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Govt., minority shareholder clash over Hidroelectrica’s strategy

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Romanian economy minister Virgil Popescu slammed Fondul Proprietatea, a minority shareholder in the hydropower company Hidroelectrica, which recommended the Government to stop interfering with the company's management.

The Economy Ministry controls 80% of Hidroelectrica, which is the biggest power producer in Romania and the most valuable state company. Fondul Proprietatea, managed by American group Franklin Templeon, holds the remaining 20%.

The argument started when minister Popescu urged Hidroelectrica to take advantage of market opportunities, bypass intermediaries, and sell electricity to residential end-users by a more aggressive campaign. The company would earn more than through contracts intermediated by third parties, and households would pay a lower price, minister Popescu reasoned, Capital reported.

He criticized Hidroelectrica for the ridiculous offer made to residential users, which seems to have been made only to formally comply with Government requirements.

"Hidroelectrica's offer, at RON 255 per MWh, is a joke. It's posted only on their website, they don't promote it, for whom is it - for their employees? Why don't they go to people to sign contracts? Make a proper sales department! They only have three people in the department. If they don't have billing capacity, they should get some software!" minister Popescu said at that time.

Hidroelectrica's offer, according to the market regulator's price comparison tool, is slightly higher than that asked by incumbent regional power suppliers, and some independent traders have better offers than Hidroelectrica as well.

In the press release issued in response, Fondul Proprietatea warned the minister that the law prohibits the direct involvement of the state as a shareholder in the company's management.

The Government and Fondul Proprietatea have had other disputes in the past around Hidroelectrica. The most recent one was related to the company's offer for the Czech utility group CEZ's local assets. The Government approved the offer while Fondul Proprietatea criticized the move arguing that it wouldn't bring value to the company.

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