EU-Romania Business Society Responds to Romania’s Draft National Energy Strategy
Romania’s Ministry of Energy last week published their draft 2016 – 2030 Energy Strategy blueprint seeking to build on strong existing foundations that help make Romania energy secure and have generated billions of dollars in foreign investment and export earnings for the Treasury.
The timing of the release was appropriate, against the backdrop of this week’s news that ING Bank has lowered the expected growth rate for Romania to 4.8%, and continued worries less than three weeks before elections about what can be done to boost public investment and jobs.
We at the EU-Romania Business Society welcome this comprehensive evaluation of the country’s energy needs and analysis of what is required by government and business to keep expanding its asset base. That is the key for continued national development.
The Government’s strategy highlights five important objectives: energy security, competitive energy markets based on a competitive economy, clean energy and a sustainable energy sector, the modernization of energy governance, the protection of vulnerable consumers and the reduction energy poverty.
We commend the thinking behind the strategy as well as its release in draft form, allowing the views and response of experts, policy groups, investors and the public to be taken into account.
While we welcome creation of the strategy document and introduction of the forward-looking agenda, we must also highlight areas of concern where government actions in 2016 could in fact undermine their own model for transformation before it is even launched.
Romania’s priority action quite rightly emphasizes the need for greater resource security and competitive markets as a bedrock for Romania’s stable energy future – for continued growth. This should include a diversity of supply, as well as a safe investment climate and protection of current assets, with rule of law for investors.
Our community has serious concerns that the seizure of KMGI’s assets and the resulting uncertainty to Romania’s relations with Kazakhstan and other partners, could call into question how the Government intends to execute its plan. We worry what message is sent when one of the largest investors and exporters is put under such threat. If KMGI departs Romania, does that open the door for Russia and Iran to fill?
Resource security and national stability is helped a great deal by the contribution of Kazakhstan’s oil, which means Romania is not reliant on Russia. Current ratio proportions show about 60% Kazakh vs 35% Russian, where just a few years ago the numbers were reversed.
Moreover, Kazakhstan’s KazMunaiGas International (KMGI) accounts for 22mt per year of production in Romania. KMGI also provides more than 40% of the country’s total processing capacity. We have seen the figure of $1.4bn invested in Romania’s largest refinery, KMGI’s Petromedia over the years to reach EU standards of efficiency and operations.
The financial investments, private capital and public spending, needed to make the draft Strategy a reality, will be huge, and need to be made from a vantage point of partnership between the state and enterprise.
These imperatives are even more vital in the aftermath of international events impacting Romania and Europe, including Brexit and uncertainty around the election of Donald Trump – and his intended relationship with the EU, NATO and President Putin. Romania’s strong energy security and safety of supply is for private investors a precondition for directing capital into the country, extending business, and financing modernisation projects.
So real concerns over what the future looks like are being tangled with concerns regarding the business climate for investors. Disputes have been playing out between the Government with international private companies like CEZ, ENEL, E.ON and Raiffeisen in addition to KMGI. The reputation of Romania as a safe destination for foreign investment is a priority for Romanians and foreign investors alike.
We encourage the Government to restore the productive and mutually advantageous public-private partnerships that have served public administration and our enterprises committed to the country so well. Ultimately it is the citizens of Romania who have the most to gain from such cooperation.
BRUSSELS, November 24, 2016 /PRNewswire/