FinMin Teodorovici: Capping gas prices, a communist practice up to a point, but neccesary due to no competition

The Government's intention of capping gas prices is a communist practice up to a point, but necessary, because on this market there is no competition, and companies raise prices as they please, said Thursday, Finance Minister Eugen Teodorovici, present at the White Book of SMEs launch conference. 

He referred to the Government decision published Wednesday evening on the Ministry of Public Finance's website, according to which the internal production gas price will be capped to 55 lei per MWh until June 30 2021. 

"Some say it is a communist practice. Yes, maybe at a first glance it might seem that way, because you are trying to enter the market, and yes, it is that way, but up to a point. We are talking about competition. What competition? There are two operators that raise prices, one by one, and the other one aligns immediately. Assumed investment have not been made, and yet the price rises without any justification, and you and the economy have to suffer for it. Some rush into it right away, as if from another country, because it is a communist practice. I had no connection with communism," said Teodorovici. 

The explanatory memorandum of the Government draft decision initiated by the Ministry of Public Finance shows that this measure is necessary in order to stop the uncontrollable gas price hikes. 

According to the initiators, the project has a positive impact through stopping the uncontrollable natural gas price hikes from the internal production, generated by the dominant position of the two major producers that have a market quota, of over 46 percent each and 95 percent together (Romgaz, with a quota of 48.88 percent and OMV Petron - 46.08 percent of the total production). 

Starting with April 1st 2017 the selling price of natural gases from the internal production was liberalized, setting itself within the competition market through freely negotiated contracts with suppliers and final clients on the basis of supply and demand. 

On the natural gas market there is currently an operator of the National Transport System - Transgaz S.A, 7 producers (Romgaz, OMV Petrom, Amromco Energy, Raffles Energy, Foraj Sonde, Stratum Energy and HUNT OIL Company), 5 foreign suppliers which bring natural gas from outside sources into Romania (Engie Energy Management, Imex Oil, MET International AG, Alpiq Energy SE and Wiee AG Switzerland), 2 operators for storage (Romgaz and Depomures), 36 distribution operators (the largest ones being Distrigaz Sud Retele and E.ON Gaz Distribution), 87 active suppliers present on the market and 3 operators of the centralized markets. On the natural gas market there are approximately 3.7 million final clients, of which 3.4 million are covered residential customers.