Underfunding of subsidy scheme puts Romania’s energy system at risk, association says

The Romanian Government has not earmarked enough financial resources to cover the subsidies pledged under the ‘cap and subsidy’ scheme enacted under the emergency ordinance OUG 27/2022, the local association of utility companies (ACUE) warns.

The budget revision, currently under debate, does not include the necessary amounts to secure the price ceilings assumed by the state for the period April - December 2022 thus posing major risks to the functioning of the entire system, the Federation of Associations of Energy Utility Companies (ACUE) warns.

The underfunding of the scheme is particularly surprising, given the robust dividends and special taxes collected by the Government from the energy companies - many of them controlled by the state, comments Radu Burnete, executive director of employers’ organisation Concordia - which ACUE is a member of.

Notably, the Fiscal Council has not commented yet on the ‘cap and subsidy’ scheme, although it has a major impact on the general government budget. Given the objections raised by the energy suppliers, the Council should cover this at least in its opinion to the budget revision.

In principle, the Government is supposed to fund the scheme from the special 80% tax levied on the “windfall revenues” generated by the energy companies as a result of high energy prices. Some of the companies, such as Romgaz and Nuclearelectrica, have already reported the supplementary taxes and they are significant: Romgaz paid EUR 900 mln in such supplementary taxes only in H1, while Nuclearelectrica paid EUR 170 mln. Hidroelectrica, 80% controlled by the state, has also reported massive profits this year.

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