EMS blames E-ON for its black times

The following post is an article that I have written in 'Gazeta de Bacau' newspaper and it was published as the main story of the issue of March 28 2008. 'Gazeta' is a weekly newspaper in Bacau, the East Romanian town where I was born. It was my second job at a local newspaper and I worked there for more than a year, before coming to Canterbury.

The story is very important because it covered an important issue of the people from Bacau at that time. Mainly, the region's power suplier, the German energy giant E-ON was accused by the state owned company 'Electrical Maitenance Services' Moldova (EMS) of unlawful practices and sabbotage regarding the network's maitenace contracts. Losing more and more maitenance contracts, EMS's financial statements predicted an eventual bankrupcy.

City residents were suffering because of this 'war' between the energy suplier and the maitenance services provider. Lots of problems regarding the electric power emerged in the city. Even the wires got frozen several times in winter time, leaving people without power. EMS could not intervene due to the ending of contracts impossed by E-ON.
Bellow is an aproximate translation into English. I hope it is pretty clear and I wish you a nice lecture:


The energy distributor E-ON was heavily accused of sabotaging the activity of “Electrical Maintenance Services” Moldova (EMS)

All this happened Wednesday, March 26, in the conference room of a hotel from Piatra Neamt. Apparently, the reason EMS’s director Toma Suru called the local press for is to announce the job cuts plan that will affect the company. Mr. Suru, the chief of EMS’s Moldova branch began by explaining why the central executives are missing from this meeting:

"Today should also be here the general director, but he had to stay in Bucharest to manage some organizational activities about the NATO summit that will take place in less than a week”.

A brief history of EMS

Electrical Maintenance Services it is a public funded company that was established by a governmental resolution in 2001. At that time this action was a necessity due to the partial privatization of the public energy supplier.

Until 2001 only the public company held the energy distribution and also the maintenance services for the entire national network. In 2005, the E-ON energy giant took the responsibility of supplying electricity for Moldova and the rest of Eastern Romania. This means that the main customer of EMS it is the massive German company, because obviously the electrical network needs to be maintained and repaired.

E-ON seems to be the main problem of EMS

TomaSuru thinks that from 2005, since when E-ON Energy operates in Moldova, lots of problems emerged.

"In 2005 E-ON has limited the contracts which we had prior to the privatization of energy, even if our company has an experience of 120 years”, TomaSuru says. He added that market liberalization allowed the access for small companies with few staff and poor experienced, but evidently companies who demand low prices:

“It looks like E-ON prefers low prices instead of quality services. For this reason we are about to be excluded from the market, although at national level we have 11,000 workers, of which 1400 in Moldova. Things like professionalism and infrastructure are on our side, but the E-ON leadership does not think that this is enough to give us contracts and so to do the work for which we are entitled to”.

EMS was forced to drop prices in orderto compete against those tiny firms. Also, they had no option than to accept one-sided contracts imposed by E-ON. According to the press release, the EMS central administration says: "... in spite of negotiations, E-ON Moldova has not fulfilled the obligations assumed, invoking the lack of liquidity and lack of materials. In 2007, E-ON issued the orders for only 50% of the contracts awarded. As a consequence, the EMS’s revenue has seriously diminished”.They are also accusing E-ON of unfair practices as stealing their skilled personnel.

An analysis on the financial results for the past two years reveals that the company is no longer cost-effective.

35% of employees will be dismissed

The lack of contracts convinced the leadership of EMS to prepare a staff restructuration plan. This will be applied to all over the eight branches of the company. Moldova division will waive 35% of 1,400 employees, in three stages. The first one means that the employment contracts will go to an end by mutual agreement and the deadline of it is April 11. The last two stages involve the elder aged workers with health problems.

"However, we really do not want to get to the third phase. We will use it only if the outlook will be bleak indeed”, Mr. Suru said.

Workers to be sent home will receive compensatory wages (between 2-20 average national wages) depending on seniority, training and other such criteria.