Large gas field found in northeast Romania

BUCHAREST, July 17 (Xinhua) -- Romanian gas company Romgaz has discovered a gas field with a storage capacity of 200,000 cubic meters in the northeast, the official Rompres news agency reported Thursday.

Romgaz had planned in 2006 to explore gas fields in eight areas throughout Romania, said the company's general manager Francisc Toth.

Seven gas fields had been found, he added.

The state-owned corporation is Romania's largest producer and supplier of natural gas, taking up 41.2 percent of the domestic market.

Romania is one of the few European countries which have natural gas resources.

With annual gas production of 10 billion cubic meters, 60 percent of the country's domestic demands can be fulfilled.

Romania wants cooperation with Gazprom to continue

18 July 2008
FOCUS News Agency

Bucharest. Romania wants cooperation with the Russian giant Gazprom to continue after 2011 when the bilateral agreements for transits of natural gas will expire, but several details need to be clarified, governmental sources said as Romanian Curierul National daily cited.

These sources said that transfer of gas through Romania, Bulgaria, Turkey, Greece and Macedonia need to be explained additionally but any details are pointed.

Six measuring stations, situated in the entrances of the Romanian towns Isakcha and Negru, implement gas transit through Romania. The transit is implemented by three pipelines, each 192 km long, Curierul National daily stresses.

Poland, Romania are tops in survey of private equity

By MATT TURNER

July 17, 2008

Emerging Europe is likely to attract more investment in the next year than Asia, Russia and South America, with Poland and Romania proving to be the most attractive venues, a survey of private-equity groups has found.

More than two thirds of 100 private-equity professionals quizzed in a survey by data provider Mergermarket said the region was the most likely destination of investment for Western private-equity firms.

This was nearly double the number who thought Asia and Russia would attract the most investment, while one in 10 thought that South America would be the prime location for Western equity investment.

The report was compiled by Remark, the market-research division of Mergermarket, in conjunction with accountancy KPMG LLP, investment bank Unicredit and law firm Baker & McKenzie.

To bolster private flows into the region, 71% of respondents said, governments in the region should implement favorable tax incentives to encourage external investment. Half thought that governments should reduce protectionist measures against foreign firms. The survey found that, in Eastern Europe, Poland and Romania attracted the most attention.

• From Financial News at www.efinancialnews.com.

Romania: Boosting Investor Confidence

Oxford Business Group Latest Briefing

A new investment law is to secure long-term financing from both local and foreign enterprises, offering Romania an opportunity to spread Bucharest's economic benefits to the country's furthest corners.

On June 27 the Romanian Government approved the long-awaited investment law. Initially a draft proposal, the government decided to promote the proposal through emergency ordinance, thereby avoiding a time-consuming approval process in parliament and having as "prompt as possible answer to the business environment's request to regulate the investment framework," Prime Minister Calin Popescu-Tariceanu told local media.

As Tariceanu explained, the aim of the law is to provide a legal framework for the provision of financial incentives to both foreign and domestic investors in an attempt to secure future investments. These incentives take the form of state aid and will be granted along criteria such as the objective, purpose, duration and budget of proposed projects.

The law provides an umbrella framework in which processes of application and allocation of such grants can be made on consistent, transparent and non-discriminative basis. Furthermore, the law mandated the ministry of economy and finance to draw up a legal framework for the establishment of the National Investment Agency by restructuring the Romanian Agency for Foreign Investments.

Although further specifications of the criteria are not yet in place, the state aids are meant to encourage investment into areas that are currently less popular.

A first key segment concerns rural areas. The gap in economic development between the capital and rural regions is widening to worrying levels. As Romanian central bank results show, Bucharest attracts 64% of foreign investment compared with the northeast region, which receives a mere 1.2%. As Paul Pacuraru, minister of labour, family and social equality, recently said in a presentation, this creates differences in minimum monthly wages from RL1200 (337 euros) for non-skilled workers and RL2400 (675 Euros) for skilled workers in Bucharest to an average of RL500 (140 euros) for many under-developed regions.

