This puts pressure on the process under which Liberty Group and the restructuring manager are seeking a buyer.
The company is licensed to buy electricity on the day-ahead market (DAM), but this requires financial resources and entails high costs at current spot market prices.
The company had recently sent most of its 2,200 employees home temporarily and is operating only its welded-pipe unit.
The electricity supply contract between Liberty Galați and Electrica Furnizare has not been extended because of unpaid debts, and a possible disconnection from the grid is “a matter of days”, sources familiar with the situation told News.ro, as reported by Profit.ro.
“We are on the verge of disconnection; it’s a matter of days,” one source said on October 30. “This time we don’t even have a contract anymore. At least we have access to the DAM, so we can stay connected for a few more days.”
The company needs a constant electricity supply to keep its equipment on standby and avoid the high costs and complex technological processes involved in resuming operations.
“A possible disconnection of the plant from the electricity supply would cause all the plant’s systems to collapse within just a few hours, making it difficult to re-energise the steel unit. This would be an extremely complex process that has never been carried out before and which we believe could take up to 50 days. We also cannot rule out imbalances in the national energy system,” Liberty Galați management explained last week, as quoted by Profit.ro.
In addition, the only section currently operating at full capacity would also be affected.
“We would also have to stop production at the welded-pipe section, although it is fully booked for the next two to three months, and current and future customers would no longer place orders,” the management of the Galați plant said.
Finance minister Alexandru Nazare announced that the problems facing Liberty Steel would be on the government’s agenda this week. The state has guaranteed almost EUR 300 million of loans extended by Eximbank in an attempt to prevent the company’s collapse.
The steel mill is of strategic importance to Romania’s industry and could benefit significantly from Ukraine’s reconstruction. However, it is currently seeking an investor as Liberty Steel Group, part of ailing Sanjeev Gupta’s GFG Alliance, failed to fulfill its commitment made when taking it over in 2019. Liberty Steel incurred huge losses, accumulated debts estimated now at EUR 420 million, and reduced operations and employment.
The management of the Galați steel plant announced on the afternoon of October 31 that it had secured a short-term extension of electricity supply from Electrica Furnizare, local daily Viața Liberă reported.
“Thus, we avoid entering the disconnection procedure, as well as the major and unwanted effects that would have followed a possible interruption. We thank those who worked to make this last-minute solution a reality,” said Aida Nechifor, general manager of the Galați steel plant.
Liberty Galați thus avoided disconnection from the electricity grid at the last minute. This could have occurred at midnight between October 31 and November 1.
Attention is now turning to the next government meeting, at which, according to finance minister Alexandru Nazare, the situation at Liberty could be discussed.
At the end of the government meeting on October 30, Nazare stressed the need to reconstitute the interministerial committee responsible for analysing the situation of the Galați steel plant.
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