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de Adrian N Ionescu 9.4.2017

Dividends of at least 2,000 million lei will be paid this year to the state budget, representing profits registered last year by the most important state-owned energy companies, according to the proposals that their management will make to the shareholders: Romgaz, Hidroelectrica, Transgaz, Transelectrica și Nuclearelectrica.

On the other hand, the government program displayed on the website has no indication on any value related to the energy investment, but just some ambitious general objectives.


The biggest dividends are proposed by Romgaz, 458 million lei at an allocation rate of only 50%. The management of Hidroelectrica has not made public its proposal yet and the dividend for the state would be over 600 million lei at the same allocation rate.


  • Dividends paid to the budget and the investment of state-owned energy companies
  • Net profit (mln lei)       budgeted profit (mln lei)          budgeted profit change vs 2016 (%)  Turnover change vs 2016 (%)         Budgeted investment 2017 (mln lei)   Investment 2016 (mln lei)       Change investment/revenue 2016       Change investment/turnover (%)       Allocation rate (%)      Dividends paid to state (mln lei)



The dividends that the state receives from the energy companies could double to almost one billion euros if all companies comply with the government “memorandum” that asks them, in fact, to pay at least 90% of the 2016 profit to the Government.

The amount increases even further if we add the dividends of the largest electricity distributor and supplier, Electrica Group, and the pipeline crude oil carrier Conpet Ploiesti.

At Electrica, the state lost the majority of the votes, although the state officials hardly get used to that. Conpet has lost much of its strategic importance, as it basically depends on a single client, OMV Petrom.


Romgaz, Nuclearelectrica, Transelectrica and Transgaz forecasted investment of 2,645 million lei in their 2017 draft budgets. The amount would be 2.5 times higher this year than in the previous year, but most of the resources come from accounting depreciations and they also need to be “achieved”.

Investment needs are much higher and every million of profit counts.

We have an old, polluting and inefficient energy system“, admits the current government, which still aims to “complete” the third national energy strategy of the last 10 years. Nor will that be easy to achieve, because the Parliament rejected an amendment aimed to allocate 200,000 lei to completing the 2017-2030 Energy Strategy.

The latest energy strategy had been completed in December by a technocratic government, much criticized by the current political cabinet.

Until a new energy strategy will be completed, the production capacity will continue to age, stop or, at best, significantly reduce their efficiency. So:


  • Evolution of the pool of available energy production capacities, if not investing in new capacities
  • Source: Ministry of Energy, based on data from Transelectrica, ANRE and company reports


At least EUR 7-14 billion investment would be needed by 2030, only to replace the production capacities that are close to the end of their lifetime, according to the energy strategy completed in December, but not undertaken by the new government.

The investment needs differ depending on the development scenario.

According to the budget of the Ministry of Energy, the transfers scheduled for 2017, including the investments, amount to 255.5 million lei and other 260 million lei in the next two years.

Budgets are not certain. Romgaz, for instance, has planned investments in 2016 worth 1,020 million lei and realized 497.7 mln, 51.2% less than in 2015.

The investments made by Romgaz are lower than in 2015 (937.9 mln lei), “following the reduction of planned investments in the surface exploration, the decrease in investment for joint ventures and the postponement of some works because of the difficulties occurred in the preparation activity (obtaining land, permits, agreements, authorizations) and the changes in the legislation on public procurement. Investments have been exclusively financed from own sources,” reads a company report.

Generally, the state companies have suffered from the lack of investment and came to the fore by accumulating net losses of 66.5 billion lei, between 1994 and 1995, according to the study “Ready for the future? A new perspective on Romanian economy”, published in the latest edition of the central bank’s Working Papers.

It is true, most part of the loss (65.5 billion lei) comes from the first decade of the interval analysed when the corporate not privatized mammoths like Sidex Galati, strongly influenced the statistics. A proof is that the size of the net loss has significantly decreased.


  • Profitability of state companies          Number of state enterprises by net result
  • Bn lei; 2015 equivalent data               State enterprises with negative net result
  • Net profit                                             State enterprises with negative net result
  • Net loss
  • Cumulated net result
  • Sources: BNR, Ministry of Finance, own calculations


However, worse is that net losses have started to increase again in the state sector after 2012.

Top 10 profitable companies make 81% of the positive net result registered by state enterprises.

An isolated market

Interconnecting Romania with the rest of the European energy markets has been a strategic objective for many years, both on the natural gas and electricity side.

Transgaz, the monopoly operator of the natural gas conveyance on main pipelines from Romania, was on the edge of losing the forefront in the project of transferring the natural gas found in the Black Sea continental shelf.

The Development plan for the Natural Gas National Carriage System for 2014-2023 comprises five major projects in various stages of execution, whose estimated value amounts to about EUR 1.5 billion.

Transelectrica has its own problems, as operator of the monopoly of electricity main transmission infrastructure.

The government program refers to the investment amount related to these two strategic companies only when invokes an annual monopoly tax of about EUR 50 million to finance “new distribution systems in areas where there is no electrical power and gas supply.”

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