News: Robert Arsene, CEO of Agricover Group, says the EUR 12.5 million funding the company received from the IFC will enable its financing division to diversify its credit portfolio to include investment credit products »page 5
ROMANIA’S PREMIERE BUSINESS WEEKLY
April 30 -May 6, 2012 / VOLUME 16, NUMBER 15
SHOPPING TRENDS
LOCAL SHOPPERS REMAIN WARY, WITH ONLY ONE QUARTER OF ROMANIANS PERCEIVING THEIR FINANCIAL STATE POSITIVELY, SAYS NIELSEN »PAGE 7
CAUTION TO THE WIND?
Despite warnings that the EUR 1.6 billion renewable energy sector might be heading for a bubble, analysts and industry players say local developments in the field are sustainable »page 10 3Q
NEWS
LINKS
FILM
Mercury rising
Fitch forecast
Smart move
Poliss
Mercury360 has upped its digital capacity with the launch of the specialized Outbox agency, says GM Adrian Pavelescu » page 3
The rating agency predicts Romania’s growth to outdo the recession-hit Euro zone this year, a local conference heard » page 4
RCS&RDS’s decision to jump on the smartphone retail bandwagon will sharpen competition among telecom players » page 6
French director Maiwenn’s gritty Cannes winner about Paris cops is an arresting watch, found BR’s movie reviewer » page 14
www.business-review.ro Business Review | April 30 - May 6, 2012
NEWS 3
NEWS in brief
3Q Adrian Pavelescu
EDUCATION National Library reopens on World Book and Copyright Day
HEALTHCARE MedLife Eva launches natural birth unit in Brasov MedLife Eva, part of the MedLife medical network, has launched the first natural birth unit in Romania as a pilot project through the international International MotherBaby Childbirth Organization (IMBCO) which aims to reduce the ratio of C-section births to 10 percent over the coming years. In Romania, 39 percent of births are induced, compared to 22 percent in France and 20 percent in Great Britain. The objective of the IMBCO is to reduce the proportion of Caesarians to 10 percent, to be used when the life of the mother or the baby is in danger.
IT&C Interactive Intelligence enters Romanian market Interactive Intelligence has entered the local market with plans to open an office in Romania in less than two years. The US-based producer of software for call centers posted a global turnover of USD 210 million last year. The company has 4,500 customers and around 1,000 employees in more than 90 countries. Interactive Intelligence plans to reach a 50 percent share in the financial sector in Romania over the next three-four years. With partners Asseco and Lucas Communication Services, Interactive Intelligence intends to sign five contracts with large companies in banking, insurance, utilities and outsourcing centers this year. According to estimations by Interactive Intelligence, in Romania there are currently approximately 250 contact centers, of which less than 20 percent have last generation IT solutions.
Antena Group and RCS & RDS clash over broadcasting issues A dispute between Intact Media Group, which controls Antena 1 and Antena 3, and RCS & RDS has flared up after the telecom company stopped broadcasting the group’s TV channels via satellite to its subscribers. Intact Media Group ac-
Courtesy of Outbox
The National Library reopened last week on April 23, World Book and Copyright Day, in a new headquarters located on Unirii Blvd. The five-floor facility includes 13 reading rooms and an auditorium with 400 seats, as it will also be used as a conference center. The library has 30,000 sqm of storage space for books and 15,000 sqm of multifunctional space for exhibitions, book shops and cafes. The total investment in the construction of the new National Library has exceeded EUR 100 million.
managing director Outbox
PICTURE of the week Logan’s run to give way to new generation The first Dacia Logan model will go out of production at the end of this year, leaving room for the Logan 2 generation. The low-cost Logan model was launched in June 2004, and the over 1.5 million units put on the market have been sold throughout the world under the Dacia brand but also as Renault, Nissan and Mahindra. cused RCS & RDS of “uncommercial practices” claiming the company had decided “without informing its partners or subscribers beforehand to take the Antena 1 and Antena 3 TV channels out of the satellite platform, starting at midnight on April 20.” Meanwhile, the telecom operator also released an official statement, claiming that Antena Group had told RCS & RDS it would have to cease broadcasting channels via satellite if it did not pay an annual fee of more than EUR 7 million. RCS & RDS publicly asked Antena Group for the authorization to resume broadcasting the Antena 1 and Antena 3 channels, with no supplementary fee.
LOGISTICS TCE Holding opens Budapest office Logistics and express delivery company TCE Holding has opened its first office outside Romania in Budapest, Hungary. The bureau has been opened through TCE Worldwide. The move makes the company the first Romanian express delivery firm to open an office outside the country’s borders. With the new Budapest subsidiary TCE Holding’s delivery times in Europe will be shortened, while tariffs for deliveries to and from Hungary will go down by 40 percent on average, it is predicted. The company has 45 working points, two main hubs in Bucharest and Brasov, and mini-hubs in Bacau, Cluj and Budapest. At the end of last year it had 1,100 employees.
