Romania Retailers in Competition Pact

BalkanInsight.com

03 July 2008 Bucharest _ Romanian food producers and main supermarkets are to make retail pricing more transparent so to lower prices and shield consumers from global rises in food costs.

Under an agreement put forward by the government, producers will have more flexibility in setting prices, now largely dictated by big retailers, farm ministry officials said.

"The new rules are aimed at boosting competition in the market, eventually leading to lower food prices," said Georgiana Tanase, media adviser at the agriculture ministry.

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

The agreement announced on Wednesday, which needs approval from the competition watchdog, sets standards for commercial contracts and bans practices that may distort competition.

For example, retailers will no longer be able to prevent producers from selling their goods at cheaper prices to their competitors. The agreement also scraps a practice obliging producers to contribute to supermarkets' marketing costs.

It was signed by producers in the bread, wine, milk and meat sectors and by major retailers, including Germany's Metro and its Real hypermarket chain, Selgros and Kaufland, Cora, of the Delhaize Group, France's Carrefour and Auchan.

Romania Govt Rejects Minimum Wage Rise

BalkanInsight.com

02 July 2008 Bucharest _ Romanian centrist government on Wednesday said it will not accept a rise in the minimum wage as it could hurt Bucharest’s efforts to protect economic stability.

"Such a measure is counter-productive and will lead to a consistent rise of annual inflation," Prime Minister Calin Popescu Tariceanu said at a press conference following his cabinet weekly regular meeting.

Earlier some 4,000 workers from across Romania have launched a protest demanding an 8 percent increase on the minimum wage.

"The protest signals growing unrest in the face of galloping food and fuel prices. We are asking for a minimum monthly wage of Lei 540 (€ 150),” said Bogdan Hossu, the president of the Cartel Alfa trade union. He added the workers are also asking the government to speed up pension rises and subsidise household energy bills.

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.

On Tuesday, Romania's ruling centrists dismissed proposals to cushion the impact of soaring food and energy costs on those hardest hit, with the opposition Social Democrat Party proposing a cut in value added tax on staple foods and in fuel taxes for farmers, and also demanding a rise in the minimum wage.

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.

Retailers sign pact to boost competition in Romania

BUCHAREST, July 2 (Reuters) - Romanian food producers and main supermarkets agreed on Wednesday to make retail pricing more transparent in a bid to lower prices and shield consumers from the global rise in food costs.

Under an agreement put forward by the government, producers will have more flexibility in setting prices, now largely dictated by big retailers, farm ministry officials said.

"The new rules are aimed at boosting competition in the market, eventually leading to lower food prices," said Georgiana Tanase, media adviser at the agriculture ministry.

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

On Tuesday, the main political parties met to agree policies to cushion those hardest hit by soaring food and energy costs.

The agreement announced on Wednesday, which needs approval from the competition watchdog, sets standards for commercial contracts and bans practices that may distort competition.

For example, retailers will no longer be able to prevent producers from selling their goods at cheaper prices to their competitors. The agreement also scraps a practice obliging producers to contribute to supermarkets' marketing costs.

It was signed by producers in the bread, wine, milk and meat sectors and by major retailers, including Germany's Metro (MEOG.DE: Quote, Profile, Research) and its Real hypermarket chain, Selgros and Kaufland, Cora, of the Delhaize Group (DELB.BR: Quote, Profile, Research), France's Carrefour (CARR.PA: Quote, Profile, Research) and Auchan [AUCH.UL]. (Reporting by Luiza Ilie and Radu Marinas, editing by Will Waterman)

Romania Workers Urge Minimum Wage Hike

BalkanInsight.com

02 July 2008 Bucharest _ Some 4,000 workers from across Romania have launched a protest demanding an 8 percent increase on the minimum wage.

"The protest signals growing unrest in the face of galloping food and fuel prices. We are asking for a minimum monthly wage of Lei 540 (€ 150),” said Bogdan Hossu, the president of the Cartel Alfa trade union. He added the workers are also asking the government to speed up pension rises and subsidise household energy bills.

