Bulgaria's tourist overnights revenue up 18% y/y in Oct
Bosnia's Rafinerija Ulja Modrica submits EIA request for solar plant
Albania eyes 900 euro avg gross wage by mid-2024 - fin min
Bulgaria, Serbia open cross-border gas link
Bulgaria's Elea Capital gets revised offer from Rehub
Nov 28, 2007 17:12 EEST
FRANKFURT (Germany), November 28 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) is eager to invest in the energy sector of European Union newcomer Romania, which suffers from critical underinvestment, Louis Borgo, senior banker in EBRD’s power and energy utilities sector, said.
“We are ready to make investments really across the spectrum of sub-sectors – generation, transmission, distribution, trading. At the moment I’d say that there is a huge need for investment in generation in Romania," Borgo told SeeNews in a recent interview.
You can download the 2023 Renewable energy in Romania report here
"So obviously we are looking at that very closely and we have been in discussions with various parties in the country to make loans and equity investments for rehabilitation and upgrades, as well as for greenfield projects. The amount of financing we have available for Romania is not limited to a definitive number, so there is no point in discussing an overall EBRD limit," he said on the sidelines of an Emerging Europe Energy Summit, organised by IBP Publishing & Conferences earlier this month.
"I mean if it turns out that we have several financing opportunities to progress at once, we will do them,” he added, noting that it is not usual for the bank to invest more than 200-300 million euro ($442 million) in any one project, although it can invest in more than one project at a time in the sector, and across different sectors.
Investments in Romania's power sector will reach 30 billion euro by 2020 and some 30% of the projected total will be invested by the Romanian government, Finance and Economy Minister Vosganian said earlier this year.
The government still holds majority stakes in gas pipeline operator Transgaz, gas firm Romgaz, hydropower generator Hidroelectrica, three of the eight units of power distributor Electrica (Electrica Transilvania Sud, Electrica Muntenia Nord and Electrica Transilvania Nord) and the Turceni, Rovinari and Craiova power generating complexes.
“There’s critical underinvestment, because all these plants were built decades ago and there has been very little new investment since, either in new facilities or to rehabilitate existing ones. The government has been attempting to bring these investments forward, and has confirmed this approach in the country’s new energy strategy,” Borgo said.
But while public Romanian companies have tried to bring their investments forward and get them financed, there have been problems in the process of tendering for financing. Various tenders have had to be cancelled, delaying funding. These cancellations are for various reasons, which are technical, but the financing has been put back in some instances, delaying the needed efficiency improvements, he said.
“Also there’s been uncertainty whether they really want to involve the private sector in certain projects. I think there’s indecisiveness. Decisiveness is key,” Borgo said.
“I think some generation should involve private sector participation so that you have different private sector operators competing to sell their power. That’s the point. If all is owned by the government, competition is impossible because, let’s be clear, if the same person owns everything, you can’t really have competition,” he added.
The leading project in the Romanian energy sector in the next few years will be the construction of a second pair of reactors at Romania's sole nuclear power plant of Cernavoda. The cost of building the two reactors will be 2.4 billion euro and their construction should be finished by 2015.
Earlier this month Romania shortlisted six companies to build the two reactors. The candidates are Belgium's Electrabel, Italy's Enel, Spain's Iberdrola, Czech company CEZ, Luxembourg-based Arcelor-Mittal, and Germany's RWE, the plant's operator, state-owned Nuclearelectrica, has said. Negotiations are due to begin by the end of November.
EBRD TO WATCH HOW ROMANIA’S PLANNED NATIONAL ENERGY CHAMPION EVOLVES
In September the Romanian government said it planned to set up a holding structure comprising state-owned energy producers and distributors and privatise the new company by listing its shares on the bourse as part of its energy strategy through 2020.
“It is probably not going to be a champion with a capital ‘C’ when it starts as some of the assets involved will need investment, and the effectiveness of its overall organisation will depend a lot on the corporate design and governance. It is something that will need a lot of help, a lot of work to make it something that really functions in the way it is intended and in harmony with the liberalisation achieved to date," Borgo said.
"We also hope that the process that’s going to lead to the specifics of the national champion will be smooth and fast to ensure that the much-needed investments across the sector can be progressed in the near future. That’s really the worry of the EBRD – how long some investments may be delayed while this uncertainty continues, considering the delays already experienced," he added.
Details related to the future energy holding company will be announced, probably in the second half of December, after U.S. company Parsons Brinckerhoff (PB) Power completes the feasibility study on the project, the deputy economy minister in charge of energy, Darius Mesca, said earlier this month.
“Romania has made tremendous progress in liberalizing its energy market. It’s probably the most liberalized market in southeastern Europe. It got [commercial power market operator] OPCOM, which is a major success actually, but it must be brought forward and they need to find a solution to create more competition among generators,” the EBRD banker said.
Romania fully liberalised its energy market this year in order to allow customers to choose their electricity suppliers at more favourable conditions and lower prices. OPCOM (www.opcom.ro) plays the role of an electricity market administrator, providing a platform for deals on the wholesale power market.
If the national champion meets the EU directives, then the EBRD would support it with debt and equity as it will probably need a lot of this, he added.
Romania plans to produce 33% of its energy from renewable sources by 2010, 35% by 2015, and 38% by 2020. In order to achieve its maximum potential of renewable energy production, it has said it needs 2.7 billion euro in investments by 2015. The greatest potential output is from biomass, which could produce 65% of the company's renewable energy, and wind energy with 12%, Environment Minister Attila Korodi has said.
"Renewable energy is very important. From what I know, various investors, both large and small, in Romania are interested. There seem to be huge opportunities to do, let’s say, wind, but also small hydro. I think Romania has a huge opportunity there,” Borgo said.
“What has to happen is that the government really has to finalise its plans for how it’s going to put the Green Certificate programme. It has one now but it ends in 2012 and it needs to put forward a new one. I know they have something in mind that‘s going around within the government for discussion. When they finalise that, and it’s a good idea, then I think a lot of renewable investments will be made.”
A Green Certificate is a document which proves that a quantity of 1.0 MWh of electricity was produced from renewable energy sources. The annual maximum and minimum values for Green Certificate trading is 24 euro/certificate and 42 euro/certificate, respectively, for the 2005-2012 period. The Green Certificates' value represents an additional income received by power producers for clean energy that they deliver into the network.
($ = 0.6788 euro)
You have run out of free articles this month.
Sign up in for
and get ten (10) free articles per month or sign up for
and get unlimited access.
Browse our free newsletter options