Romania: Lower electricity prices hinge on investment, says interim PM

Reducing electricity costs is a fundamental condition for Romania's economic recovery, according to interim Prime Minister Ilie Bolojan. He stressed that achieving lower prices hinges on accelerating investments across the energy sector, specifically in production capacity, energy storage solutions, and the modernization of existing power grids.

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For our economic recovery, lowering the price of electricity is a basic condition.

Bolojan pointed out that the high energy prices of recent years have not only strained household budgets but also eroded the competitiveness of Romanian businesses, particularly those with lower added value or higher energy cost dependencies. This impact is reflected in a decline in industrial production over the past five years. He asserted that economic revitalization is impossible without addressing the cost of electricity.

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We will reduce the price of energy only once investments in energy production, storage, and grid modernization are realized, as well as by eliminating delays for investments for which we already have financing secured.

The Prime Minister also highlighted the significant underutilization of available funds, particularly from the EU's Modernization Fund, which is financed by greenhouse gas emission certificates. Romania has secured approximately 12 billion euros in non-reimbursable investments from this fund, with 7.7 billion euros earmarked for energy projects and 2.7 billion euros for transport efficiency. However, many projects are stalled, primarily those managed by state-owned energy companies, which have demonstrated a very low rate of investment realization in recent years.

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The largest financing we have is through the Modernization Fund. Romania benefits from transfers from greenhouse gas emission certificates. The sums can only be used for investments in renewable energy, energy efficiency, and grid modernization.

Bolojan warned that delays in these crucial investments could jeopardize the country's energy security. He criticized the current system where individuals hold leadership positions in monopolistic state-owned companies with high earnings, yet these positions are not sufficiently conditioned on tangible achievements. A government analysis revealed major delays in projects funded by the Modernization Fund, which must be completed by 2030, with state energy companies like Complexul Energetic Oltenia showing less than 10% of contracted work completed for approved investments totaling nearly 900 million euros.

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The non-use of funds is also caused by the non-realization of investments allocated to large state-owned companies in the energy sector. These have had a very low degree of investment realization in recent years.