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Current proceedings within the HSE group, focussing on the most recent events at the Šoštanj thermoelectric power plant

1. 6. 2016

In sending you this letter we wish to impartially inform you of the current proceedings within the HSE group, focussing on the TEŠ Company, in particular on the events which were a result of an incident, an act of crime that took place at the power plant (TEŠ). On May 22, 2016 at 09.42pm block 6 was taken out of the network after a condensate pump went out of commission. At the inspection that followed it was discovered that the roughing pumps’ electric conductors for measuring temperature and vibrations had been cut. (Image1, 2 of the attachment). The electric conductors were cut by an unknown person. After evaluating the situation temporary repairs were performed on the electric conductors for measuring temperature and vibrations, specifically on the condensate’s roughing pump. Block 6 TEŠ was connected back to the network on the following day, May 24, 2016 at around 9pm.

In addition to the incident described above and allegedly carried out by either one or more perpetrators, more signs of intentional damage were found on  block 4, which was subsequently also out of commission for more than 12 hours. This incident, which fortunately and as a result of its timely discovery had no effect on the business, was discovered on block 4 also on Thursday May 26, 2016.

 

Due to the damage to property and with it the temporary decommissioning of two of the functional blocks at the Šoštanj thermoelectric power plant (TEŠ), the company suffered an economic loss in the amount exceeding 300,000 EUR.

Ungounded rumours and speculation have nevertheless led to statements which have begun to emerge among the public; these claim that the incidents were a direct result of the enforced measures carried out as part of a restructuring of the marketing and financial departments of the TEŠ Company. Namely, measures calling for a cut in labour costs. It is a precedent yet to be seen in the Slovenian energy sector. The management of both companies strongly condemn these incidents. To look for any kind of attenuating circumstances and links with the rationalisation measures is completely unacceptable. To intentionally damage a production facility, a part of significant infrastructure for the entire country, is not in any way considered an acceptable way of showing disagreement with the decisions which the company’s management and its partner have made. The latter have  followed all the required technical aspects of the accepted documents both within the company and the HSE group.

 

The process of implementation of the rationalisation measures and the optimisation of business performance at the TEŠ conforms to the verified documents accepted by both the TEŠ and the general assembly of the HSE – SDH: (1) Business plan for the period 2016-2018; (2) A financial and business restructure plan for TEŠ; (3) Development plan 2016-2020, emphasising the restructure of the HSE group; (4) Decision of the Court of Auditors – audit report no. 321-1/2014/49 dated August 19, 2015.

 

In accordance with the above, a decision was made in the TEŠ Company on February 29, 2016 to introduce a restructure and reorganising plan for the business processes, which has been underway since April. The emphasis of this plan is on the optimisation of labour costs, a new system of employee positions (a result of a reduction in business activity which has led to the termination of numerous job positions in the technical, as well as in the support sector) and an overhaul or an adjustment of the salary system. Employment contracts at the TEŠ have up to this point been signed against the tariff sections of both the business, as well as the collective agreement contracts; as a consequence they were unreasonably (too) high. Following the provisions of the new and valid systemisation of job positions, the salaries of the TEŠ employees now comply with currently valid company regulations. 

 

On May 10, 2016 contracts were offered to 172 employees for suitable job positions. Up to this point in time 94 employees have signed the new contracts. Salaries specified in the offered contracts are in accordance with the valid regulations of the TEŠ and take into account both, the collective agreement of the power industry, as well as the business collective agreement and accepted and verified business plans. In the following days and as part of the excess workers programme (altogether 118 surplus employees) a further 92 employees will be given contracts for job positions different to those they have previously held. Employees who accept these contracts for the new job positions are entitled to the payment of the leaving allowance determined by the difference between their previous and current salary, a result of being downgraded to a lower paid job. For the remaining 25 employees the TEŠ Company is negotiating potential job transfers with various employers locally and in regions a little further away, in particular with the HSE d. o. o. as the owner of TEŠ. Those external contractors whose jobs can be performed by TEŠ staff will have their contracts terminated.

At the end of the year 2016 the TEŠ Company is expected to have no more than 339 employees. We particularly emphasise that up until now and also for the future, all changes regarding reorganisation of the Šoštanj thermoelectric power plant were and will be performed according to regular social dialogue consisting of all the key factors: the union representatives and the TEŠ Works Council. We each have a significant final goal, namely assuring that none of the TEŠ employees lose their job.

 

It is worth adding that TEŠ Company currently has two arbitration proceedings initiated: (1) A proposal to initiate an arbitration proceeding according to the Worker Participation in Management Act, whereby the subject of the arbitration proceeding is the employer’s decision to restructure and reorganise the business processes at TEŠ (arbitration is yet to be constituted); and (2) A proposal to initiate an arbitration proceeding SDE, which was launched based on the Article 37 of the collective agreement, regarding the right to withhold the employer’s right to accept the programme of excess workers programme. A commission has also been set up to negotiate changes to the collective business contract.

 

The complexity and the volume of the tasks ahead of the HSE group demand not only access to additional external financial sources, but an increase of our own additional financial resources. Alongside the already started business rationalisation and optimisation, the focus will be finding additional group synergy and consolidation of business processes at a group level. It is worth mentioning that these business rationalisation and optimisation procedures are not being implemented exclusively at the TEŠ d. o .o. and PV, d. d., but also in companies dealing with hydro energy - DEM d. o. o. and SENG d. o. o. – and of course the holding company HSE d. o. o. It is also necessary to point out that a substantial flow of funds has been diverted to stabilise TEŠ. Last year we recapitalised TEŠ to the amount of 248 million € and recapitalised PV for the amount of 75 million €. We issued guarantees for DEM and SENG for ensuring the liquidity of the entire HSE group. We have also already back in 2014 sold our divestment of shareholdings to HESS d. o. o. 

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