Alro Complies with All Legal Requirements in Relationship with Hidroelectrica
Mon, 11/01/2016 - 18:26
Slatina, January 11, 2016 – Alro S.A. (BVB: ALR, “the Company” or “Alro”), one of the largest aluminum producers in Central and Eastern Europe, reaffirms its position that the Company has maintained a fair commercial relationship with Hidroelectrica, in compliance with all legal provisions governing the energy sector in Romania.
The Company acknowledges the conclusions of the Competition Council's investigation regarding the contracts concluded with Hidroelectrica, including the sanction imposed on the company amounting to 21,238,718.99 RON, which represents 1.05% of the revenue generated in 2014. Alro has not entered into any horizontal or vertical agreements related to the contract analyzed by the Competition Council.
The Company will review all necessary legal measures and will act to demonstrate once again that, in its relationship with the electricity producer, it fully complied with existing regulations.
As a final consumer of electricity, Alro has not resold electricity, but has used it exclusively in the aluminum production process within the Group. Moreover, there are no precedents in European jurisprudence regarding the sanctioning of a final consumer of electricity for vertical agreements aimed at closing the market through long-term contracts.
Alro has a unique electricity consumption profile in Romania, paying in advance for electricity supply, which provides the energy supplier with guaranteed cash flow to finance its operational and investment activities, without further guarantees for fixed assets and receivables.
Alro reminds that these contracts were investigated by the European Commission (EC) in a case regarding a potential “preferential tariff” for electricity. Following a thorough analysis conducted over several years, the EC concluded that “Hidroelectrica's prices were fully in line with the market reference price.”
According to the EC's statement from June 12, 2015, “The electricity supply contracts signed by Hidroelectrica, the state-owned electricity producer in Romania, with certain energy traders and clients in the industrial sector did not involve state aid.”
Furthermore, according to a study by the Centre for European Policy Studies (CEPS), commissioned by the European Commission, the tariff at which Alro purchases electricity is 4.5 times higher than that of the lowest-priced company in Europe and three times higher compared to the European average.
Alro operates in a highly competitive international market, which has led to the closure of several aluminum plants in recent years due to unsustainable electricity costs. The company exports over 70% of its production, and high, non-competitive electricity costs have forced Alro to close 25% of its production capacity.
For more information, please contact:
Florenta Ghita
Premium Communication
Bucharest
Phone: +40 (0) 21 411 01 52
Email: florenta.ghita@premiumpr.ro
Note for Editors:
Alro is a subsidiary of Vimetco N.V., a global producer of primary and processed aluminum, vertically integrated. Alro is one of the largest aluminum producers in Central and Eastern Europe, with an installed production capacity of 265,000 tons per annum.
The main markets for Alro's products are the European Union (Hungary, Poland, Greece, Germany, and Romania). The company also exports to the USA and Asia. The plant is certified with ISO 9001 for quality management and holds NADCAP and EN 9001 certifications for its aerospace production units, with its products meeting the quality standards for primary aluminum set by the London Metal Exchange (LME) as well as international standards for flat-rolled products.