The Autonomous Administration for Thermal Energy Distribution (RADET) is the second largest system of thermal energy in the world after the one in Moscow, representing, at the same time, a huge bottomless bag of money, said on Thursday Gheorghe Piperea, lawyer at Piperea and Associates, the receiver of RADET, at a conference organized by The Diplomat.
“I do not want to shock the audience, although some figures that you will hear are truly shocking. I found, when I took over this mandate, that the thermal energy system in Bucharest is the second largest in the world, the first being Moscow. It is so large that no less than 563.352 apartments, 8.500 housing units, more than 1,2 million people are still supplied by it”, said the lawyer.
He compared RADET with a huge bag of money. “The problem of RADET, like with other public companies, is that this bag of money has no bottom, it is pierced on everywhere. No matter how much money you put in, if you do not realize a simple sewing operation of the bag, you will get nowhere. Regarding this huge bag of money, we are all contributors to the Bucharest City Hall budget, which pays each year 15% of its budget for the heating subsidy for the Bucharest inhabitants”, continued Piperea.
He also said that the City Hall wants to attract, through the Operational Plan for Large Infrastructure, 200 million euro from the European Union to restore a part of the thermal energy infrastructure.
“Everybody has to know that the Bucharest City Hall is implementing a program that will attract from the European Union 200 million euros to rebuild – not all, because more money are necessary, the infrastructure that RADET uses to give heat for Bucharest”, said the receiver.
RADET will merge with Elcen by absorbing it
The Autonomous Administration for Thermal Energy Distribution (RADET) will merge by absorption with Electrocentrale Bucuresti (ELCEN), and the shares of the Ministry of Energy in the new entity will be transferred to the Bucharest City Hall. “The main element in the reorganization plan for both companies is the merger, as soon as RADET, which is an autonomous administration, will be transformed into a joint stock company. After this step, there will be a merger by acquisition, in which the future RADET will swallow ELCEN. As aresult, the mutual debts will be totally erased and thr rest will remain to be covered”, said the lawyer.
According to him, the entire procedure will be subject to the state aid legislation. “The merger will involve the absorption of what RADET will be over an year or so, and of what is currently ELCEN, following that the shares that belong to the Ministry of Energy to pass into the ownership of the City Hall, through a commercial and legal sound procedure, so that we do not have a risk of state aid involved”, said Piperea.
He argued that there will not be a reorganization plan for both entities earlier than November 2017. “On the other hand, it is good to note that the significant economic and social effects already occurred. Some of them are automatic: neither of the companies can be sued anymore. Secondly, the penalties will not increase. Out of the 3.6 billion (LEI – e.n.) that RADET owes to ELCEN, more than 3.3 billion are penalties, which for now have been frozen. The agreements that were undergoing are continuing, except those that were illegal and which were abolished by us”, said Piperea.
The City Hall paid upfront about 420 million lei into the subsidy account for natural gas throughout the entire winter, until April, so there won’t be any gaps in the supply of heatiing to the population, he recalled. “If this plan fails, both entities, RADET and ELCEN will declare bankrupcy”, added the receiver.
ELCEN and RADET entered into insolvency last year in Autumn.