Energy Prices Stifle The Romanian Economy

Companies in the energy sector in Romania all estimate profits - sometimes huge profits - while companies in the industrial sector strive to stay afloat while paying huge energy bills.

The associations of owners note that the price of utilities in Romania stays high, while priced on international markets had dropped.
"It is perfectly feasible to lower the utilities' prices by 10 to 15%, to allow Romanian companies become more competitive," said the president of the National Council of Small and Medium-sized Companies Ovidiu Nicolescu.

The National Authority for the Regulation of the Energy Sector (ANRE) decided in May to lower the price energy companies could charge by 3%; while in July it decided for a 5% drop in prices. However, the owners' associations are still disgruntled with the decrease, saying the prices are still too high.

To compare, the results posted by companies in the energy sector look like this:

Romgaz had 323.8 million lei net profit in the first six months of 2009, which is 13.6% higher than the same period last year. The company estimates its year-end profit 727.2 million lei, from 537.29 million in 2008 and 509.55 million lei in 2007.

Transgaz, the national company in charge with natural gas transportation, estimated an year-end profit 10 to 12% higher than the 239 million lei recorded in 2008.

Nuclearelectrica, the company operating the nuclear power-plant at Cernavoda, posted a six-month net profit of 140 million lei, up 33% from same period last year, and revenues at 473 million lei, or 22% higher than those in the same period last year.

Transelectrica, the national company in charge with the power grid in Romania, estimated 12-month net profits at 56.7 million lei, which is 40% up from last year.
Hidroelectrica, the company in charge with water-powered electric plants, estimated net profits at 59 million lei.
While the coal-based electric plant in Turceni estimated net profits of 45 million lei, from 18 million lei in 2008, while the one in Rovinari estimated net profits of 18.2 million lei, from 1.04 million in 2008.

At the same time, some of coal-based power-plants asked ANRE for a hike of prices; their request is under examination.

This time, companies in the industrial sector lay off their personnel, to lower their costs - still high under the pressure of high prices for utilities, electric power and bank credits. The National Council of SMEs estimates some 115,000 companies will dissolve or suspend their activity by the end of the year.

The General Union of Industrialists in Romania (UGIR-1903) stated in May that the main five branches of the economy - namely IT, machinery, textile industry, metallurgy and chemistry - are in free fall, with shrinking rates surpassing the EU average.

- Translation AAP