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.

In a related development on Tuesday, Romania's ruling centrists dismissed opposition proposals to cushion the impact of soaring food and energy costs on those hardest hit, saying such moves would just hurt the economy more.

The opposition Social Democrat Party proposed a cut in value added tax on staple foods and in fuel taxes for farmers, and also demanding a rise in the minimum wage.

The government said such proposals could hurt its efforts to protect economic stability.

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.

IMF warns Romania vulnerable, inflation a worry

WASHINGTON, June 27 (Reuters) - Romania's currency has been hit hard by global financial market turmoil and the country remains vulnerable to further spillover, while inflation is a problem, the International Monetary Fund said on Friday.

"(IMF) directors expressed concern about underlying inflation pressures, as the first-round effects of food and energy price increases have already pushed headline inflation above the National Bank of Romania's target range," the IMF said in a regular assessment of Romania's economic health.

"They noted that world financial market tensions contributed to a sharp nominal depreciation of the Romanian currency, and cautioned that Romania remains vulnerable to additional adverse spillovers from events in global markets," the IMF said in a statement.

Romania economy overheating due to borrowing-cbank

BUCHAREST, June 27 (Reuters) - Romania's central bank warned on Friday that excessive domestic borrowing continued to overheat the economy, threatening inflation projections and long-term economic stability.

Governor Mugur Isarescu said the Romanian economy was likely to expand by around 8 percent this year thanks in part to a good harvest, compared to last year's growth of 6 percent.

But he said the economy was overheating and should grow more slowly.

"It is obvious that we are in a situation of overheating," Isarescu told a financial seminar.

"With wise policies, this country can ensure economic growth until adopting the euro, but a more reasonable growth would do us more good."

The central bank has raised interest rates by three points in eight months to tame inflation, hoping that by making borrowing less accessible it would weaken consumption. Interest rates now stand at 10 percent, after a quarter point hike on Thursday.

Many analysts expect the bank to pause for now, betting on inflation easing later this year due to a favourable statistical base effect.

Despite the monetary tightening, private lending rose 61 percent on the year in May. Hard currency lending for households jumped roughly 131 percent.

"We think the (current) speed of lending is excessively risky. It is essential to weaken the speed of lending growth," Isarescu said.

"For Romania it is extremely worrisome to hear that loans are made because people need money to pay their rent."

Analysts have long warned about overheating in Romania as fast consumption and credit growth fuel a large trade deficit and fan inflationary pressures.

The deficit reached 14 percent of GDP last year raising concerns about potential troubles in financing it if foreign cash flows were to dry up.

Romania cbank hikes rates, CPI yet to peak

BUCHAREST, June 26 (Reuters) - Romania's central bank raised interest rates by a quarter point to 10 percent on Thursday, tightening borrowing costs for the sixth time running in a bid to cool stubborn inflationary expectations.

Analysts expect the bank to wrap up the current tightening cycle after this hike that brought the total increases since October to 300 basis points, because inflation is expected to ease later this year.

"This should be the last interest rate hike in this cycle," said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

Central bankers had raised market expectations of a hike at Thursday's meeting, signalling concern about overheating risks for Romania's fast-growing economy.

The decision follows a similar move by Poland this week. Eastern European central banks have tightened rates considerably since last year as inflation has shot up to multi-year highs due to rising food and fuel prices and ravenous domestic consumption.

In May, Romanian inflation came off a two-year high of 8.6 percent hit in March, edging down to 8.5 percent. But many analysts expect annual price growth to peak in July when gas and power price rises come into force.

The central bank targets inflation at 2.8-4.8 percent at the end of this year and at 2.5-4.5 percent in 2009.

Ten of 14 analysts surveyed by Reuters last week saw a hike of a quarter point. All but one analyst expected rates to remain unchanged after the June increase or be cut by the end of the year, according to the survey.

The central bank will relase a detailed statement at around 3 p.m. local time (1200 GMT).

