Results of an one year technocrat mandate at the ministry of Energy

Certainly, one of the most important achievements of Victor Grigorescu’s portfolio as a minister remains the completion of the energy strategy, warts and all. Then, there are several concrete projects that have been finished or put on a predictable operational path: unlocking the National Investment Plan, implementation of some necessary mechanisms in the gas market, the electrification program, the interconnector Romania-Bulgaria and BRUA. Other lines of action were professionalization of human resources, with increased transparency, but also some fundamental restructuring measures in the mining and renewable sectors.

Defining the guidelines for a new Romanian energy strategy – let aside fears related with its future implementation – is undoubtedly the most important realization of Victor Grigorescu and his team.

A proper framework for the coming years policies

Finalization of this document is an important step for the whole sector, because, besides providing a blueprint of the current state of the system, it offers a new vision for the evolution of the system in the coming years. The Energy Strategy provides a fair framework for the energy policies in the coming years, policies on which, obviously, the future ministers will leave their own imprint.

According to the minister Grigorescu, the objectives of these policies, however, must remain the same: to replace one third of the fleet of generating capacity, to preserve a role for coal in the energy mix, to combat energy poverty and to make the heating producing systems more energy efficient.

“Previous strategies were, sometimes, colored by some personal touch, and I think it is very important that we got rid of this. It is important to develop plans that can be used over a long period of time and which allow the most appropriate choices in the long term, beyond anyone’s preferences and prejudices. I saw people who wanted to have specific projects listed in the strategy, but those who requested for this can make a simple exercise of identifying those projects that were listed in the past strategies. How many of them have been realized? Besides, our energy policy must be technologically neutral, so that it could support any economically viable project, which will  be confirmed by the market. The state is no longer the only actor in the energy sector, today. Private capital also plays an important role, and the state should support private investment for updating the system.”

It does not mean that, in line with the strategy, some projects can not be assumed, the ministry said: “on the contrary, such a support would be extremely useful, but not within the national strategy, but in the subsequent implementation plans.”

 Unlocking NIP, three years after initialization

One of the great successes of this year is the unlocking of the National Investment Plan (NIP) three years after its initiation, given that earlier this year Romania was very close to lose this funding scheme.

“We have already signed contracts for a number of projects worth 503.3 million lei, including the investment of Oltenia Energy Complex at Işalniţa and Rovinari. I would have liked to have more companies enlisted in the program. We have also received a request for funding from Oltenia Energy Complex for a thermal power group in Rovinari and we are waiting the funding request to be filed by the end of this year for the investment in the Iernut plant,” said State Secretary Cristian Busu.

Among the novelties introduced this year, one is the modification the framework contract, in order to adapt it to the new realities of the 2016 market.

NIP has 853 million lei, which represents the equivalent of certificates sold in 2013-2015. With this money we can finance up to 25% of the eligible costs of investments that lead to reduction of greenhouse gas emissions. “We had to wait for three years, with money in our accounts, for us to be able to return this money into the real economy”, said Cristian Busu.

Needed mechanisms for the gas market

In less than a year, the ministry has managed to introduce a number of fundamental legislative changes in order to boost transactions on the gas market. “We have built a clear and transparent mechanism necessary for the gas price formation on the Romanian market, so that we could offer to the end consumer, the citizen, for the first time, a transparent price formed through transactions on the market”, summarizes Secretary of State Aristotel Jude.

The measures were necessary for consolidating a competitive, transparent and non-discriminatory framework for running transactions on the Romanian gas market, at real market prices, based on supply and demand. “At the same time, we regulated the setting, by decision of ANRE, of the volumes of natural gas to be stored by each provider, and also the manner of establishing contravention and the fine applicable to providers and to transmission operator that will not constitute the minimum gas stock. This is important for Romania’s energy security and for leaving behind the rhetorical questions we met each winter so far: Do we have enough gas for household consumption and for heat producers?”, explains Aristotel Jude.

Electrification program thorugh the EEA and Norway Grants

Romania still has more than 100,000 homes with no access to electricity, and most of those living in such households have no chance to obtain this access by themselves. Ministry of Energy announced that, together with the Polytechnic University of Bucharest, has identified several technical solutions that could be implemented so that these homes to be electrified.

The first stage of the process began with the help of Ministry of European Funds, which identified as funding source the EEA and Norway Grants 2014-2021. “For the first time, the Ministry of Energy has become a partner in this program that will provide funding for the electrification of 10,000 homes. Very soon, the first households which will benefit from this program will be identified and will be focused also the most suitable technical solution,” said Dan Ionescu, advisor to the Minister of Energy.

