The Ministry of Energy voted against the proposal made by Fondul Proprietatea (FP) in the General Shareholders Meeting of Nuclearelectrica held on October 17 to commission the Board of Directors of Nuclearelectrica to draft a report on the costs incurred by the company so far for the project related to Cernavoda’s reactors 3 and 4.
“We are very surprised and disappointed by the vote of the Ministry of Energy, given that it sets a dangerous precedent and disregards completely the principle of transparency in state owned companies, which is actually endorsed by the Government and the Ministry of Energy based on corporate governance legislation. The project to build Reactors 3 and 4 generates massive costs for Nuclearelectrica negatively influencing the profits of the company and shareholders are entitled to have access to information on the expenditures incurred so far for this project,” Greg Konieczny, CEO of Franklin Templeton Investment Management Limited UK Bucharest Branch (“FTIML”) and Portfolio Manager of Fondul Proprietatea stated.
Konieczny further stated: “Moreover, since Nuclearelectrica is listed on the stock exchange, the Ministry of Energy should observe even more vigorously transparency and reporting requirements to the benefit of the company and all its shareholders.”
FP official considers that the project to build Cernavoda’s 3 and 4 units is not feasible and could be value destructive for Nuclearelectrica’s shareholders if continued, given the current electricity market context, as well longer term forecasts.
“According to the latest public statements made by officials in the Ministry of Energy, this project will recover its investment value only at an energy price of EUR 82/MWh, while the current OPCOM wholesale energy price is much lower, i.e. EUR 35-40/MWh. This price discrepancy clearly shows that the project is not feasible,” the statement reads.
Fondul Proprietatea urges the Ministry of Energy and other line ministries that are majority shareholders in state owned companies “to support observance of transparency in those companies and inform regularly all shareholders on key developments that have an impact on companies’ activity.”