The prime minister also highlighted areas such as energy efficiency and output from renewable sources, water management, research and development, innovation and labour force employment and training.

The non-discriminative aspect of the law underlines the government's efforts to attract domestic as well as foreign investment in the targeted areas. Local investment remains unrecorded, which reflects its small size in comparison to foreign investment. However, industry insiders predict that this is about to change. The new investment law comes on the back of continued initiatives from the European Bank for Reconstruction and Development and the European Investment Bank as well as increased absorption rates of EU-funds; this will result in a much more prominent role for local sources of financing in the medium-term.

Foreign investors will welcome the law. The importance of foreign funds to Romania's economic growth is clear. Foreign direct investment (FDI) inflows are estimated to cover more than half of the current account deficit this year, Constantin Chirca, deputy general manager of the statistics department at the Romania Central Bank, told local media.

However, signals from the Foreign Investors Council (FIC) indicate that confidence in Romania as an investment destination has come under pressure, mainly due to the government's slow renewal of the previous investment law, which expired upon EU-accession.

"Investors became concerned by the lack of clarity and transparency over state aid implemented by the government and by the delays in setting the legislative framework for the allocation of EU funds," Richard Moat, CEO of Orange Romania and president of the Foreign Investors Council, told OBG. He added that "the situation could have had a negative effect on FDI, as investors have been unable to take advantage of many funding opportunities which ought to have been available."

With the introduction of the law, the country has taken a significant step in staying on top of investor's wish lists, looking to tap into the south east Europe region. It will be up to the government - facing national elections at the end of the year - to keep investors happy and the pace of national development going.

Romania to Up Minimum Wage from October

BalkanInsight.com

16 July 2008 Bucharest _ Following days of protests from trade unions, Romania’s centrist government has accepted a rise in the minimum wage but only from October.

"We can accept a rise of the minimum monthly wage to Lei 540 (€ 150) starting only from October, with a further increase to Lei 600 from next January," Prime Minister Calin Popescu Tariceanu said at a press conference. The government is now waiting for a response from trade unions.

Earlier this month, thousands of workers across Romania launched a protest demanding an eight percent increase on the minimum wage to Lei 540 from July 1.

Like other countries in eastern Europe, Romania is struggling to ease poverty while combating pressures from global price rises and rampant consumer spending that have taken Romanian inflation as high as 8.6 percent this year.

More than six million Romanians, almost 28 percent of the country's population, live under the poverty line, according to independent surveys.

The centrist government plans to keep to a budget deficit target of 2.3 percent of gross domestic product this year and to focus spending on long-term investment in infrastructure.

Romania hikes spending, keeps budget deficit goal

BUCHAREST, July 16 (Reuters) - Romania increased its spending plan for this year in a budget revision on Wednesday, but left the deficit target unchanged at 2.3 percent of the gross domestic product, the government said in a statement.

The finance and economy ministry has said more spending was possible without hurting the deficit goal thanks to better nominal GDP forecasts which boosts revenue expectations.

"The executive approved ... the second budget revision this year, increasing total spending to 4.4 billion lei ($1.95 billion), and the revenues plan to 3.8 billion lei," the statement said.

Almost 2 billion lei would be directed to investments in transport infrastructure.

Other funds were allocated for new sport facilities, the expansion of water pipe networks in rural areas, defence acquisitions, and increases in subsidises for farmers.

Finance minister Varujan Vosganian told Reuters earlier on Wednesday there are very high chances for a new budget revision in the fall and that he hoped the target would be kept, despite political pressure for higher spending.

Opposition parties have racked up demands for more social spending in recent months to offset the impact of soaring food and energy costs on the poorest Romanians.

But the central bank and international observers have urged Bucharest to tighten wage and fiscal policies to avoid adding inflationary pressures to the overheated economy, which beat expectations to grow 8.2 percent in the first quarter.