Romanian Post could become mobile virtual network operator The extensive territorial coverage of the Romanian Post qualifies the institution to become a mobile virtual network operator (MVNO), said Marius Fecioru, state secretary within the Ministry of Communications. MVNO can supply mobile communications without a license to use radio spectrum and without owning, totally or partially, the infrastructure required to supply these services. In the future, mobile operators may also be under the obligation to accept MVNO into their networks, said representatives of telecom regulator ANCOM.
RETAIL Succes buys four Pic hypermarkets Four of the insolvent Pic hypermarkets will be taken over by Succes, a retail network owned by businessman Nicolae Sarcina from Gorj. The Pic hypermarkets, which are owned by businessmen Ilie and Cornel Penescu, entered insolvency in November 2009, after running up debts of EUR 76 million. The stores will be bought in monthly installments over the next three years, PwC Romania, Pic’s judicial administrator, has announced. Pic has already rented its stores in Pitesti and Craiova and reopened them under the Succes brand. The hypermarkets in Oradea and Calarasi will be reopened soon under the same name.
Why did Mercury360 decide to create Outbox as a separate digital agency at this juncture? The decision to launch Outbox came as a natural result of constant organic growth of the digital division Mercury360. The actual launch confirms the focus on the interactive. Mercury360, which posted a turnover of EUR 14 million in 2011, is an integrated communication agency. With advertising now diversifying and adjusting to the specifics of the communication channels, players who understand the market will become proficient in each communication segment. Our focus will be to create digital communication platforms, head-to-tail online strategies. At the moment we can deliver a large pool of digital services, including web development, mobile apps, games, video, augmented reality, LBS, pQR and SMS integration. One of the ways in which one can make a difference in communication is to exploit new technologies. Outbox is one of the few agencies in Romania that has developed its own augmented reality capabilities. At this point we have several projects in development that include augmented reality components. What can you tell me about the Outbox team? At the moment, the team is made up of 15 people, working on a framework of client service, design, programming and social media. We have a background of direct & digital, of 121 integrated offline and online projects. Consequently, the digital team is doubled by the consumer interaction team, which provides the call-center components, promo management, prize logistics – all these processes being administered inhouse. What clients does Outbox have at the moment? The brands we are working for are traditional clients for which the digital division has developed online competences integrated under Mercury360. Nescafe Alegria, Purina One, Gourmet, Friskies, CioccoLatte, Zuzu and Fulga are a few brands for which we are constantly developing digital projects. otilia.haraga@business-review.ro
www.business-review.ro Business Review | April 30 - May 6, 2012
4 NEWS MACRO
LEISURE
Romanian economy to outgrow Euro zone in 2012, says Fitch
Richard Hunter, managing director, EMEA & Asia-Pacific Fitch Ratings
R
atings agency Fitch forecasts economic growth of 1.6 percent for Romania this year, while the Euro zone economy is expected to shrink by 0.2 percent, slipping into a mild recession, according to the latest quarterly Global Economic Outlook (GEO) issued by the rating firm. Romania’s credit rating was upgraded to BBB- by Fitch with stable outlook last July, granting an investment grade to the country, but the elections in Romania may bring some policy slippage, according to Richard Hunter, managing director, EMEA & AsiaPacific Fitch Ratings. Hunter was guest
speaker at the third risk management conference organized last week by ICAP Romania, the credit risk firm, and Cycle Europe. “Romania has come down but has stronger growth than the Euro zone,” said Hunter. Fitch cut Romania’s economic growth by 0.9 percent this year but expects the economy to pick up next year with GDP predicted to rise 3 percent. Meanwhile, Euro zone growth was cut by 1 percent, signaling a recession, while growth of 1.1 percent is expected for 2013. Hunter said inflation in Romania was still volatile and the volume of non-performing loans could still pose a threat to the country. He also pointed out that foreign exchange lending has been driving otherwise weak credit growth. “If you have a hedge, go for foreign currency; otherwise don’t do it,” urged the MD. George Georgakopoulos, executive vice-president at Bancpost, said the banking sector in Romania was well capitalized, and the lending rates were low by historical standards and were unlikely to change due to lack of profitability in the banking sector, competition for savings and high credit costs. ‘The banks in Romania have clean balance sheets. In this country there weren’t any subprime loans,” added Georgakopoulos. ∫ Ovidiu Posirca
World Class works up expansion sweat with ninth local gym
Class action: the new gym will cater to workers from America House
S
wedish fitness group World Class has opened a new unit in America House, the seventh such venue in Bucharest and the ninth in Romania, including centers in Timisoara and Cluj. “The total investment in the ninth World Class center amounts to approximately EUR 900,000, including fit-out and fitness equipment. The landlord, AEW Europe, also contributed to covering the costs with World Class. Our objective is to open 15 to 20 World Class centers by 2014, including the two new confirmed locations in Titan and Floreasca,” said Mikael Fredholm, CEO of World Class International. The center has a surface of 920 sqm and is planned to expand by an additional 105 sqm. It will offer strength, cardio, functional training, cycling and aerobics classes, as well as wet and dry sauna. AEW Europe has renewed leases representing more than 13,000 sqm of its office area with long-term tenants, such as Tuca Zbarcea & Asociatii, Deloitte, the Japanese Embassy and S&T, and has also leased 4,100 sqm of its vacant office and retail area. “However, the work is not over; we still have 3,500 sqm of vacant office space in
