THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
Romania Power SWOT
- 20 Jan 2022
- Most of the electricity market has been unbundled and liberalised. Many foreign investors are present in the power sector, competing on a level playing field with local firms.
- The regulatory framework is developed and accords with EU norms.
- The country has a balanced portfolio of generating capacity comprising hydro, coal, nuclear and gas-fired plants.
- Romania's population is still poor by EU standards, placing a cap on its consumption of electricity sold at market prices.
- The business environment remains challenging due to high taxes, the heavy burden of regulations, inefficient bureaucracy and corruption.
- Much of Romania's existing generation capacity is ageing: one-third will be obsolete by 2020 and half by 2035.
- Corruption not only leaves Romania vulnerable to EU-imposed fines, but will also impede efficient resource allocation over the long term.
- Skills shortages may deepen over the longer term as qualified workers migrate to other parts of the EU in search of higher pay and better employment opportunities.
- The government plans to invest USD14bn in energy sector during the 2020-2025 period.
- The government's energy strategy plan for 2011-2035 foresees an additional 14.8GW of power-generating capacity, with a focus on nuclear, renewables and hydropower.
- The government is privatising its nuclear and hydroelectric assets. Nuclearelectrica is now listed on the Bucharest Stock Exchange, with state-owned power company Hidroelectrica set to follow pending reorganisation procedures.
- The aim to phase out coal power by 2032 will create a wide range of opportunities in lower carbon alternatives, particularly in non-hydropower renewables.
- The government has re-introduced long-term bilateral Power Purchase Agreements after banning them for almost eight years.
- Due to Covid-19 and its wider economic impact, our Country Risk Team expect fixed investment to contract after robust growth in 2019; investment decisions to be delayed, amid weak investor confidence and high uncertainty over future economic prospects.
- Geopolitical threats surrounding the Ukraine crisis expose the risk of disruption to Russian oil and gas supplies.
- Persistent political instability could result in heightened investor concern.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.