Liquidity problems, poor performance, poor management contracts. Electrica’s nine years after listing, during which it lost more than 20% of its share value, could provide valuable lessons for how Hidroelectrica should be managed from now on.

Of course, it is very nice that Hidroelectrica has finally entered the stock market after many years of delays. This is a big step towards transparency, but it does not mean that it is over, from now on all problems are solved and the company will continue to work.

More important than the listing itself are things like how the company will continue to operate from now on, who will manage it and the degree of political interference.

And in more recent history, we have the example of Electrica, a company that also went public with great fanfare nine years ago, in 2014, and which reached bankruptcy last year in late summer.

This is after the Government delayed for many months the payment of sums compensated from the state budget from the price of energy carriers. But of all the providers on the market, Electrica had the worst liquidity at the time.

Another moment when Electrica showed its inferiority to other suppliers in the market (Enel, E.ON and CEZ) was the decision of the state authorities to compensate part of the bills to the population. Then ANRE imposed sanctions on six companies, the biggest fine of 120,000 lei was given to Electrica, because it was not able to implement the changes in a short time, and consumers suffered.

And in terms of distribution, the company is at the bottom of the rating, as evidenced by performance indicators. According to ANRE data, in 2021 two of the three distribution companies in the Electrica group recorded the longest blackouts, respectively 167 minutes per year for each customer, on average in the case of DEER Muntenia Nord and 157 minutes per year for Southern Transylvania. .

In comparison, the best performance was 88 minutes (Delgaz Grid from the E.ON group), which is half that of Muntenia Nord.

In May 2022, Corina Popescu, then CEO of Electrica, was unanimously fired by the board of directors. However, she received compensation in the amount of 3.4 million lei because she was dismissed before the end of her term of office.

Since listing in July 2014, Electrica shares have lost 21%, from 11.2 lei per share to 8.8 lei today, with a peak of 13.9 lei in early 2021 (when the electricity market was fully liberalized) and a low of 6, 1 lei in August 2022 (when information about Electrica’s bankruptcy risk was published in the press).

“Smart people” in energy have not disappeared

Let’s stay a little in the past and remember that “Hydroelectricity” was also insolvent for two years (2012-2014), after it was kissed from all sides, it could no longer breathe.

These were the famous “smart guys” who not only bought the electricity produced by Hidroelectrica at ridiculous prices, but also forced Hidroelectrica to buy much more expensive power from coal-fired power plants, only to sell it all back to them at a much lower price, at a loss to the company.

Bohdan Badya, CEO of Hidroelectrica, pointed out in an interview with Agerpres in 2018 that smart people have not disappeared, but are hiding around the corner and waiting for the return of lost privileges. “They are still lurking around the corner, and as you can see, there are still fierce battles with the ‘smart guys’ on all fronts.” Do not think that they have disappeared, they exist and will constantly try to regain the privileges that they had in the past,” said Badea.

So pay close attention to this ‘jewel in the crown’ which, if mismanaged, could once again find itself in a disastrous situation, with or without an IPO.

Currently, the Romanian state (through the Ministry of Energy) owns 80% of the shares of Hidroelectrica and 48.7% of Electrica.