Romania's centrist coalition government approved a calendar on Friday to liberalise its electricity market by 2013 for industrial consumers and 2017 for households, which will raise prices and encourage much needed investment.
Romania has agreed to free up its gas and electricity markets under a 5 billion euro ($6.54 billion) aid package from the International Monetary Fund and the European Commission, which requires member states to align its energy prices to European Union levels over a number of years. The commission and foreign investors such as Germany's E.ON, Italy's Enel and Czech CEZ - which own local gas and power distributors - have repeatedly criticised Romania's energy price caps for hurting competition and discouraging investment.
A draft strategy by the economy ministry estimated last year Romania needs 30-40 billion euros of investment in new electricity generation, while it is forced to close a third of its outdated power capacity by 2020 and more than half by 2035. "We have moved to consolidate competition on the electricity market by ... setting a clear calendar for eliminating regulated tariffs," Dan Plaveti, the head of Romania's national energy regulator ANRE, told reporters after the government meeting.
He did not comment on potential price rise estimates. The calendar will eliminate regulated prices in six stages for industrial clients by the end of next year and in ten stages for households during 2013 and 2017. The government should soon approve a similar calendar for gas prices. ANRE has already enforced three price hikes for industrial consumers since last year. The power price calendar is part of a larger bill regulating the electricity market - which will now go to parliament for approval - bringing it in line with EU legislation.