Energy Price

Gas price liberalization has been postponed in Romania.

Florentin Căpitănescu, 18.09.2014, 13:41

Against a complicated regional background, in which Europe’s main gas supplier, Russia, has started to trim its gas supplies including to Romania, the Bucharest authorities have resorted to measures which have been described not only as logical, but also commonsensical economy-wise. So, the Chamber of Deputies, as a decision-making forum, has passed a draft law on amending and completing the Law on Electricity and Natural Gas and Oil.

One of the main amendments refers to the postponement of gas price regulation by two years and a half, given that the initial date agreed upon with Romania’s external creditors was December 31st 2018. Beyond strategic reasons, which economic pundits insist on, the leftist government in Bucharest believes that gas price liberalization should be preceded by the creation of a predictable economic background, also invoking social reasons which many have labeled as populist.

The Social-Democrat PM Ponta, who’s officially running for president in November, told Romanians they would have borne the brunt of hiked gas prices, had that happened as scheduled. In another development, PM Ponta has voiced hope that president Traian Basescu will promulgate the laws passed by the Chamber of Deputies, as the last move ahead of their enforcement.

Also in the field of energy, very sensitive in Romania just like anywhere in Europe, the government is trying to convince the Italian giant Enel, an operator involved in the production and distribution of electricity not to give up on its operations in Romania. In spite of having made good profit on Romania’s domestic market, Enel announced its decision to sell its shares to several regional branches without giving further details on the decision.

However, specialized publications in Romania have argued that Enel has every reason to leave. Among the issues mentioned are Romania’s taxation policy, believed to be unfriendly to investors, the plummeting energy consumption caused by the present economic crisis, as well as the company’s internal problems, which it tries to solve with money coming from the sale of its businesses in Romania and Slovakia. Experts have also pointed out that Enel’s departure, a strategic investor with a huge volume of operations, is not a good signal meant to attract foreign investors, which Romania badly needs.