UPDATE November 3, 2014: On October 31, Oltenia Energy Complex and China Huadian Engineering after all signed the joint venture agreement for the Rovinari power plant.
The steps to create a Romanian-Chinese joint-venture that would build a 500 MW coal power plant in Rovinari were frozen according to Laurentiu Ciurel, CEO of the Romanian company Oltenia Energy Complex.
Though there were many discussions in the last two years about the construction of the new plant, concerns have been raised lately about its profitability, once the feasibility study was completed.
The main concern appears to be that the Oltenia Energy Complex – the company that represents the Romanian side of the joint-venture – on several recent occasions had to sell its energy for a price way under production costs. There were times when the energy complex sold its electricity for as little as EUR 0.25 /MWh [ro] – not even one per cent of the production costs of EUR 35-55/ MWh. This price is not only too small to cover the production costs for any existing power plant but will never be able to cover investment and production costs of a new power plant which in this case are estimated to rise above EUR 1 billion.
According to Laurentiu Ciurel, at the end of September, a delegation from China Huadian Engineering, the Chinese part of the joint-venture, visited two institutions in Bucharest that could provide some explanations for the strong oscillations of coal energy prices: OPCOM – which manages transactions and contracts on the electricity market, and ANRE – the National Regulatory Authority for Energy. There is no reaction after their visit in Bucharest in Rovinari besides the fact that the steps to create the joint-venture were frozen.
However, Mr. Ciurel does not seem to be bothered by this state of affairs. He stated that the project is still on and he is confident that construction will begin in 2015 and will last for 3-4 years.
The new 500MW power plant would be inside the current industrial platform that was built in the 1970s and would burn lignite taken from the open cast quarries surrounding Rovinari. The construction itself would be executed by Romanian companies and the investment would be covered by the Chinese. Nevertheless, no financial institution has shown interest in providing the necessary funds yet. The feasibility study is said to have been completed and that the Oltenia Energy Complex is due to get a copy later this month.
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