Natural Gas Price, A Ticking Bomb

Alina Toma Vereha

A recent decision of the National Energy Regulatory Authority (ANRE) to maintain the natural gas price unchanged in the second quarter of 2009 outraged the public opinion and stirred much controversy among politicians as the general expectation was to have a lower reference price as a result of lower prices for imported gas. The Liga Habitat Condominium Association has announced intent to stage street protests unless the price is reduced. Concurrently, sources from the Liberal Democrat Party (PD-L) say that the party has been split into two sides, that is, those who want heads to roll over the gas scandal and those who do not want to startle the natural gas companies. The same sources indicate that the Social Democrat Party (PSD) have their own energy programme, which does not match the one endorsed by the ruling partners as concerns the calculation of the invoices and the establishment of the National Energy Company.

Contacted by BURSA, Adrian Gurzau, Vice Chairman of the Abuse Committee of the Chamber of Deputies, stated: "All these controversies about the pricing policy must be clarified. I believe that a parliamentary inquiry panel must be appointed urgently to investigate the price of natural gas and the method of setting the unit prices. I have submitted the necessary papers to the Standing Bureau, who need to make a decision this week. I have collected 101 endorsement signatures from Members of Parliament representing all the political parties, who are interested in shedding light on the price of natural gas." He stressed that the inquiry panel must investigate the development of the natural gas price over the previous few years, whether the 15% reduction stipulated in privatization contracts had been implemented, how distributors recovered their investments through the unit price and whether investments had actually been made.

Gabriel Sarbu, a Director with ANRE, told BURSA that the 15% price cut had been applied, in line with the privatization contracts, in the first regulatory period, that is, 2005 - 2008. Referring to investment recovery, he added that ANRE would only recognize finalized and commissioned investments. "ANRE specialists verify the eligibility of such investments through random sampling on site," he said. According to ANRE, the approval of distribution prices considered the investments made by the operations in addition to the commitments made in the privatization contracts. ANRE is the institution that should verify whether the contractual provisions have been observed.

The scandal gained momentum in the last few days, as ANRE announced the new fixed costs for gas procurement, which are by approximately 12% less in Q2 than in Q1. The difference will go to suppliers and distributors to compensate costs that were not recognized in the unit price last year and in early 2009, according to ANRE representatives. In other words, ANRE should have increased the gas price even more in 2008, but did not and thus caused losses to some of the gas companies.

ANRE"s action seems plausible, considering that major distributors and suppliers Distrigaz Sud and E. ON Gaz staged vehement protests in the first half of 2008 following ANRE"s decisions to adjust the price of gas for the regulated market. The two companies claimed that the price increases authorized by ANRE in February and July 2008 did not cover the cost of buying imported gas. E.ON announced at some point that they were ready to sue ANRE to recover the costs. The situation calmed down in the second half of the year, when the international price of oil and gas plunged to unsuspected depths. Last autumn, gas companies were hoping to recover their losses in the first half of this year.