WHY WE HAVE ABRUPT PRICE RISES COMING Gas providers will recoup 400 millions Euros in costs

Natural gas providers in Romania will recoup costs of 400 million Euros in the next six years, which are not acknowledged in the regulated tariff practiced over the last three years.

Nicolae Havrileţ, the president of the ANRE (the regulator of the energy market), said: "Over the last three years, the operators incurred additional expenses of approximately 400 million Euros with the acquisition of imported natural gas. The ANRE did not acknowledge those costs in the regulated tariff, which is why the operators have filed a lawsuit against it.

They have requested to recoup these costs through an increase of the regulated price by 15%. We have decided that this percentage was not bearable by consumers and we have decided to implement, starting in September, a 5% increase for the price of the gas supplied to the population, the public institutions and the electric plants, as well as a 10% increase for the natural gas supplied to the companies which still benefit from this regulated price".

He explained that the hike of the price of gas will allow operators to recoup their costs in six years, and companies, in two years.

This year, the ANRE will liberalize the price of the natural gas market, which overlaps these price hikes. Two years from now, all the companies will have a liberalized price for natural gas, and the price paid by the population will see the price it pays liberalized six years from now.

A new price increase for the population will take place one year from now (8%), when the liberalization process will begin, the president of the ANRE said.

The companies will bear additional expenses this year (5%), and for them the liberalization process is set to begin in December.

The head of the IMF mission, Erik de Vrijer, announced on Tuesday that the price of natural gas supplied to the population will increase 5% in September 10%.

Former prime minister Emil Boc yesterday said, quoted by Mediafax, that the rise of the price of gas is the proof of the current government's inability to negotiate with the IMF: "So I should take it that I am being charged with not raising the price of natural gas; if I did I would have been criticized for having done it".

"This hike of the price of natural gas is the proof of the government's inability to negotiate with the IMF. Because I know how hard the negotiations were each time when it came to the price of utilities and natural gas and I know the price increases hurt everyone's wallet".

He said that during the period when he led the government he protected the citizens' interests to prevent the price of gas from being raised.

When asked by journalists why did the Government decide to do this increase, Prime Minister Victor Ponta said that the Government has found that the former government did not raise the prices of natural gas itself, like it was required to: "We just found that this price increase should have been made by the previous government and it wasn't. It is the meeting of an obligation assumed by the Romanian government, which last year postponed these regulations, and we are implementing them now".

Ponta said that the price increase is an update and it has nothing to do with the liberalization program.

Silvia Vlăsceanu, the executive manager of the Association of Utilities Companies in the Energy Sector (ACUE), said: "The law clearly states that the gas bills, the regulated costs are recognized by the ANRE. Any delay, and I am speaking here about the delays in the scale of years in terms of costs, will cause operators to incur losses, at least on the regulated market".

He said that the operators have made a profit on the free market, not on the regulated market: "The operators are making a profit and it is normal, because it is an economic activity just like any other. We are speaking about the regulated market where the electricity and natural gas suppliers alike are losing money. We want the regulator to issue the laws on time and to abide by its own regulations".

The price of electricity supplied by ELCEN to consumers in Bucharest will not increase, even though the price of natural gas used by ELCEN as fuel to produce heat will be increased in September, says Rodin Traicu, secretary of state in the Ministry of the Economy.

The Ministry of the Economy is the majority shareholder of ELCEN Bucureşti, the supplier of thermal energy in Bucharest.