Iohannis stops excessive prices from Romanian natural gas producers

President Klaus Iohannis says no, for the moment, to the promulgation Emergency government order no. 7/2013 concerning the excessive taxation of Romanian natural gas and oil producers, more precisely regarding the additional income obtained by these companies, following the deregulation of prices in the natural gas sector.

Parliament wants to impose the increase and make it permanent

Iohannis made this decision because Parliament decided to increase the overtax on profits from 60% to 80% and to make this tax permanent, even though its applicability was scheduled until December 31, 2017, when the entire natural gas sector will enter the free market.

The procedure provides that the president can block the projects proposed by Parliament only once, so if the document is submitted to another meeting, but retransmitted in the same form, the head of state is obliged to promulgate it, if he does not contest this action at the Constitutional Court.

Harald Kraft, president of the Romanian Association of Petroleum Exploration and Production Companies (ROPEPCA), stated about a month ago that this The decision on the surcharge represents discrimination in the true sense of the word against Gazprom’s Russians, who are not obliged to pay these taxes, nor to sell the entire amount of gas on the exchange.

It’s important to know natural gas overload was introduced in 2013 as a temporary measure for the period of the economic crisis. Currently, in 2017, the tax has been increased from 60% to 80%. Domestic producers are clearly penalized, losing ground to Gazprom, which will not be obliged to sell 100% of imports on the stock exchange.

The Industry and Services Commission of the Chamber of Deputies has decided to modify the law approval of the Ordinance of government emergency n. 7/2013 in the sense of increasing the tax rate from 60% to 80% for natural gas sales prices above 85 lei/MWh. GEO 7/2013 provided for only a 60% surcharge on the additional profit, applying it to the difference between the reference price set at 72 lei MW/h and the one reached after each price increase.

The president calms the situation: «Given the specific, temporary and extraordinary reasons for the introduction of this tax, we believe that its regulation should follow the same temporary nature. Considering the particular importance of the regulatory framework for the performance of the oil and gas sector, we consider it essential to define a predictable and stable fiscal and legislative framework, conducive to the creation of long-term business plans, for the continuation of current investments and the stimulation of new investments. Furthermore, for the achievement of objectives of a social nature, we consider it necessary that this law provides for a transparent mechanism, based on the principle of equality between taxation and protection of vulnerable consumers», is the firm declaration of the Head of State, with which he clearly rejected the amendments and the ordinance which will have to be re-examined by Parliament.

Conclusion

The decision by President Klaus Iohannis to postpone the promulgation of legislation related to the taxation of additional revenues earned by Romanian natural gas and oil producers highlights the complexity of balancing government fiscal objectives with the needs of the energy sector. The issue centers on the taxation of extra income generated by energy companies following the gradual deregulation of natural gas prices, a process that has significantly influenced the dynamics of Romania’s energy market.

Energy taxation policies play a critical role in shaping investment decisions, market competitiveness, and the long-term development of the energy industry. Governments often seek to ensure that extraordinary profits resulting from market changes contribute to public revenues, while energy companies argue that predictable and stable fiscal frameworks are essential for maintaining investment and supporting future production. As a result, decisions regarding additional taxation frequently generate debate among policymakers, industry representatives, and consumers.

The President’s decision not to immediately promulgate the measure suggests the importance of carefully evaluating its potential economic and strategic consequences. Excessive taxation could discourage investment in exploration, production, and infrastructure development, particularly in a sector that requires substantial capital expenditures and long-term planning. On the other hand, policymakers must also consider the public interest and ensure that the benefits arising from market liberalization are distributed fairly within the economy.

This situation reflects a broader challenge faced by many countries seeking to manage their natural resources effectively. Striking the right balance between encouraging energy sector growth and securing appropriate public revenues requires transparent regulations, consistent policies, and constructive dialogue among all stakeholders. A stable regulatory environment can help attract investment while ensuring that national energy resources continue to contribute to economic development.

The debate also underscores the strategic importance of the energy sector in Romania. Natural gas and oil production remain key components of the country’s energy security and economic stability. Decisions affecting taxation, pricing, and market regulation can have far-reaching implications for investors, consumers, and the overall energy landscape.

In conclusion, the postponement of the promulgation of legislation concerning the taxation of additional revenues in the natural gas sector highlights the need for careful consideration of both economic and regulatory impacts. Finding an appropriate balance between fiscal responsibility and maintaining an attractive environment for energy investment is essential for the sustainable development of the sector. As Romania continues to modernize its energy market, well-designed policies will play a crucial role in supporting growth, energy security, and long-term economic prosperity.