The problem is that after foreign investors have withdrawn from the big projects, even local companies sitting on hefty cash reserves fail to identify opportunities to invest it.
“The freeze in the energy sector is a problem of governance, a problem of vision and of human resources. Energy companies paid more than EUR600 million to EUR700 million dividends last year, six or seven times more than estimated,” former minister delegate for Energy Razvan Nicolescu said on ZF Life.
“Energy companies have become the main source of funding for banks, when it should be the other way round,” he added.
Nicolescu took the position of executive lead advisor with Deloitte’s energy practice early this year.
The local energy sector has seen no fewer than 12 memorandums signed for projects worth about EUR11.5 billion in the past eight years that would have boosted installed capacity by 27% or at least replaced old generation facilities. None of the projects actually got off the ground.
The last chapter was written this week and is about a EUR850 million investment in a coal-fired plant in Rovinari, a project that has been discussed since 2009.
Although many projects announced over the years were dropped mainly because investors backed out, the most important local energy companies were sitting on almost 9.5 billion lei (more than EUR2 billion) cash at the end of the first quarter, most of which kept in bank accounts instead of putting it to work through investments or acquisitions.
Under the circumstances, Romania is unable to find RON400 million to open a new uranium mine, which it absolutely must if it wants to keep one of the most important industrial chains still in business in Romania going.
(English version by Loredana Fratila-Cristescu)