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Romania's gas market not ready for full deregulation - industry


Romania's gas market is not ready for a sudden price liberalisation planned for next month, as the final price for households could jump, the Federation of Associations of Energy Utility Companies, ACUE, said on Friday, quoted by seenews.com.

Although it fully supports the liberalization of the gas market in Romania, ACUE thinks the process should be carried out gradually, it said in a press release.

The Romanian natural gas market has been gradually liberalised from 2001 to July 1st 2007, when it was fully opened for all customers who are now able to choose their own supplier. Also, from 2007 to 2015, the market has been liberalised for non-household customers but the process has been postponed several times for households consumers.

One of the main reasons why ACUE is in favour of postponing this change in the gas market, which is to take place on April 1, is that it will lead to a price increase for households and for heating energy producers which are currently benefiting from a purchase price of gas set by the government.

The natural gas price on the regulated market currently is 60 lei ($14/13 euro) per MWh. Deregulation will result in an immediate increase of the cost for the free market, which currently stands between 72 and 80 lei per MWh, ACUE said.

For winter 2017-2018, ACUE forecasts an increase in the cost of natural gas, which is expected to reach 100 lei per MWh in the third quarter and 104 lei/MWh in the last quarter.

This will happen in the absence of a fair price for gas from domestic production, experts said.

The federation pointed out that there is a very high probability that domestic producers will set their selling prices at a value close to the price of imported natural gas, which is likely to affect the continuity and safety of gas supply and lead some market participants to bankruptcy, primarily heating energy producers but also some natural gas suppliers.

On the other hand, the experts believe that the gradual deregulation of natural gas purchases does not hamper increased competition given that any customer, including households, can change its natural gas supplier. "This does not currently happen in a meaningful manner precisely because the natural gas market in Romania lacks mechanisms to generate adequate liquidity and thus create customer requirements so that consumers have more options regarding the choice of supplier," ACUE argued.

Established in May 2012, ACUE Federation has 30 members, including powerful groups in the electricity and gas sectors: E.ON România, ENGIE România, ENEL România, CEZ România, C.N.T.E.E. Transelectrica SA, Societatea Energetic? Electrica SA, WIEE, WIROM GAS, GAZ EST, with a total of about 27,000 employees and an aggregate annual turnover of over 5.5 billion euro ($5.83 billion).