Romania to own majority stake in nuclear reactors

BUCHAREST, June 24 (Reuters) - Romania will retain a majority stake in a partnership to build and operate two more reactors at the country's sole nuclear power plant in Cernavoda, the government decided on Tuesday.

Last year, Bucharest selected six bidders to partner Nuclearelectrica.

They are Belgium's Electrabel (LYOE.PA: Quote, Profile, Research), Italy's Enel (ENEI.MI: Quote, Profile, Research), Spain's Iberdrola (IBE.MC: Quote, Profile, Research), Czech CEZ (CEZPsp.PR: Quote, Profile, Research), a Romanian unit of ArcelorMittal (ISPA.AS: Quote, Profile, Research) and Germany's RWE (RWEG.DE: Quote, Profile, Research).

Nuclearelectrica initially envisioned a 20 percent stake but negotiations with the selected power firms were frozen after the government said it will seek a bigger share.

"We have reconsidered the state's participation at Cernavoda ... to a minimum of 51 percent social capital of the company that will work on the third and fourth reactors," Prime Minister Calin Tariceanu told a news briefing.

He estimated the investment in the two reactors at around 4 billion euros.

Work at the Cernavoda plant began 30 years ago. The plant's first unit went on stream in 1996 and the second in 2007. The two new units should be completed by 2015.

Romania Retail Sales ‘To Double by 2018’

BalkanInsight.com

23 June 2008 Bucharest _ Romania’s retail industry was worth € 31.2 billion last year and could grow by 132 percent in the next ten years, a global consultancy firm predicts.

In a study comparing retail markets across Europe, Deloitte said Romania and Bulgaria have the highest growth potential for the next decade.

The Baltic countries are also on course for significant growth but their markets are still comparatively small, Deloitte pointed out.

On the other hand, Poland, a regional giant, could see a growth in its retail industry of around 71 percent in the next 10 years, after its retail market amounted to € 140 billion in 2007.

The average increase in the European Union is estimated at 25%, analysts say.

Romania’s retail sales were the lowest in Europe last year, reaching only 31 percent of the EU average with € 1,447 per capita.

Consumer transactions at cash & carry stores, hypermarkets, supermarkets and big discount stores accounted for 40 percent of sales last year while this year, their share is set to rise to 60 percent.

Profit margins in the Romanian retail industry were up by some 10 percent compared to 2007 and this trend is likely to continue, the report said.

E.ON-Enel consortium and Termoelectrica to build 800MW plant in Romania

20th June 2008

Energy Business Review

Romanian state-owned power generator Termoelectrica and a consortium formed by German company E.ON Kraftwerke and the Italian energy major Enel, have signed a memorandum of understanding to build a coal-fired unit at the Braila power plant in Romania.

The MoU envisages a joint venture between the three parties for the development of the Braila power plant, with a new 800MW coal-fired production capacity. The project will also utilize the existing assets from the power plant currently in operation.

According to the MoU, an independent valuation of the existing assets of Termoelectrica and an analysis on the new capacity will be carried out, as part of a feasibility study. Based on the results of the feasibility study, expected by the end of 2008, the parties will decide whether or not to implement the power plant project.

Within the joint venture, Termoelectrica will contribute the existing assets of the Braila power plant, while the E.ON-Enel consortium will contribute capital for the investment. The consortium will have the majority of the shares in the joint venture, while Termoelectrica stake will be based on the value of its existing assets.

Romania: Farmers Flex Muscles

Oxford Business Group Latest Briefing

With projections of an excellent year for agriculture, Romanian farmers are flexing their muscles and restoring trust in the industry's vast economic potential. The challenge for the medium term is for the public and private sector to come on board and get the sector on stable grounds.

Romania's Gross Domestic Product (GDP) has posted impressive year-on-year growth for Q1, according to the National Statistics Institute (INS). The 8.2% figure ranks among the three highest growth levels for respective time periods since 1990, topped only by a 9% advance in 2004 and 8.3% in Q3 of 2006 and compares favourably to last year's 6% GDP growth.

