European Commission requests dismissals of directors at Hidroelectrica and Complexul Energetica Oltenia

Several energy companies must pass, before 28th November 2025 though a transparent and fair process of selection for new managers, so that Romania can obtain the 228 million euro from PNRR, Milestone 121, corporate governance. There are 13 energy companies under discussion but in the case of two of them, the ministry of energy says that they cannot change the managers, as the European Commission requests, according to a statement made by the ministry of energy in the government meeting last week.   „The Ministry of Energy, as the majority shareholder of SPEEH Hidroelectrica, respectively the Oltenia Energy Complex, does not have legal instruments to be able to force the Supervisory Board to revoke the members of the Directorate highlighted in the COM decision" the document presented at the government meeting reads. In the case of the other companies the procedure for electing new managers has started.   The European Commission decided last year to suspend part of the payments from PNRR, on payment request no. 3, among the reasons being the non-transparent and non-competitive way in which the appointments to the head of energy companies are made. The 121st milestone was worth almost 300 million euros, but following Government clarifications, „the amount proposed to be suspended in the preliminary letter by about 71,000,000 euros".   The decision connected to the management of the energy companes was mentioned in May. The commission said that the sum could be lost forever if the milestone was not met until 28th November 2025, the deadline.   More exactly, by that moment, procedures for transparent appointment of the new managers must be organised.   The target companies are Hidroelectrica, Complexul Energetic Oltenia, SN Nuclearelectrica SA, Conpet, Romgaz, Oil Terminal, Electrocentrale Craiova SA, Midia Green Energy SA, Societatea de Administrare a Energie S., National Company for Control of Boilers and Pressure Containers (CNCIR), Eurotest and Radioactive Mineral Magurele SA, Institute for Scientific Research and Technological Engineering Mine Design on Lignite S.A, Energy Complex Valea Jiului S.   In the statement addressed by the ministry of energy to the government it is shown that a revocation would oblige Hidroelectrica to pay compensions worth five million lei. On the other hand, if the managers of the two companies are not revoked, Romania would lose minimum 25 million euros from Milestone 121.   The ministry of energy considers that the responsibility goes to the Supervisory Board from the two companies.   The institution argues that an "amendment to the constitutive act" would have no legal effect, "in view of the fact that the members concerned have concluded contracts of mandate with the Supervisory Board".   According to the document, one conclusion is "the finding that the members of the Supervisory Board of SPEEH Hidroelectrica did not give effect to the Commission's Decision, which required the resumption of a transparent and competitive selection procedure for the Board of Directors within 6 months (until November 28, 2025). This conduct can be characterized as contrary to good faith and an unjustified disregard of the requirements of Milestone 121".   The ministry of energy shows that they informed the European Commission with regard to the risks associated to appeals to the courts by people dissatisfied with the results of ongoing selection procedures’.   The Commission found four shortcomings in the Supervisory Board and two shortcomings in the Management Board. The Ministry of Energy has dismissed three members of the Supervisory Board, the fourth being the representative of the minority shareholder, who only needs to obtain the opinion of AMEPIP.   A new selection procedure for the Supervisory Board has been launched and is underway. In the case of the Management Board, the Ministry of Energy claims that it cannot act and that only the Supervisory Board can do so.   The European Commission accuses the fact that the present president of the Directorate, Karoly Borbely was a member of the Supervisory Council and was part of the Committee for the appointment and remuneration (CNR) when the selection for the Directorate was made. He resigned from the Supervisory Council after the selection procedure had started.   "He was appointed CEO on the basis of recommendations made by the NRC of which he was a member," the commission accuses. Karoly Borbely has been chairman of Hidroelectrica's board of directors since November 7, 2023. Romania could not demonstrate to the Commission that the latter’s presence in the Supervisory Council did not influence his appointment as CEO of the Directorate. The Commission also considers that the person who was appointed CFO did not meet the eligibility conditions imposed in the selection procedure for the Board of Directors at the time of the selection. "The evidence submitted by Romania could not confirm that the person held an active certification as a financial auditor, chartered accountant, tax consultant, ACCA-UK or CFA member," the Energy Ministry document submitted to the government on Thursday said.   At Complexul Energetic Oltenia SA, the Commission found five shortcomings in the Supervisory Board and two shortcomings in the Management Board, similar to the problems at Hidroelectrica.   The members of the Supervisory Council were revoked, a new selection procedure being started,and being underway. As regards the Board, similarly to Hidroelectrica, the ministry of energy considers that they cannot select new members. They also admit that’ obviously’ the deadline for meeting Milestone 121 will not be met. "More specifically, COM noted that two of the current members of the Complex's Board of Directors were involved in the procurement procedure of the independent expert who carried out the selection of the Board of Directors. As in the case of Hidroelectrica, the Ministry of Energy does not have the legal possibility to revoke the members of the Board of Directors, this prerogative being strictly incumbent on the Supervisory Board, which will obviously lead to the overrun of the deadline for compliance measures for Milestone 121", the document submitted to the Government states.