Romania to See Gas Price Increase
Romanian household and industrial users of natural gas are expected to see an increase in user pricing based on a government decision to be issued at the end of this month
The Romaniab government has committed to the World Bank, IMF and European Commission to deregulate gas prices for industrial users by December 31st, 2014 and for household consumers by December 31, 2018.
The price of domestically produced gas used for the regulated consumption by home users and by producers of thermic energy for the use of homes will be increased 19.4 percent by the end of 2014, while the industrial users will pay a price 2.6 times higher. At present, both household users and industrial users pay the same regulated price for gas of 45.71 Romanian New Leu (RON) per MWh.
Currently, end consumer prices include gas from domestic production and imported gas, which is more expensive. Domestically produced gas represents a part of this total. The amount of domestically produced gas to households is greater than the amount allocated to industrial users.
In November, total gas delivered to industrial users was comprised of 39.2 percent imports and 60.8 percent from domestic production. For the same month, total gas delivered to households totalled 94 percent from domestic production and 6 percent from imports.
According to obligations between the IMF and the government, gas prices will be completely deregulated in stages and differently for the home and industrial users. Households will see an increase of 10 percent over the next year and in 2014 and from 2015 – 2018, an increase by 12 percent yearly with periodic adjustments. According to the schedule set by the government, final prices paid by industrial users will be increased in stages of between 3 and 5 percent.
For households and for the producers of heat delivered to households, current domestic prices will be maintained until July 1st, 2013 and will be increased to 48.5 RON per MWh, as shown in a government decision project drafted by the Ministry of Economy. The next increase, up to 49.8 RON per MWh, will take place on October 1st.
On January 1st, 2014 price is set to increase to 50.6 RON per MWh, 51.8 RON from April 1st, 53.3 RON on July 1st and to 54.6 RON per MWh on October 1st, 2014.
For other types of users, domestically produced gas will be increased in 2013 in four stages. The first increase is scheduled for January 1st to 49 RON per MWh, the second April 1st to 55.3 RON, the third July 1st to 63.4 RON and the fourth October 1st to 68.3 RON.
In 2014 the schedule for increases to industrial users will be as follows: January 1st (72 RON per MWh), April 1st (89.4 RON), July 1st (109 RON) and October 1st (119 RON).
For industrial users, the period for elimination of regulated prices can be prolonged with one year, until December 31st, 2015 if authorities find significant differences between the commercial price for the domestically produced gas and the European import price.
These price increases will be accompanied by increased taxes on oil and gas companies, as previously announced.
“The envisioned effect will be correlated with the legislation to be issued regarding the taxation and income tax over the activities in the oil industry, respectively with the plan to support vulnerable consumers” is shown in the substantiation report of the law project.
Romania’s domestic natural gas production is produced almost entirely by OMV Petrom and Romgaz Medias.
Silviu Molnar