Energy price capping ordinance reaches Parliament

The Ordinance on Energy and Gas Price Capping was approved by the Romanian Government and is to be debated by Parliament

Daniela Budu, 21.03.2022, 13:50

Given the situation caused by the increase in the price on the electricity and natural gas markets at international level, Romanian authorities are looking for solutions, just like the other European states, in order to further help their citizens. After intense debates, the Emergency Ordinance regulating these prices for one year, starting April 1, was approved by the Government on Friday and is to be debated by Parliament next.

The measure will apply to both domestic and industrial consumers, based on the average monthly energy consumption registered in 2021 and the final prices for natural gas. According to the Minister of Energy, Virgil Popescu, the provisions of this ordinance will benefit eight million households, in terms of electricity, and all households connected to the natural gas network, regardless of consumption. The ruling Social Democratic Party (PSD) and National Liberal Party (PNL) give assurances that the measures adopted by the Executive will have major positive effects on Romanians’ purchasing power and will ensure the predictability of costs next year.

However, the Save Romania Union (USR) believes that the ordinance blocks investments in the two sectors, and representatives of the Alliance for the Union of Romanians (AUR) say that, through the approved measures, the Government guarantees very high profits for energy companies, providing them with state subsidies. After reaching a consensus on new regulations on electricity and gas prices, representatives of the governing coalition each support other initiatives that they say will ensure an increase in employee income, strengthen the economy or reduce the pressure on inflation.

PNL proposes to reduce the health insurance contributions from 25% to 20%, as a measure to increase the net salary. The party’s leader, Florin Cîţu, sees it as the only measure that could increase the net income of all employees and that would not represent a cost for companies. According to him, this would have a smaller impact than subsidising energy bills and explains where these amounts could come from.

Florin Cîţu: From the same place where we get the money for energy bills, only here we are talking about a benefit for all Romanians, money that will be, on the one hand, invested in the economy, and we ‘ll also have money left over from corporate profits. That means about 20 billion lei (n.r. about 4 billion euros) that will stay in the budget.

USR supports the measure, but the Social Democrats (PSD) do not believe that the proposal is sustainable for the state budget. PSD President Marcel Ciolacu:

We have asked the Minister of Finance to give us an estimation of the budgetary impact. From my point of view, given the interventions regarding energy, I don’t think it’s sustainable. But maybe those who proposed it have a miraculous formula.

Instead, the Social Democrats have announced that they want a quick regulation of fuel trade and are calling for measures regarding vehicle insurances, which they say would reduce both transport costs and the inflationary pressure. (MI)