Romania's Cabinet to give up idea of a sole energy company, but set up 2-5 equal producers insteadPublish date: 09-02-2009
Creating a national energy company (CEN) would mirror into higher prices for the electricity sold to eligible consumers according to a memorandum approved by the government three days ago and built on 2006 study which ranged advantages of having 2-5 equal producers on the market.
The memorandum, elaborated by the Ministry of Economy, was endorsed at the meeting on February 5 when this year's budget passed. The Cabinet sent a proposal to Parliament to deny an emergency ordinance from 2008 which agreed to the creation of a national power company, people from the ministry told NewsIn.
If set up, CEN would have included all the electricity producers in Romania, with Electrica taking over the stakes in Hidroelectrica and power complexes Turceni and Rovinari. Electricity transporter Transelectrica would not have been included in the plan.
The memorandum approved by the Cabinet includes the pros and cons of such an idea, showing that the power market would be affected by distortion, as far as competition goes.
CEN would have controlled 80 percent of the installed power, 50 percent of the electricity output and more than 90 percent of the system services, having significant power which could impose a point of view in talks with authorities, the memorandum reads among the cons of setting up the respective company.
Also, the company would occupy a dominant position on the market which would break competition rules in the field. Its employees union would be so strong it could impose its own salary policy, the document points.
Moreover, CEN would focus on maximizing profits and hit small producers by operating at the lowest production costs possible and manipulating the market, the memorandum underlines. Electrica would only look for ways to hike its profit, taking advantage of consumers, the document reads, while the Ministry of Economy which controls state power companies too, would look into ensuring competition on the market and protect consumers.
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