The Romanian energy sector underwent dramatic changes in 2019, according to data made public by the National Statistics Institute. In the first 8 months of the year, the country turned from an energy exporter into a net importer, and the natural gas and electricity output nosedived. Specifically, electricity imports went up 72.8%, gas imports rose by 85.7%, while electricity exports fell by 37.5%. The natural gas output saw a 2.4% decline and the electricity output dropped 3.4%.
These negative changes in the energy sector are the effects of the controversial Government Order no. 114/2018, analysts say, explaining that distortions in the Romanian market pushed the natural gas price above the regional average, both for industrial consumers and for households. Here is the former president of the National Energy Regulatory Authority Niculae Havrilet, currently a secretary of state with the Energy Ministry:
Niculae Havrilet: “Even for households, the regional average price is lower than in Romania, namely 12 euros per MW, 59-60 lei, which is below the 68 lei per MW, the gas price set for households under Order 114.”
The roughly 14 euro cap on natural gas prices for households, which was below the market price at the time, led to an increase of prices in the open market, pushing the prices charged to industrial consumers up to almost double the regional average. The increase rippled across the national economy throughout 2019, with prices for all products and services going up.
Two months into its term in office, the Liberal Cabinet repealed in December the provisions in Order 114 concerning energy companies and caps on the prices charged by natural gas and electricity producers. The Government and the National Energy Regulatory Authority also decided that as of July 1 this year the state will fully deregulate the natural gas market.
Unlike electricity prices, which will be liberalised next year, the decision to immediately deregulate prices in the natural gas sector was prompted by the favourable global context, in which Romania may bring its gas prices down to match international levels.
(translated by: Ana-Maria Popescu)