America House to lease through Jones Lang LaSalle, which has been appointed exclusive consultant for leasing the office space,” said Isabelle Clerc, head of asset management at AEW Europe in Central Europe. World Class has 15,000 members in Romania, 50 percent of whom are corporate clients. The fitness chain is in active expansion mode, with all new openings being funded from its profit, with no external financing. Three new gyms are due to be opened, totaling investments of EUR 5.2 million. One will be located within the Asmita Gardens residential compound, and will be completed within three months. Another will be opened in Titan, inside Iris Shopping Center, within six months. The third outlet, to be opened in Floreasca, will require a very large investment of EUR 3 million. Work on this center will start this summer and will take about one year to complete. Other potential locations for World Class include Charles de Gaulle, within a residential compound, where the investment would amount to EUR 700,000. ∫ Otilia Haraga
ENERGY
CEZ to complete 600 MW wind park this year
C
zech utility provider CEZ will have its 600 MW wind park in Fantanele and Cogealac (in the Dobrogea area) fully operational by the end of this year, according to Adrian Borotea, corporate affairs director at CEZ Romania, speaking at the Focus on Renewable Energy event organized by BR last week. CEZ currently has 387.5 MW of installed wind capacities and will be adding another 30 MW in May, reaching full capacity this year, following an investment of EUR 1.2 billion, said Borotea. Apart from wind, the utility has 20 MW in small-hydro, after acquiring TMK Hydroenergy Group (four reservoirs with dams and four small hydropower plants) last year in a deal worth EUR 20 million. Borotea said some river sectors will become
available and could be attractive for smallhydro investors, as developers failed to sell projects or start production. CEZ’s power output was 239,373 MW in the first quarter of this year, and it received a total of 474,080 green certificates, according to data from Transelectrica, the grid operator. Under the current support scheme set out by renewable law 220/2008, wind capacities are granted two green certificates for every 1 MW generated and delivered to consumers through to 2017, and a single certificate afterwards. The price of one green certificate ranges from EUR 27 (floor) to EUR 55 (ceiling). At present, green certificates are being traded close to the maximum price. ∫ Ovidiu Posirca
www.business-review.ro Business Review | April 30 - May 6, 2012
NEWS 5
AGRICULTURE
Agricover Credit IFN harvests EUR 12.5 mln from World Bank Agricover Credit IFN, part of Romanian agribusiness holding Agricover Group, hopes to increase its number of customers by 200 this year, after signing a EUR 12.5 million credit agreement with the IFC, which will enable the Romanian institution to diversify its product portfolio with investment credit. Looking to do battle in foreign fields Agricover Group’s objectives for 2012 will be to develop existing divisions and consolidate its latest launched business lines – fuel distribution and livestock – but it is also looking at new market opportunities, Robert Arsene, Agricover’s CEO, told BR. The company has an investment budget of about EUR 4 million this year which will go into modernization, the expansion of production facilities and possible acquisitions, he added. The Romanian company has ambitions to become a regional agribusiness player and after setting up a division in Bulgaria two years ago is now looking at Serbia for expansion, said the CEO, without disclosing a timeline for entering this market. Robert Arsene CEO, Agricover Group
∫ SIMONA BAZAVAN Agricultural financing solutions are in their early days in Romania but the sector is expected to develop considerably over the next couple of years, as agriculture will become a focus for banks and financial institutions, thinks Ana-Maria Mihaescu, International Finance Corporation (IFC) Romania chief of mission. The IFC, which is part of the World Bank, has recently granted a EUR 12.5 million credit to Agricover Credit IFN. The funds will enable the non-banking financial institution to diversify its credit portfolio for local farmers to include investment financing solutions for agricultural equipment acquisitions and farm expansion and modernization, in addition to existing working capital credit, said Liviu Dobre, general director of Agricover Credit IFN. Credit will be available in euro to local companies or registered sole traders active either in the vegetal production sector or zootechnics, for a period of up to 36 months with a 20 percent advance and two annual reimbursements. After managing to increase its credit volume by 54 percent in 2011, Agricover Credit IFN hopes to boost the figure by an additional 33 percent this year, totaling RON 400 million (approximately EUR 93 million). The institution had 700 clients at the end of 2011, the average credit amounting to EUR 90,000-EUR 100,000. About 90 percent of the company’s clients are local farmers registered as companies and the remaining 10 percent are registered sole traders. The bulk of credits went to farmers in the vegetal sector (90 percent), and the rest to practitioners from the zootechnics field, but Dobre thinks there is potential for growth for the latter category.
