Annual policy report

EFOR has released its 2022 annual report on two relevant topics: energy and politics

 

 

EFOR has released its 2022 annual report on two relevant topics: energy and politics.

Who is to blame for energy prices? Myths and realities

 

  • Energy prices have increased in Romania because they have risen across Europe, but also because we have adopted poor policies, such as the law on capping and offsetting. The law probably pushed prices up more than they would have done without any support.
  • The price crisis has nothing to do with liberalization – there was no shock to the liberalization of domestic gas consumption in the summer of 2020, on the contrary, prices fell by about 27% and the reduction continued until the summer of 2021, when prices began to grow everywhere in Europe.
  • The European market model is not wrong either, and electricity prices have not risen “because of emission certificates”. It was understood in reverse: energy prices have risen due to the gas deficit, which Gazprom has been deliberately deepening since the summer, and the price of emission certificates has also risen due to the gas crisis. The fact that there were speculations on the certificate market and therefore increased CO2 costs proved to be a big fake news.

 

 

  • In Europe, gas consumption increased significantly in the first half of 2021, but then collapsed due to prices; where it was possible, especially in the production of electricity, we returned to coal, resulting in a rapid increase in the price of CO2 certificates.
  • Gazprom has a significant share of the blame – it has honored its contracts with Europeans to the limit, preferably emptying its warehouses in Europe in the summer, delivered as little as possible through the pipelines – except for “friends” on Nord Stream and Turk Stream, to send a clear message. In general, Gazprom’s strategy was to abuse European rules, formally respecting them just to show that European rules are the ones that fail.
  • In Romania, the law on capping and offsetting has nothing to do with the problem or the solution: prices rose rapidly in the second half of 2021 for industrial consumers, before households, which will mean inflation in 2022 – inflation is what it will hit our personal pockets rather than energy bills.
  • For natural gas, prices for non-households had risen by almost 80% by November, while for households they remained about the same; Industrial consumption has been declining since the summer, so it’s no surprise that GDP is declining in the fourth quarter and inflation is rising.
  • Before think of the future plans starting from April, we need to analyse the data – it is possible that the cap and offset law itself is a cause of the rapid rise in prices over the last 3 months.
  • The law has loopholes that would allow speculation and only applies partially. The tax on additional income for renewables is inapplicable, the funds from the budget to compensate suppliers are delayed. Governments are about to put competition in the long run and supply competition for household customers, as well as future energy investments, which have not moved since 2016.
  • Rising energy prices will remain a problem beyond this winter – the solution is to move energy efficiency measures in buildings (envelopes) and investments in energy production faster. The EU gives us money, but it does not put us in the bag: it is unacceptable that the Ministry of Energy has not done anything to make the money from the Modernization Fund accessible to investors, that investments in state-owned companies are delayed –  for example Romgaz – Iernut – and that the law on offshore gas is yet to be amended.

Money in politics: the budget subsidy for parties

  • Political parties received almost one billion lei from 2018 to 2022. The parties receive one of the largest per capita allocations in the EU from public money (comparison in report). Funding in 2022 could theoretically reach up to half a billion lei. Although transparency has improved, the political parties that receive the most money are not necessarily open to make their expenses public.
  • Although it has been publicly circulated, we do not consider it a good idea to eliminate subsidies, but the fact that they are paid is not enough to ensure the integrity of political funding. Allocation criteria need to be changed and upper limits reduced.
  • In terms of integrity and transparency, the parties that receive most of the money, i.e. PSD and PNL, are performing poorly: they did not respond to requests for access to information, although the law requires them to do so. Neither Pro Romania nor PMP are better. USR is the only party that publishes the list of expenses on its own initiative (at general secretariat level). PSD, the party that receives the most money, did not publish any information about the contracts, although there were several requests
  • Subsidies are spent by PSD and PNL at the central level. Leaders do not trust their own party members and local branches; or they probably don’t want to share the money. At USR there are also expenses at the branch level.
  • Political parties spent only 47% of what they received . As a percentage, most of the money was spent by Pro Romania, and the least by AUR, i.e. 0.0004%. PSD spent 61% of the money and PNL 43%. USR stands at 39%. At the end of the year, the parties were left with 124 million lei and are not required to return them
  • 56% of the funds were spent for press and advertising. PSD spent 71% (39 million lei) of money on such services. PNL is not far away either, spending 64% (21 million lei) of funds for the same services. USR spent only 7% (1.4 million lei) and Plus 9% (1.2 million lei). The parties spent more towards the end of the year, with PSD reaching seven million lei in December. PSD and PNL carried out campaigns on topics such as energy prices.
  • The parties have larger budgets than some companies in the competitive market, such as telecommunications or large retailers. The materials are not marked in any way and can be confusing to the public
  • Staff is the second largest source of advertising and propaganda spending, accounting for 16% of the total money spent in 2021. Most of the money was spent by USR, ie 45% of the money spent (7 million lei). PSD allocated only 12% (6 million lei), and PNL 7% (2 million lei). AUR did not spend any money on staff.

More statistics and all EFOR recommendations can be found in the report on www.banipartide.ro .

 

Project implemented by Expert Forum 

This material was produced with the financial support of the Active Citizens Fund Romania, programme funded by Iceland, Liechtenstein and Norway through the EEA Grants 2014-2021. The content does not necessarily reflect the official position of the EEA and Norway Grants 2014-2021; for more information visit www.eeagrants.org.”

Material edited by Expert Forum, February 2021


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