News 11 Jan 13

Romania Eyes Regional Energy Hub Status

Romania hopes to become a regional centre for power - but the new minister's ambitious plans also depend on improvements to the country's currently struggling economy.

Marian Chiriac

Romania’s new Energy Minister has ambitious plans for the near future, though the current poor economic climate and delays to planned energy privatizations might derail some of his plans, analysts say.

“Romania wishes to become a key power market in the region with equal focus on the purchase and sale of energy, and to host more renewable energy projects,” Constantin Nita said recently.

“The Economy Ministry aims to attract as much money as possible to re-tool power production units and also to attract more foreign investors,” he told an economic conference.

In recent years, Romania has become a lucrative market for energy investors, particularly for those interested in wind and solar power.

Official data show around 2,000 MW entered recently the national power system from renewable sources, while Romania is hosting other renewable energy projects with a potential output of 21,000 MW. Installed wind energy alone increased by around 112 per cent in just a year.

But analysts say the boom in investing in renewable energy projects may end soon, and Romania must prepare for the change.

“The spectacular increase in 'green' projects in Romania was motivated only by incentives and by EU support for investing in such projects," journalist Adriana Gavrilescu says.

"Romania will soon have to invest in improving interconnection networks and in retooling power units to become a viable energy provider and exporter in the region, which will be difficult to achieve in the current bad economic environment,” she adds.

Cash-strapped Romania is dependent on a 20 billion euro rescue package from the IMF, the European Union and the World Bank. It obtained the loan in May 2009 in exchange for agreeing to push through austerity measures aimed at taming the country’s yawning deficit.

Bucharest promised to sale minority stakes in such energy companies such as Romgaz and Nuclearelectrica.

But these projects have been put on hold, mainly due to disagreements between the centre-left government of Prime Minister Victor Ponta and President Traian Basescu.

An IMF mission is to come next week to Bucharest to hold discussions on the next review of the programme.

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