Latest News

EU warns Romania that it faces legal action if it does not remove the gas price cap

The European Commission warned Romania Wednesday that it could face legal action if it did not remove its gas price cap. According to the EU executive branch, the policy violates EU rules on the energy market.

Since November 2021, gas and electricity bills for Romanian households and small businesses, as well as public institutions, are capped at certain levels of consumption per month. The suppliers are compensated for any difference.

In a statement published on Wednesday, The European Commission stated that the Romanian policy violates EU regulations on the free formation wholesale gas prices since it forces firms to sell a part of their production for a wholesale price fixed.

The Commission stated that "Regulated wholesale prices on the EU's entire market distort price signalling and market effectiveness."

After Russia restricted deliveries, European wholesale gas prices began to rise in 2021. The following year, prices reached record levels after Moscow cut supplies further in response to its February 2022 invasion.

The EU has given the Romanian government two months to respond. If the warning is not resolved, the Commission may refer the case to Europe's highest court.

Romania has an interim government in place ahead of the run-off presidential election on May 18, which is unable to issue decrees or implement policies.

The former prime minister Marcel Ciolacu announced his resignation on Monday, after George Simion, a hard-right eurosceptic who won the first round in the re-run of the presidential elections. The president who was elected in this month's election will name a new Prime Minister.

The former government extended in February the gas price ceiling for an additional year and the electricity price limit until June to help consumers control their bills.

Romania produces most of the gas that it consumes in its own country, via producers OMV Petrom and Romgaz, as well as offshore producer Black Sea Oil & Gas.

(source: Reuters)