Why GEO 64 does not apply, even if it has been in force for over 6 months?


by Dumitru Chisalita

Government Emergency Ordinance 64/2016, amending and supplementing Law 123/2012, came into force on 1 April 2017, determining the transformation of principles of transparency, competition, non-discrimination on the gas market into concepts, which can be applied, measured and verified, based on procedures, instructions and specific methodologies.

Thus, today the Natural Gas Law 123/2012 establishes the obligation of suppliers purchasing gas for the population:

  • to make proof of gas acquisition for population in conditions of minimization of the cost of resources allocated (I believe that in the recent years costs haven’t always been minimized for gas acquisition for population, this being one of the items that led to price escalation for population),
  • to make proof of purchasing gas through procedures ensuring the possibility for any supplier to participate in the selection process, in order to obtain a fair price (limiting participation of certain suppliers in the gas acquisition process determined that the price of gas sold-purchased was not always the fair one);

We have the legal provisions under which we could have had the lowest gas acquisition price for the population in the last 6 months, but we cannot apply the law, because we don’t have the “Implementing Rules” (secondary legislation), which, although should have been issued by 30 November 2016, do not exist.

The Natural Gas Law 123/2012 currently establishes the obligation for suppliers purchasing gas for schools, hospitals, kindergartens etc.:

  • to make proof that conditions of market competition are ensured (gas purchased in the recent years was often based on the existence of a single commercial relationship, without the intention to consult other offers and even less so having actions regarding gas acquisition through competitive procedures based on supply and demand);
  • to make proof of gas acquisition through procedures ensuring transparency (the gas supply activity is lacking any procedures – good practices – showing the intention to ensure the transparent sale-purchase of gas and subsequently allowing verification whether facts coincided with intentions);
  • to make proof of ensuring conditions of transparent access to the market (the gas supply activity is performed especially behind bilateral contracts, hidden, without presenting to the general public the conditions of access to selling offers, the way in which the supplier makes sure it takes all measures to get a fair price, that it does not use dumping prices, that there is connection between the contractual provisions and the price or discounts granted etc.);
  • to make proof of ensuring the conditions of non-discriminatory access to the market (the gas supply activity in Romania did not allow all players access to gas offers, having numerous selective barriers which actually restricted massively competition and market development).

Similarly to the situation of gas acquisition for population, these methods, which would allow the acquisition of gas for other categories in the market in a transparent, competitive and non-discriminatory manner, could not be applied either, because we have not established the “Implementing Rules” (secondary legislation), although it should have been done by 30 November 2016.

The draft for the approval of GEO 64 has created an entire discussion on the need for one or two exchanges, but does not analyze the fact that failure to issue the “implementing rules” for Law 123 will determine, even in spring, certain suppliers to put their hands into household consumers’ pockets, who in absence of these rules will ensure the profit of supply companies.

The FairGasPrice caravan has recently completed a new attempt to prove the importance of eliminating oligopolies on the gas market, if they are intended to persist in Romania, and which are the real premises for a decrease in gas prices, not the conjectural ones.

Translation from Romanian by Romaniascout.

Image courtesy of jscreationzs at FreeDigitalPhotos.net