Swiss co Alpiq says to review business in Romania after Hidroelectrica cancels deals

Swiss energy company Alpiq said it will review its business in Romania after the country's insolvent hydropower producer Hidroelectrica unexpectedly cancelled its long-term power delivery contracts with two of Alpiq's local subsidiaries.

"The cancellation will have a negative impact on Alpiq's 2012 results," the company said in a statement on Tuesday.

State-controlled Hidroelectrica, declared insolvent by a Bucharest court in June, has cancelled its long-term contracts with Alpiq RomIndustries and Alpiq RomEnergie, with effect from August 1.

Romanian media has reported that Hidroelectrica has cancelled over the last few weeks several bilateral contracts under which the company had been selling electricity below market prices.

"This decision by Hidroelectrica has broken off the ongoing negotiations despite Alpiq acting in good faith to reach a mutually satisfactory conclusion," Alpiq said.

The company said it has launched a legal assessment of the situation.

"The book values of the contracts, incl. goodwill from acquisitions, amount to around CHF 80 million [$80.6 million/67 million euro], with EBITDA [earnings before interest, taxes, depreciation and amortisation] at around CHF 20 million," the statement added.

Alpiq Group has subsidiaries in more than 20 countries. It specialises in electricity generation and transmission, sales and trading, as well as energy services, and is responsible for around one-third of Switzerland's electricity supplies.

In Romania, the company has four subsidiaries.

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