Reaping the fruits of a good agricultural year Agricover Group has reported total revenues of RON 920 million (approximately EUR 217.5 million) for 2011, up 48 percent on 2011 y-o-y. The growth was higher than the company’s initial objective and the performance was also the result of the “exceptional growth” reported by the agricultural sector last year, company representatives previously announced. Compared to the turnover reported in 2007, the company managed to increase its revenues fourfold in 2011. Also, the group’s EBITDA amounted to over RON 44 million (approximately EUR 10.4 million), up 40 percent y-o-y. For 2012, the company targets a 29 percent turnover increase, said Agricover’s CEO. “In 2011 we continued to rely on the two pillars of our business, the grain trade and the distribution and sale of certified seeds, fertilizers and pesticides. At the same time, in order to continue our development strategy, we launched two new business lines at the end of 2010, trade with meat and livestock and the sale of diesel fuel, which are very popular with farmers. These last two have come to represent, together, more than 10 percent of the turnover,” said Arsene. Grain trade represented over 55 percent of the group’s total turnover, up 20 percent in volume y-o-y. The distribution and sale of certified seeds, fertilizers, pesticides, and diesel fuels generated, in 2011, 50 percent higher revenues than a year before. Also, the group’s division in Bulgaria saw revenues from the sale of certified seeds, fertilizers and pesticides increase sixfold, to EUR 6 million. Agricover Group was set up ten years ago and is owned by Jabbar Kanani, an Azerbaijani businessman who has been living in Romania for the past 27 years.
simona.bazavan@business-review.ro
www.business-review.ro Business Review | April 30 - May 6, 2012
6 LINKS
Big guns come out in the smartphone battle Telecom operator RCS&RDS has recently announced that it will enter the smartphone market with a range of subsidized handsets, planning to boost the use of mobile data by its customers. This move is bound to rattle the cages of other operators who have been active on this market for years. ∫ OTILIA HARAGA Last year, demand for mobile phones was again on the rise in Europe, mostly as a result of the growing popularity of smartphones. GfK figures show that 3.2 percent more mobile phones were sold in 2011 than in 2010, while sales of smartphones hiked by 67 percent. Overall, Europeans bought 258 million mobile phones last year. What of Romania? The CEE Telco Industry Report 2011 finds that Romania is at the lower end of the ranking, even in the region. While countries such as Slovenia, Turkey and Lithuania have 27.6, 23.7 and 18.5 percent smartphone usage ratios respectively, Romania had only 8.4 percent adoption at the time when the survey was carried out. But this means that the only way is up. “2011 was the year of smartphones, despite statistics showing that regular phones are still preferred by a segment of users. According to our internal evaluation, the Romanian smartphone market registered a rate of growth of 55 percent in 2011, compared to 2010,” Panos Makris, chief commercial officer at Cosmote Romania, tells BR. Uptake of the devices has spawned developers of mobile applications, contributing to a more complex and complete user experience. Meanwhile, smartphone usage has given impetus to the traffic of mobile data in operators’ networks. In the business sector, the adoption of smartphones is progressing a lot more smoothly since companies are interested in their employees staying connected. But it is among domestic users that things get interesting, say some players. “The smartphone battle is taking place in the residential sector, and the challenge is how to bring more value for money to the customer, because at the end of the day these technologies cost a great deal,” Julien Ducarroz, chief commercial officer for business-to-consumer at Orange Romania, tells BR. So far, RCS&RDS has pretty much kept out of this fight, giving its users mobile handsets in “custody”, which had to be returned if customers decided to end the con-
Look smart: smartphones are driving growth on the mobile phone market a tradition in promoting smartphones. tract. However, recently RCS&RDS has anSubscribers to RCS&RDS’s DigiMobil nounced it will also take the plunge on the service can now acquire a smartphone by smartphone market. “We have introduced paying the full price all at once or can opt subsidized smartphones into our range in to pay in 12 installments. “We have handseveral cities and we intend to expand this sets with market prices between RON 240 to other cities, depending on the feedback we get from clients,” Valentin Popoviciu, and RON 430, which in our shops can be bought for only RON 5. There are phones business development manager at that cost RON 1,250 on the market which RCS&RDS, tells BR. we offer at only RON 100. Also, handsets Information provided to BR shows that that have a market price of around RON the range of available handsets includes the Nokia C2-01, and from Samsung the E3210, 2,000, for Digi subscribers cost RON 500,” S5610, I5500, S5660, Galaxy Ace, Galaxy W, outlines Popoviciu. With the introduction of the new range Galaxy SL, Galaxy S Plus and Galaxy SII. of smartphones, the company will also “RCS&RDS will subsidize all the phones modify some of its points of presence, in a on offer. These handsets are not integratway that will reflect RCS&RDS’s new aped in the custody offer, but the cheapest of proach to voice and mobile data services. them can be acquired at a total price of only RON 5, while for some of them there is the “We will be modernizing our network of payment spots and points of presence, in line option of payment right away or in installwith the development of mobile voice and ments,” says Popoviciu. data. We will expand the offer of subsidized The entrance of RCS&RDS, which smartphones depending on the demand we throws out very aggressive price-driven ofregister. We have at our disposal, for this exfers onto the market, and the company’s pansion, over 230 locations at national plans to boost mobile data traffic among its level,” says Popoviciu. customers, is bound to ramp up the presIn terms of mobile internet, since its sure on existing operators who already have
