E.ON’s main problem in Romania, where the group has both natural gas and electricity distribution and supply operations, is still related to the prices regulated at a level seen as low, particularly for natural gas.
The German giant is aware that should it not get a price hike this year, getting it next year would be virtually impossible given the upcoming elections.
“After hiking prices by 10% for industrial consumers in July, an increase of around 20% for the same segment would be necessary starting October for prices for household consumers to stay unchanged,” says Frank Hajdinjak, general manager of E.ON Romania.
However, the National Energy Regulatory Authority (ANRE) has recently announced an 8% hike, below the Germans’ target. This summer, the government and ANRE decided to set up two natural gas baskets for a nine-month period, namely July 1-March 31. The move was meant to protect household consumers against possible price hikes, with the price on this segment set to remain unchanged until next spring.
E.ON’s requests for gas price hikes come at a time when the company expects the price of imported gas to rise toward yearend, as will the share of imported gas in covering consumption. The company also needs to cover losses from previous financial years, when the price at which gas was bought was higher than accepted by the energy market regulator.
“We’re no longer living in 2004, when companies rushed to launch new projects. Nevertheless, Romania is still a very good market,” says the E.ON Romania boss.
Despite the good outlook, the German giant is taking small and cautious steps on the domestic market in fields other than electricity and natural gas distribution and supply.
In 2008, the company signed a partnership with the Romanian state and Italy’s Enel to develop an 800 MW power station running on coal in Braila, but Hajdinjak says the project campaign will start being drawn up as late as this year.
The Romanian subsidiary of E.ON also has renewable energy projects with a 70-100 MW capacity under development in Moldova, which may reach as much as 200 MW, but a firm investment decision will be made toward yearend.
Given all the current uncertainties and a slight electricity and natural gas consumption increase in Moldova, Hajdinjak hopes 2011 figures will be close to last year’s. The group has around 6,500 employees in Romania. E.ON built its presence on the Romanian market after taking over the former Electrica Moldova and Distrigaz Nord.
(English version by Catalina Apostoiu)