Friday, March 23, 2007

Romania: Privatization could save energy sector

23 March 2007

Romania could face an energy crisis in the next two years. A solution envisaged by president of oil company Rompetrol Dinu Patriciu, is the privatisation of the electric energy production system, ACT Media news agency reports.
The president of the Rompetrol Group told The Money Channel on Saturday that the privatisation of the state-owned energy producers, could lead to the emergence of a market in this area and could therefore balance the electric energy prices. 'When all the companies are private, regardless of being profitable or not, the market would emerge, the element by which the prices are balanced.'

The privatisation should include all production capacities for electric energy, whether they are coal thermo-electric power stations, hydro-electric power plants or the nuclear station from Cernavoda.

Alexandru Sandulescu, the general director of the Energy Policies Division within the Ministry of Economy and Trade agrees with Patriciu and considers that the amounts that the energy sector will be granted by the European funds are not sufficient to rehabilitate the energy producers.

'Romania will be the beneficiary of 600 million euros between 2007 and 2013, but the largest part of the amount will be oriented to the growth of the energetic efficiency', the director of MEC explained. Beside the capital infusion, the privatisation of electricity producers could generate cuts in the supplied electric energy prices, as an effect of the competition, Dinu Patriciu estimated.

As regards the proposal of the president of the Industry and Services Commission at the Chamber of Deputies, Iulian Iancu, to create a legal instrument by which a part of the profit of suppliers, that acquire energy at low amounts and sell it to the consumers at much higher prices, should be granted to the producers, Patriciu considers it an absurdity: 'This would be absurd.

How can we penalize the private sector? It should be stimulated. The suppliers have their role and take their chances', Patriciu added. The declarations of Patriciu were supported by the latest scandals related to the 'smart boys', who have concluded energy contracts at low prices in order to resale it on the market at much higher prices for profits of millions of EUR.The pressure for the conclusion of energy contracts has stopped.

The Minister of Economy and Trade Varujan Vosganian said that the 'smart boys' are history. 'From January, since I was appointed as minister, I did not receive any phone call in order to influence the prices or the energy policy' Varujan Vosganian said Sunday, at a press conference in Iasi.

The minister stated that the number of the preferential contracts, with cheap energy, will gradually decrease, as the contracts will expire.

The independence of Romania in terms of energy will increase in the following years and will exceed 90 percent in 2015, when the investment projects in the nuclear-electric production units and in the mine industry in Valea Jiului are concluded, the Minister of Economy and Trade Varujan Vosganian on Sunday said in Iasi.

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