Thursday, September 6, 2007

Romania government approves energy sector revamp

By Luiza Ilie

BUCHAREST, Sept 5 (Reuters) - Romania's government on Wednesday approved a long-term energy strategy that sets up an integrated electricity holding company and envisages investment of about 35 billion euros ($48 billion) in the sector.

Finance and Economy Minister Varujan Vosganian said the state will hold 25 to 40 percent of the company, which would pull together state-owned power transporters, distributors and producers from the nuclear, thermal and hydro sectors.

A 20 percent stake will belong to investment fund Fondul Proprietatea, set up to compensate Romanians whose properties were seized under communism, with the rest of the shares to be gradually listed on the Bucharest stock exchange.

"Such a company in the future will be a private company," Vosganian told Reuters in an interview after the government meeting.

More details about the company, which Prime Minister Calin Tariceanu likened to Czech giant CEZ (CEZPsp.PR: Quote, Profile, Research) or Italy's Enel (ENEI.MI: Quote, Profile, Research), will be announced within 30 days.

Meanwhile, some of Romania's previously announced energy privatisation plans, such as the sale of the three remaining units of state power distributor Electrica, are now awaiting a decision concerning the holding's structure, Vosganian said.

The government's strategy aims to increase efficiency, continue the restructuring process, seek private partnerships, boost renewable energy, diversify import sources and transport routes, modernise lines and protect critical infrastructure.

Vosganian said European Union newcomer Romania could become an important electricity exporter in the region by 2020, as the strategy envisages doubling the country's power output to around 100 TWh by 2020, more than estimated domestic consumption.

Romania plans to promote renewable sources so that they account for 33 percent of overall power consumption by 2010. It estimated that aligning domestic gas prices to import price levels will be finalised by 2010 at the latest.

The strategy seeks to create various public private partnerships, in areas such as building Units 3 and 4 of its sole nuclear power plant in Cernavoda.

It also plans to encourage the regional expansion of state owned power grid Transelectrica (TSEL.BX: Quote, Profile, Research) and monopoly gas pipeline operator Transgaz.

--Additional reporting by Marius Zaharia

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