Bucharest thermal energy distributor RADET, which went into insolvency at the end of September last year, had RON 3.66 billion (EUR 810 million) worth of debt at the end of 2015.
Some 98% of the amount represented debts to ELCEN, the state-owned power producer that also provides the heat and hot water distributed in Bucharest, reports local Hotnews.ro.
RADET’s dire situation was caused by the Government’s and the Bucharest City Hall’s failure to pay the promised subsidies amounting to RON 1 billion (EUR 221 million) or the delay in paying the subsidies, according to a report on the insolvency causes drafted by local firm RomInsolv, RADET’s judicial administrator.
Other causes included the bad condition of RADET’s transport network, the lack of investments, the decision to freeze the heat tariffs although it was actually necessary to increase them. The late payment of subsidies led to the accumulation of penalties.
The report also points out that the heating system is old and oversized. However, the document doesn’t pinpoint to any guilty parts.
According to RomInsolv, RADET had to continue its activity, although this led to more losses, to avoid a social crisis that would have affected 1.25 million people in Bucharest who would have been left without heating.