UPDATED: Romanian MPs vote to repeal anti-market regulations

Author: Aura Sabadus Karolina Zagrodna

2019/08/27

LONDON (ICIS)--Romanian MPs advised on Tuesday morning the repeal of controversial government ordinances which reversed the liberalisation process in the electricity and gas sectors.

The Commission for Industries and Services voted to remove a series of requirements passed since last year, which stipulated the regulation of prices for domestically produced gas, introduced an import obligation and slapped a 2% tax on companies’ turnover. Although the latter was subsequently changed to 2% on gross margin for traders and suppliers.

The Commission has also advised the removal of an obligation for electricity producers to sell some of the output earmarked for household consumption at regulated tariffs.

A Commission representative told ICIS on Tuesday that the proposals will have to be backed by other parliamentary committees including the Commission for Labour and the Commission for Budget and Finance.

If the controversial articles are repealed in parliament, the regulator ANRE will have 90 days to implement the latest legislative changes and bring the electricity and gas market to status quo ante, namely to the position where the electricity and gas markets were fully liberalised.

PRICE IMPACT

Romanian gas and electricity traders welcomed the news but added that the latest changes may trigger some confusion ahead of winter and may even crash domestic prices.

“Producers will start selling more to the free market, which will pressure prices both for gas and electricity,” an electricity trader said.

He added that if approved, the regulatory changes may impact the Romanian Calendar Year 2020 contract by reversing its spread with coupled Hungary.

The Romanian-Hungarian Cal ‘20 Baseload spread flipped on 7 August for the first time, with the Romanian product settling €0.89/MW above benchmark Hungary, according to ICIS assessments.

Low renewables, rising carbon prices and forecasts for decreasing conventional capacity in Romania were the main bullish drivers supporting the Cal ‘20 spread which hit a high of €1.19/MWh on Friday.