EXCLUSIVE INTERVIEW WITH THE CHAIRMAN OF ELECTRICA, VICTOR CIONGA Electrica does not rule out an expansion in the region

Reporter: Will the current Board of Directors replace the executive management of Electrica or not?

Victor Cionga: I stand by my statement made after being elected as Chairman of the Board: we want to cooperate with the current executive, which had a significant contribution to the successful listing of Electrica.

We are talking about a profitable economy, which has succeeded in a benchmark IPO, which wants to improve its economic performance and to become a powerful player on a national, and why not, regional level. The changes, intended to increase the efficiency and the implementation of good corporate governance, will probably involve some changes in the organization chart. We don't want change for the sake of change, or because a certain part of the market expects it. If necessary, we will bolster some management positions by promoting new people. People are a company's main resource, its employees, and this is the case of Electrica as well. If we do not find the person that fits best among our own employees, we will of course recruit from the outside, but we will ponder this carefully, because we want to complete the existing structure, not to (over)load it.

Reporter: What is your take on increasing the efficiency of the activity of Electrica in the coming years and what are the measures that you proposing in order to achieve that goal?

Victor Cionga: There is a set of restructuring measures taken prior to the IPO, which have already begun producing concrete results when it comes to improving the efficiency of the company. Sure, we are reviewing the solutions used by some of the companies in the sector, companies which have long since been privatized. Regardless of the measures that were taken, they need to be reviewed in a local, regional and international context. That doesn't mean we are going to waste time. But we won't make rushed decisions, either. Unfortunately, there have been enough situations in Romania, as well as abroad, where decisions have been made without being sufficiently reviewed, and the result was a waste of time, people and resources, but particularly of credibility. When you have a company of the scale and importance of Electrica listed on the Stock Exchange, you have to take things seriously.

Reporter: What is your opinion on Electrica's role in the region?

Victor Cionga: I will start by making an observation: unfortunately, I don't know of any Romanian company that is a regional player. This is a simple observation, I won't go into analyzing the reasons for that. From that point of view, Romania is behind Hungary, the Czech Republic and Poland, as the latter has a global scale player in KGHM.

Electrica is the biggest company in the area of distribution and supplying electricity in Romania, and Electrica is currently focused on its current operations in Romania. Subject to opportunities, reviewing an expansion on a regional level is not out of the question; in this case, it would be best if we were as prepared as possible from a managerial point of view for such a step. If an opportunity appeared in the future that would be interesting enough to get us to consider the possibility of an acquisition, we will probably advance in that direction, but only after conducting a very serious analysis of that < business case > provided by the executive, of talks on the Board of Directors and obviously, with the agreement and the decision of the shareholders.

Reporter: What are your priorities as chairman of the Board of Directors of Electrica?

Victor Cionga: Over the last few months, Electrica started a process of major changes, and the IPO is just one of them, a new beginning, perhaps the most important in the history of the company. The transformations aren't going to stop there. A period of restructuring within the group will follow, and when I say that, I am referring first and foremost to the corporate governance structures. The creation of a process for that purpose, a system that would respond to the practices and international standards in the field, is a priority for the executive, as well as for the Board of Directors. Good corporate governance means lower risks and translates, in the end, into more confidence in the company. As more and more companies adopt the values of good corporate governance, the business sector in general and the stock market will enjoy an improved reputation.

Going back to priorities, they are discussed and agreed upon by the members of the Board of Directors together with the Executive. We are talking about a joint stock company, and therefore the relationship with the shareholders and the investors, the development of the company, both organically and through acquisitions, and its transformation into a more effective player are key elements, which we are focusing on. Prioritizing the next steps will be done based on the merits of each individual project, but taking into account both the opportunities provided by the market, as well as the external constraints.

Reporter: What is the current status of Electrica's plan to review the opportunity of acquiring some assets of Enel România?

Victor Cionga: Electrica has expressed its interest in the opportunity to acquire some of the assets of ENEL România, and has submitted a non-binding offer to that end, within the deadline and in compliance with the rules set by the seller. We are being assisted in this process by a consortium led by JP Morgan and which also includes KPMG and CMS Cameron McKenna.

Reporter: When do you expect the shareholders will be summoned to discuss this opportunity?

Victor Cionga: The process for the sale of the operations of ENEL in Romania involves two stages: one in which non-binding offers are submitted, and one in which the selected bidders submit the binding offers. Depending on the reaction of the seller to our non-binding offer, in a future general shareholder meeting we may request the first, on-principle approval to be able to submit the binding offer and to negotiate the contract. The second approval will be requested in a general shareholder meeting which will be summoned if our binding offer gets accepted; as for the date, that will depend on the time the contract gets signed.

Reporter: What are the main objectives of the mandate that you have received from the shareholders?

Victor Cionga: Like I have already said, one of the goals is turning Electrica into a model of corporate governance in Romania. A company that would encourage a system based on clear, transparent rules, and where the professional development of the people gets done only based on criteria of competence.

Electrica currently has the advantage of having a Board of Directors which is mostly made up of independent members, professionals whose abilities complete each other very well. Together with the management of the company and obviously, with the shareholders, we have engaged in a project which we hope will become a benchmark in Romania.

Reporter: What is your opinion on the effects of the conflict in Ukraine in the Romanian market?

Victor Cionga: In the short term, and strictly in terms of meeting the domestic demand for natural gas this winter, I don't think there will be any serious effects. Due to the existing reserves and because of the drop in industrial consumption we don't depend too much on natural gas imported from the Russian Federation, more specifically, not as much as others. Romania ranks third in the European Union in terms of energy independence. In the long term, however, solutions will be sought and found to increase the energy independence.

In terms of the business climate in the relationship between the East and the West, it will take some time before a normalization, the mutual abandonment of the economic sanctions happens. Confidence is hard to gain and easy to lose.

The political situation in the last ten months and the current economic implications of the tension in the region have once again demonstrated, if there was any further need, that economic interdependence can halt the supplemental slip-ups before they become extremely dangerous and lead to open conflicts between countries. I hope that, in the end, wisdom will prevail and I hope that the approach that gets the upper hand will be one of a cost-benefit nature, and the major economic interests will pass before the political ones.