RPIA and RWEA: "The direct concession of ADS land to state companies is profoundly anti-competitive"

George Marinescu
English Section / 10 octombrie 2023

RPIA and RWEA: "The direct concession of ADS land to state companies is profoundly anti-competitive"

Versiunea în limba română

The draft emergency ordinance by which the Government wants to directly grant to state companies in the energy field part of the land under the administration of the State Domain Agencies violates competition, claim, in a press release sent to the Editors, the Association "Romanian Photovoltaic Industry Association" ( RPIA) and the Romanian Wind Energy Association (RWEA).

That is why the representatives of the two associations that bring together producers, developers and providers of services and equipment in the renewable energy sector, with a total installed power of approximately 4.5 Gigawatts (GW) ask the authorities to ensure fair competition conditions for all capacity developers of energy production from renewable sources.

In the cited press release, RPIA and RWEA show that they have repeatedly notified the non-competitive nature of the direct concession of land administered by the State Domains Agency (ADS) to companies in the state's portfolio, which contravenes national and European legislation.

The representatives of the two associations specify: "In the context in which, from 2022, private investors can only develop projects on areas below 50 hectares (maximum 42 Megawatts) based on the restrictive interpretation of the land fund law by the Ministry of Agriculture and Rural Development (MADR ), the draft Emergency Ordinance regarding some measures for public property of the state, which favors entities and companies where the state is the majority shareholder, is profoundly anti-competitive. It is imperative that such a legislative change, with an impact on a market where distinct types of entities and companies compete freely, respect national and European norms. RPIA and RWEA reiterate that the repeated attempts to modify the legislative framework discourage investments and, implicitly, affect the achievement of the climate neutrality targets assumed by Romania, as a result of the message they send to private actors. Such measures must respect the principle of transparency and fair competition, which implies the organization of public tenders for the award of concessions and surface rights, or, at least, the definition of clear and non-discriminatory selection criteria; a direct negotiation between ADS and certain selected companies is not able to ensure such a level playing field. We emphasize that the inclusion of projects to be carried out by state companies (or private, where the state is the majority shareholder) in the category of investment objectives of national interest implies the facilitation of the approval process, not the direct assignment of land or surface rights".

The cited source mentions that RPIA, RWEA and related industries are not opposed to the implementation of such projects, but require the provision of a level playing field for all developers of renewable energy production capacities, which can be achieved by removing the 50 barrier hectares and by inviting all interested parties to participate in a transparent and competitive process of awarding land areas owned by the state.

We show that the draft emergency ordinance was made publicly available, on October 3, by the Ministry of Finance and provides

the right of state companies to directly concession from ADS, without organizing any auction, the lands necessary for the development of energy projects of national interest, such as the photovoltaic park that Hidroelectrica wants to build in Dolj county.

The text proposed by the Ministry of Finance states: "By derogation from the provisions of art. 312 paragraph (1) of the Administrative Code, with subsequent amendments and additions, for projects of strategic interest and national security in the energy field, energy infrastructure investment projects of strategic national interest, direct concession rights are granted over land in the public and private domain of the Romanian State to legal entities under private law in which the Romanian State is a full/majority shareholder under financial conditions approved by the Privatization Concession and Leasing Committee upon proposal State Domains Agency. Any existing contracts, regardless of their nature, ongoing for these categories of land are amended by law to ensure the implementation of investment projects of national strategic interest by the corresponding reduction of the land areas that are the subject of them, by means of an additional act, concluded in accordance with the law . (...) The concession by direct assignment is made during the existence of the fixed asset or asset, but not more than 49 years".

In the supporting note, the Ministry of Public Finance shows that not adopting these measures, as an emergency, would have negative consequences by generating an additional impact on the general consolidated budget deficit, an impact that would affect the sustainability of public finances. In this context, the experts of the Ministry of Finance show that it would increase the risk of non-compliance with the recommendation of the European Commission established within the excessive deficit procedure launched for our country, as well as the risk of non-implementation of investment projects for local communities, co-financed from the European level through the Policy of Cohesion and through PNRR.

At point 3.4.2 of the Background Note, the Ministry of Finance notes that the adoption of this emergency ordinance will not generate any impact on the competitive environment, nor in the field of state aid.

If it is adopted in this form, the draft normative act will allow state companies to build new energy capacities on the ADS lands that they will receive directly, with the right of use for 49 years, without having to participate in any auction where other potential private investors could have emerged who could bid higher for the lease.