New Romanian government, EU must address red tape, market frustrations – MP

• Romanian MP calls on EU to work closely with member states to cut back on red tape
• Incoming Romanian government must address bureaucracy, high taxation, introduce market reform
• Romania can establish itself as viable regional alternative to Austrian gas hub

LONDON (ICIS)–The incoming European Commission should simplify procedures to access funds for energy projects and strengthen the dialogue with member states particularly in Eastern Europe amid growing popular discontent, a Romanian parliamentarian told ICIS.

Speaking to ICIS, Cristina Pruna, vice-president of the industries and services committee in the Romanian parliament said the Romanian energy sector played a major role not only in the EU but also in supporting neighbouring countries such as Moldova and Ukraine.

She warned previous delays in allowing Romania to join key agreements such as the EU’s Schengen area, which abolishes border controls, or bureaucratic procedures complicating efforts to tap funds had created major frustrations, which may be partially responsible for gains made by far-right parties in recent polls.

REFORM

She conceded the incoming Romanian government, which will be formed following parliamentary elections on December 1, will also have to address multiple internal challenges.

These include encouraging local and foreign investments in the gas and renewable sectors, cutting back on red tape, reducing taxes and preparing the market for deregulation.

She said her party, Uniunea Salvati Romania (USR), which is currently in talks to form the incoming coalition government, had proposed to establish a one-stop-shop at the regulator ANRE to help investors navigate the bureaucratic process to access EU funds for renewable projects.

Furthermore, she said Romania should establish power and gas markets where prices are set by demand and supply and insisted there should be a predictable legal framework in place to support vulnerable consumers as well as industrial consumers.

One of her party’s proposals is to introduce an automatic mechanism to guarantee tax credits for industrial consumers, which would allow them to deduct from taxes part of rising energy costs.

Market participants have complained caps on electricity and gas prices introduced following the 2022 energy crisis had led to burdensome taxation and market distortions.

Pruna agreed caps should be lifted but insisted consumers should be prepared for market deregulation expected in 2025.

TAXATION

Although the ruling Partidul Social Democrat (PSD) won the latest polls with a narrow lead, their policies to date have led to a high taxation regime that has throttled investments and led to nosediving liquidity on Romania’s forward electricity and gas markets.

As a result of policies spearheaded by PSD and the liberal party, PNL, in the outgoing coalition government, up to 87% of the money made from gas/oil sales is paid in royalties, windfall taxes and contributions to various funds.

Their policies have also led to regulatory unpredictability, deterring large-scale investments.

Meanwhile, there are fears that the three far-right populist parties which won seats in parliament –  Alliance for the Union of Romanians (AUR), Partidul Oamenilor Tineri (POT) and S.O.S. Romania – could push for policies that would exacerbate an already visible nationalist streak which has underpinned Romania’s energy regulations in recent years.

AUR calls into question the privatisation and sale of Romania’s oil and gas assets to OMV Petrom in the early 2000s.

Meanwhile, the front-running presidential candidate Calin Georgescu who will face the USR candidate Elena Lasconi in a run-off on December 8, claimed Romanians are ‘suffocated by taxes’ but neither he nor his newly established party POT has proposed concrete measures to scrap them.

ENERGY MIX

Although USR advocates scaled up nuclear and solar as well as onshore and offshore wind production, Pruna is keen to point out that Romania should capitalise on its gas reserves.

“Offshore Black Sea gas production is due to come onstream in 2027 during the mandate of the incoming 2025-2028 government. We need to ensure that Romania establishes itself as a viable regional market and an alternative to the Austrian gas hub,” she said.

She also noted the importance of working closely with Moldova and Ukraine to increase border capacity for electricity and gas flows.