BR’s TAX & LAW | Ioan Niculae (Interagro): We will not get any subsidized gas

Interagro president Ioan Niculae said at the Tax & Law Conference hosted by Business Review that his chemical plants are not beneficiaries of the changes made to OUG 114, and that his chemical plants will not burn any Romanian gas. Niculae said that the only chance Interagro has to open its chemical plants, which are big consumers of natural gas, is to find the necessary resources on external markets.

“I would start with a remark: we are discussing a very important issue for the Romanian economy and we see a low appetite from authorities to discuss this topic. If we look at the US, we can see their actions in recent years and how they have cut prices. We went completely the other way around,” says Ioan Niculae.

OUG 114 created a huge debate topic in the last few months and one of the subjects was the fact that major industrial consumers may receive gas at the capped price of RON 68/MWh.

“Talking about OUG 114 and the fact that Interagro will receive low-priced gas: I can ensure that Interagro will not receive anything at a subsidized price. And under the conditions of OUG 114 it would mean that no plant could restart. We, on the domestic market, have never imported more than 35 percent of total consumption. Now domestic production is expected to be over 90 percent and the rest is import. Our only hope now is to find solutions elsewhere, not in Romania, with the new pipelines such as the South one, and we hope to include Bulgaria and Romania for the Caspian Sea gas,” says Niculae.

He also said that the price of the gas started growing several years ago and it was due to the regulations adopted by the government at the time.

“During Victor Ponta’s time as prime minister a law was passed that led to an increase of the gas price of 25 percent each quarter, to over RON 90 MGWh. I asked to have a talk with the PM, who told me that we are no longer interested in gas because they no longer had authority over it, but that went to private producers. I told him the industry has no chance in those conditions. We did a study ourselves, which we gave out to all authorities. The figures were as follows: in December 2012 consumption was 18 billion cubic meters; in 2014, we would reach 15 billion cubic meters, and in 2016 less than 12 billion cubic meters of gas. It was even more dramatic than was estimated in the Deloitte study,” says Niculae.

“I hope to see in a few years how offshore gas will enter the domestic market because the current regulations are not a viable price. The gases do not come from the producers, they come from the distributors. The influence of the price of RON 68 will be non-existent for the final consumers, the price will be RON 130-140 given the transport and distribution structures.”