launch, the service has brought RCS&RDS over 30 percent of the users of mobile data (used via USB modems). “Of course, our evolution on this market also depends on the spectrum we have access to. We have reached these results even though we did not have access to the 900 MHZ frequency, which is much more advantageous for operators and users, as the other competitors did. Granting our company a part of the 900 MHz spectrum as a compensation measure instituted by EC Directive 200/114 would be to the customers’ advantage,” argues Popoviciu. Telecom operators are directly interested in encouraging the adoption of smartphones, as this in turn will drive the traffic of mobile data in their network to new peaks. Cosmote, which has revenues of EUR 468.2 million and a total customer base of 6.5 million clients “significantly extended its 3G customer base by 116 percent in 2011, compared to 2010, when Cosmote Romania launched its mobile broadband range,” says Makris. The operator recently launched the Nokia Lumia 710 and 800, and prior to that, the Motorola Motoluxe. The Samsung S6102 Galaxy Y Dual SIM and Samsung Galaxy Note have also entered the company’s portfolio recently. Major rival Orange, which has a customer base of 10.2 million, posted a 63 percent hike in smartphone sales in its outlets year-on-year while mobile data traffic soared by 62 percent y-o-y, according to the financial results announced by the company for Q4, 2011. “Between 25 and 30 percent of sales are smartphones,” says Ducarroz. “At the end of the day, the main barrier to greater smartphone adoption is the price. Today we have a range of Orange own devices. Also, we have promotions around the Orange Vancouver, the Motorola Defy and HTC . This brings the price of the full package down, because you might have a very cheap device, but pay a lot in monthly bills,” says Ducarroz.
otilia.haraga@business-review.ro
www.business-review.ro Business Review | April 30 - May 6, 2012
FOCUS RETAIL 7
Romanian consumers remain conservative on low financial expectations After two years of constantly declining consumer confidence, Romania posted the first pick-up at the end of 2011, reveals the Shopper Trends 2012 survey put together by Nielsen Romania. Even so, an environment of increasing prices and political instability doesn’t leave room for consistent growth this year, data suggest. ∫ SIMONA BAZAVAN The Romanian economy is showing signs of recovery, a trend evidenced by the fact that local consumers increased their number of shopping visits to most retail formats in 2011 compared to 2010, thinks Oana Potec, senior research executive at Nielsen Romania. The end of last year brought more reasons for Romanian consumers to be cheerful, with an 8 percent average salary increase in November, y-o-y, while inflation fell from just below 8 percent in December 2010 to around 3.1 percent in December 2011. Consumer confidence grew despite the fact that the perception that food prices were rising was even more pronounced last year than in 2010, according to the Shopper Trends 2012 report. More than four in five shoppers believed that food prices had gone up in Romania. However, despite the pick-up at the end of 2011, overall Romanian consumer confidence remains conservative, lower than
the European and global average, as only one quarter of consumers are satisfied with their financial state, in an environment of increasing prices and political confrontation, according to Nielsen. Looking at the structure of the market, last year the modern trade sector continued its advance both in terms of shopper engagement and revenue but also in network development, as more than 100 new stores were opened. Out of this figure 60 were discounters. Shoppers too have matured with the market and their expectations are becoming harder to satisfy. In addition to an accessible location, stocking a broad product portfolio, promotions and good value for money, a modern store should pay attention to aspects such as the general atmosphere in the shop and the details that make a visit there a pleasant shopping experience, Potec explained.
Thrifty Romanians look at promotions Promotions continued to be an important
Where do Romanians do their weekly shop?* Hypermarkets Supermarkets Discounters Traditional Cash&Carry
2009
2010
2011
53 19 16 6 5
50 22 18 6 4
55 21 17 3 2
*Percentage Source: Nielsen Romania factor determining purchasing behavior last year. Retailers used this strategy to the point where they flooded the market and made it very hard for shoppers to differentiate between competitors. “Promotions effectiveness is directly linked to whether the buyer had a positive experience with the product/brand or if the consumer’s perception is positive. Price cuts are by far the preferred promotional scheme among Romanian buyers, fol-
lowed by buy one, get one free (BOGOF) and getting a larger amount for the same price,” said Potec. The data for the Shopper Trends 2012 report was collected between October and November 2011 from 1,200 respondents (main grocery shoppers and key influencers for household monthly shopping), aged 18-65.
simona.bazavan@business-review.ro
www.business-review.ro Business Review | April 30 - May 6, 2012
8 INVESTMENTS
Growing wind s blown out of pr
PARTNER CONTENT
New promotion system for renewable energy welcomed by investors
Larisa Popoviciu Senior Associate Zamfirescu Racoţi Predoiu
The recent changes to the legislation on promotion system for electricity produced from renewable sources have generated various debates in the past months.
