This amount accounts but for a small portion of the nearly EUR 20 bln of required investments in the power sector by 2025, according to an Economy Ministry adviser Tudor Serban.
Economic investments are a priority growth resource. The Foreign Investors Council (FIC), an organisation joining 125 members representing the largest foreign companies in Romania with local investments totalling EUR 36 bln, estimates that the Romanian renewable energy sector may attract renewable energy investments equal to at least EUR 5 bln over the next five years, Mediafax reports.
The FIC is laying out tomorrow what it sees as the priority actions towards a thaw in the renewable energy sector. Last year alone, wind power projects came up to nearly EUR 800 M. Among the great wind power investors, Czech group CEZ, Italy’s Renel or Enegias de Portugal.
Despite this, the Romanian power sector is facing a tough problem, the withdrawal of large foreign investors, of which four – RWE, CEZ, GDF Suez and Iberdrola – pulled out of a project seeking to finish the construction of reactors 3 and 4 at the Cernavoda nuclear electric plant. Other Termoelectrica projects too are silently abandoned one by one, with lack of investments to steeply increase operating costs and, implicitly, electricity tariffs. Tudor Serban, an adviser to the Economy Ministry, told “Gandul” daily newspaper that “by 2025, Romania will need power sector investments of circa EUR 20 bln.”
For example, in 2008, the company signed with Czech group CEZ a memorandum on the construction at Galati of a new gas-steam combined cycle new group to generate approximately 40 MW. Last year, CEZ dropped the EUR 400 M investment and began talks with Arcellor Mittal, yet nothing came out of it. At Doicesti, it’s been years since a new 250 MW group to run on domestic and imported coal was said to be in the pipeline, yet nothing happened after negotiations fell through with Russian group Mechel, aside from the plant’s 20 MW group 7 being torn down. At Borzesti, GDF Suez was going to erect a new 400 MW gas-steam combined cycle group. The Memorandum was signed, also in 2008, yet work has not got off the ground ever since. At Braila, it’s been three years since the largest imported pit coal-run thermal power plant supposedly been in the offing, a public-private partnership project worth EUR 1 bln. However, the project company hardly been set up a few months ago. Paper work is dragging its feet at the new EUR 1 bln hydroelectric plant of Tarnita-Lapusesti. Aside from crisis, potential investors in Romania have to deal with the lack of predictability of the energy market, lack of clear price regulations and a “fluid” legislation that fails to at least guarantee the right of ownership. It’s been two years since government has been contemplating whether to set up national state-run power companies Electra and Hidroenergetica, which are expected to play a decisive influence on the market, with a final decision yet to be reached.
THE PITESTI PHENOMENON
In several cases, legislative loopholes allowed situations of the “Pitesti phenomenon” type, which resulted in several foreign companies losing no less than EUR 70 M, as follows: The City Hall took over the local thermal power company without paying any money, it didn’t pay the gas bills, yet found a way out of the situation by declaring the company bankrupt, selling its assets and then setting up a different company with a similar field of operations. This was made possible by Government Resolution no 102/2002 allowing the assets of trade enterprises (Termoelectrica lost 12 stations in this case) being transferred free of charge to the asset fund of local administrative authorities (mayoralties). Learning that encroachments have been the case on an organic law and international agreements on mutual protection of investments, the Executive fixed its mistake with law no 643 of 2002. Yet, as some employees with the Pitesti City Hall said under the protection of anonymity, the Executive has nonetheless forgotten to scrap the former law as it should have, which allowed , with the tacit or express agreement of government control bodies, for the assets taken over from Termoelectrica to vanish into thin air.