Heating problems in Bucharest ahead of winter season
The Bucharest Court of Appeals has ruled the public utility company RADET bankrupt.
Corina Cristea, 12.11.2019, 13:55
Recent rumours regarding the impending bankruptcy of the public utility company RADET have been confirmed this week by a final ruling of the Bucharest Court of Appeals. The judges dismissed the appeals and upheld the decision made in April this year by the Bucharest Court, which had rejected the companys reorganisation plans and declared it bankrupt instead.
Without any significant investments for the past 50-60 years, Bucharests public heating system has shown ever more frequent signs of failure, and the temporary suspension of hot water and heating supply in order to fix breakdowns has turned into a regular practice.
As Bucharests Mayor General Gabriela Firea explained before the Court hearing, a prospective windup of RADET is not to mean that the heating supply system will be dismantled. Instead, the utility will be taken over by the Termoenergetica Municipal Company.
One of the causes of RADETs huge debts is the accrual of penalties, which is not related to how the company has been managed, but rather to an unfavourable contract between RADET and ELCEN, on the one hand, and to the actual state of the infrastructure, the Mayor also explained. ELCEN, a state-owned company set up in 2002, is the biggest producer of thermal power in Romania. There is a 10-day delay between ELCENs invoices to RADET and the date when RADET issues invoices to households, because the company has to read some 36,000 heat meters, the authorities explained. This is why, for years in a row, RADET has been unable to collect the money to pay its invoices in due time, and this delay led to penalties imposed by ELCEN.
The thermal power producer took advantage of its position in the market and did not agree to streamline the economic circuit so as to help RADET from amassing penalties and artificial debts, the Municipality also argues.
The Economy Minister Virgil Popescu promised however that the people of Bucharest will not be left without heating and hot water, because ELCEN is willing and able to continue to supply thermal power to households. The only aspect left to clarify is the operator that will carry and deliver it. The Bucharest City Hall announced its intention to take over the service through a company it has recently set up, Termoenergetica, but this company is neither licensed as a public utility, nor has it signed a contract in this respect with ELCEN.
(translated by: Ana-Maria Popescu)
