Review of the energy marketplace: the foreign companies have stopped the investments, but finally, the Romanian companies are starting to show interest in acquisitions

The sudden changes in the legislation regarding energy have affected the investment plans of the foreign companies. “We bring projects to headquarters, and we are not credible”, say the investors. On the other hand, for the first time, Romanian companies are starting to look for acquisitions outside Romania, revealing a lack of patience to wait for the completion of a strategy energy project, rejecting promises made every year, but never kept.

These were the most important conclusions of the 4th edition of the ZF Power Summit ’15, an event dedicated to the energy marketplace, organised by Ziarul Financiar. This year’s edition attracted more than 25 speakers, the elite of an industry of 30 billion euro, who brought to the debates, in the two days of the conference, more than 200 participants. The Romanian Energy Ministry, The Romanian Regulatory Authority for Energy, the President of the Competition Council, the Executive Managers of MOL Romania, CEZ Romania, GDF SUEZ Energy Romania, Enel Romania, Electrica, General Electric Romania, Hidroelectrica, Nuclearelectrica, Complexul Energetic Oltenia, Verbund Romania and Fondul Proprietatea were all present.

[Tweet "this autumn, Romania will finally have an energy strategy project"]The new Minister of Energy, Andrei Gerea, declared that this autumn, Romania will finally have an energy strategy project, but the foreign investors declared that if a major investment showed up, they would not be interested in investing. The good news is that the public energy companies have started to be confident in building their own strategies.

“Romania still needs investments in infrastructure. But after what happened with renewables, it is becoming more and more difficult to go to headquarters with projects, and tell them to be confident that we will receive fair treatment. The management’s reaction would be: what about the renewables?”, said Eric Stab, the President – and General Manager of the natural gas corporation, GDF SUEZ Energy Romania, on the first day of the ZF Power Summit ’15.

In 2013, the government made a sudden cut in support for renewable energy, first, by delaying a number of green certificates given for the production of energy, then by cutting by half the subsidies. The past year has brought a new change: the Romanian Regulatory Authority for Energy (ANRE) is reducing the rate regularised by the profitability (RRR) to energy resources from 8.52% to 7.7%. This indicator, which influences directly the distributors’ profitability, was modified shortly after the public company, Electrica, was listed on the Stock Exchange, with the promise of a certain profitability rate.

The RRR revision took everyone by surprise, especially Electrica, Transelectrica, and the other distributors. “For the distributors, the regulation frame should have been set many years ago, but the regulator had decided to change an essential element. When all companies decided to invest in Romania, they had in view a certain productiveness”, said Toni Volpe, General Manager, of Enel Romania.

The second day of the ZF Power Summit ’15 brought more optimism, as, for the first time, the companies owned by the government in the energy sector showed their intentions for expansion or to include new activities in their portfolios.

[Tweet "Hidroelectrica, the largest energy producer in Romania, will make the first step in diversifying the generation portfolio"]Hidroelectrica, the largest energy producer in Romania, will make the first step in diversifying the generation portfolio, the company being interested in the acquisition of a hundred megawatts in the wind sector, simultaneously, whilst opening new trading offices in Austria and Germany. Electrica, the largest local company in the sector for providing electric energy, declared that is currently analysing the region for potential acquisitions, the Republic of Moldova being mentioned.

“In regard to trading, we will open an office in Serbia in March, and we hope, by the end of the year, to be present in Austria and Germany. We are also considering the acquisitions of energy capacities in Senegal, Africa. I am very confident in Africa. There, I can take transport, distribution and also production capacities. Until then, there are some opportunities, even in Romania, with renewables. There is a chance that we will buy one hundred megawatts in the wind and photovoltaic sectors”, proclaimed Remus Borza, judicial administrator at Hidroelectrica.

The problem is that, at the foreign investors’ level, we were able to see a homogenous message, but the public companies still have different perspectives regarding the evolution of energy consumption or the urge to start major investment projects, such as reactors 3 and 4 at Cernavodă or Tarnița-Lăpuștești hidroelectric power station.