Following the increase of green certificates quota by 17%, the aluminum producer Alro will develop a plan for the closure of a significant key capabilities for primary aluminum production in order to reduce drastically energy consumption, a decision that could result in a significant decrease in the number of employees.
“The new quota for green certificates went up 17% from the previous estimate and will have a negative impact on the financial results for this year. Board of Directors will prepare a plan for the temporary shutdown of part of the company’s operations to assess the viability continuing activity,” said the aluminum producer in a release sent to the Bucharest Stock Exchange (BVB ).
Alro, one of the biggest consumers of energy, states that on February 26 the share of green certificates which all consumers must pay increased to 0.224 CV/ MWh, according to an order of the National Regulatory Authority for Energy (ANRE). This rate must be paid by all energy consumers, as part of the support scheme for renewable energy production in Romania.
“All the signals of the market shows that subsidies for renewable bubble will continue even more aggressively. The eco- tax increase was generated by the emergence of new generation of photovoltaic parks (an increase of 2.000% of capacity last year) and of the wind power installed by the end of 2013. Main impact factors are lack of predictability for the application of the support scheme for renewable energy and a decrease in the international aluminum market. Accordingly, the company will have to pay extra for eco -taxes about 20 million lei, only for the expenses accrued in 2013, and the impact on the budget for 2014 is expected to reach at least 80 million lei, according to the current estimate of the company ” , says the statement.
Closing production capacities and lay-offs
The aluminum manufacturer specifies, however, that the absence of any measures to support industrial consumers in accordance with the guidelines proposed by the European Commission Directorate General for Competition puts the company in a position to reassess all operations for the current year.
“Therefore, the company needs to develop a closure plan for an important part of the key capabilities for the production of primary aluminum, thus drastically reducing the power consumption. This could lead to a significant decrease in the number of employees of the company, for which measures will be discussed in advance with the social partners ,” reads the statement.
In the first half of last year the average number of employees at Alro was of 2.459, compared to the same period in 2012, of 2,516.
Energy consumers paid 415.8 million euro last year to support renewable energy through green certificate system, 33.7% more than the level reached in 2012, of 310.8 million euro, even if the price of a certificate has decreased by 25%.
Given the increasing share of green certificates to be paid, the company states, in the press release that administrators do not support the proposed budget version 2014 and published in early February on the company’s website for AGM scheduled for Friday.
In the current budget the company management has considered a drop ” in the co-generation bonus and burden green certificates” by implementing a consumer exemption scheme in accordance with proposed guidelines for public consultation launched by the Directorate General for Competition (DG Competition) of EC on December 18, 2013, according to Mediafax.
Revenues were projected to grow by 5.7% to USD 642.3 million and the company was to record a net profit to USD 3.2 million.
Alro posted for last year a preliminary adjusted net loss 78 million (USD 23.3 million), compared to a profit in 2012 and the business fell by 12% to 2.02 billion lei (USD 607.6 million). Company registered in 2012 an adjusted net profit of 123 million lei at a turnover of 2.3 billion lei.
Vimetco Group, registered in the Netherlands and controlled by the Russian businessman Vitaly Mashytski, holds 84.19% stake in Alro, and the Fund is 10.21%.
Alro shares closed Tuesday’s session up 5.77% at a price of 1.43 lei. At this quotation, the company’s capitalization is 1.02 billion lei (226.2 million euro).