Romania’s industry may axe over 500,000 jobs over swift deregulation of gas market

Newsroom 18/03/2014 | 16:57

The country runs the risk of losing EUR 6.3 billion in GDP and over half a million jobs if the gas prices for industry are aligned with the EU average by the end of this year, says a Deloitte report commissioned by CONPIROM, the local employers association comprising representatives from the industry, agriculture, constructions, and services sectors in Romania.

Gas prices are set to soar by 72 percent by October 2014, according to the deregulation schedule agreed with international lenders including the International Monetary Fund (IMF) and the World Bank (WB).

CONPIROM representatives said that prices will go up by 24 percent this April. They were due to met government ministers on Tuesday afternoon and ask for a rescheduling of the deregulation process.

“The market is not mature enough for a double liberalization, both on the gross and retail segments. The storage capacities need to be developed and rules for operating them need to be put in place. We have to see if we continue to maintain the gas basket or not,” said Valeriu Binig, director, financial advisory services, energy & resources and corporate finance, at Deloitte Romania.

The report proposes a transition period between 8 to 14 years for the roll out of deregulated so companies can find alternative supply sources. At present, domestic gas production is covered by state-owned gas producer Romgaz and Austria’s oil major OMV Petrom. The biggest share of imported gas comes from Russia’s Gazprom.

Mihai Ivascu, CONPIROM’s secretary general, said: “The so-called liberalization of the natural gas market will immediately lead to a reduction in half of the industrial contribution to GDP, through company closures and relocations to other countries whose legislation supports the economic activity.”

Ovidiu Posirca