Page 108 - SE Outlook Regions 2022

overlapped and resulted in record prices. The government set in place
a “cap and subsidy” mechanism aimed at protecting households,
particularly low-income ones, while prompting concerns among energy
producers and suppliers.

One of the key issues that became visible in 2021 is the insufficient
power generation capacity. Natural gas self-sufficiency (over 90% in
recent years) dropped as well. Furthermore, Romania agreed to phase
out the use of coal by 2032, under the Resilience Plan.

To address these, Romania must pursue the projects already outlined
in the nuclear, renewables and natural gas sectors. Bolstering nuclear
power capacities with two more traditional reactors and new,
small-sized reactors planned with US partner Nuscale is part of the
answer. Construction of new wave of wind and PV generation
capacities is taking place. But the offshore wind segment needs legal
clarifications. The natural gas producers, including OMV petrom,
Romgaz, BSOG and Lukoil, are waiting for a new Offshore Law for
starting production.

3.9.5 Construction

After outstanding performance during the COVID-19 year 2020,
Romania’s construction sector shows signs of fatigue. But the
Resilience Plan is likely to provide fresh impetus after 2022.

Romania’s construction sector has constantly lost ground since April
2021, and it marked a significant 7.5% y/y decline in Q, 2021.

However, the sector demonstrated outstanding resilience during the
crisis in 2020, which is why it isn’t now enjoying the benefits of low base
effects seen in other industries and more broadly in terms of economic
growth.

The trend has been visible in all three market segments: residential
buildings, non-residential buildings and civil engineering.

However, the residential buildings sector made a substantial 29% y/y
annual advance while the non-residential buildings (-22% y/y) and civil
engineering (-13% y/y) posted negative annual performances.

In response to the unexpected negative developments in the
construction sector, the state strategy and forecasting body, CNSP,
abruptly revised downward its forecast for the value-added generated
by the sector this year to a dismal 0.2%, from 6.1% envisaged in
August.

Part of the revision may be attributed to the rise in the price of
construction materials and energy.

The sector is expected to recover in 2022 when the value-added
generated by construction companies is set to surge by 9%, driven by
the much-expected projects financed under the Recovery and
Resilience Programme.

108 SE Outlook 2022 www.intellinews.com