Romanian SocDems change offshore law again, coalition partners unhappy

The Social Democratic Party’s deputies came up with new amendments to Romania’s offshore law, which was discussed on Tuesday, October 2, by the Chamber’s Industries, Finance and Administration Committees in a joint meeting. The PSD MPs introduced some important changes to the law adopted by the Senate last week, which granted investors in offshore oil and gas projects the possibility to deduct their investments from the taxes owed to the state and provided that the taxation applied to offshore operations wouldn’t change as long as the agreements are in place, after the law comes into force. PSD has decided to increase significantly the taxation rates for the extra revenues recorded by companies that extract gas from the Black Sea when the gas price increases, local Profit.ro reported. Thus, for gas prices between RON 100 and RON 115 per MWh, the tax rate on extra revenues will be 30% instead of the 20% decided initially. For gas prices over RON 190 per MWh, the state will take 70% of the extra revenues companies make, compared to 50% in the previous form of the law. The MPs motivated that the higher tax rates were meant to prevent price spikes on the gas market and generate additional revenues to the state budget. The PSD MPs also changed the article that provided unchanged taxation for offshore gas operations for the whole period of the license agreements. Thus, only the royalties will remain the same while other taxes could change. The Social Democrats also kept the obligation that companies sell at least 50% of the gas extracted in a year on the local market but introduced a penalty that didn’t exist in the initial form of the law. Thus, companies that don’t respect this obligation will be fined 10% of their turnover in the respective year. The PSD MPs presented their amendments to coalition partners ALDE, the opposition and the oil companies’ representatives just one hour before the debate started. Thus, the investors left the meeting saying they didn’t have enough time to analyze the impact of the proposed changes on their business plans. PSD’s amendments were criticized by the opposition MPs as well as by deputies of the coalition partner ALDE. The proposed changes to the offshore law were, however, adopted by the three committees and may be voted by the Chamber of Deputies on Wednesday. This is the second time this law is being voted. The Parliament initially adopted the offshore law in early July, but president Klaus Iohannis sent it back for review. Romania’s ruling party concedes to big investors and changes offshore law