The agricultural sector takes most of the credit for these positive results with output significantly higher than forecast during the first three months. Finance Minister Varujan Vosganian claimed that this year could see a 7.5% growth overall, if the agricultural sector manages to maintain its current output. This is a marked rise from the 5.5% growth outlook made by the IMF in April, which recently stated it would revise its performance prediction for Romania upwards.

The potential of the agricultural sector this year is significant. Despite 2007's disappointing crop yield - largely due to drought - farmers have benefited from government financial support as well as access to high European prices for soft commodities, such as corn and wheat.

As Felix Manolescu, head of sales for Syngenta AGRO, a crop protection and commercial seed supplier, told OBG, "For a number of farmers, this has meant sufficient funds for investment in basic materials and equipment, which was not taken into consideration in last year's budgeting period."

This, combined with rising food prices, has lead to a positive annual outlook. Moreover, the prediction for climate conditions looks positive: the country has had plenty of rainfall and farmers expect a good wheat and barley harvest. With these factors in mind, Syngenta CEO Paul Claxton, predicted a doubling of last year's output combined with a tripling of the prices, which would contribute to 10% of Romania's GDP.

Romania believes it can benefit from its agricultural sector in the long as well as short term. The country has some 9.4m hectares of arable land, of which close to 2m is unused. With the current global food shortage, this land could be brought back into use, suggesting large scope for expansion.

Furthermore , around 2m Romanian farmers are currently categorised as subsistence farmers, with plots of land smaller than 1 ha. Their consolidation would offer great potential for alleviating the difficulties in the distribution of EU-funds in the years to come and would generate large economies of scale and thus more efficient output.

Despite some sector consolidation already, the pace of rural development is relatively slow, and could be stimulated by both the public and the private sector. The government has shown its willingness to support the farming industry by introducing last year's disaster relief fund following the drought and its ongoing efforts in the distribution of EU funds, but it has neglected to keep rural development high on its agenda. The lack of development in the country's infrastructure is seen as a burden to the development of many sectors, including the farming industry.

Important initiatives have also been taken by the private sector. As Sergiu Staicu, Executive Head of GEER (Group for Expertise in Rural Economy), a Romanian private association providing Romanian farmers with financial and administrative support, told OBG. "The technical expertise is in place, it is up the private sector to ensure gaps in managerial skills are filled." Demand for the service is huge as the membership of GEER - which rose from 7 to 100 members in less than two years - shows.

Financial institutions are pivotal in the efforts to trigger support from the commercial sector. So far, construction and real estate, whose returns are seen as high and secure, have attracted their attentions. Conversely, agriculture, due to its under-developed state and recent history, has largely been neglected. Current funding comes mainly from supplying-companies providing credit in cooperation with certain financial institutions. However, high global food prices and increasing belief that these prices will continue their upwards trend are starting to attract financial interest in farming. Although unconfirmed, some first movers, including French firm Credit Agricole, are expected to show their interest shortly.

As soon as the finances are in place, other players in the private sector are likely to follow. "Rural development has a knock-on effect on all industries," Claxton told OBG. As he explained, rural development will lead to higher purchasing power nationwide, which will increase the demand in other areas such as housing, business and infrastructure. This process could provide many small farmers with a more stable and more profitable means of income, opening up smaller plots of land for consolidation by industrial farmers.

According to industry experts, the agricultural sector is set to attract capital from foreign and domestic investors as well as from increased revenues from high-priced crops. With the development of higher-level courses in agricultural education, modernisation and increased competitiveness of the industry is inevitable.

These are exciting times for Romania's farmers. With the abundance of opportunities for development, the high level of unused land, Romania's access to the Black Sea and the ongoing rise in global food prices, the country is on its way to becoming a net grain exporter. Less than a century ago, the country was considered among the world's agricultural superpowers. With private and public support in the right areas, it might eventually be able to claim back that long-lost title.

