Romania Set to Liberalise Electricity Prices

Bucharest is to introduce a phased rise in electricity prices for both industrial and household consumers, in line with an agreement between the government and the IMF made public on Wednesday.

Prices will go up by around ten per cent by next July and a similar increase will follow in 2014.

Analysts say this is first step towards the deregulation of the electricity market in the Balkan country.

“Romania needs around 35 million euro in order to modernize its energetic industry. But foreign companies will only invest if the market is liberalised," economic analyst Mihai Tanasescu explained.

Liberalization of Romania's market in electricity is urged both by the IMF and the European Union.

Further steps will include a gradually cancelation of lower tariffs for poor families, a measure that will affect around 1.4 million consumers, or some 17 per cent of total number of household consumers.

By 2015 Romanians will no longer get "social tariffs" for electricity. Instead, the government plans to offer financial aid to those on net incomes lower than the average salary, which is 700 lei (Euro 165) in Romania.

Other measures may include an increase in exports of domestic produced electricity, which is currently hampered by technical issues and legislative restrictions.

Liberalization of gas prices is also expected to start next year in Romania.

Romania is one of the biggest energy producers in the Balkans, with production levels of around 60 TWh last year.

Romania produces hydro-power, nuclear and coal fuelled energy, but many of its production units need costly technological upgrades to meet environmental standards and boost output.