Romanian utilities warn new energy support scheme risks jamming markets

BUCHAREST (Reuters) - A new support scheme approved by the Romanian government to shield households and small businesses from soaring energy bills risks blocking the country's gas and electricity markets, energy utilities said on Friday.

The government extended a support scheme on Thursday until end-August 2023, capping natural gas and power bills for households, small businesses, hospitals and schools up to certain monthly consumption levels and compensating suppliers for the difference.

But the decree, which was approved without public consultation, also introduces an additional tax on revenue for producers and traders, and caps the electricity purchasing prices for which suppliers can be compensated.

The Romanian energy utilities' association (ACUE) said the capped compensation price did not take current market values into account, broke national and European Union legislation and would trigger significant losses among suppliers.

"ACUE requests that the new changes be revised to avoid a complete market block," it said in a statement. "The situation is critical and ... directly impacts the continuity of supply and distribution services."

Speaking at a Black Sea security forum on Thursday, executives of gas and power supplier Engie Romania and gas producer OMV Petrom said they were still analysing the decree to assess the financial consequences.

"I am afraid this decree will have unexpected and unwanted effects," Engie Romania Chief Executive Eric Stab said.

"We are in an extraordinarily complicated situation, it is not easy to take well-thought measures we are certain will have the desired effect."

OMV Petrom Director of Public and Regulatory Affairs Alexandru Maximescu said "consulting the industry before making very important decisions such as this decree is important."

(Reporting by Luiza Ilie; Editing by Sandra Maler)