E.ON: Romania ignored the crisis

E.ON Romania, the biggest integrated utilities group present domestically, poised to reach turnover of above one billion euros this year, says that while other economies, such as Germany's, are showing signs of recovery, no improvement is being felt in Romania in the absence of growth incentive programmes.

"Romania has ignored the crisis. We can see no improvement," says Frank Hajdinjak, general manager of E.ON Romania. The Germans have built their presence in Romania in the wake of two privatisation programmes in 2005, when they took control over the former Distrigaz Nord and Electrica Moldova.

Hajdinjak says E.ON's gas deliveries dropped by 16% in the first nine months of the year, while on the energy segment the company had 6% lower sales. "This year, 1,150 employees have left through voluntary departure programmes and we've come to 7,800 at the level of E.ON Romania," says Hajdinjak. "We're trying to avoid redundancies as much as we can and we plan to not operate more than 200 layoffs by yearend," he adds.

At the same time, the company slashed its 2009 investment programme by 60% from the initial target, to 250m RON, with most funds targeting distribution networks. E.ON Romania has also cut the investment budgets announced for 2012 both on the segment of natural gas, and on the electricity one. "We'll earmark 60-65m euros per year," Hajdinjak also specified.

Hajdinjak believes, though, some positive signals may emerge as late as the second half of next year. Meanwhile, E.ON Romania is restructuring further, so as to cope with falling sales, but especially to become more efficient.

E.ON Romania calls for energy prices to be raised by 12% and gas prices by 15% from 1 January, 2010. The problem is these demands could be bigger from several reasons. The main reason is the Romanian state's decision to extend the period during which industrial consumers are supplied with natural gas from domestic production. The state's decision also considerably expands the area of consumers. As a result, there's less cheap gas for the population, generating a need for bigger imports.

"(...)Whereas imported gas has accounted for 10-18% in the gas basket, in the wake of this move the weight of imported gas may go as high as 50%. Moreover, the price of imported gas will rise by 20% in January. All these will push gas prices beyond the 15% increase we ask for from 1 January," Hajdinjak says.

"(...)What is being said about keeping energy and gas prices unchanged next year is a fairy tale (...)," he also says.