The liberalisation of the gas market

The gas market in Romania is now fully liberalised, a development whose effects are yet to be seen.

Eugen Coroianu, 01.07.2020, 14:00

Beginning
on 1st July, the domestic gas market in Romania has been completely
liberalised, something that should normally lead to an increase in competition
and a decrease in prices. Household users are yet to feel these benefits, given
that the big suppliers haven’t changed their offers, notes the Romanian news
agency Agerpres in its analysis of this market. Theoretically, Romanian clients
have had the possibility to change their gas supplier ever since 2007 but very
few have done so because there has been a minimum regulated price established
by the Romanian Energy Regulatory Authority. This system no longer exists as of
1st July, and household users can now survey the market and choose
the best offer.

Agerpres
warns, however, that the liberalisation comes at a time when the energy supply
market is in effect divided among very few suppliers, with two companies supplying
90% of household users. These companies have sent their users offers that
contained the same price as before and, unless they receive an answer, the
offers in question apply automatically. The authorities are saying, however,
that tariffs for the population should decrease, because the gas intended for
delivery in the second part of the year is traded at lower prices on the stock
exchange markets.

A week
ago, the Romanian energy minister Virgil Popescu said the population should pay
10-15% less after liberalisation. He also said he was slightly disappointed with
the response from suppliers, especially the big companies who hold a very big
share of the market, who, he says, have tried to take advantage of the fact
that Romanians are averse to change and perhaps not very well-informed. The minister
warns that if the big suppliers do not lower their prices, the competition law
in force allows the government to intervene on the market for a period of six
months.

The
representatives of the Romanian Energy Regulatory Authority also admit that it
will take some time for users to feel the effects of the liberalisation on
their budgets. The liberalisation will have positive effects for household
users, even if not exactly starting tomorrow, on this market dominated by a
small circle of providers, said Zoltan Nagy-Bege, the vice-president of this regulatory
body. It remains to be seen what happens next considering that more than a half
of people in Romania haven’t even heard about the liberalisation of the gas
market, according to an opinion poll published recently.

Moreover,
a gas supplier from the domestic market has poured cold water on the
authorities’ enthusiasm, saying there aren’t big amounts of gas available on
the market at reasonable prices and for the long term for the population’s gas
bills to decrease as of 1st July. This statement was described by
the energy minister Virgil Popescu as somewhat arrogant. Certain providers are
abusing their dominant position and refuse to lower their prices for end
consumers although they are buying gas from producers at much lower prices, the
minister explained.

The
electricity market will also be fully liberalised in Romania starting next
year. (CM)