96065 Romania Has Become a Regional Power Exchange Leader July 16, 2008 WASHINGTON, July 16, 2009 - Just a few years ago, Romanians paid less than the cost for power and heat, a legacy from communist days. But propping up an ageing state power complex was a huge drain on the country’s coffers. The electrical infrastructure was neglected, billing was in shambles. Billions of investment dollars were needed to make the system modern. Something needed to be done. “That was the idea behind the project, to liberalize, invite foreign investors in electricity generation and distribution and provide the market mechanisms where the price of electricity could be established in a very transparent and competitive fashion,” says Benoit Blarel, Country Manager of the World Bank Office in Romania. The World Bank aimed to help Romania’s electricity sector Romania has just become a meet EU requirements and to privatize. It has helped to regional power exchange, the first refurbish several power sub-stations and to create a market in this part of Europe. Romania’s where electricity is traded openly. electricity comes from coal power plants, hydropower, and nuclear Lucian Palade is the head of the OPCOM – the electricity energy. market operator in Romania. “Every day, in every hour, there are around 60 participants in the market as generators, Multimedia suppliers, and traders concluding transactions in their head Video: Romania Power market,” he says. Related Links The trading software is so sophisticated that one man oversees all the transactions. Most electricity is traded In Depth: Romania Results through long-term contracts, but there is now also a short term market. Generation companies say how much energy Project Story: Romania Has they will produce the following day and electricity supplier Become a Regional Power companies make bids. Exchange Leader Romania has just become a regional power exchange, the Project Story: When first in this part of Europe. Romania’s electricity comes from coal power plants, hydropower, Nutrients Strangle Life and nuclear energy. Production, distribution and transmission of electricity are no longer a monopoly, they’ve been separated and once monolithic companies are learning Project Story: new ways of doing business. Mine Closure Opening New Windows Of Teodor Chirica, the former CEO of Nuclearelectrica is proud of the process: “We learned to Opportunity For Romania move faster, we learned to be very careful, we learned to follow what happened, the conditions, especially the day-ahead market which is very dynamic here.” As companies adapt to market forces Romanians will pay higher prices for heat and power, but they are still among the lowest in Europe. The World Bank played a significant role in the development of Romania’s energy sector through the last few years. The Government’s 2003 Energy Sector Road Map and 2007 Energy Strategy encompassed privatization in order to attract private investment, upgrade obsolete technology, increase efficiency and reduce losses. The strategies were implemented closely in the pre-accession period. A satisfactory regulatory framework was put in place and bill collection issues addressed, allowing Romania to privatize successfully some electricity and gas distribution companies with the support of the World Bank's partial risk guarantee for the first transactions in electricity. Electricity markets - totaling about 9.5 million consumers - were liberalized, but few households and 50% of the companies exercise their right to select an alternative energy provider resulting in a limited free market.