A new attractive support scheme for renewable energy power plants has been implemented by the amendments brought to Law no. 220/2008 (“Law 220”) by Emergency Government Ordinance no. 88/2011 (“GEO 88”). Investors consider this a positive action, as the amended Law 220 establishes the promotion system for electricity produced from renewable sources of green certificates (“GC”) combined with the annual mandatory GC acquisition quota, system that has been priory authorized by the European Commission in July 2011. In addition to GEO 88, several regulations and methodologies regarding: l
the issuance of the GC;
l the organization and functioning of the
GC market; l the issuance and survey of the origin guarantees for the electricity produced from renewable sources; l the monitoring of the promotion system for electricity produced from renewable sources; l the accrediting of the electricity producers from renewable sources have come into force by end of the first trimester of 2012. These normative acts are meant to lead to the implementation of the complex system of the above referred support scheme. Energy producers may benefit from the GCs if they are accredited by the National Energy Regulatory Agency (“ANRE”) according to the accreditation procedure approved by means of Order no. 42/2011 issued by ANRE. It is to be noted that the accreditation may be performed as well in stages, depending on the commissioning of each individual power group developed within a power capacity containing several power groups. Consequently, the applicability period of the GC support scheme shall differ depending on the date of the accreditation.
Romania’s wind sector is estimated to triple capacity through to 2013 but growth in this sector is sustainable and bears no resemblance to gal experts and industry players surveyed by BR.
With special focus on the wind energy it is to be noted that according to the GC support scheme the electricity producers will benefit from 2 GC by 2017 and 1 GC starting with 2018 for each 1 MWh produced and delivered. The trading price of GCs will have a minimum value of EUR 27 per GC and a maximum value of EUR 55 per GC. Starting from 2011, these limits of the GC prices are to be annually indexed with the average EU inflation index (as officially communicated by Eurostat).
∫ OVIDIU POSIRCA The country climbed two positions to tenth place for wind sources in February, ranking alongside Ireland and Poland in the Country Attractiveness Index published by Ernst & Young (E&Y) consultancy. Transelectrica, the local grid operator, is flooded with projects for wind capacities. This April, there were grid connection contracts for 10,458 MW and technical connection agreements (ATR) for 9,416 MW. Additionally, Transelectrica has received requests for solution studies (technical-economical studies) for wind projects totaling around 15,000 MW.
A significant provision of Law 220 is the one referring to the period for the scheme’s availability (the Law refers as well to the period following 2025). Apparently, such amendment is meant to increase the investor’s confidence in the support scheme. Nevertheless, one of the most significant concerns of the investors resides in the legislative stability of the GC support scheme. Hence, it is considered that future changes which may lead to the reduction of the number of GC may negatively impact the development of future projects.
Boom not bubble
The legislative amendments referring to wind farm projects need also special attention. According to these, an economic agent developing a power plant with an installed capacity higher than 125 MW, which qualifies for the GCs support scheme, must prepare and submit to the European Commission the required documentation for a detailed assessment by the latter authority on state aid in order to apply to and benefit from the support system. ANRE will grant accreditation only after and based on the result of the assessment by the European Commission. The above referred procedure may determine part of the developers to reconsider the contemplated capacity of their projects and to reduce such capacity under the above referred threshold, in order to avoid the necessity of fulfilling supplementary accreditation conditions, which may turn out to be rather burdening.
ADVERTORIAL
Therefore, electricity producers would benefit from the support scheme in case
they have been granted the ANRE accreditation and the commissioning, respectively the refurbishment of groups/plants are completed until the end of 2016.
Wind is not becoming a bubble because this would have meant an unfulfilled promise and the increase in capacities to over 1.200 MW this March from 14 MW three years ago doesn’t constitute that, according to Ionel David, public affairs director at the Romanian Wind Energy Association (RWEA). “In wind, things are different from real estate where we have buildings lying unused for years,” says David. “It is the most vibrant economic sector in Romania.” Financing wind projects is challenging, so this could prevent a bubble in this industry, according to Valeriu Binig, director of financial advisory services, energy & resources, and corporate finance at Deloitte consultancy. “There will be fundamental filtration elements and one of them is financing. ANRE (the energy regulator) issues permits only if full financing of the project is approved. Evidence comprises a loan contract, and the financial situation of the investors, if we’re talking about utilities,” says Binig. The development of the wind industry in Romania started in 2006, so the current capacity is the result of gradual development supported by European policy, not something happening overnight, says Claudiu Munteanu-Jipescu, partner and head of the energy practice at law firm Salans. “Unlike the accelerated development in the real estate sector, we should bear in mind that the energy sector is monitored by the regulatory authority ANRE and also by Transelectrica, the system operator, ensuring control of the generation capacity development,” says Munteanu-Jipescu. Financing has currently stopped a potentially unsustainable path developing in the wind sector, and many wind projects were built solely, or with a large portion of, equity, while many others remain “on paper” due to lack of financing, so no project inflation should occur, according to Cosmin Stavaru, partner at law firm Bulboaca & Asociatii. “Before 2009, banks were lending real es-