Romania to float 5 pct more of Transgaz on bourse

BUCHAREST, June 19 (Reuters) - Romania plans to sell up to 5 percent more of gas pipeline operator Transgaz TGNM.BX on the Bucharest bourse as part of its property restitution scheme, a government member said on Thursday.

Last year Romania floated 10 percent in the state monopoly which is part of a consortium planning to build the Nabucco pipeline to bring Iranian and Caspian gas to central Europe.

"The (new) stake is just under 5 percent," Finance and Economy Minister Varujan Vosganian said during a financial seminar. "A few hundred new investors will be on the bourse at the start of the autumn."

Transgaz is the second state-controlled energy firm to float a minority stake after the listing of power grid operator Transelectrica TSEL.BX last year.

The government had also planned to list a small stake in nuclear power operator Nuclearelectrica this year, but the process has been delayed.

Transelectrica has since upped its stake on the bourse as various Romanians whose properties were seized under communism were compansated with shares in the firm.

The state offers shares in state companies as part of its compensation scheme for properties that were confiscated by the communist regime but cannot be returned to their previous owners.

Analysts have said share listings of state-owned energy firms could breathe new life into the European Union member's tiny bourse with a market capitalisation of just under 34 billion euros.

On Thursday, Transgaz traded at 222.0000 lei per share, down 0.05 percent on the day, compared to a life high of 287.0000 hit in January. (Reporting by Luiza Ilie; Editing by Louise Ireland)

Romania renews talk of Petrom contract review

BUCHAREST, June 19 (Reuters) - Romania has renewed threats to review the privatisation contract of local oil company Petrom SNPP.BX in a pricing row that has cast a shadow over the sale of the company to Austria's OMV (OMVV.VI: Quote, Profile, Research, Stock Buzz) in recent years.

Finance and Economy Ministry Varujan Vosganian said Romania may look into the level of taxes paid by Petrom on the use of the country's oil reserves.

"It's not normal to give a company all of the oil reserves, to accept that it pays a tax smaller than half of the EU and then to not set any conditions concerning prices," Vosganian told the Money Channel late on Wednesday.

"The one thing that could be done if things continue as they have, would be to see to what extent this (sell-off) contract fits European legislation, because a tax half the size as in other states could be seen as a type of state aid for Petrom."

The Petrom privatisation has been plagued by controversy in Romania, which joined the European Union last year, since the leftist government that sold the company lost power in 2004.

Centrist politicians, including President Traian Basescu, have criticised the sale for giving away too much control over Romania's natural resources. Tax levels were also an issue.

At one point parliament had discussed cancelling the sale. Vosganian has said in the past this was not on the cards, but he has criticised the pricing policy of Romania's energy companies. Soaring global energy costs are a sensitive issue in Romania, where many people cannot afford heating in the winter months. (Reporting by Luiza Ilie, editing by Will Waterman)

Romania C/A deficit widens 7.5 pct y/y in Jan-April

BUCHAREST, June 16 (Reuters) - Romania's current account deficit widened by 7.5 percent year-on-year to 4.8 billion euros ($7.37 billion) in the first four months of this year, data showed on Monday, signalling accelerating export growth.

Last year the deficit jumped by 130 percent to about 14 percent of gross domestic product after Romania's entry to the European Union meant an end to customs taxes with member states and the leu rose early in the year.

The deficit has become a key headache for Romania, exposing its economy to shocks if global financial woes were to cut down hard currency inflows.

However, a sharp reversal in the leu trend which started last summer slowed the widening of Romania's external shortfall, prompting many analysts to predict a stabilisation of the deficit for this year at around 15 percent of GDP.

Equally, analysts say the latest data reflects an improvement in Romania's export capacity as foreign direct investment generates higher value-added exports.

"The growth of the current account deficit has decelerated on the back of an improving trade balance and positive dynamics of services," said Melania Hancila, research analyst with BCR.

