Gov't proposes capping prices of domestic production's natural gas to 68 lei/MWh, until February 2022

The Executive envisages capping the price of natural gas from domestic production to 68 lei / MWh (rd 14 euro, ed. n.), for a period of three years, until February 2022, Minister of Public Finance Eugen Teodorovici announced Tuesday at Victoria Palace. 

"Setting a price ceiling for gas is another measure taken to protect both households and the economic environment. Unfortunately, the behavior of certain companies in different sectors of activity shows very clearly a contempt, we can say, with what the economy in Romania means, a course of behavior based on existing laws, an unfair behavior towards what the Romanian economy means, where these companies have found projects, develop projects, but which, by different methods, as is the case of the gas sector, let's say, apply prices or there are very large differences between the price of production and the final consumer's price. It is therefore proposed a capping of 68 lei per MWh for a period of three years until 28 February 2022 so that the purchase price paid by suppliers for the domestic gas production needed to cover the final customer and households in industry consumption cannot exceed 68 lei per MWh, regardless of the seller," Teodorovici explained. 

He pointed out that the need to adopt such a measure resulted from the "unfair" behavior applied by producers selling the extracted natural gas at a price three times higher than the production price. 

The Finance Minister has first launched the idea of capping the natural gas price this summer, indicating that, although communist to one point, this measure is necessary because there is no competition on the market. 

As of April 1, 2017, the domestic natural gas sales price was completely liberalized, being established within the competitive market by contracts freely negotiated with suppliers and customers based on demand and supply. 

The price of imported natural gas is established on the competitive market through free negotiation between importers and natural gas suppliers in Romania. The estimated average selling price of imported natural gas on March 31, 2019 will be 94.58 lei / MWh. 

On the natural gas market, at present, active are an operator of the National gas transmission company Transgaz SA, 7 producers (Romgaz, OMV Petrom, Amromco Energy, Raffles Energy, Drill Probe, Stratum Energy and HUNT OIL Company), 5 external suppliers that bring natural gas from external sources to Romania (Engie Energy Management, Imex Oil, MET International AG, Alpiq Energy SE and Wiee AG Switzerland), 2 storage operators (Romgaz and Depomures), 36 distribution operators (the largest ones being Distrigaz Sud Retele and E.ON Gaz Distribution), 87 active suppliers present on the market and 3 operators of the centralized markets. On the natural gas market there are approximately 3.7 million final customers, of which 3.4 million are regulated household customers.