Friday, April 18, 2008

Romania must clarify energy holding plans-agency

BUCHAREST, April 17 (Reuters) - Romania must speed up efforts to set up an energy conglomerate or abandon the plans alltogether in order to ensure its energy firms remain viable, privatisation agency chief Teodor Atanasiu said on Thursday.

Under existing government plans, the power holding would incorporate Romania's three remaining electricity distributors along hydro power producer Hidroelectrica and two of the country's three lignite-fired energy firms.

Analysts say Romania has a sound mix of hydro, nuclear and coal fuelled energy but producers across the spectrum badly need costly technological upgrades to meet stringent environmental standards in the European Union and boost production.

"Looking at the lignite power firms alone, they have two major projects ... to become compatible with environmental legislation and to increase output. These are projects worth several billion euros and they need to be supported," Atanasiu told Reuters in an interview.

"We cannot maintain uncertainty over whether this company will be set up or not for a long time. The decision will have to be made by summer."

Plans to set up the mammoth energy firm -- which Prime Minister Calin Tariceanu likened to Czech CEZ (CEZPsp.PR: Quote, Profile, Research) -- were announced late last year.

Major energy privatisations have been put on hold pending a decision concerning the holding's structure, made difficult by disagreements within Bucharest's centrist coalition government and among opposition parties over energy privatisation.

Foreign power players, such as CEZ, have criticised the government over indecision.

"I think the company will be established. I don't think any respectable political party will pass on the chance of setting up such a firm," Atanasiu said.

The holding will be entirely state-owned at first, with a market share by production of 40 percent. It will be able to list a stake on the bourse at least one year after it is set up, Atanasiu said.

He said it was too early to say whether Romania will retain a majority stake in the holding in the end.

Romania wants to become a major energy player in southeastern Europe in coming years, providing energy exports and transit routes.

Observers have said major policy plans have lost momentum ahead of this year's parliamentary elections, expected in the fourth quarter. (Reporting by Luiza Ilie; Editing by James Jukwey)

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