Romanian Energy Sector: For 30 Years the Same Results with the Same People!

My story about persistent wishes and promises

Why did I start to sincerely admire Gheorghe Hagi’s academy project 10 years ago? I was a great supporter, since my childhood, of the Champion of a Great Love and, without being from Oltenia, I loved the spirit of the Universitatea Craiova, which managed to beat the teams that were permanently favoured: Steaua and Dinamo. And the natural question: why didn’t I persevere to the end!? Probably because the team’s management proposed at the beginning of each competition year, permanently from 1991 until now, to win the Cup and the Championship, and at the end of the competition they barely managed to save themselves from relegation. Probably with our professional maturity, we all realize that we can no longer accept to be endlessly emotional in front of desires and promises without foundation and purpose.

Talking about the Romanian energy sector, we all know, without exception, how nominations are made in the top management positions of the companies where the Romanian state is the majority shareholder. The fact that very few of the “anointed” manage to complete their mandates and that the results do not come and are not likely to come (except at times favoured by the seasonality of the market) … is obvious! That these “performant recruitments” will not stop and we know that too! But what some of us still don’t understand is why they are hurting an industry with tradition, and which is intended to be one of the most performing industries!?!

 

Lack of continuity of energy ministers

As far as continuity is concerned, in order to avoid any interpretation or subjective comment, I have turned to the statistics of those who have managed this ministry since 1990.

Long story short: there have been 17 energy ministers in the last 33 years, which translates into an average of no more than 2 years for each minister. This partly explains the lack of a clear strategy and direction for the industry. If we add that in the same period there were also 17 Prime Ministers of the Romanian Government, we can conclude that not only the Ministry of Energy is the happy beneficiary of this “winning ticket”, and we can even extend the “performing management” to the national level!

For statistics purposes, I leave here a summary of the ministers and ministries of energy – under their various names, over the last 33 years, as follows:

• Ministry of Resources and Industry (3 ministers between 28.06.1990- 19.11.1992)
• Ministry of Industry (2 ministers between 19.11.1992 – 12.12.1996)
• Ministry of Industry and Trade (3 ministers between 12.12.1996 – 29.12.2000)
• Ministry of Industry and Resources (1 Minister: 28.12.2000- 19.06.2003)

Since 19.06.2003, the Ministry of Energy has merged with the Ministry of Economy and Trade!

• Minister Delegate for Energy: 2 ministers between 21.12.2012 – 17.12.2014
• Ministry for Energy, Small and Medium Enterprises and Business Environment, period: 17.12.2014 – 17.11.2015
• Ministry of Energy (3 ministers, period: 17.11.2015 – 4.11.2019)

From 4.11.2019, the Ministry of Energy becomes the Ministry of Economy, Energy and Business Environment.

• Ministry of Energy, (2 ministers, period: 23.12.2020 – today).

 

Specialists and projects in the energy sector

As in other industries, the energy sector must fight to promote other concepts, other people, to learn new trends and to implement efficient solutions, technologically confirmed overseas or in other Western European countries!

Given the aggressive dividend distribution policy of the Romanian state, in which state-owned companies are left without an investment budget, one of the big – if not the only – opportunity is to attract European funds for the development of old infrastructure. However, so far, we can say that we have failed in attracting such European funds for projects in the energy sector and here I present some examples:

• Whether we are talking about small energy efficiency projects, Electric Up, which is 2 years old. Payments to beneficiaries have only recently started… after 2 years!
• Whether we are talking about the Modernisation Fund with a budget of EUR 16 billion, where Romania is far behind the other 9 beneficiary countries, which need to improve and invest their production, transmission, and supply infrastructure.
• Whether we are talking about the Romanian NRRP (National Recovery and Resilience Plan), where all funding axes need rapid improvements and a new approach:

a.Component 6, Investment 1 for the 950 MW/h PV proposed for development, where the evaluation of about 300 winning projects has not been completed after almost 16 months of analysis!

