- CET Govora's new steam price is 135% higher than in 2018.
- CIECH Group invested over EUR 100 million in Romania from 2006-2018.
- CET Govora terminated the steam supply contract on June 18, 2019.
- CIECH Soda Romania's production halt starts on September 18, 2019.
Reason for Production Halt
CIECH is preparing to halt production at its Romanian soda factory starting September 18, 2019, due to the termination of its steam supply contract with CET Govora. The new steam price proposed by CET Govora is 135% higher than in 2018, making operations unprofitable.
Impact and Future Plans
Despite the halt, the CIECH Group's adjusted EBITDA target of over PLN 900 million for 2021 remains unaffected. The company is exploring alternative steam sources and is open to further negotiations with CET Govora. A broad severance package, including voluntary leave and outplacement programs, is being developed for employees.
Background
Technological steam is essential for soda production, accounting for over 30% of operating costs at CIECH Soda Romania in 2018. CET Govora, currently in bankruptcy, terminated the existing steam supply contract on June 18, 2019, and proposed a new price that includes the cost of CO2 certificates while also limiting supplies by approximately 20%.
Investment and Modernization
Between 2006 and 2018, the CIECH Group invested over EUR 100 million in the Romanian plant, modernizing production processes and expanding capacity. Products from the Romanian plant are distributed to Europe, Asia, and Africa. The Romanian soda plant is the smallest of the four soda factories in the CIECH Group, with the others located in Inowrocław, Janikowo, and Stassfurt, Germany. Unlike the Romanian plant, the other factories have their own sources of technological steam.
