Government plans foreign loan for cogeneration plants

The government plans to apply for a foreign loan worth several billion euro to modernize cogeneration plants, because apartment building heating system units are not a viable medium-term solution, Prime Minister Emil Boc announced yesterday during a conference regarding Romania's energy strategy, organized by the Mediafax news agency.

This statement was made shortly after the Romanian authorities contracted a €19.95 billion loan from the International Monetary Fund (IMF), the European Commission, the World Bank, and the European Bank for Reconstruction and Development (EBRD). "I hope we will be able to identify the necessary financial arrangement. The solution is a foreign loan of several billion euro to focus on modernizing these plants. I believe that the government must make this courageous decision," said Prime Minister Emil Boc. The official estimated that this "massive investment" will be recovered in 10 years, as a result of savings generated by ensuring this source of energy. "We may begin negotiations for this loan as early as this year. We will initiate talks with the IMF and the European Commission to see how we can meet the budget deficit targets," the Prime Minister added. "If you ask the mayors, 9 of 10 will tell you that their priority is heating," Boc said, adding that state subsidies cannot solve the problem.

Specialists interviewed by Business Standard have reservations regarding the plan announced by the Prime Minister, but insist that there are major losses in the system, and a solution must be identified immediately, separate from political campaign interests. The former attache of Romania to the EUon energy affairs, Razvan Nicolescu, said that, by way of this announcement, the government in engaging in "a very ambitious project." "I wish for this intention to succeed. Until then, there are private companies that plan or are already building own cogeneration energy plants with new and high-level technology," added Nicolescu.

Business Standard