Romania Power Report Q1 2008

The new Romania Power Report from BMI forecasts that the country will account for 3.35% of Central Eastern Europe (CEE) regional power generation by 2011, and to remain a net exporter of electricity to neighbouring states. BMI's CEE power generation estimate for 2006 is 2,006 terawatt hours (twh), representing an increase of 4.00% over the previous year. We are forecasting an increase in regional generation to 2,451twh by 2011, representing a rise of 22.14%.

CEE thermal power generation in 2006 is estimated by BMI at 1,247twh, accounting for 62.23% of the total electricity supplied in the region. Our forecast for 2011 is 1,527twh, implying 22.54% growth that raises the market share of thermal generation to 62.32% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Romania's thermal generation in 2006 is estimated at 36.5twh, or 2.93% of the regional total. By 2011, the country is expected to account for 3.05% of regional thermal generation.

For Romania, gas is the dominant fuel, accounting for 39.4% of primary energy demand (PED), followed by oil at 27.0%, coal at 19.7%, with hydro having a 10.7% share of PED. Regional energy demand is forecast to reach 1,724mn toe by 2011, representing 19.8% growth over the period. Romania's 2006 market share of 2.70% is set to rise to 2.97% by 2011. Romania in 2006 accounted for 1.63% of regional nuclear energy consumption, with a forecast market share of 2.48% by 2011.

Romania's overall business environment can be considered attractive in a regional context, with belowaverage long-term political risk countered by above-average long-term economic risk. Capacity and demand growth are high in a regional context, while imminent EU inclusion means good progress towards deregulation. The degree of energy import-dependency is also below the regional average. In the BMI Business Environment Ranking matrix, Romania now receives a composite score of 33, which ranks the country third out of nine states included in the CEE region.

BMI forecasts Romanian real GDP growth averaging 5.42% per annum between 2006 and 2011, although this year's forecast is 5.8%. The population is expected to contract from 21.6mn to 21.3mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly. The country's power consumption is expected to increase from an estimated 49.8twh in 2006 to 61.6twh by the end of the forecast period, while exports should rise from an estimated 12.4twh in 2006 to a forecast 20.4twh in 2011, assuming 5.5% annual growth in generating capacity.