Gala BURSA 2018

DEPUTY VIRGIL POPESCU, VICEPRESIDENT OF THE COMMISSION FOR INDUSTRIES AND SERVICES"Revenues from the exploitation of natural gas in the Black Sea need to return to the energy sector"

Adelina Toader (translated by Cosmin Ghidovean)
English Section /

"Revenues from the exploitation of natural gas in the Black Sea need to return to the energy sector"

The offshore law will once again reach the Commission, in one or two weeks, according to Mr. Virgil Popescu, the vice-president of the Commission for Industries and Services, the Chamber of Deputies.

He said: "The offshore law has returned to the Parliament, it is with the colleagues in the Senate, probably in a week or two it will go into the Commission. The offshore law was necessary to resolve certain issues. For instance, if someone wants to start an exploration in the Black Sea, they don't know who to get their building permits from. Since we are talking about an exploitation in the territorial waters of the Black Sea, whose jurisdiction does it fall under? Of the Constanţa? It is clear an issue concerning the release of the construction permits, of licenses, plus the fiscal party".

Virgil Popescu said that the fiscal side has raised the biggest controversies.

He said: "We will once again had discussions on the fiscal side, if we deduce or not deduce, to issue a right of deduction of the investments made by the operators. We first need to see where we are. Through the taxing ordinance of additional revenues from the sale of natural gas is granted to operators of 30% of investments. We have also claimed that the fiscal regime for offshore should be less burdensome that for onshore, with bigger investments that you need to make and there are investment risks - if you find natural gas or not.

I think that there has been an omission when it comes to the fact that the appendix of the calculation of taxable revenues has omitted to pass the deductibility of investments. In the text of the law, it is stipulated that there can be a deductibility of up to 60% of investments, and in the calculation appendix it was removed, there were no deductibles included. The law, currently, which has come out for promulgation and has returned the fiscal regime for offshore was more burdensome than onshore. And we, and the PSD, in the Industries Commission, backed the same taxation mechanism. Unfortunately, the Ministry of Finances could not come and tell us, in due time what the impact will be. We only have a calculation of the transposition of the total estimated volume of natural gas in the Black Sea - 200 billion. Thus, if the calculation method from the ordinance were to apply, then the Romanian state would collect an additional tax of 500 million lei over 20 years. We are hoping that the Ministry of Finance can make a calculation simulation and to also know how much the Romanian state would gain following these exploitations".

According to the vice-president of the Industries and Services Commission, the Chamber of Deputies, another question which arises is what we are going to do with the revenues from the exploitation. "The fact that it finances an investment fund with public-private partnership, essentially doesn't satisfy us. We want these revenues to return to the energy sector", Virgil Popescu added. He also said that Wednesday, in the Commission, has submitted an amendment by which the revenues from the natural gas exploitations of the Black Sea to be used for the financing of the development of the natural gas distribution to the population, thus having the possibility that in 10 years, to reach 35% surface covered by the gas distribution network, to 60% and to finance the industries through state aids.

Virgil Popescu explained: "We are talking about how the Hungarians are coming and taking our natural gas, but we are not doing anything for it to be consumed in Romania. Concerning this aspect I would be very curious to see what will happen starting with December 15th, because by then the two Hungarian firms which have won the Romania-Hungary interconnection bid need to decide if they stand by it. For now no investment decision in the Black Sea has been announced.

I think that we need to be more intelligent and to develop the industry which is a consumer of natural gas in Romania".

The deputy reminded that he has submitted an amendment which was approved and mains can be made directly for industrial companies with a consumption greater than 150,000 megawatts and thus they don't have to go through the distribution tariffs which raise the costs.

Furthermore, Virgil Popescu emphasizes that the money which will go into the budget from the exploitation of natural gas in the Black Sea which could be used as an aid given to firms which are major consumers of energy.

"Obviously, the CET would become more viable when they stop paying the distribution costs", the deputy said.

He said and has also referred to the BRUA project, which had a national consensus, and which transports gas from Azerbaijan and Greece towards our country. Virgil Popescu thinks that the project will be completed on time. "On this project both political forces, the PNL and the PSD, have worked together and here we can reach a consensus on a certain project", said Virgil Popescu.

The PNL deputy said that Romania is being avoided by all the gas pipelines which supply Europe, and the BRUA essentially puts Romania on the map for the transport of natural gas and supply. "It is up to us if we want to become an important player on the natural gas market or whether we prefer to complain about what the Russians or the Germans are doing to us etc.", Virgil Popescu further said.

Also, the deputy also said: "There have been many incorrect interpretations. The BRUA doesn't mean the natural gas in the Black Sea, that is not what it is made for. It is for the natural gas in Azerbaijan and for the natural gas in the Mediterranean, from the Greek ports, but it can also be a conductor for the natural gas in the Black Sea, in the conditions for these exploitations, which we want and we think that through these investments is a chance to develop Romania, both in the energy sector, as well as horizontally in all the other related areas".

He also added that currently, on the Romanian territory there are only three pipelines which come from Ukraine and are going to Bulgaria, or this is not a good thing for Romania.

Virgil Popescu added: "The law of energy and natural gas was approved prior to the offshore one. We have succeeded to include the fact that all the producers are required for at least 50% of the natural gas production to be sold on the Romanian trading markets, which is a first step. Also, on the energy law, I have succeeded in moving from the Ministry of Energy the gas distribution, the decision of assignment of gas distribution to territorial administrative units, being another positive thing. We shouldn't forget the fact that only in 35% of the Romanian territory a gas distribution network is also due to the fact that starting in 2012 the Ministry of Energy did not grant any concession. This deadlock should stop".

Virgil Popescu also said that the firewood has become very expensive, over the last three years have quadrupled in price.

He said: "I believe that the price of gas will be far more accessible, taking into account that wood can no longer be cut without permits, on the black market, the forest police being vigilant, which is very good. I think that the gas distribution is a place for increasing the natural gas consumption".

The deputy also said that the European parliamentarians of the PNL will raise on a European level the problem of the vulnerable consumer.

"We want a European level definition of the vulnerable consumer and we believe that we can obtain it. Thus, we can establish a minimum income level for the vulnerable European consumers, which will provide an advantage to Romanian consumers which have lower incomes than the European averages, and a financing scheme, just like in Agriculture, to try and attract European money for the subsidizing of the European vulnerable consumer. I would be happy if this problem could be raised by the Romanian government, given the presidency of 2019".

Virgil Popescu also emphasized that the fact on a national level we do not succeed in taking the subsidies for heating and electricity exactly where they are necessary.

Also, the vice-president of the Commission for Industries and Services consider that a discussion on an energy strategy needs to happen in the Parliament, which the parties that come and go need to respect.

"The parties come and go, but Romania's strategy remains and if we have consensus on it when a political party comes and another goes, will follow the same strategy".

He said that he has clarified that the main reason for these other states is developed, because regardless of who comes in power follows a well defined and agreed by all strategy.

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