Over 50 energy specialists in consulting, law and finance analizyed at Energy Breakfast Club what are the best opportunities for financing energy development in Romania. The turbulent regulatory climate and volatile sectorial policies, as well as the economic crisis drastically select the projects which end up being funded.
Lucian Anghel, president of Bucharest Stock Exchange and general manager of BCR Pensii, Șerban Țigănaș, Managing Director at TEB Energy Business, and George Guran, Manager at Intermediate Body for Energy, Ministry of Economy proposed their own answers to the main question: What is the most important when you are trying to obtain financing in the energy industry?
The dialogue involved the audience and concluded that each technical and financial solution comes with benefits and risks, so that having the public authorities involved – as a guarantor and co-financier it is increasingly important, and also providing a credible management and operational team.
Stock Exchange is increasingly becoming an option for financing
Fortified with Romgaz and Electrica, BSE experiences its best year in history, with an advance of around 40% in trading volumes during the first semester compared to the same period of 2013. Changes in practices and even in legislation are still required so that the listings make their favorable impact visible in market behavior of listed companies. Lucian Anghel, president of Bucharest Stock Exchange, presented two case studies (the integrated copper producer KGHM, Poland) and CEZ Group (Czech Republic) in order to identify the beneficial development of some companies after the listing. One of the needed changes relates to offering incentives for the companies’ management in such a manner that they are interested in the company’s shares performance, including the granting of stock options and bonuses. Another possibility would be the acquisition of shares from state companies by state companies themselves, a kind of transaction now forbidden by law in Romania. This type of acquisition has been used by companies to strenghten the majority shareholder position and reward the management in both countries.
It was aknowledged that the CEZ Group’s and KGHM’s spectacular performance (9-fold increase in market capitalization between 1997 and 2014) were possible because the capital markets in those countries are more advanced than in Romania. In this respect, Lucian Anghel referred to the prospect of BSE to be advanced from the stage of non-investment grade (frontier), to that of emerging market. BSE is running a program of modernization of the local market by removing eight identified barriers to investors, through the BSE Task Force working group. Meanwhile, the BSE could enter in 2015 on the watch list of MSCI, with 3 to 4 companies that could meet the quantitative criteria (total market capitalization, free float market capitalization, liquidity): ROMGAZ OMV Petrom, Banca Transilvania, Electrica.
Advancing the Romanian stock market to the emerging markets category would significantly increase the value of the shares of listed companies, with more opportunities for future financing through BSE.
Good prospects for investments in biogas
There is money, but investors must be convinced of the profitability of proposed projects, noted Serban Tiganas, managing director at TEB Energy Business. Currently, investors are stunned by the many uncertainties of the energy market, in all sectors: nuclear (unclear legislative and energy policy at the European level , and the difficulty of anticipating future demand for electricity), coal (high environmental costs and high production prices), renewable (withdrawal of subsidies and the costs integrating production in the national network).
According to Serban Tiganas, natural gas remains a solid option, as a a resource available for many decades to come and because many technical solutions are at hand, many of them already tested and applied in Romania. The representative of TEB Energy Business listed some of the customable solutions for using natual gas, such as gas fermentation, gas from fermented sludge, associated petroleum gas, special gases, CHP (natural gas).
Even after the reduction of subsidies for producing electricity from biogas, such units remain financially profitable and are still interesting for investors, banks inluded, the speaker stated. And for the near future, this type of projects can count on the European Commission’s support and co-financing during the 2014-2020 financial framework.
European funds for energy efficiency
George Guran, manager at Intermediate Body for Energy, Ministry of Economy, presented the EU programs for financing energy (2007-2013): a total of 725 million euro, through Axis 4. 87 million euro were money allocated from the state budget, while 638 million euro were EU’s contributions. The lion’s share – 263 million euro – was used for supporting green energy production. Companies have shown a lower interest for investment projects in energy efficiency and co-generation projects.
For the 2014-2020 financial framewok, part of the UE funds of 420 million euro for energy will be allocated under the operational program Integrated Infrastructure, with three priority axes (7 – Safe and clean energy for a low carbon economy, 8 – Intelligent and sustainable transportation of electricity and natural gas and 9 – Development of urban transport in Bucuresti‐Ilfov Region).
300 million euro will be allocated through the Regional Operational Programme, Priority Axis 3 – Energy efficiency in public buildings, while the most consistent amount – 2.6 billion euros – will be available for Urban development, Priority Axis 4.
The first money will be released as early as the second half of 2015, after having completed all the bureaucratic procedures, estimated George Guran.
Representatives of Adrem Invest, Agility Logistics, BCR, Rottco Consult, SGS România, Star Asset Management, Tylo (Swedish Business Club), Slow Energy Europe, Deloitte, Ernst & Young, Mazars Romania, DSV Solutions Romania, Explore Asset Management, George Butunoiu, ICAP Romania, Intelen, InterAviation charter, Iveco, New Energo Biosistem, Next Energy, Promod, CMS Cameron McKenna, Consus Romania, Serban & Musneci, Tradeville, UTI Grup, UPB, CNR-CME, IRE (Institutul Român al Energiei) and Russian Embassy attended the presentations and participated in discussions.
WU Energy Expert
During the event. Sergiu Spătaru, managing partner at Wing Media Energy Consulting, introduced the audience to the WU Energy Expert program – the innovative professional development program specially designed for executives in the Romanian energy industry.
The program will help mid to top experienced managers to better understand energy related matters that are not typicaly studies in classic management courses. After attending this course, the participants will grasp a wider perspective on their current activity and will be able to imediately generate real value for their companies.
The 5-day program will include specific training within local premises. The current program follows closely the quality of the MBA Energy Management of the WU Executive Academy. Also, the attendants will be carefully selected, considering cultural and academic background, skills and work experience.
The qualifications obtained by following the program will be certified by a special diploma, issued locally and endorsed by WU Executive Academy. WU Executive Academy will ensure content for the printed and electronic materials and annexes.
About the event
Energy Breakfast Club is a 2-3 hours meeting between energy specialists that want to be updated with the latest information and the most influential views on one hot topic. As a host, starting at 09:00, energynomics.ro provides the moderator and the coffee, proposes the theme and launches invitations to speakers.
These are selected from people that know the topic best and are responsible for organizing ideas and intellectual challenges. Presentations do not exceed 45 minutes and are intended to be starting points for dynamic exchange of ideas and perspectives. The club closes at 12:00.
Access to Energy Breakfast Club is open to all professionals in the Romanian energy industry and related sectors, based on a custom invitation launched by energynomics.ro. You can write us at firstname.lastname@example.org to request an invitation or propose a theme!