Money for production or distribution?

The privatisation of Romania’s energy system should begin with the power producing segment, not with distribution, according to Valeriu Binig, power and utilities director of the Romanian-American Investment Fund (FRAI).

“The issue is where the money is more needed: in power distribution or production? Romania needs investments amounting to 15bn dollars in the next 10 years, most of which are required in the production segment. The State can no longer afford to finance these needs, following the international institutions’ intervention, so the solution is to attract private investors. As the power consumption increases and the installed power drops because of age, we have to invest in the output segment to avoid problems with the system,” Valeriu Binig told a meeting on power issues. The talks were part of the “Biz Days” conferences organised by Business Media Group.

Valeriu Binig was vice president of the former RENEL, an integrated energy structure that included the nationwide power output, transportation, supply and distribution, employing some 115,000 persons. Afterwards, Binig was appointed director on power issues at the European Commission Delegation in Romania. He also worked as manager corporate finance at Arthur Andersen Romania until 2002.

“After 2006, Romania may face a power deficit of 1,000 MW, as the already planned 700 MW will enter the system. Some of the output capacities, which are highly damaged, will be taken out of the system, should a new power plant be built until then,” Binig added.

A private investor acquiring a power distribution plant cannot manage the business independently, if it sells energy at the price set by the National Energy Regulating Authority (ANRE) and buys from the producers at a price also enforced by others, Binig explained. adrian.mirsanu@zf.ro