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with 5.83%, informs the National Regulatory Authority of energy (ANRE). The news comes exactly when governors have announced a lower gas price of 20 percent and capped it at 55 lei / MWh by 2021! It is true that the Minister of Finance, Eugen Teodorovici, recognizes that this measure is communist (up to a point), but necessary. On the other hand, the fall in gas prices seems to have a "collateral victim": the chairman of the Competition Council, Bogdan Chiriţoiu, who will most likely be dismissed and replaced by former Prime Minister Mihai Tudose. The fact is that if there is a gas jump for the population, it will not happen until April 1, 2019! Indeed, the suppliers have contracted, for a certain time, gas purchase contracts to cover their needs up to the winter (ie March 31, 2019), at current prices, for the first time. 39, about 75-80 lei / MWh. According to the legislation in force, ANRE must recognize the costs of gas buyers to suppliers, so that as of 1 April 2019 a price of 55 lei / MWh for domestic consumers could come into force! Thus, the population will receive the first reduced bills in May 2019, which is fixed in the month when the elections of the European Parliament are held! What is the coincidence
"Given the demands of gas suppliers and the in-depth analysis of the costs reflected in the final price, the Regulatory Committee, applying the legal provisions, found that an adjustment were met on average 5, 83% of the price of natural gas for households, as of August 1, 2018. "
A few days ago, we remind Darius Vâlcov, State Councilor of Prime Minister Viorica Dăncilă, announced that the price of gas will decrease by at least 20%. Immediately on the website of the Ministry of Public Finance (MFP) appeared a draft government decision (HG) whereby the maximum price with which producers can sell gas is 55 lei / MWh until June 30 2021. Currently, it is appropriate prices of the Romanian Stock Exchange (BRM), the weighted average price for the fourth quarter of this year is nearly 78 lei / MWh. On the Vienna Stock Exchange (CEGH – Baumgarten), the price of the 4th quarter is about 105 lei / MWh (remember that the price of Romanian gas is calculated on the basis of the spot price on the CEGH)
Funding motivates the issuance of this normative act in the Commentary, among other things, that in the Competition Act (21/1996) it is stated that "in economic sectors or markets where competition is excluded or substantially restricted by the effect of a law or the existence of a position the Government may, by way of decision, establish appropriate forms of price controls for a maximum period of three years which may be extended successively for periods of not more than one year if the circumstances justifying the adoption of that decision continue to "
The MFP shows that the adoption of the price of GHG cap gas is justified because, as a result of the total liberalization of the price of gas, to the network of producers as of April 1, 2017, the upward trend in prices was stable and steady, "currently 29.5%, while for March 2019, an increase of 33.75% is expected". On the other hand, the finance also claim that there are seven producers on the Romanian market: Romgaz, OMV Petrom, Amromco Energy, Raffles Energy, Drilling Probe, Stratum Energy and HUNT OIL Company. It is true that the first two, Romgaz and OMV Petrom, together account for about 95% of the market
It should be noted that competition is not excluded or substantially restricted by the effect of a price liberalization law (on the contrary!), and the monopoly of gas production can not be said, since there are 7 domestic producers!
It is true that the law on competition states that "in exceptional circumstances, such as: crisis situations, major imbalance between demand and supply and the obvious market failure, the government may order temporary measures to combat excessive price rises or even block them. "But" such measures may be adopted by decision for a period of six months, which may be extended successively for periods not exceeding three months, while the circumstances that led to the adoption of this decision persist ", not for three years! [19659005Enoutrelaloisurl'énergieetlegaznatureldisposeque"encasdedéséquilibreimportantentrel'offreetlademandeet/oudeperturbationmanifestedumarchédugazlegouvernementpeutsurpropositiondel'ANREetavecl'avisdul'augmentationexcessivedesprix/tarifsouleurblocagepouruneduréedéterminéeallantjusqu'à6moisquipeutêtreprolongéesuccessivementpourdespériodespouvantallerjusqu'à3moisalorsquelescirconstancesquidéterminentl'adoptiondecettedécisionpersistenta)fixerunelimiteprixplusélevé()"
But there is no imbalance between the demand on the Romanian market
Another strange thing is that the HG to cap the price of gas is initiated by the Ministry of Finance, although the activity producers, distributors and suppliers in the field are coordinated by the Ministry of Energy. In addition, the normative act should not be approved by the Ministry of Energy! The advisers are the Ministry of Economy, the Ministry of Justice and the Competition Council.