b.The storage component of the NRRP, which was apparently proposed, a few months ago, for removal from funding!!! What a lack of vision and understanding of the industry to propose eliminating the only component that can help renewables become a constant source in the process of balancing the national system!

c.The hydrogen component, where funding projects were signed and, the next day, beneficiaries were asked to cancel the contracts! “Quite a destiny” – in the words of Cioran!

d.Energy efficiency projects that have been put on standby since last year, with no clear communication as to why! … and they expect a “blessing from Brussels”, forgetting to mention what actually happened in our backyard!

e.Projects specific to the competence of the Ministry of Energy, carried out through the Ministry of European Funds (MIPE), where there is no competence and know-how! … and I stop here to avoid boring the audience, although there are plenty of examples!

As far as the energy voices are concerned, promoting an industry or a sector within it is understandable as long as the support of interests are based on strategic investments and efficient projects to be developed in Romania. But to present a singular idea, to support one’s own interests or to like to be seen on TV to be called “specialists” … is harder to understand. And here I move on to the next chapter: the specialized media.

 

Industry media

The media has had and still has an essential role in observing and objectively reporting what is happening in the industry: as clearly, accurately, and promptly as possible. But the media, like politics, is the mirror of society and industry, so there is obviously room for improvement.

For the most part, companies in the industry have managed to avoid being criticized, and that’s relatively easy: the annual promotion budget is allocated to the most relevant trusts, which are also fighting for every budget, so they can offer quality in a virtually non-existent market!

I remember when I was running the business of a media platform, one of the managers of an energy company was accusing the energy media of organising too many conferences and debates! Why did he say this? Because he simply saw the media as a small tool to promote the company, where the manager had, naturally, an ephemeral role… without ever considering that he could be objectively criticized, when the time came!

Perhaps in the media, as in the energy industry, there is a need for long-term projects, professionals to build trust and a more accelerated involvement of the new generation!

Specifically, my observation is that although we obviously have industry specialists in the media, who best observe the slippages in the sector, the media still does not dare to present constructive criticism of companies and entities. Why? Here I leave it to the media specialists to answer…

Until then, I propose to make a common front and to put our shoulder to the quicker change of mentality, of management and to show that everyone does his job well!

 

Why do Romanian managers in private companies get results?

A simple question to which most decision-makers, instead of learning and applying the rule of good practice, end up permanently hiding behind sterile accusations. Examples: foreign management, low taxes, exported profit etc. Like it or not, the naked truth is that the best skilled labour force is trained and works in corporations!

To be more specific, I propose to present OMV Petrom as a business case! Did it sell cheap? Yes, very cheap and I don’t understand how the due diligence was done, but I can say with a sense of responsibility that if it hadn’t been sold, the Crown Pearl would have ended up on the rocks! I say this from the perspective of an employee who has worked in this company for over 10 years: 5 years before and 5 years after privatisation.

Does the company make billions of euros in profit? Yes, because it knows how to bring in competent and responsible people, but, most importantly, since privatization, the company has become the biggest contributor to the state budget.

Why don’t Romanian companies make such profits? Is it because they don’t bring in educated people, professionals with clear mandates, concerned about the sector and the profitability of the company? And this instead of doing advanced statistics, with arrangements and combinations taken as many times as possible!?

 

Conclusions

The energy sector is in crisis, we all know it! There is an obvious need for people and entities to face the current geopolitical, social and energy market challenges.

The appointment of new and young people in the relevant ministries, regulatory authorities and industry entities can give us hope again that we still have a chance to move a cemented system. Let’s hope that Archimedes’ Law won’t work in this case too, and that desired changes prevail over resistance to change.

From the perspective of each of us whose destinies intertwine with the energy sector, I believe it is incumbent on all of us to do our jobs as well and as correctly as possible. And last but not least, I believe that the energy sector can do better and faster!