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October 6, 2022

ANRE: Gas liberalisation calendar for industrial consumers could be cancelled

The energy suppliers reject the idea considering that a functional market is necessary, a spot market for gas, to establish predictability over prices.

The National Energy Regulatory Authority (ANRE) proposed the Government the annulment of the liberalisation calendar of the gas market for non-household consumers starting July 1, 2014, Authority’s President Niculae Havrilet told yesterday in a conference on energy-related topics, Agerpres informs.
He explained that the measure is necessary as the market price became lower than those established in the liberalisation calendar, following the price decline on the international markets and some diminished gas imports.
‘We propose the Government to conclude the liberalisation process in the industrial sector on July 1, so they (ed. note: the non-household consumers) could also benefit from the possibility of accessing lower prices than those provided in the calendar. The current calendar provided price increases at higher levels than those currently registered, which is no longer feasible, therefore we propose the annulment of the calendar,’ Havrilet said.
The ANRE official brought to mind that, at the moment of the liberalisation start, the difference between the domestic production gas price and the imported gas price was of 1 to 3. ‘The import price accounted for USD 590 per thousand cubic metres and the domestic production gas price stood at USD 150-160 per thousand cubic metres when the liberalisation process began. We must also bear in mind that the gas market liberalisation was one of Romania’s obligations in the process of joining the EU, which should have been completed in 2007, but was not achieved’ Havrilet also said. According to him, the liberalisation calendar was established based on a study conducted by Rolland Berger.
The consultant estimated three scenarios, but none of them turned into reality. ‘A first estimation referred to the fact that over the coming years the consumption would increase, which did not come true. A second claim was that imports would go up to 35 percent of the total consumption, but this estimation did not fit either. The third supposition was that the gas price would remain at USD 500 per thousand cubic metres, but in all hubs in Europe the prices currently stand at USD 330-360,’ the ANRE President also explained. He showed that 75 percent of the gas market was represented by industrial consumers, out of which 16 percent still paid ANRE regulated rates and they needed the annulment of the liberalisation calendar. The rest of 25 percent of the market was represented by the household consumption, in the case of which the liberalisation would conclude in 2018.
Liberalization of the industrial market for natural gas before the due term inscribed in the deregulation calendar is a dangerous step both for industrial consumers and operators in the gas sector, said Frank Hajdinjak, President of E.ON Romania, present at the conference.
Nobody calculated what will happen the day after the industrial gas market is fully liberalized, and the deregulation calendar should be extended, not postponed, said in his turn, Eric Stab, General Director of GDF Suez Romania. ‘What will happen to the 170,000 consumers that will be affected by this change? What will happen is not known. This calendar should be extended, to slow down the rise in the internal production price’, said Stab. In his opinion, a functional market is necessary, a spot market for gas, to establish predictability over prices. ‘We may like it or not, Romania is still dependent on imports. If from July the market is deregulated for non-household consumers, who will do the imports’, the quoted source stated.
He reminded that there are only two gas producers in Romania and only one import source, while on the wholesale European market thousands of transactions are conducted every day.
Household gas prices at least 2 pc higher
Although the price of household gas is set to go up by 2 percent as of July 1 pursuant to the deregulation agenda, ANRE is currently assessing the need for such a price adjustment, Niculae Havrilet, president of ANRE, stated. Household consumer prices will go up by 10 percent per year according to the deregulation agenda, but in fact, ANRE is projecting an increase of 5 to 7 percent. “By the end of the deregulation period, i.e. late 2018, the price is projected to go up by 26 percent, but we estimate the increase will be around 22 percent,” the ANRE representative said further.
20 to 30 pc of production sold on gas market
Domestic gas producers will be bound to sell between 20 and 30 percent of their production on the gas exchange market, Havrilet went on, explaining that this amount is enough for the market to set a reference price used in negotiating future contracts. In turn, Mihai Albulescu, Secretary of State for the Energy Department, said the Department has already launched a bill draft for public debate, regarding domestic gas producers being bound to sell a quantity of gas determined by ANRE on the gas exchange market. “We have a gas exchange market and a set of regulations but we need to see what the reference price will be,” Albulescu noted.

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