tate developers more than 80 percent of construction costs based only on collateral strictly related to the financed project (non-recourse financing). It is much more difficult for wind projects to be financed like this, because the cash-flow projections are less certain and the value the bank can derive in the event of forced enforcement of such collateral is much more uncertain,” says Stavaru A wind bubble could have built up if the support scheme regulated by law 220/2008 had not had clearance from the European Commission three years from its adoption, says Sorin Vladescu, partner and co-head of the energy practice group at law firm Tuca Zbarcea & Asociatii. “We might witness a crash in the renewable energy in the future if isn’t understood that legal instability which would impact the rights of producers that started investment based on the support scheme in the legislation framework in force when the investment was started, risks compromising and discouraging projects in this field,” warns Vladescu. Miruna Suciu, partner at law firm Musat & Asociatii, adds there is a wind bubble only on paper. “At the level of projects with true realization potential, the development is sustainable, in line with the potential and capacity of the grid to absorb the energy output from different renewable sources,” says Suciu. The renewable industry has also attracted some opportunistic players, some of whom may have been real estate owners, who saw a good opportunity to make some profits, argues Ioana Talnaru, counsel at law firm Clifford Chance Badea. “However, such cases are more likely the exception than the rule and there are also many serious projects, developed by reputable and experienced industry players and investors, based on thorough technical analysis,” says Talnaru. Ciprian Glodeanu, partner, head of the real estate and renewable energy practice at law firm Wolf Theiss, thinks there is no bubble in wind similar to the real estate one. “This year I expect to see projects with installed capacity of approximately 500 MW starting operation,” predicts Glodeanu. Transelectrica is talking about the integration of around 3,000 MW of sustainable wind capacities in the national energy system (SEN) and the grid operator has a power reserve of 729 MW to cover the volatility of wind generation. Around EUR 500 million is needed by Transelectrica to upgrade the grid, focusing on transportation lines and power stations. David of RWEA believes wind capacity may soar to 3,000 MW in 2013 if the renewable law remains unchanged, accounting for almost to EUR 5 billion in the
www.business-review.ro Business Review | April 30 - May 6, 2012
INVESTMENTS 9
d sector not proportion
PARTNER CONTENT
Challenges of the Support Scheme for Renewable Energy
2013, reaching 3,000 MW, with another few thousand MW on paper, ce to the real estate bubble that burst about three years ago, say le-
Romanian wind industry. In addition, the 850 MW gas-fired thermal power plant of OMV Petrom will start operations in the second half of this year, which would create room for another 2,000 MW in wind, according to David.
Dispatches from the field Alfonso Otero Zapata, general manager at Bogaris Romania, says there are a lot of projects being developed (obtaining the permits), but prices are not going up, nor are they for projects already built. “Since the real estate bubble exploded, investors are very selective and prices are not going up at all. It is a buyer’s market,” says Zapata. Bogaris is currently developing seven wind projects in Romania. The most advanced has an installed capacity of 52 MW and is slated to start production in the summer of 2013, following an investment of EUR 75 million. Commissioning for a 72 MW wind park in Constanta County is expected at the end of 2013, following an investment of EUR 110 million. In addition, the company is developing four wind parks in Braila County with a combined capacity of 198 MW. Commission is expected in 2015, following an investment of EUR 300 million. Meanwhile, Adrian Borotea, corporate affairs director at Czech utility provider CEZ, said that despite the impressive amount of capacity granted connection permits, only 1,000 MW is operational and investors had been waiting for the renewable energy law to become functional. This happened last November and only since then has activity picked up in this field. Borotea says a mixture of decreasing green certificate prices, low electricity consumption and limited export capacities will limit developments to a maximum of 5,000 MW. CEZ will complete its 600 MW wind parks located in Cogealac and Fantanele (in the Dobrogea area) this year, following a EUR 1.2 billion investment.
Certified green
ovidiu.posirca@business-review.ro
Anca Velicu, lawyer
(EC). The support scheme entails a quota obligation combined with a green certificates (GCs) trading system. It benefits power facilities which are (i) accredited by ANRE2 and (ii) either commissioned or retrofitted by end-2016. The life span of the support scheme depends on energy source and generation capacity. The number of GCs allocated to producers depends on RES type and the installed capacities. Regardless of the RES however, only 1 GC is granted during the testing period. Suppliers of electricity are obliged to acquire GCs to comply with mandatory GCs quotas. 1.1 Accreditation and Licensing E-RES producers benefit from GCs upon accreditation by ANRE, starting with the month of accreditation. A preliminary accreditation may already be granted in the testing period. Upon commissioning of the power facility, this may be transformed into a final accreditation and the producer should apply for the generation license. It is however not clear when the full number of GCs will be secured for a commissioned plant. This topic is extremely relevant for plants being preliminarily accredited towards a year-end and receiving final accreditation in the next year. The challenge is that a decrease of GCs number due to overcompensation might apply starting with January of this next year. The most favourable approach is that plants already preliminarily accredited have secured their full number of GCs (e.g. 6 GCs per MWh for solar). A more conservative approach will require both the final accreditation and the generation license to have been issued. 1.2 Excess of GCs GCs may be currently traded on two competitive distinct markets. No legal provisions regulate export of GCs. If GCs offer exceeds demand, such excess could remain un-purchased, since the law does not provide for a last resort purchaser. It is nevertheless expected that ANRE will use its right to adjust the mandatory GCs acquisition quota, allowing a subsequent limited trading period for suppliers to comply with the adjusted quota. Currently, ANRE uses this to reduce quotas in line with the actual number of GCs available (as there is currently a shortage). This mechanism could be used to increase the quota ex-post in line with the preceding year's supply of GCs, effectively obliging suppliers to purchase all remaining GCs on account of their quota obligation. 1.3 Large Plants Law 220 imposes an obligation to produc-
