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Electrica's headquarters yesterday turned into a battleground between the representatives of the Ministry of Energy and the administrators of Electrica SA.
Even though the BURSA "Energy plugged in" conference was hosted inside the Electrica SA building, the only representative of the company who had the courage to stand up to state secretary Bogdan Badea was the chairman of the Board of Electrica, Victor Cionga.
But the attacks were launched indirectly, and Victor Cionga chose to respond to the Ministry of Energy official at the end of the conference, in the absence of Mr. Badea, in a context wherein the participants were debating the manner in which the state manages the companies.
The conflict began two days ago, when the General Shareholder Meeting of Electrica rejected the plan for the administration of the company and the compensation system for the members of the Board of Directors, as the vote of the state, through the Ministry of Energy, was decisive. The members of the Board of Directors responded by addressing a letter to Energy minister Andrei Gerea, in which they were complaining about political interference in the activity of the company, referring to the appointment of politically-backed executives at Electrica and of its subsidiaries.
Yesterday, Bogdan Badea, secretary of state in the Ministry of Energy, opened the works of the BURSA conference with a harsh speech, without naming the companies he was talking about: "In the energy sector there are all kinds of slip-ups, pressures and interest groups. We will not allow ourselves to be intimidated into looking the other way when it comes to performance in the companies in which the state holds shares. I am not one of those who allow themselves to be bought by the various interest groups that are leeching the energy sector. We will fight them until the end to clean up the energy system".
The official said that the energy distributors need to resolve their existing grid problems and invest in new power lines, saying that many consumers are left without power and in Romania there are still areas that do not have electricity. Bogdan Badea said that the energy distributors did not invest enough in the system and added that some energy companies are making profit out of inertia, regardless of the quality of their management.
He said: "Investments are necessary to ensue the energy supply and the safety of the national energy system. We have seen a slip-up and we are trying to fix it before it is too late. What would happen if a dam were to crack due to a lack of investments? It would be an extremely dangerous way of waking up to reality".
The state secretary said that he doesn't want to be the CEO of Electrica, and said that he mentioned that in order to deny "the information that has appeared in the press lately" around that subject.
In the market, over the last few days there have been rumors that the goal of the Ministry of Energy is to make the administrators of Electrica SA to leave because they have refused to appoint 20 members of ALDE (party led by Călin Popescu Tăriceanu, of which Andrei Gerea - the minister of Energy is also a member) in the management of Electrica and of its branches. Voices in the market have claimed that state secretary Bogdan has nominated himself for the position of CEO of Electrica, but he was turned down.
Bogdan Badea said yesterday: "We are monitoring the administrators' performance. We can not grant them compensations if there is no performance. It is not me personally that wants to be the CEO of Electrica. I want to be demanding. I just want to protect the interests of the Romanian state in a legitimate manner".
He stated that he is reviewing all the companies in the ministry's portfolio and that the executives that are not performing well will not be paid large compensation packages.
Victor Cionga said, at the end of the conference, that he has noticed issues with the understanding of the common notion of good corporate governance: "I will give you an example in which a person was saying that he was on the Board of Directors of an energy company, but that he didn't feel he was involved in a conflict of interest even though the company of which he was an executive had a lawsuit with the former because it was representing the interests of the state. The moment one gets appointed in the Board of Directors of a company, they are no longer representing the shareholders' interests, but the interest of the company in question. It is a basic issue of corporate governance".
In his opinion, this miscomprehension of corporate governance generates conflicts between administrators and shareholders in some cases.
Bogdan Badea also said that in many cases, the energy system runs on "hope": "If it rains it's good for Hidroelectrica, if it doesn't rain it's good for coal. We need to find a cohesive mechanism that would take into account the specifics of each segment. We are reviewing a rethinking of the entire legislative framework so that the distortions which are affecting the market nowadays can be corrected".
Bogdan Badea said that currently, the energy strategy is being discussed as well, and said that in the case of renewable energy, the price is "desperately low" because of some dysfunctionalities in the system.
If we do not resolve the problems that exist in the market and if we do not produce and sell our energy at a price that is as competitive as possible compared to that of other European countries, investors will not come to Romania to develop businesses here, Mr. Badea concluded: "We have always wanted a strong national company, capable of entering real competition with the major global players. We have been one step away from achieving this project, but we have failed. We need to resume the talks on this topic".
According to the official, the energy sector is one of the main pillars for development in Romania, as energy independence is very important.
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