The Galati steel plant needs 100m euros in funding to cover its carbon costs, as Liberty Galati is part of the drifting empire of industrialist Sanjeev Gupta, according to an FT report.
The situation highlights the growing problems facing the GFG Alliance empire of the industrialist Gupta after the collapse of its largest creditor, Greensill Capital.
The publication wrote in March that units in Eastern Europe, including the former Sidex Galati, were assigned a negative value of 2.6 billion dollars, in the context in which they have debts of 1.6 billion dollars. This negative value emerged from the calculation of the consultants called by GFG to think of a restructuring plan.
In the case of Liberty Galati, the plant sold carbon loans of almost 100 million euros last year, after receiving them in accordance with the European ETS emissions trading scheme.
Under this scheme, large polluters receive a certain allocation of carbon credits free of charge each year. These credits are calculated on a case-by-case basis and are issued in February. Subsequently, polluters have to give back enough carbon credits to the EU to cover every tonne of emissions by April next year.
Liberty Galati has been selling carbon credits received for 2020 since last year, and is now facing the identification of the funds needed to buy the carbon credits needed for emissions in the last 12 months.
An additional challenge is EU carbon credit prices, which have risen sharply in recent weeks.
The plant in Galaţi is in talks with Liberty Ostrava from the Czech Republic, in an attempt to obtain the carbon credits that the Czechs did not use.
The sale of carbon credits is a common practice among major European industrial groups. Companies can be left with unused carbon credits if they manage to reduce their emissions during that year, which allows them to capitalize on the rest of the credits.
Others choose to sell the entire allotment and buy them back in 12 months.
Mediafax wrote at the beginning of the year that the heads of the Galati plant would be involved in the corruption scandal involving the former Minister of Environment, Costel Alexe.
According to FT, Liberty Steel announced that it will “fully cooperate with any investigation launched by the Romanian authorities.”
How Liberty Galati responds to the topic in the Financial Times:
Dorian Dumitrescu, communication director of Liberty Galati:
“Like other large industrial companies, the LIBERTY Steel Group units trade in carbon credits as part of their regular business.
This aspect includes credit buying and selling transactions, depending on commercial requirements and the market price.
We do not comment on the current balances of our units for commercial reasons, but we expect them all to show the correct number of credits to the EU Register at the end of April. “
Liberty Galati is strongly committed to ensuring that its representatives act to high standards of behavior and that it has implemented sound procedures in place to support this commitment.
We will fully cooperate in any investigation carried out by the Romanian authorities. Liberty has already ordered an external inquiry into the matter, which is ongoing.
In order to ensure that the process is completely objective, a manager from the upper echelon voluntarily relinquished his responsibilities until the investigation was completed.
We will not comment on this matter while the investigation is ongoing. “
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