Romanian PM says no deal reached with the IMF and EC

The Romanian Government didn’t reach an understanding with the International Monetary Fund (IMF) and the European Commission (EC), as the two international financing institutions have asked for a substantial increase in gas prices and a massive restructuring of the Hunedoara and Oltenia energy companies. Prime Minister Victor Ponta said on Monday that Romania will not sign a new letter of intent with the IMF and the EC and that the negotiations on those two issues will continue in April. He said the current stand-by agreement between Romania and the IMF and EC remains valid. However, this agreement is only formal, as it was suspended last summer. This means that Romania couldn’t draw any money until the two sides signed a letter of intent. The IMF and the EC have asked the Government to increase the price of natural gas sold to the population and the local thermal energy producers by 16%, starting April. The Government rejected this increase as non-sustainable. “We will come with a new, more realistic calendar proposal by April,” Ponta said. According to the previous calendar agreed with the IMF and the EC, the natural gas price for households should have increased from RON 53.3/MWh, in July 2014, to RON 53.6/MWh in October 2014, RON 56.1/MWh in January 2015, RON 58.9/MWh in April, and RON 62/MWh in July 2015. The Government postponed the increase and asked for a three-year delay in eliminating regulated gas prices, according to Mediafax. The IMF, World Bank and EC have also asked the Government to massively and radically restructure Romania’s two largest thermal electricity producers, Complexul Energetic Oltenia and Complexul Energetic Hunedoara. Ponta said that this restructuring wouldn’t save this industry. “We won’t accept measures that will lead to the disappearance of this sector that is essential to our energy security and the economic and social development of the Gorj and Hunedoara regions,” Ponta said. Complexul Energetic Oltenia produces up to 30% of Romania’s electricity, in three lignite-powered thermal plants. The company has almost 19,000 employees. Complexul Energetic Hunedoara covers about 7% of Romania’s energy consumption and has about 6,500 employees. Romania has a EUR 2 billion stand-by agreement with the IMF, which was signed in September 2013 and expires in September this year. The Romanian authorities treated this as a precautionary agreement and didn’t draw any funds. Romania also has a EUR 2 billion loan from the European Union, also signed in 2013. editor@romania-insider.com