That is why we think that the President of the Competition Council, Bogdan Chiriţoiu, will probably be a "collateral victim" of this DG! Indeed, the normative act violates the law on competition: it is not a monopoly on the market and competition can not be restricted when prices are collected! That's why we can not see how Bogdan Chiriţoiu could approve the HG project! And if he does not advise, there will be a reason for the government to dismiss him or ask for his resignation and replace him, rumorously, by former Prime Minister Mihai Tudose.
The Romanian Association of Petroleum Exploration and Production Producers (ROPEPCA) disputes the price cap of gas by a government decision and states that It is an anti-competitive measure that puts domestic producers in a discriminatory position
The Romanian Association of Petroleum Exploration and Production Companies – ROPEPCA is deeply concerned by the draft government decision, by which the executive wants to rationalize the price of gas sales from domestic producers to suppliers to 55 lei / MWh by 2021, below the level of pre -liberalization of 60 lei / MWh, on the grounds that, in the absence of such a measure will bring domestic gas to more than 80 lei / MWh in 2019. Natural gas producers are challenging both the object of this decision and the way it is without adequate consultation of the parties concerned. ROPEPCA argues that capping the selling price of gas from domestic production is an anti-competitive measure to place indigenous producers in a discriminatory position relative to natural gas imports, "said a statement from ROPEPCA
. In the medium and long term, such a measure leads to increased dependence on external sources, and the increase in imported quantities will have a negative impact on both security of supply and price. consumers
they point out that the state collects 60% of this increase in gas prices after the liberalization of the market, by exaggerating.In addition, royalties must be paid according to the reference price established in relation to Baumgarten exchange rate, much higher than prices in Romania
"ROPEPCA believes that precisely to ensure a fair competitive environment in The government must take steps that will not discourage investment in indigenous natural gas production, "said Haralad Kraft, president of ROPEPCA.
According to the press release, investment in the development of deposits, which are made at a high cost production is endangered by such a decision of the Romanian Government and the imposition of a price of 55 lei / MWh calls into question the economic viability of certain deposits, which could attract their closure, with an impact on production and location
"A government decision that plays the selling price l of the producers' domestic production to suppliers is incompatible with the free market status, this decision will discourage the production of domestic gas for which Romanian companies invest significant amounts in the exploitation of deposits and the creation of jobs, "says Harald Kraft.
The Romanian Association of Exploration and Petroleum Production Companies is composed of 16 members, holders of concession contracts. These agreements were signed by the member companies with the Romanian state, on the basis of the oil law in force. Currently, ROPEPCA members hold the majority of oil concession agreements for onshore development and production blocks in Romania, representing for the year 2017 cumulative investments of 900 million euros, a figure of 39, business of nearly 3.4 billion euros, a state of 300 million, and the creation and maintenance of 13,700 jobs. Communist but necessary measure
The government's intention to cap its gas price is a communist measure at a point but necessary because it does not has no competition in this market and that companies raise prices as they please, said Finance Minister Eugen Teodorovici at the launch conference of the SME White Paper
"Some say it's a Communist practice Yes, this may seem at first glance because you are trying to enter the market.It is true, up to a point.We are talking about competition.What competition? has two operators who increase the prices one by one, and the other immediately aligns.Investments have not been made, but the price is increasing without any justification, and you suffer and l 39; economy suffers, and some speak immediately, as if they came from a other country, that it is a communist practice. I have nothing to do with communism, "said Teodorovici, according to Agerpres.
Later, in discussions with journalists, the minister said that this proposal for a government decision would be discussed in the first meeting of the Executive Committee, but nothing will be adopted, never talking about anything!
"We have on the market these two operators, who unreasonably increase the price of gas. At the same time, the underlying investments are not realized. "
When asked if there is a study proving that this measure will have the desired effect, namely the reduction of the final price for consumers, he replied:" Obviously, there will be reductions. Here is an example: Households receive a lot of subsidies. If the price is low, the subsidy will decrease. Domestic and industrial customers will also benefit. "
Teodorovici also stated that the question arose as to why state officials agreed in these companies with rising prices
." Journalists also asked him which guarantors can say that they will not benefit from gas traders, who will become "smart boys" again, buy cheaply from producers and sell expensive to consumers
"I think that there is also a leverage here "
In addition, the proposed ceiling of 55 lei per MWh is lower than the ceiling at which producers pay an additional income supplement. In this regard, Teodorovici confirmed that the state is ready to abandon the sums received from this surcharge. "The budget has a loss in the first round, but we have to look at the winnings of the second round," said the government official
. He also said that there would be discussions with the European Commission on this issue. "If we have posted it (not – the HG draft), it means that we are not violating anything legally," said Teodorovici, asking what is the opinion of the Competition Council on this measure.
