging for the citizens of Bucharest, considering that winter is coming.

Still, general mayor Gabriela Firea keeps reassuring people that everything will be all right: "I want to assure the people of Bucharest that warm water being turned off is out of the question. It would be a criminal offense. Heating is a critical national infrastructure".

But a sign that the situation is serious are the criticisms levied by the General mayor of Bucharest against Romgaz, which, even though it has the state as its majority shareholder, is listed on the Bucharest Stock Exchange and is not under the state's thumb. Ignoring that aspect, the General Mayor said, after Romgaz announced that it was cutting off the supply of gas to Elcen: "Given that the state has a 70% stake in Romgaz, and a 90% stake in ELCEN, the Romanian state is cutting off its own gas supply, punishing Romanians. That is the conclusion, because the two entities, Romgaz and ELCEN are subordinated to the Romanian government, they have representatives of the Romanian government on their boards of directors and one of the boards of directors, that of Romgaz, has decided to cut off the gas supply to ELCEN, just because it went into insolvency, a procedure which is necessary in the current economic situation".

The General Mayor also explained that RADET, which is subordinated to the General Mayoralty, has asked to go into insolvency to protect the residents of Bucharest, "because ELCEN is requesting the payment of a historic debt which is not recorded on the books of the General Mayoralty and we had no legal document or justification for paying those penalties accrued on penalties, just like it was during the time of the real estate bubble when loans would be granted willy-nilly using a simple paper".

As for what concerns the cutting of the gas supplied by Romgaz to Elcen, the general mayor said: "ELCEN has bought gas recently, it still has some in stock, I want to assure the people of Bucharest that warm water being turned off, according to the threats made by Romgaz is out of the question,.

By the end of the year, the Mayoralty of Bucharest will pay the debt owed to RADET, and RADET will be able to continue paying ELCEN and will pay to Romgaz, Distrigaz and Transgaz the amount of 193 million lei, or 42 million Euros, amounts which are stipulated in the budget on the subsidy chapter.

Citizens have paid their bills on time, so they shouldn't be punished because of commercial lawsuits or disagreements between two companies owned by the state. The problem is now the responsibility of the Government".

The secretary of state in the Ministry of Energy, Corina Popescu, said yesterday: "This situation is the outcome of the financial deadlock between RADET and ELCEN which has been going on for a long time, it is not something that just happened today. It is a complex problem, which involves talks and dialogue between all the factors involved and which cannot be resolved from a single perspective. Everyone should sit down at the same table".

According to her, ELCEN has assured Romgaz that it would pay 6 million lei, meaning a small tranche of the debt of 316 million lei.

The state secretary has explained, in an interview, the decision of Romgaz to suspend the supplying of natural gas to ELCEN: "Romgaz has tried to play a heavy hand and to collect the money it was owed for the goods supplied. It is the behavior of a good management, it doesn't want to get even deeper into this debt. Romgaz is listed on the stock market, including in London. Investors have to be reassured that Romgaz does business correctly, pursuing its interest".

The state secretary also assures that the residents of Bucharest will not be left without warm water and heat.

"I've been told that the mayoralty is willing to pay a certain amount that would allow it to keep providing heat in the future. This could lead to resuming operation between the two companies", said Corina Popescu.

The representatives of Electrocentrale Bucureşti (ELCEN) have asked the management of Romgaz to continue supplying natural gas, with ELCEN set to pay up part of the debt on September 30, sources from within the company said yesterday, quoted by Agerpres.

"ELCEN has asked Romgaz for a reprieve until September 30, when it expects to receive a payment from Transelectrica as a bonus for high efficiency cogeneration. The amount isn't large, but it would cover the gas needed for a week or two", the sources further said.

According to the Romgaz press release, if ELCEN goes into insolvency, Romgaz will register its receivables with the body of creditors, as it is one of ELCEN's biggest creditors. ELCEN currently owes Romgaz 319 million lei.

In July 2016 Romgaz signed two contracts for supplying natural gas to ELCEN which are ongoing until September 30 2017, with a combined value of 935.5 million lei. The two companies have also agreed in August to reschedule the outstanding debts of ELCEN to Romgaz over a period of 36 months.

Romgaz maintains that as a company of national interest listed on the stock exchange, it has the duty to protect to an equal degree the interests of all its customers and those of its shareholders, in full compliance with the law and the contractual commitments.