The Cabinet has decided the purchase price of natural gas from domestic production for household consumers to remain unchanged until the 31st of March 2017 at the current value of 60 lei/MWh. According to price liberalization calendar set out in Annex of GD no. 488/2015, the price of natural gas from domestic production should have increased to 66 lei/MWh from July 1st, 2016.

In a press release, the Government has highlighted the very purpose of the existence of regulated prices for natural gas, “the goal of administrative establishinging of the purchase price of natural gas for mentioned consumers is to protect a significant category of household customers from the negative effects of the liberalization of the gas market, generated by natural gas price alignment at the level of prices within the European markets.”

The Government recalls that “unforeseen changes in the market of primary energy resources, including the sharp decline of oil prices in recent years, have generated a particular context in the Romanian natural gas market, where the administrative prices, which are determined in accordance with the law, but also with the acceptance of the European Commission and international financial institutions, have become comparable and sometimes even higher than market prices “. In this context, ANRE officials have publicly raised the possibility of a so-called “early liberalization“.

The Ministry of Energy requested from the National Regulatory Authority for Energy a study on the price evolution in the Romanian natural gas sector, and based on this analysis, it came clear that a revaluation of the domestic natura gas production prices, as contained in the calendar from GD. 488/2015, was necessary. According to the Government, the decision on Tuesday took into account the following:

• currently, the purchase price of natural gas from domestic production for domestic customers and heat producers, stricly the quantities of natural gas used for producing heat in cogeneration plants and in heating plants for household consumption, is 60 lei/MWh, and – according to information provided by ANRE – if that price would increase to 66 lei/MWh, an increased risk that the regulated price be higher than import prices and than most prices recorded at the main gas hubs relevant for the Romanian market
• the need for a prudent approach by the public authorities so that the stated purpose and undisputedly accepted by the very primary legislation, namely supporting the completion of the gas supply liberalization, without major negative effects on the housing sector being produced
• there is a steady decline in gas consumption due to the decline in the industrial consumption, but also because of energy efficiency programs implemented by both categories of consumers, households and non-households
• there was a drop in demand for natural gas from electricity producers, as renewable production capacity has entered the market
• the deregulation process for households is expected to be end up to 30th of June 2021, in accordance with the provisions stipulated by the Law electricity and natural gas
• the low level of affordability of the household customers, in terms of gas prices