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October 23, 2020
ECONOMY FINANCE&BANKING POLITICS

The cold season starts with a wave of price hikes for Romanians

The National Regulatory Authority for Energy (ANRE) decided price increases for electricity and gas starting from October. Fuel price will also increase again from October 1, causing chain hikes for several products and services. The rates of the Romanians who have loans in RON will also increase starting in October, as a result of the increase of the ROBOR (Romanian Interbank Offer rate) index.

 

Electricity and gas bills will take more money from the Romanians’ pockets

 

National Regulatory Authority for Energy (ANRE) announced an increase of the tariffs for the electricity supplied to the population in regulated regime since October 1, 2017, on average by RON 3.45 for the month with a consumption of 100 kWh, at national level.

ANRE approved the competitive market component (CPC) tariffs for each of the eight distribution areas in Romania. The increases of the CPC tariff are between 8% and 9.3%, and the new tariffs will be implemented starting from October 1, being included in the bills issued to the population in November. The lowest increase was for the Moldova area, while the highest was for the South of Transylvania.

The CPC tariffs are important because this is the price at which 90% of the electricity consumption of most of the eight million consumers in Romania who receive electricity in a regulated system is paid.

ANRE Vice President Emil Calota announced that gas price for households will increase by an average of 6% in the 4th quarter.

“The proposals that we have in the map at this point, and which my colleagues from the Regulatory Committee probably discussed, indicate that the increase will be around 6% in the 4th quarter for the consumers in the B1 category, namely for the households” Emil Calota pointed out.

 

Fuel excise taxes will increase

 

The Government has decided to increase the fuel excise tax by RON 0.16 per litre since October 1, after a similar increase was implemented on September 15. On September 15, when the first increase of the excise tax was implemented, the fuel suppliers increased the fuel prices by RON 0.09 per litre.

A worrying thing is that the increases of the electricity, gas and fuel prices will automatically cause price hikes of the services and products for the population, especially of the food products.

For instance, it is expected that the price of the food products will increase in the end by 5-6%, according to Dragos Frumosu, the President of the trade union federations in the food industry.

“While all these price hikes mean a 2-3% direct increase for the producers, the shelf price could be 5-6% higher. This is because the transportation influences the raw material, but the transportation price also means the transportation from the producer to the retailer. Secondly, the increase of the electricity price is also borne by both the producer and the retailer” Frumosu stated for Agerpres.

He mentioned that the products whose prices will increase the most are meat, meat products, milk, dairy products and bread.

“Therefore, although the salary has grown, people have also higher expenses, because they spend more on electricity, gas, food, transportation” Frumosu added.

 

PM Mihai Tudose’s explanation for the fuel price increase in Romania

 

The hurricanes that hit the world influenced the barrel price at the global level, and this is reflected in the fuel price increase in Romania, PM Mihai Tudose explained on Friday, after the meeting of the PSD National Executive Committee (CExN), being asked about the fuel price increase after the over-duty was implemented again at gasoline and diesel oil.

“Regarding the fuels, I believe you were also informed that hurricanes occurred and they influenced the barrel price at the global level, and they affected Romania even less than the rest of the world” Mihai Tudose answered.

“I made a calculation yesterday, with my colleagues from the Finance Ministry – almost not existing on a certain time span, we were under a normal growth related to the oil stock market. That excise tax was already added to the price, and the price increased by 0.9, so those RON 0.16 ae not reflected, and the impact on the price was higher due to the meteorological phenomena” the PM insisted.

Unlike Tudose, the Senate’s Speaker Calin Popescu Tariceanu seems not to have seen the fuel price hikes. He stated on Thursday that he didn’t see any price hike after the over-duty was implemented again on fuels, claiming that there are very big differences in price, up to 10%, between the prices of the various distribution networks.

“I know what happened and I don’t agree with this. Therefore, I remind you that when we decided to eliminate the fuel excise tax, pump prices didn’t decrease. We didn’t see any concern at that time. Now, I see there is a concern. Of course, it’s a natural concern, I don’t want to repress you this right, God forbid, but our intention, the legislator’s intention, when it eliminated the fuel excise tax, was to decrease the price. The only consequence was a minus in the budget revenues” Calin Popescu Tariceanu stated, speaking about the amendment voted by the Budget Committee on eliminating the introduction of the over-duty for fuels.

The Senate’s Speaker was also asked about the announcement of the National Institute of Statistics (INS), according to which the prices and the activity in industry and constructions will record moderate increases between September and November, while the number of the employees will remain stable, according to the trends in the development of the economic activity.

“INS said that it will be, but I saw no price hike at the fuel. I know that there have been certain increases or decreases of prices. I don’t know if you have a car, do you go to the gas station to buy gasoline or diesel oil? You don’t? Too bad, I do” Calin Popescu Tariceanu answered.

He claimed that there are very big price differences, up to 10%, between the prices applied by the various distribution networks and by the gas stations in various cities.

 

Orban: Tariceanu is fueling from the Senate’s budget, he doesn’t care how much the gas costs

 

PNL Chairman Ludovic Orban stated on Thursday that the statements made by the Senate’s Speaker Calin Popescu Tariceanu on the fuel price have no connection to the reality, and he said that his driver is probably fueling his car from the Senate’s budget, so he doesn’t care how much the gas costs.

