Boston, MA -- (SBWIRE) -- 04/30/2013 -- Romania is attempting to privatise its state hydro and nuclear power companies, hike electricity prices while limiting damage to the economy and establish a capacity expansion programme capable of meeting long-term demand growth. Although plans to expand its nuclear generation capacity are in disarray, there is growing momentum behind the country's wind power programme. Low electricity prices threaten investment in generating capacity and transmission infrastructure.

Romania's state-owned Hidroelectrica power company has reopened applications for pre-qualification to upgrade its Stejaru project at the Bicaz Dam. The tendering process had been suspended in 2012 in the aftermath of the company's insolvency, but following improved financial results, Hidroelectrica may exit insolvency procedures by June, according to Remus Borza, the company's judicial administrator. The European Bank for Reconstruction and Development has approved a US$150mn loan to finance the project, although disbursement of these funds is conditional on the company's coming out of insolvency. The state is planning to sell 10% stakes in Hidroelectrica, as well as nuclear generator Nuclearelectrica, in H113.

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Key trends and developments in the Romanian electricity market:

- During the 2013-2022 period, Romania's overall power generation is expected to increase by 2.9% per annum to 75.6 terawatt hours (TWh). Driving this growth is an annual 9.0% rise in nuclear generation and a 20.2% average increase in non-hydro renewables-based supply, offsetting a 0.5% average annual decline in oil-fired electricity.
- After having seen its output decline 11% in 2012 as a prolonged drought prompted the country to cut electricity supplies, Hidroelectrica resumed operating at full capacity in December 2012. The company is projecting gross profits of US$134mn in 2013, compared with a loss of US$47mn in 2012.
- Following an anticipated 0.5% increase in 2012 real GDP, BMI forecasts average annual growth of 3.0% between 2012 and 2022. The population is expected to fall slightly from 21.4mn in 2012 to 20.9 in 2022, with net power consumption forecast to increase from 52.6TWh in 2013 to 61.5TWh by 2022. During the 2013-2022 period, the average annual growth rate for electricity demand is forecast at 2.8%.
- In May 2012, according to data from the European Energy Portal, the average household electricity price - based on 3,500 kilowatt hours (kWh) per annum consumption - in Romania was EUR0.1095/kWh, which is well below that of most European rivals. In the Czech Republic, for example, the price was EUR0.1480/kWh, compared with EUR0.1488/kWh in Poland, EUR0.1708/kWh in Hungary, EUR0.2031/kWh in Italy and EUR0.1419/kWh in the UK. Low electricity tariffs have discouraged investment in power infrastructure and capacity improvements.

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