New Troika-Romanian Gov’t agreement failed. PM Ponta: They ask gas prices increase and energy companies revamping

The Romanian government didn’t get any agreement with the International Monetary Fund (IMF) and the European Commission (EC) in the current assessment mission, the international lenders demanding gas prices hike for households and CHPs in April and massive restructuring of  Hunedoara and Oltenia energy companies, Prime Minister Victor Ponta announced on Monday.

According to him, in these circumstances, a letter of intent will not be signed and the discussions on these two divergence points will continue in April. The agreement remains in force.

“Many of the important objectives for Romania of the new undergoing agreement are fulfilled — and this means the economic growth objectives, the budgetary discipline, which, however didn’t prevent implementing the measures on increasing the minimum wage, the pensions, the gradual reduction in the social insurance contribution by 5 percentage points, did not generate a catastrophe, but begins producing the anticipated positive effects,” the Prime Minister told a press conference at the Palace of Parliament.

IMF and EC asked the gas price liberalization to be applied to population and to combined heat and power (CHPs) starting this April. The gas price increase was labeled by PM Ponta as a “steep” one, namely from RON 53.5/MWh to RON 62/MWh.

The government rejected this request, considering it unsustainable, arguing that population and CHPs can not support such an increase in April.

Regarding Hunedoara and Oltenia energy complexes, IMF and EC urged a “massive and radical” revamping. According to PM Ponta, such move wouldn’t save the industry, but rather would significantly diminish the importance of this sector.

“We have stated very clearly that we agree to measures for making the system more efficient, but we shall not accept measures through which this sector, essential to our energy security, to the security of the energy system and to the economic and social development of some regions, measures which may lead to the disappearance of this industry on medium and long term,” Victor Ponta argued.

The Prime Minister mentioned that Romania’s agreement with the international financial partners is to cease in September this year.

PM Ponta asked the heads of trade unions of the energy companies to understand that wage increases can not be accepted, because such a measure means the closing of the two companies.

Victor Ponta also said that Troika will never agree with VAT cut, a measure announced like an intention for next year, adding that such decisions is exclusively the Government task.