"It is a structural improvement, it is not caused only by the exchange rate ... so it can be judged as a positive signal."

The trade deficit, a key component of the current account, has seen exports expanding at a higher pace than imports in recent months, but the central bank said it needed more time to decide whether the trend was solid.

Central bank data showed the deficit was 66.5 percent covered by foreign direct investment, which reached 3.2 billion euros at the end of April, almost double than the level recorded in the first quarter. (Reporting by Marius Zaharia; editing by Victoria Main)

EU Commission urges Romania to cut budget deficit

BRUSSELS, June 13 (Reuters) - The European Commission warned Romania on Friday that its lax fiscal policies were bad for its economy and it urged the Black Sea country to cut the budget deficit and embark on structural reforms.

The European Union executive said in a policy report on the bloc's newcomer that it risked exceeding the EU's budget deficit ceiling of 3 percent of gross domestic product next year, and macro-economic imbalances were likely to grow.

"Coupled with structural reforms, budgetary consolidation will help address the overheating of the economy and promote a more balanced catching up process with the rest of the EU," European Monetary Affairs Commissioner Joaquin Almunia said. (Reporting by Marcin Grajewski; Editing by William Schomberg)

Romania c.bank seen hiking rates, despite lower CPI

* WHAT: Romanian inflation data, interest rate decision.

* WHEN: May CPI on June 11, c.bank meeting on June 26.

* May CPI is seen at 8.4 percent and a majority of analysts expect the central bank to hike rates to 10 percent from 9.75 percent at its next meeting.

By Marius Zaharia

BUCHAREST, June 6 (Reuters) - Romanian inflation probably slowed in May, economists polled by Reuters said, but the central bank is still expected to raise interest rates to double digits after this week's strong economic growth data.

Romania's economy grew a hefty 8.2 percent in the first quarter, compared with 6.1 percent in the same period in 2007. The growth beat expectations of a 6.4 percent increase during the period.

This has triggered warnings from central bankers about the economy possibly overheating as increased consumption and vast credit growth fuel a large expansion of the country's current account deficit.

The current account deficit was at around 14 percent of GDP, last year, raising concerns about possible trouble financing it should foreign cash flows dry up.

The mid-range of a Reuters poll of 13 banks this week showed May annual inflation at 8.4 percent, compared with 8.6 percent in April. Monthly inflation is seen at 0.5 percent, driven mainly by food and fuel prices.

"After the GDP data for the first quarter, there is a much higher probability than before that the central bank will hike again the key rate," said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

"The GDP data was bad news for the central bank, as the figure is much above the growth potential of the economy and is adding inflationary pressures."

Most of the economists have revised growth forecasts for the end of this year, bringing the mid-range figure to 6.9 percent, compared to 6.4 percent in a previous poll.

Eight out of 13 analysts polled expected the central bank to continue its tightening cycle and bring interest rates to double-digits after five hikes in a row since October, totalling 275 basis points.

Six of them expect the bank to cut its key rate during its last meeting for the year in October, as an expected good harvest this year will likely curb inflation drastically in the last quarter. "Falling inflation towards the end of the year would make the real interest rate too restrictive," said ABN AMRO analyst Catalina Constantinescu, who sees a rate cut of 50 basis points to 9.5 percent in October.

Analysts kept their end-year inflation target virtually unchanged at 6.1 percent, fairly in line with central bank's forecast, but well above its 2.8-4.8 percent 2008 target. (Editing by George Obulutsa)

IMF to up Romania's 2008 economy growth forecast

BUCHAREST, June 6 (Reuters) - The International Monetary Fund will revise upward Romania's economic growth forecast for this year, following strong first quarter GDP data, but said it was still expecting a slowdown in 2009.

Romania's economy grew by a higher than expected 8.2 percent in the first quarter, fanning overheating concerns as the new European Union member also struggles with a ballooning current account gap and resurgent inflation.

After April's annual consultations with authorities, the Fund came in with a 5.5 percent growth forecast for this year and a 4.7 percent estimate for 2009, compared to 6 percent in 2007.