“I don’t know how Mr. Tariceanu didn’t see the increases of the pump prices, it means that he is not the one who is fueling at the pump, his driver is probably fueling his car, or he is fueling from the Senate’s budget, so he doesn’t care how much the gas costs. Anyone who entered into a gas station saw with his own eyes an obvious and clear increase which is almost equal to the increase of the additional excise tax that was introduced in the budget (…) Mr. Tariceanu’s statements have no connection with the reality” the PNL Chairman Ludovic Orban said.

 

Romanians’ rates for the loans in RON will increase

 

The 3-month ROBOR index, according to which the interests for most of the loans in RON are calculated, has reached 1.58%, the highest level since January, 2015 until today, according to the data published on Friday by the National Bank of Romania (BNR).

The 6-month ROBOR index, which is used in the calculation of the interests of the mortgage loans, has also increased from 1.57%, as it was rated on September 28, to 1.69%.

At the beginning of September, the 3-month ROBOR was rated at 0.92%, while at the beginning of this year it was rated at 0.87%.

ROBOR is the average interest rate at which Romanian banks borrow between them in RON. The index is established every day by BNR as an arithmetic mean of the quotations applied by ten banks selected by the National Bank.

 

PM Mihai Tudose: The colleagues from BNR have been gone away a little bit. Their role was to keep ROBOR at the same level. We will probably have a talk next week

 

PM Mihai Tudose stated on Friday at Sucevita that the role of the national Bank was to be careful not to increase the level of the ROBOR index; Tudose mentioned that he intends to talk on this issue with the BNR Governor Mugur Isarescu during next week.

“I believe our colleagues from the National Bank have been gone away a little bit, because BNR had the role to keep the same level and to prevent certain actors to play on this issue” the PM stated.

Being invited to comment on the statements according to which the increase of the ROBOR index was caused also by taking the profit of the state companies to the budget, Tudose answered: “I think you’re joking! We took our money, wasn’t it fair? It was our money, my God, the state’s money! We didn’t steal somebody else’s money”.

Tudose also announced that he intends to have a talk with the Governor of the National Bank, Mugur Isarescu, during next week, also related to the recent statements made by the Governor’s Counselor Adrian Vasilescu.

“We might have a talk next week, because I want to ask the Governor if Mr. Vasilescu represents the National Bank when he makes such statements. If he is speaking for himself, it’s his problem, but he should wear a T-shirt on which the word «private» is written. If he wears a T-shirt on which BNR is mentioned, we should be informed if it is still a structure belonging to Romania, or if it’s a structure of gods concerned by their own existence. Which is a very good one, by the way…” Tudose added.

 

The answer of the BNR Financial Stability Director related to the PM’s attack: These are political statements. The rates and the interests on deposits will increase

 

Eugen Radulescu, the Director of the BNR Financial Stability Department, stated on Friday at a press conference held in Sinaia that PM Mihai Tudose’s statements since Friday are “political statements” to which he will not answer, but he draws attention that he expects increases of the rates and interests on deposits.

“I’m not answering to political statements. This is a political statement. What should I do to him? First of all, I believe that right now, the talk about ROBOR is totally disproportionate. For the moment, we are talking about an increase from 1% to 1.5%, we are speaking about an increase of 50 basis points. The inflation has increased much higher than this” Radulescu stated on Saturday, at a press conference held at Sinaia.

In his opinion, the interests cannot stay at the same level if the inflation will increase.

In this regard, he says that “inflation will become seriously positive”.

“Mr. Vasilescu also said this, I believe yesterday (e.n. – on Friday, September 29): the time of the small interests has gone. USA has already increased the interest two or three times. We’re talking about nine years in which the interests were very, very small. This will end, it cannot last forever”, Radulescu pointed out.

Asked if we should expect higher interests, the BNR representative answered “of course”.

“We are saying this since a long time ago! Obviously, the interests on deposits will also increase. For the moment, the interests on deposits are very, very low, and they are not covering the inflation anymore” Radulescu added.

 

 Tariceanu: Personally, I don’t have loans, the ROBOR increase is not related to collecting dividends from the state companies

 

The Senate’s Speaker Calin Popescu-Tariceanu stated on Thursday that he has no loans in RON, when asked about the connection between the increase of the ROBOR index and the fact that the Government collected dividends from the state companies.

“Personally, I don’t have loans as an individual, thank God. Thank God because any loan is a pressure, you have a debt which you have to pay, but I am telling you that in my life, as an entrepreneur, I had many nights in which I couldn’t sleep because I pledged with my own assets, as an entrepreneur, for the loans made by my company, and it’s not easy to know that, in case an incident occurs, you can lose your house, everything, and you have to start from nothing. I empathize with those who have loans and I understand them very well” Tariceanu stated at the Senate, when asked if he has loans in RON.

As for the public statements according to which the ROBOR increase is caused by the Government’s decision to ask for the dividends from the state companies, Tariceanu denied any connection between the two issues.

“No. It doesn’t have anything to do with this. (…) I have an economic experience that entitles me to say without any hesitation that any shareholder, either a private or a public one, has the right to receive his dividends. It is a right that cannot be put under question. If the state wishes to collect its dividends and it is criticized, then you should criticize also the private companies that are doing the same. If we don’t criticize the private companies since we don’t have this right, logically, because it is a wrong logic, I tell you that the same wrong logic is applicable to the state. The state has the right to collect its dividends as any other shareholder” he explained.

 

 

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