There is a certainty that there are employees they also appreciate this because the low price will apply as soon as it will be passed by the government. The Federation of Free Trade Unions of Chemicals and Petrochemicals, the national representative organization at the sector level, welcomes the initiative of the Ministry of Energy and the Ministry of Finance to promote a government decision to set the price of gas natural on the national production. Alpha
"As long as there are only two producers and there are no scholarships to which all producers are obliged to sell, the prices have risen and will continue to grow, thus putting the domestic industry as well as the citizens it is more difficult to bear the natural gas bills! We hope that this normative act will appear as soon as possible and will save what can be saved of the Romanian industry, "the statement said.
Up to another, the gas grows!
The members of the ANRE Regulatory Committee discussed the price adjustment requests from natural gas suppliers, requests that stemmed from the fact that from the beginning of April 1, 2017, the price the purchase of natural gas from domestic production has been liberalized and producers are free to sell natural gas at a price that is no longer regulated
Currently, the Natural gas is sold in the competitive market, including for their acquisition being freely established, based on demand and supply. Thus, according to the legislation in force since August 1, the price of natural gas for the population increases by 5.83% to cover the costs of purchasing gas suppliers
ANRE indicates in a press release that In January 2013 – April 2017, through the liberalization schedules established by the Government's Memorandums and Decisions, the evolution of the price of domestic production increased from 45.71 lei / MWh to 60 lei / MWh , to domestic consumers
With the entry into force of GEO 64/2016, domestic gas sales prices were 67.99 lei / MWh from April 2017, 68.50 lei / MWh from June 2017, 67.52 lei / MWh from August 2017, 70.33 lei / MWh from October 2017, 71.11 / MWh from December 2017 and 73, 85 lei / MWh from March 2018.
With regard to the sale price of natural gas from domestic production under the contracts concluded in the centralized market, with live Rare in August 2018 – March 2019, it has evolved as follows: 77.72 lei / MWh for August 2018, 79.57 lei / MWh for October 2018, 79.97 lei / MWh for December 2018, 80.21 / MWh for January 2019 and 80.25 lei / MWh for March 2019.
"Cumulative, the growth in percentage of domestic gas prices in domestic production was 75.56% between January 2013 and March 2019, with the mention that ANRE did not have and does not have the jurisdiction to determine the level of these prices, "the release says.
In addition, in addition to domestic production natural gas, Romania imports a quantity of natural gas annually to cover its estimated consumption needs for the cold season and the import price established in the competitive market was from 80.14 lei / MWh from April 2017, 79.39 lei / MWh from October 2017, 91.02 lei / MWh from January 2018 and 94.58 lei / MWh since March 2018.
"According to the provisions of the regulator has the obligation to set the price of natural gas to households on the basis of the purchase of natural gas by suppliers of centralized markets, plus tariffs of transport, distribution, storage and supply, which are still regulated by the ANRE, explains the representatives of ANRE
Thus, the regulated tariffs between 2017 and 2018 were 8.89 lei / MWh for transportation, 17.14 lei / MWh for storage and 27.12 lei / MWh, 1 April 1, 2017, 6.89 lei / MWh, 17.14 lei / MWh, 26.99 lei / MWh from November 2017, 6.57 lei / MWh, 13.13 lei / MWh, respectively 27.31 lei / MWh from July 2018.
Thus, the price of transport fell in 2018 compared to 2017, by 26.1%, the storage rate of 23.42% and distribution by 0 7%. The cost of supply decreased by 23%, from 5.90 lei / MWh in April 2017 to 4.49 lei / MWh in April 2018.
Regarding the influence of the price capped gas on households can not be seen before April 1, 2019. Suppliers have already concluded gas purchase contracts to cover their consumption between August 2018 and March 2019 (the last month considered "winter" in Romania) at prices between 77 and 80 lei / MWh (according to the version of ANRE). In these circumstances, the regulatory authority must apply the legislation in force and recognize these costs. As a result, a price of 55 lei / MWh can not be recognized by ANRE until 1 April 2019! Thus, the low price will benefit, first and foremost, industrial consumers. The population will receive the first bills lower than the price dropped to 55 lei / MWh in May 2019, exactly in the month when the elections of the European Parliament will take place!
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