Task for the Government: The incompatibility director – civil servant must disappear

by Dumitru CHISALITA

Energy is the most important economic sector of Romania, maybe even some of the last sectors operating at almost normal parameters. At the same time, it is the sector with one of the greatest inertia, requires large investments and is the main contributor to environmental pollution, global warming and climate change. The Ministry of Energy should focus exclusively on public energy policies. The establishment of the Department for Energy, in 2012, led by a Minister Delegate, within the Ministry of Economy, was a shy beginning of recognition of the importance of this sector. In late 2014, the Ministry for Energy, Small and Medium Enterprises and Business Environment was established, being an important step of the idea of entity responsible for the realization of public policies in this important economic sector. The “Colectiv movement”, the mini revolution in the autumn of 2015, brought the first Ministry of Energy in Romania’s history. After 326 years of coal exploitation, 158 years of oil exploitation, 132 years of thermal energy production, 113 years of hydropower production and 106 years of gas extraction, Romania has a Ministry of Energy. It must prepare a set of public policies to create the proper framework for cooperation with the social environment, the business environment and international environment. Such a system could give to both the business environment and civil society the necessary leverage to make sure that decisions made in relation to this sector are justified, fair and well documented (supported by impact and risk) and also predictable. A Ministry of Energy was absolutely necessary, but as institution responsible for drawing up the public policies in the energy field and participation in preparing public policies in related or interdisciplinary areas, namely:

• Defining and managing protected customers
• Defining and managing vulnerable customers
• National Action Plan regarding energy poverty
• Elaboration of an Energy Code by defining an unitary regulatory framework at sector level and aligning/amending the European Directives to Romania’s particularities
• Aligning public policies with the private ones in the energy sector
• Increased labor productivity in the energy sector
• Increased efficiency in the energy sector
• Integration in the EU market
• Ensuring the transparency, competitiveness and non-discrimination in the energy sector
• Implementing smart metering and smart grid
• Promoting eco-friendly transport (electrical, CNGV, hydrogen, biofuels)
• Specific Policies for developing energy of communities (microsystems of co & tri-generation at the level of buildings and districts, renewable energy locally produced, biogas, biomass, vegetable waste, low pressure gas, manufactured gas, the extraction and use of thermal and kinetic energy of fluid flowing through pipes or channels, zero-energy buildings, interchangeability and duality of fuels)
• Developing energy storage methods (cells with hydrogen and fuel cells, pumped storage hydropower stations)
• Assuming the functions of Planning, Forecasting and Energy Monitoring
• Increased energy efficiency
• Exploration and exploitation of unconventional resources
• Programs for monitoring the critical infrastructure
• Developing the energy storage capabilities
• Developing the capacity to produce energy with low carbon (nuclear, natural gas)
• Developing RES-E production capacities (with a focus on biomass, geothermal energy, hydro)
• Reengineering of infrastructure and production capacities in an unitary approach with the stakeholders
• Policies for supporting the discovery of new oil, gas, coal resources, onshore and offshore
• Increasing the recovery of resources, improving operational processes
• Developing the existing production capacities and new production capacities
• Identifying new import sources and facilitating access to them
• Ensuring in the long run a high degree of independence on import sources
• Interconnection with the energy systems of neighboring countries

The Ministry of Energy must operate as a Competent Authority, in the field of energy security, coordination and harmonization of dispatching intersectoral energy:

• Competent Authority for guaranteeing the security of gas supply (the Ministry for Energy, Small and Medium Enterprises and Business Environment was appointed under GD 42/2015 as Competent Authority for the implementation of the Regulation (EU) 994/2010 of the European Parliament and Council of October 20th 2010 on measures to guarantee the security of gas supply)
• Competent Authority for coordination, establishment, maintenance, control and supervision of minimum stocks of crude oil and petroleum products (the Department for Energy was named by Law 360/2013 as competent authority for coordination, establishment, maintenance, control and supervision of minimum stocks of crude and petroleum products)
• Authority responsible for the compliance of certain thermal power plants (S.C. Complexul Energetic Craiova S.E., S.C. Termoelectrica S.E. Petrosani, R.A.A.N. –ROMAG TERMO branch, S.C. Complexul Energetic Rovinari S.A. and S.C. C.E.T. Govora) with the requirements of Directive 2001/80/EC of the European Parliament and Council of 23 October 2011 on the limitation of emissions of certain pollutants from large combustion plants.
• Competent Authority for safety of oil and gas offshore operations (Ministry of Energy, Small and Medium Enterprises and Business Environment launched in August 2015 a bill involving the safety of offshore oil operations, project transposing Directive 2013/30/EU, proposing the establishment of a new Authority, given that this approach should be at the level of the Ministry of Energy, as found in most EU countries)
• National Authority for Dispatch in Energy Security, which in my opinion is necessary in the context in which processes carried out in the market in the last 15 years in the energy sector (market liberalization, unbundling of former integrated energy companies, privatization of energy companies, lack of data in the market needed to substantiate a unitary decision, with the reason of classifying them at the level of companies and sectors, separating positions coordinating the energy sector between various institutions NAMR, ANRE) determine the lack of unitary national coordination of energy resources and ensuring their balanced dispatch. Lack of essential functions of dispatching all forms of energy is accompanied by lack of energy planning and forecasting functions.

The Ministry of Energy did not emerge from the logical necessity, but from the political battle on managing energy companies. The Ministry of Energy should not continue, under any circumstance, the practice for which in 2012 the Department for Energy appeared actually, namely the battle to manage energy companies between the National Liberal Party (PNL) and the Social Democratic Party (PSD). The Ministry of Energy should not manage energy companies.

This practice creates an important conflict of interests:

• between the position of administrator of the Ministry of Energy in some energy producers/suppliers/distributors and the role of initiator of public policies, policies which must be equidistant from all producers/suppliers/distributors.
• between the position of administrator of the Ministry of Energy in some energy producers/suppliers/distributors and the role of Competent Authority, authority which must intervene in the market to ensure Romania’s energy security, even to the detriment of companies’ profits.
• between the position of administrator of the Ministry of Energy in some energy producers/suppliers/distributors and the role of initiator of public policies for protecting vulnerable customers.

I believe that it is impossible that the same person (Minister, Secretary of State, Director in the Ministry, Civil Servant in the Ministry) can think objectively when he/she is put in the situation of deciding to increase the profit of the company managed or protecting consumers as representative of the Ministry of Energy by public policies, respectively drawing up policies equidistant from other companies in the market that are competing with the company administered. A civil servant cannot make in the same time profit in companies where it is director (to increase prices) and social protection for consumers (to decrease prices). The practice invented many years ago by which civil servants with low salaries (and not only) see their revenues inflated by being placed in the Boards of Directors of companies managed by the Ministries creates conflicts of interest, becoming to be rather directors than promoters of public policies, adapting policies in the favor of companies where they hold the positions of directors, being tolerant towards them in delivering some control activities etc. I believe that some of the first measures that should be taken to normalize the activity and apply the principles of administrative governance are:

• giving up entirely by ministries the administration of capital of state-owned companies,
• establishing an Authority for State Assets Administration subordinated to the Government (maybe an exception would be placing under the Ministry of Energy the companies Transgaz and Transelectrica, which by law must have different representatives to coordinate and manage the company than companies supplying gas and electricity. The justification for such an action would also be that these companies have an important strategic component, but are natural monopolies with regulated tariffs and the only ones operating in Romania),
• an extremely rigorous selection of employees of the Authority for State Assets Administration under GEO 109, by a consultative council consisting of academics, deans of faculties of management, bankers, members of professional associations of management and corporate governance, representatives of NGOs of the business environment,
• granting direct income (without placing them in the Boards of Directors) to civil servants and personnel of the ministries, but only in conjunction with increasing the efficiency of their activity, labor productivity and only based on the achievement of objectives allocated,
• limiting the rights of persons to be part of more than one Board of Directors,
• applying GEO 109 for the election of members in the Boards of Directors and limiting the election of members exclusively among academics, banking, bars, experts and consultants. These people are involved in their current research activity and can bring the primary element needed by a company from a director: the vision required to develop a company.

 One should eliminate the incompatibility:

– director – civil servant

– ministry as manager of companies – ministry as initiator of public policies for these companies.

Source: www.dumitruchisalita.ro

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