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Romania, Budget for subsidies to energy consumers will be covered by Hidroelectrica

28.Oct 2021.

Romanian Minister of Energy Virgil Popescu said that the budget for subsidies to energy consumers will be covered through additional dividends distributed by electricity producer Hidroelectrica.

Minister Popescu explained that the budget for this year is fully covered only by the additional dividend of Hidroelectrica, which is around 160 million euros. It was an additional dividend because Hidroelectrica and Nuclearelectrica are the two companies that do not pay CO2 certificates, they have lower production costs, but sell at the market price, which is given by the highest market price. The highest market price is for electricity produced from coal, because there are another 60 euros added – the cost of CO2 certificates.

He also said there is a source of financing for gas subsidies – from the additional income tax from the deregulation of the price of natural gas, where at over 17.2 euros/MWh the income obtained is taxed by 80 %. Thus, the revenues to the state budget from the additional income tax have practically doubled.

According to the Government’s measures, households with the consumption between 30 kWh and 200 kWh per month will pay 0.036 euros/kWh, which is around 22 % of the average electricity price (0.17 euros/kWh). The amount of subsidy was calculated as the differential between the best (lowest) offer on the market and the average offer.

Regarding the subsidies for natural gas consumers, households with annual consumption of under 1,200 cubic meters will receive the subsidies. The 25 % subsidy was calculated based on an expected price of 51.5 euros/MWh, about twice the price last winter.