Hidroelectrica to execute 8 mln euro guarantees from Andritz Hydro

Hidroelectrica will execute in the first week of March the letter of guarantee worth 8 million euro issued by UniCredit Bank Austria on behalf of Andritz Hydro for the refurbishment of five hydropower plants, after having won a dispute against the Austrian company.

The Vienna Court dismissed on February 19, 2015 the appeal initiated by Andritz against the enforcement of the letter of guarantee corresponding to a contract Hidroelectrica signed in 2004 with the consortium between Andritz and Voith for upgrading the Ipotesti, Draganesti, Frunzaru, Rusanesti, and Izbiceni hydropower plants.

The decision is final, the Romanian hydropower producer expecting a similar outcome in the dispute against Voith in late March, when the Court will return the verdict.

Hidroelectrica paid 400 million euro as per the refurbishment contract for the five power stations commissioned between 1987 and 2000, whose total capacity installed amounts to 270 MW, and that had been upgraded by Andritz and Voith between 2006 and 2013. As during the guarantee period Hdorelectrica had discovered corrosion at those plants and had notified the consortium to replace the equipment affected, without success, though, in July 2014 the state-owned company requested UniCredit Austria to execute the related guarantees in the amount of 15.6 million euro.

Subsequently, both Andritz Hydro and Voith Hydro Holding have initiated legal procedures to block the execution of the letters of guarantee through which they managed to suspend it temporary. Hidroelectrica, represented by its judicial administrator, Euro Insol, disputed the initial decision, winning the litigation eventually.