The Slovenia Times

Slovenia Energy Sector Will be Able to Solve Liquidity Problems


The Velenje coal mine and the TEŠ coal-powered power station will be back on their feet in 3-5 years.

The first priority of the boss of the state-owned electricity group is to wind down the Trbovlje coal-fired power station (TET), with the plan for re-hiring the redundant workers from the facility still being in the works.

"Together with the government, the Infrastructure Ministry, the Slovenia Sovereign Holding, the newly-established government coordination task force and other state-owned energy companies, we are looking for solutions to re-hire as many of the 155 workers as possible," Košorok has told the STA in an interview.

Not all of them will be re-hired, but a majority will, according to him. Grid operator ELES is ready to hire a certain number of workers, and the hydro power stations on the lower Sava river and the national railway operator Slovenske železnice could take between five and ten people each in the coming years.

The Velenje coal mine is meanwhile in a very serious position liquidity-wise, and all stakeholders, including the employees, must be aware of this, Košorok said, adding that the mine is very important in terms of the supply of the TEŠ plant with the primary energy source.

The operator of the mine, Premogovnik Velenje, will need to adjust its policy and streamline its operations. "They will have to start dealing with the primary activity, and get rid of all the others," including hotels, restaurants, ski resorts and other investments.

Regarding the controversial EUR 1.4bn investments in the new generator at TEŠ, Košorok says that TEŠ6 is already operational and that it is emitting electricity to the network. It is approaching the full capacity of 600 megawatts, he says, adding that it is expected to work until 2054.

Both TEŠ and Premogovnik Velenje will undergo a thorough audit regarding the eligibility of all operating and maintenance costs as well as costs of services and labour. "Financial restructuring plans have been made both for TEŠ and Premogovnik and this is the path they will have to take."

The plans also envisage cuts in wages and the number of employees, Košorok says, adding that labour costs represent 60% to 65% of total costs of the group. "I see certain risks here, but a first step needs to be taken. The 'opposite side' also understands that certain things will change."

The latest investment programme for TEŠ6 has been drafted and puts the price of coal at EUR 2.75 per gigajoule. The price is fixed but does not affect the overall price of the project, which currently stands at EUR 1.428bn. It does affect however the financial indicators - liquidity and expected results in the coming years.

The investments in the sixth generator will be repaid in the next 20 years. The biggest burden comes in 2015, 2016 and 2017, as HSE will start repaying the principal amount of the EUR 440m loan from the European Investment Bank, Košorok says, adding that the group will be able to solve the liquidity problems in the next three years on its own.

The first task is optimising costs, then "we can go to banks and convince them that we are on the right track, to be granted additional liquidity funds in the form of short-term loans," he said, adding that issuing bonds is also a probable option.

TEŠ will need about EUR 300m for the next year, and a certain amount will be secured through the conversion of claims, and there will be some additional borrowing. HSE will also issue in the first half of 2015 up to EUR 300m in bonds with maturity of up to ten years.

Košorok expects that TEŠ and Premogovnik Velenje will be back on their feet in three to five years if all risks are addressed and all measures are taken. There is meanwhile very little room for new investments, as HSE is simply not able to afford them at the moment.

The results of the group for this year are in line with plans. "In the first nine months there was more than EUR 50m in net profit, but the figure will be lower at the end of the year, and it will depend on the results of Premogovnik Velenje and TEŠ."

TEŠ is concluding the year with a loss of up to EUR 18m, and Premogovnik Velenje with a EUR 20m loss. The coming year is expected to be better for the coal mine operator because of the higher coal price, but it is still expected to have a losing year, as is TEŠ.


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