Romanian Parliament May Annul Social Gas Fund

The Romanian Parliament may annul the social gas fund established earlier this year based on an agreement with Romania’s gas producer Romgaz Medias and the country’s largest vertically integrated oil company Petrom, aiming to provide financial support to 850,000 families for paying gas bills.

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The Government passed in February an emergency ordinance setting up a social gas fund to help low-income persons pay gas bills, based on an agreement with Romgaz Medias and Petrom, which contribute with total funds worth 172 million lei (EUR1=RON3.6658) in 2008.

Early May, the Senate passed a bill according to which the emergency ordinance on establishing the social gas fund was rejected.

In case the Chamber of Deputies rejects the emergency ordinance as well, the gas fund will be annulled.

Early April, the two gas producers provided total funds of RON31.4 million for the period February-March 2008.

Petrom and Romgaz are the largest natural gas producers in Romania. The companies cover about two third of the national consumption, while approximately one third is covered from gas imported indirectly from Russia.

In its most recent adjustment, the Romanian energy watchdog increased household gas prices by 8.5% on Feb. 1, on higher international prices.

Electricity prices are expected to rise come July 1 due to higher production costs over environmental requirements.

Gas distributors E.ON Gaz Romania, the local unit of Germany's giant E.ON, and Distrigaz Sud, majority-owned by French utility Gaz de France, have repeatedly urged regulators to raise gas prices to cover losses from soaring import prices.

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