It has said the potential slowdown could be caused partly by the knock-on effects of the global tensions. "The latest (growth) data were on the strong side, and the IMF team will revise up the projection of GDP growth for 2008, compared with the April visit," The Fund's senior regional representative Juan Jose Fernandez-Ansola told Reuters.

"This would be in line with a likely continued boom scenario in 2008, but we still expect a slowdown in 2009."

Ansola added strong growth meant price pressures are bound to remain significant and the implementation of the inflation targeting framework will remain a difficult challenge for Romania's central bank.

Inflation stood at 8.6 percent in April, compared to a post-communist low of 3.7 early in 2007, well above the central bank's target of 2.8-4.8 percent for December. Economists and the central bank expect end-year inflation at around 6 percent. (Reporting by Marius Zaharia; Editing by Ron Askew)

Enel closes purchase of Romania's Muntenia Sud

MILAN, June 5 (Reuters) - Italian power company Enel SpA has completed its purchase of a controlling stake in Romania's Electrica Muntenia Sud (EMS) in a 820 million euro deal, Enel said on Thursday.

Enel, Italy's dominant utility, holds a 64.4 percent stake in EMS as part of a privatisation accord agreed last year, it said in a statement.

Enel bought 50 percent of EMS from state-controlled Electrica SA for 395 million euros on April 25, and subscribed to a capital increase of 425 million euros.

Enel plans to invest a billion euros in EMS over the next 15 years, Chief Executive Officer Fulvio Conti said in the statement.

Investment fund Fondul Proprietatea holds 12 percent of EMS and Electrica 23.6 percent. EMS is the only power distributor in Bucharest, Romania's capital.

Enel shares were up 0.46 percent at 7.20 euros at 1144 GMT, in line with the DJ Stoxx utilities index. (Reporting by Ian Simpson)

Romania's Q1 final consumption up 13.5 pct y/y

BUCHAREST, June 5 (Reuters) - Romania's final consumption grew by a robust 13.5 percent in the first quarter this year against 11.4 in the same period of 2007, official data showed on Thursday, offering the central bank more scope to hike rates.

Romania's economy expanded by a hefty 8.2 percent in the first quarter, widely outstripping market and official forecasts as consumption and real estate investment showed no sign of slowdown.

Consumption was up 8.9 percent in the fourth quarter of 2007, the country's first year as a European Union member.

Analysts said voracious domestic demand, which remained the main driver of economic growth in Romania, was likely to fuel inflationary pressures further and put upward pressure on interest rates.

"Domestic consumption has risen at an accelerated pace. The new data will offer the central bank a strong reason to hike rates at its next board meeting from the current 9.75 percent," said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

Data by the National Statistics Board showed construction recorded the steepest rise of 32.4 percent against 30.6 percent in the first quarter in 2007 while industry and services posted rises of 5.4 and 7.5 percent respectively.

Agriculture was 0.5 percent down on the year.

It said gross fixed capital formation grew by a hefty 33.2 percent in January-March compared with 23.5 percent in the same period of 2007 and 29 percent at the end of last year. (Reporting by Radu Marinas; Editing by Gerrard Raven)

Boeing wins $238.5 mln order for three 737-900ER jets to Romania's Blue Air

LONDON (Thomson Financial) - Boeing Co. said on Thursday that Romanian low-cost carrier Blue Air has agreed to buy three Next-Generation 737-900ER jetliners worth $238.5 million at current list prices.

Earlier this year, the Bucharest-based airline ordered two 737-800s.

The planes will be equipped with performance-enhancing blended winglets, which improve fuel efficiency and reduce CO2 emissions by up to 4 percent.

Ten customers around the world have ordered 232 Boeing (nyse: BA - news - people ) 737-900ER airplanes. One hundred fourteen customers have ordered more than 4,700 next generation 737s. Boeing has more than 2,200 unfilled orders for the Next-Generation 737 valued at more than $160 billion.