Romania plans to cap domestic gas price, producers’ shares drop

Romania’s Government wants to cap the price of gas sold by domestic producers to RON 55 per MWh, according to a decision draft published by the Finance Ministry. This measure is needed to eliminate the negative effects on household consumers as gas prices increased significantly after the market was liberalized in April 2017, the ministry argued. The price of gas sold by domestic producers on the centralized market increased from Ron 60 per MWh in March 2017, to RON 70.93 per MWh in April 2017 and RON 77.72 per MWh in August 2018 and is expected to reach RON 80.25 per MWh in march 2019, according to the Finance Ministry’s data. These are the prices at which producers sell their gas to suppliers. The final gas price for households is higher as it includes other costs as well. The measure will likely impact the two big gas producers in Romania, state-owned Romgaz and OMV Petrom, which is part of Austrian group OMV, which have a combined share of about 95% of the domestic gas production. The shares of the two companies declined on the Bucharest Stock Exchange (BVB) on Thursday morning. Romgaz’s shares (BVB ticker: SNG), went down almost 4% while OMV Petrom shares (SNP) lost 2.8% of their value. The two companies currently play an 80% tax on the extra profits made from the domestic gas price liberalization, which means that the state will also get less money from this tax if the Government decides to cap the price. However, the Finance Ministry hasn’t calculated the financial impact of such a measure on the state budget. Romania's junior coalition partner asks Govt. to change recently voted offshore law editor@romania-insider.com (Photo source: Freeimages.com)