Romania expects this week the EC's EUR 1 bln decision on coal-fired power units

Romania expects a response from the European Commission after the government in Bucharest asked for permission to defer the closure of several coal-fired power units, absolutely necessary for balancing the power system this winter, as the gas-fired units supposed to replace them are not yet in place, energy minister Bogdan Ivan announced on October 6 while attending an energy conference in Bucharest.

Romania should either pay a EUR 1 billion (over 0.25% of GDP) penalty for not closing the coal-fired power plants, or face costly imports possibly insufficient to cover its entire demand, minister Ivan said, adding that he hoped that the EC would waive the financial penalty.

"By Friday [October 10], we will know the Commission's position about milestone 119 under the National Relaunch and Resilience Plan PNRR, regarding the closure of coal-fired power plants," said minister Ivan at an event, as reported by Economica.net.

The financial implications of the decision, however, are insufficiently explained. A few days ago, minister Ivan said, in an interview with Digi24, according to Hotnews.ro: "If Romania decides to keep the plants in operation, we risk a penalty of approximately EUR 2 billion from the European Commission."

At the same time, in a response sent to Hotnews.ro last week, the Ministry of Energy stated that there is no risk that CE Oltenia will return the state aid of EUR 2.6 billion due to non-compliance with the obligations in the restructuring plan. The money was extended under the PNRR for replacing the coal-fired power units with gas-fired ones and renewable capacities.

On October 6, minister Ivan said that the financial penalty would offset the positive impact of the first and second packages of budgetary measures this year – an impact estimated at 0.6% of GDP, consistent with the EUR 2 billion penalty.

The same day, the energy minister recalled that, following the adequacy study of the Romanian energy system presented in Brussels, it emerged that Romania will face enormous pressures this winter in the scenario in which these plants will be shut down, and he also said that Romania will pay penalties of one billion euros if they are not closed.