Page 124 - SE Outlook Regions 2023

3.9.4 Energy & power

Thanks to its comparatively lower reliance on imports of primary energy
resources and higher self-sufficiency rate, Romania’s economy is a
favourable spot in Europe for the development of manufacturing.

BSOG already started production in the Black Sea and will add 1bn
cubic metres of gas to the country’s depleting production (under 10 bcm
per year) and OMV Petrom/Romgaz should begin production in 2027.

The country is developing a broad nuclear cooperation strategy with the
US, aimed at building two new 700-MW reactors by 2030-2031 and
more small-sized reactors across the country.

Separately, the country is hosting a new wave of investments in wind
farms and PV parks. The offshore wind segment remains, however,
underdeveloped.

Even so, the poor functioning of the already dysfunctional European
energy markets in 2022 hit the country as well.

After it completed the liberalisation of the electricity and natural gas
markets, it now has to resort to centralised strategies in order to restore
a certain level of functioning and sustainability. A “cap and subsidy”
system was set in place at the end of 2021 and repeatedly amended
during 2022 – with its two legs (consumer subsidies and windfall profit
taxation).

By the end of December 2022, the government fully enacted the WU
Regulation 1854/2022 on an emergency intervention to address high
energy prices.

In September, Romania adjusted and prolonged the “cap and subsidy”
scheme for energy prices.

The new decree prolongs the validity of the scheme until the end of
August 2023 (from the end of March 2023) and seeks to secure a better
balance between the cost of the subsidies and the revenues generated
from the “solidarity contributions”, which are taxes levied on the
“windfall revenues” derived by energy companies.

Such contributions will be charged along the whole energy chain and
will resemble a "price-plus" system allowing specific profit margins for
each player and penalising attempts to artificially increase the prices by
repeated trading.

The scheme will cost the budget some RON1bln (€200mn) per month
and the solidarity contributions should entirely cover it.

In December, the government transposed the EU tax on windfall profits
for fossil fuel producers and refineries.

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