March 29 (SeeNews) - Romania's government has said it plans to cancel some 1.6 billion lei ($378 million/336 million euro) of debt owed to the state by two major energy companies - Complexul Energetic Hunedoara (CEH) and Societatea Electrocentrale Bucuresti (ELCEN).
The safety of the national power supply system and even the country's energy security could be affected if proper measures aren't enforced, the government said in a draft emergency decree for cancelling the debt published on Thursday.
Before forgiving the debts, the government plans to transfer some assets of the two companies under its direct ownership, in order to comply with the EU's competition rules, the draft document showed.
According to local media reports, the government plans to change the legal status of CEH and ELCEN in order to avoid fines for violation of European Union state aid legislation.
According to information from Romania's fiscal authority ANAF, CEH owed 800 million lei to the state budget as at the end of last year, while ELCEN owed 830 million lei.
In November, the European Commission said that Romania needs to recover some 60 million euro ($67.3 million) of illegal state aid from CEH.
On 21 April 2015, the Commission approved a temporary aid of 37.7 million euro to CEH under EU state aid rules, as the company had been in financial difficulty since 2013. In the context of this decision, Romania committed to submit a restructuring plan aimed at ensuring the future viability of the company, should CEH be unable to pay back the rescue aid in six months' time.
As CEH failed to repay the aid and in the absence of a credible restructuring plan or any real steps towards the liquidation of the company, the European Commission opened an in-depth investigation in March 2018.
CEH operates two power plants - Deva and Paroseni, as well as four coal mines providing fuel for them. The company, which employs around 6,500 people, has been loss-making since 2013. Insolvency proceedings against it have been suspended since January 2016.
ELCEN was established in December 2002 as a subsidiary of S.C. Termoelectrica. The energy ministry holds 97.51% of ELCEN's shares, while the remainder is held by natural gas producer Romgaz [BSE:SNG].
(1 euro=4.7628)