Sunday, August 7, 2011

Romania to Pay $661 Million of CFR’s Electricity Debt This Year

Romania will this year pay 1.98 billion lei ($661 million) that CFR SA, the state-owned railway company, owes to its electricity suppliers, including CEZ AS (CEZ), E.ON AG (EOAN) and Enel SpA (ENEL), Transport Minister Anca Boagiu said.

The price of 476 lei per megawatt-hour that CFR is paying for the electricity is triple the production cost, Boagiu said, adding that almost half of the debt represents penalties for delayed payments for used electricity “which is not normal.”

“I would recommend to all the electricity suppliers to look very carefully at the prices CFR is paying them” and “don’t assume Romania is a no-man’s land,” Boagiu told a news conference in Bucharest today. “We don’t plan to erase CFR’s debt and we will pay it this year. Afterwards CFR will be able to buy electricity from the free market.”

Jan Veskrna, the chief executive officer of CEZ’s Romanian unit, said yesterday the company may have to ask for bankruptcy of its unprofitable sales unit, CEZ Vanzare, or stop investing in it if it fails to recover a 330 million-lei debt from CFR.

Prime Minister Emil Boc’s government, which plans to sell a 20 percent stake in CFR’s freight unit, CFR Marfa, seeks to select a manager for the sale by November, Boagiu said. It may also select a manager for a 20 percent stake sale in the national carrier Tarom, by the same month.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez in Prague atjagomez@bloomberg.net

No comments: