One CNE or four CNEs? That is the question…

Newsroom 13/04/2009 | 16:00

“We have to restructure the energy production sector in order to have two or even four profitable national energy companies, which will put Romania's energy potential to good use. The restructuring process will create the performance premises for everything related to energy sector in Romania,” said Adriean Videanu, the economy minister, recently.
The Romanian official's statement comes as a surprise to energy market players, as all speculation surrounding the national energy company seemed to be settled at the end of last year.
On October 8 of 2008, the Romanian government inked an emergency ordinance approving the formation of a national energy company. According to the document, the national power entity, with a total capacity of 10,000 MW, would comprise the state-owned hydropower producer Hidroelectrica, electricity distributor Electrica and the power complexes in Rovinari and Turceni.
Romanian officials estimated at that time that the value of the national energy company would be between EUR 20 and 24 billion, and would reach an operating profit of EUR 800 million by 2012. Moreover, the authorities even had plans to list the company on the stock exchange in the next two or three years, with about 25 percent of the shares.
The economy minister has now made a 180 degree about turn in the strategy for this project which, according to the statement made five months ago by government officials, was expected to become operational in March this year. In brief, new government, new ideas, new experiments, no concrete results.
Videanu has now set another deadline. “This strategy must be discussed with each company from the energy production structure. At the end of this year, I estimate that these companies will be fully operational,” said the minister.

Who is left on the sidelines?
Although, as the architect of the new plan, he might be expected to have details about the several national energy companies, the minister was unable to give any clarification as to which state-owned companies would be included in the restructuring process.
He stated only that he would consider the development of these businesses by public-private partnerships and joint ventures.
However, Videanu's reticence to give details has not presented speculation on the market about the constitution of the two national energy companies. One, rumor has it, would be formed of Portile de Fier, Electrocentrale Bucharest, Mintia thermo power plant, Paroseni, Deva, Autonomous Company for Nuclear Activities (RAAN) and Compania Nationala a Huilei. The other would consist of Lotru, Valcea
and other hydro power plants, the three energy complexes Turceni, Rovinari and Craiova and Societatea Nationala a Lignitului Oltenia (SNLO).
Things might look good on paper, but it is worth remembering that some of these companies have a lot of work to do. For instance, Complexul Energetic (CE) Turceni will be forced to close units three and six if the company does not complete its EUR 120 million investment
in environment measures by January 1, 2010.
One thing is for sure: state-owned companies Nuclearelectrica, Romgaz and Electrica will not be included in the new plans of the Economy Ministry.
“The decision to exclude Electrica was taken in order not to discriminate against the most important foreign energy groups with operations on the local market, which have acquired only energy distribution companies and have no production capacities which are controlled by the state,” market specialists told Business Review.
This new project will probably be analyzed next month and, if all goes smoothly, the companies are expected to be operational in September-October. Market specialists are skeptical, as around the time of the new deadline given by the Economy Ministry, Romania will have to face another challenge: presidential elections. It is unknown which parties will form the majority in Parliament at that time. What is also unsure is whether the Romanian authorities will manage to make good on their plans, or whether this new idea will join the others in the waste paper bin.

By Dana Ciuraru

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