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Integrated energy corporation might control 80pc of market in peak season

The establishment of an integrated energy corporation in Romania would be incurring losses on the Romanian market and consumers, and it is in disagreement with specific requirements of the European Union, Chairman of the National Institute for Energy Planning and Use (IRE) Jean Constantinescu told journalists on Monday.

'Among the risks to consumers posed by an integrated state-owned company is high pricing of use. Likewise, the waterpower royalties will not be able to support any national programme in this field. The design of the integrated energy corporation comprises Hidroelectrica, two energy complexes and three distribution utilities. The integrated corporation should control 40 percent of the market. In reality, the control will be 50 percent and, in peak season, when use and prices are high, it will reach 80 percent,' argued Constantinescu. He added that his stance on the design of the integrated energy corporation took into account his participation in the restructuring of the Romanian electricity sector in 1997-1998. 'Romania is incompatible in terms of economy, technology and management with countries owning successful integrated companies, such as France, Germany, the US or the Czech Republic. In the same line of thought, the Scandinavian market, where there are no integrated companies is the most efficient energy-wise,' said Constantinescu. The integrated corporation should turn private by flotation on the Bucharest Stock Exchange (BVB) and its management should be in private hands. 'If state-controlled, the corporation would be condemned to poor performance, and consequently a low level of investment,' argued the IRE chairman. He also said that there are already large energy companies in Romania working on a profit - such as Hidroelectrica and Electrica - and the system that should be used to further develop the local energy market should entail the privatisation of the existing companies. The under-30 percent market shares so far owned by them have encouraged the continuing development of the wholesale energy market, said Constantinescu. 'Money for investments, which the authorities are putting at 2 billion euro, cannot be raised on time from floatation on the BVB, securities or unsecured loans. Investors have to be drawn by good achievements,' he said. The IRE official added that strategic investors are a source for investments in the development of the national energy system in Romania. Constantinescu also mentioned that, according to the Romanian Ministry of Economy and Finance, integrated companies would become viable only if they possess water power stations, which give them cheap waterpower. 'The European Union forbids cross subsidies. The project for the integrated national corporation is in breach with the EU policies. A competitive market secures transparency for transactions and supply security, both required by the EU. An integrated corporation that is domineering and dominated by the State is advocated as a panacea for economic development, when in fact what is being sought is control over the energy market and the privatisations of large water power stations,' Constantinescu concluded. Sursa: http://www.rompress.ro

Tags: integrated corporation market energy companies control should constantinescu euro bvb

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