Marian Năstase, Alro:  The contract with Hidroelectrica can be desecretized, even though the company would be placed at a disadvantage

Aluminum maker Alro Slatina (ALR), controlled by Russian group Vimetco, supports the idea of desecretizing the energy procurement contract concluded with Hidroelectrica, but this will place it at a disadvantage compared to its competitors, Marian Năstase, the company's vice-president of the board said yesterday. "We would agree to make the contract with Hidroelectrica public, but not to put it on the internet. We are on a competitive market for aluminum makers. This practice of putting commercial contracts on the internet isn't used anywhere in the world. This disclosure will affect us. The question is who will pay for those damages? We have remitted the contract with Hidroelectrica to all the Romanian and international authorities who asked to see it, including to the European Commission. We are willing to make it available to the IMF as well".

Marian Năstase also said that Alro is in advanced negotiations with Hidroelectrica and that the price of electricity is directly correlated with that of aluminum on the metal exchange of London.

The management of Alro is flexible when it comes to renegotiating the price of energy bought from Hidroelectrica, but less so when it comes to reducing the volumes of electricity, Marian Năstase said, and he went on to say: "I think that there are constructive talks (ed. note: those with Hidroelectrica.). The nature of Alro prevents it from reducing its volume of electricity. Any reduction in the amount of electricity leads to a drop in output. I think that industrial consumers need to be treated differently than the others. Industrial consumers, through the way they are organized, have a different profile. We do not want to be treated differently. For us, energy is a commodity. We are willing to renegotiate prices and take on more risk".

The IMF has set a short deadline by which the bilateral contracts of Hidroelectrica would need to complete the renegotiation of the bilateral contracts of Hidroelectrica, namely, until February 15th, 2012, and to cancel, within the limits of the law, the agreements for those negotiations which can't be concluded.

The deadline of February 15th was set through the letter of intent agreed following the latest evaluation mission, of January-February.

The Ministry of the Economy has not yet reached an agreement with the beneficiaries of the bilateral contracts for the sale of energy concluded by Hidroelectrica, and as a result has sent the documents to the Ministry of Justice to be reviewed with a view of canceling them, and a position will be announced by February 23rd.

Such direct contracts have been concluded by Hidroelectrica starting with the year 2000, and half of them were extended until 2018.

In autumn last year, the government pledged to the IMF that by December 31st, 2011, it would send to the companies involved notices announcing the cancellation of all the bilateral contracts of Hidroelectrica which weren't concluded through the OPCOM energy exchange.

In December, the officials of Hidroelectrica claimed that they have sent notices announcing their intention to cancel ongoing contracts which hadn't been concluded though the OPCOM, stating that they would be terminated "upon the first possible term".

• Profit of Alro rose 44%

The turnover of aluminum maker Alro Slatina (ALR) rose 23.6% last year, to 2.2 billion lei (528 million Euros), up from 1.81 billion lei at the end of 2010.

The company's profit at the end of 2011 rose 43.9% YOY, to 230.05 million lei (54.2 million Euros), compared to 159.78 million lei in 2010. Total revenues rose 22.4% last year, from 2.19 billion lei to 2.68 billion lei. Total expenses increase 20.1%, from 1.99 billion lei to 2.4 billion lei, according to the preliminary results sent on Wednesday to the Bucharest Stock Exchange (BVB).

The aluminum maker, which is the largest producer of electricity in Romania, is affected by the drop in the volume of electricity supplied by Hidroelectrica, which was affected by the drought. At the end of September last year, Hidroelectrica activated the clause of force majeure, because of the drought which led to a massive drop in output. By activating said clause, Hidroelectrica notified all of its customers that it would reduce the volume of electricity supplied. The company is being pressured by the IMF to renegotiate its bilateral contracts in order to increase profitability.

At the end of December, had 237 million in debts coming due in less than one year, up 10.2% than in 2010, when they amounted to 215 million lei.

The Vimetco group, registered in Holland and controlled by Russian businessman Vitaliy Machitski, together with one of the companies in the group (Conef), owns 87.96% of the shares of Alro, and 10.03% belong to the Proprietatea Fund.