Cost of energy inefficiency: $1bn in 2002

Low tariffs and uncollected bills have caused more than one billion dollar losses for the entire Romanian energy sector in 2002, Ziad Alahdad, World Bank’s representative in Romania on Tuesday said.
Still, the losses and subsidies in the energy system in 2002 account for 2.5% of the Gross Domestic Product (GDP), therefore much less than in 2001, when they accounted for 4.8% of GDP. “The price has to cover both the losses and the investments a company in this sector has to make,” Alahdad explained during a roundtable organised by ASPetrol, an association of private oil companies in Romania.
The restructuring of the energy system has progressed in the last few years, albeit not as fast as it should have, so that tariffs are not actual and state subsidies remain very large. The oil sector, deemed as the most promising one, has already seen many refineries privatised, while the privatisation of SNP Petrom, the largest Romanian company is in ongoing. “Petrom’s privatisation is not just a matter of money, i.e. the money the State can make from it, it is also significant with regard to the competition on the domestic market. On the other hand, this process shows how committed the Romanian State really is to the idea of conducting privatisation with international investors,” Alahdad said. He added an improvement in the financial discipline, as well as privatisation and restructuring of the energy system were necessary, as was attracting private investors in this sector.
The World Bank official also explained the heaviest losses were being registered by the thermal power and coal sectors. Out of the total companies in this field last year, only Compania Nationala a Lignitului (National Lignite Company) Oltenia posted profit, while all the other operators such as Termoelectrica and the local heating regies autonomes logged losses.