Romania – Bulgaria interconnector and BRUA

Ministry of Energy has made an important contribution in completion of the gas interconnector between Bulgaria and Romania, developed by Transgaz, but also in the approval of the financing and in the development of the BRUA project, the largest energy infrastructure project of the recent years. Over 528 kilometers of new pipeline, operated at high pressure, will cross the country from South to West, opening Romania to new options for the purchase and transit of natural gas in the region.

“We operationalized within the Ministry the Authority for Projects of Common Interest, which will manage, together with the transmission operator, the entire complex process of implementation. The BRUA project represents, among others, a clear contribution of the energy sector to Romania’s economic growth in the coming years,” said minister Victor Grigorescu.

Mining – fundamental restructuring measures

Secretary of State Corina Popescu managed two of the most sensitive dossiers of the moment: the mining restructuring and rebuilding the support scheme for renewables.

“I took over when the mining sector was in an extremely fragile situation. Mining activity is deeply undercapitalized, with no investment works made at all, “ Corina Popescu told us. “People are working under extremely heavy conditions, with outdated equipment and tools. This is why the mining activity seems uneconomical and, in addition, we are talking about activities taking place in areas where there are no other options.

The Coordination Committee mining have devised a restructuring plan for the coal mining, and for this we increased the state aid granted to SNIMVJ for inclusion in the closure procedure of two more unsustainable mines from Hunedoara Energy Complex, respectively Lonea and Lupeni mines.”

“The same predicament we found in uranium mining sector, where we were able to approve a 62 million lei worth rescue aid for the National Uranium Company. The company is facing financial difficulties and needs a thorough restructuring process in order to reenter the market. In early November, the first installment, worth 47.2 million lei, reached the company. NUC is the link that completes the full nuclear cycle Romania has – an unique advantage that we can have,” said Corina Popescu.

Recovery measures for the renewable sector

Renewable industry has a very important role in the production of green and clean energy, but the sector needed a new design, a new legal framework in order to be saved from a disaster, which was repeatedly announced by the companies in the field. “Mistakes have been made in the past, and they had to be addressed. But it is very difficult to find the right balance after years of mess. We may change and fix now as much as the law allows us. For now, we have a legislative proposal which, once approved, would bring predictability and stability in the market and a reduced impact on final consumer”, said Corina Popescu.

Increased quality in human resources

The ministry started many processes of recruiting for professional managers in the state-owned energy companies, but also within the Ministry, for stronger transparency and a new attitude.

“With Hidroelectrica we had no less than 15 candidates per seat when selecting the members for the Supervisory Board, while in the competition for Department of Energy Policies in the Ministry we had the pleasant surprise to have three candidates per seat,” says Minister Grigorescu. “We started an intensive process of making the sector more transparent, and that is why the Ministry of Energy became part of the National Anticorruption Strategy. This will help us in the area of procurement and institutional transparency. I hope that our program of cooperation with civil society will make visible fruits in the coming period, especially since we have benefited from the expertise of nine NGOs, which signed a cooperation protocol with the Ministry, in order to implement some important measures dedicated to public procurement, whistleblower and ethical codes, among others.

 Research, a starting point in energy

“We have opened an intensive collaboration with the research experts in Romania, because I consider this field as a vital one for the development of the energy system. We brought together key Romanian research institutes in the energy sector and we were able to facilitate a series of visits for exchanging experiences in Norway, an action which already materialized in clear partnerships,” said Minister Grigorescu. Similar actions will follow in the United States and Iceland. Once this program launched, it should contribute to reconnecting the local energy expertize to the flow of international research. “I hope these steps taken by us to be institutionalized as quickly as possible into a dedicated body for research within the Ministry of Energy”, says Minister.

Regional and European role

Ministry officials also lists, among the successes of this mandate, reconnecting Romania to the regional and international energy platforms. Among them, the minister Grigorescu mentions the strategic partnership with US which “has found this year a series of concrete developments in energy, both in exploration and exploitation of energy resources and in research and development.”

Next year, Romania could host the CESEC (Central South East Europe Gas Connectivity) reunion, the main forum for energy security and regional cooperation in this part of Europe. In this format, the members also support the actions of other states, which are not EU members, but which share the same goals and concerns, such as Moldova.

Romania will organize the 2018 International Energy Charter meeting in Bucharest, in the context of global efforts to combat climate change and to ensure a successful transition of the global energy system towards a cleaner energy with reduced environmental impact. Lastly, the ministry of Energy has resumed its efforts to join international organizations in the field of energy under the OECD, in order to allow increased international collaboration and to develop new opportunities for the Romanian energy sector.

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