The walls are closing in on the "clever boys" in the energy industry

On Friday, Prime Minister Răzvan Ungureanu was expected to announce his first decision in the case of the direct contracts between Hidroelectrica and certain privately owned energy suppliers. The decision was postponed until this week, when the IMF delegation is expected to arrive in Bucharest.

Moreover, Romania will need to answer, among other things, for the issue of the contracts to the World Bank as well, with which it is negotiating a stand-by loan agreement of 1 billion Euros, sources close to the talks say.

Whereas some sources in the Ministry of the Economy consider that the termination of those contracts with the so-called "clever boys" in the energy industry is a sure thing, other sources close to the talks claim that the talks aren't yet over. The Romanian authorities have been tasked by the international institutions to solve the problem of these contracts, which are eating up Hidroelectrica's profit. Thus, either the prices will be hiked, the quantities and the applicability periods will be reduced, or the Government will have to decide the termination of the contracts and to sell the hydroelectric energy available on the open market. What is certain is that Prime Minister Ungureanu needs to solve the issue of the contracts this week.

A "legend" has been created around the "clever boys" which says that the termination of the contracts would be extremely costly. That myth was further reinforced by the reaction of the ministers of the economy who since 2004, have failed to change those contracts after reviewing them. President Traian Băsescu also studied them and talked about them, but nothing significant happened.

Authorized sources which had access to these contracts have also said that the termination is not as big a problem as it's made out to be. It would be enough for an interministry commission (Finances - Justice - Economy) to carefully study the problem and to negotiate a harsh settlement system with the "clever boys". The same sources claim that in fact, these days the prime-minister needs to review the results of the negotiations and to publicly announce what he has decided. The Ministry of the Economy supposedly even prepared documents to present to the IMF mission, which state that starting in 2013-2014, Hidroelectrica will sell all the available energy on the free market.

• Hidrosind wants to challenge the direct contracts in court

The unionists in the Hidrosind Union Federation yesterday announced that they want to challenge in court the direct contracts between Hidroelectrica and "the clever boys". They said, in a press release: "Hidrosind will continue its legal actions by which it requests that the clause in question be declared fully void (ed. note: the addendums which extend the validity of the contracts) and the covering of the possible losses caused. Also, the federation will request the notification of the European Court of Justice in the interpretation of the community regulations which concern the energy market and will take all the necessary legal action to notify the Competition Council and the European Commission to get them to review this situation".

On Friday, the process initiated by Hidrosind for the conciliation between SC Hidroelectrica and some of the companies which it has concluded contracts with outside the OPCOM began, with a view of terminating the Addendums which extend the aforementioned contract, by the mutual agreement of the parties.

The only ones to answer the invitation were the representatives of Energy Holding. Hidrosind, assisted by law firm Cincan & Constantin, has presented again to the present parties (Hidroelectrica and Energy Holding) the claims in the settlement invitation stating that, under the current operating conditions of the energy market, the clause of the Addendum, which was appended in 2010 to the initial contract, which extends its validity, is null and void, because the intention of the parties continues to be removing important volumes of energy manufactured by SC Hidroelectrica SA outside the competitive market, even though the law requires that bulk energy quantities be traded on this market.

Energy Holding, through its legal representatives, has rejected any claim formulated in the direct conciliation summons, and has reserved the right to formulate any defense before the court, in case any legal proceedings were initiated.

Faced with the refusal expressed by Energy Holding, Hidroelectrica - represented by two members of the Board of Directors, who were legally assisted, has found that the completion of this conciliation is not possible because any contract, governed by the principle of mutual agreement, can end either by the parties' agreement, either due to other causes legally and/or contractually set.