ers developing RES projects in excess of 125 MW/plant eligible for the support scheme. In this case, the EC analyzes the project pursuant to community guidelines on state aid3 and the producers will benefit from the support scheme only upon EC authorization. In lack of definition of the "plant", problems might occur when several projects are developed close to one another. To consider them as individual projects, not composing altogether a "plant", corporate, technical or regulatory criteria might be relevant. It will be thus checked whether separate entities of the same group are developing each project; whether projects have individual transformer stations and a common feed-in point; or whether separate permits were issued for each project. 1.4 Overcompensation Should the annual monitoring process performed by ANRE emphasize an overcompensation4 of a certain technology, ANRE will propose measures to decrease the number of GCs granted, subject to approval by the Government. In case of a downward adjustment, the amended scheme shall not apply retroactively. The major challenge this year is that ANRE will perform the first overcompensation analysis during the first semester of 2012, based on information received by 30 March 2012. If overcompensation occurred, proposed adjustment measures shall apply to producers starting to generate electricity already as of 1 January 2013. 1.5 Grid Access "Guaranteed access" is an ensemble of technical and commercial rules on the basis of which E-RES benefitting from the support scheme sold on the electricity market is guaranteed the off take into the network. Such rules however have not yet been enacted. Therefore, the actual implementation of this guaranteed access is still doubtful. 1.6 Expected Legislative Amendments Another likely challenge investors might face would be an amendment of the legislative framework. Government Emergency Ordinance no. 88/12 October 2011, amending Law 220, should be approved by law, which is currently with the Parliament. A strong debate around the number of GCs granted to solar power plants is expected. ANRE seems to support a decrease from 6 to 4 GCs per MWh, motivated by lower investment cost. 1 Law no. 220/2008 on the promotion system for the energy generation from renewable energy sources was published in the Romanian OJ no. 743 of 3 November 2008. 2 Autoritatea Nationala de Reglementare in domeniul Energiei. 3 Community Guidelines on state aid for environmental protection 2008/C82/01 4 "Overcompensation" is defined as an internal rate of return (IRR) 10% higher than the reference IRR for a specific technology authorized by the EC. The IRR is calculated per project, by a cost-benefit analysis.
ADVERTORIAL
Wind is granted two green certificates (GC) for every MW generated and distributed to end-consumers through to 2017 and one afterwards. GCs have a floor price of EUR 27 and a ceiling of EUR 55, and the current trading price is close to the maximum. However, estimates are that starting 2015 there will be a surplus of GCs that will drag prices down. David said a surplus of green certificates appears only when the country quota of green certificates in fulfilled. Electricity suppliers need to acquire annual quotas of electricity from renewable sources or can compensate for it by acquiring the equivalent number of GCs, calculated by combining the mandatory quota of GCs and the electricity output delivered to end-consumers.
The quota set for 2011 was 10 percent and this year increases to 12 percent. However, Romania reached only 3.5 percent last year. “This surplus is likely to occur in 2015 when the renewable energy production quota will be 16 percent. Only then can we talk about a surplus, but the market mechanism will solve this,” says David. He doesn’t think GCs will be traded at the minimum price. Zapata of Bogaris said that if there is a surplus of GCs, the price will drop to its minimum, but some producers will not be able to sell their certificates. “Currently this issue is hampering the financing of projects, as banks cannot predict the price of the GC or whether they are going to be sold at all,” says Zapata. He argues that reducing the maximum price for a GC, combined with an increase in the minimum price, would bring more stability for banks and investors. Binig of Deloitte says it is not currently possible to export the excess GCs, but the statistical changes could be considered in the years to come. Moreover, there isn’t a last resort buyer that would acquire the GCs because this would be similar to feed-in tariffs. Stavaru of Bulboaca & Asociatii cites overcompensation and Order no.6/2012 from ANRE as measures that would impact the renewable industry. ANRE is entitled to reduce the period of the supporting scheme and/or the number of GCs granted if the Internal Return Rate (IRR) exceeds by 10 percent the rate of the technological calculations sent to the European Commission for approval. In this case there is overcompensation. ANRE carries out its first analysis this semester which will impact renewable capacities that start generating after 2013. “As the number of green certificates can change every year, banks will not lend the money for the construction, because they will not be certain what number of GCs the project will obtain,” says Zapata. David says this order has frozen transactions in the wind sector, pointing out that legal unpredictability is lethal in Romania. “Order 6/2012 should have been expected under the Law 220 umbrella and overcompensation mechanics are detailed by Law 220, so it should not be seen as a novelty, but rather as an assumed risk,” says Stavaru. “What seems to generate concern is the prospect of an overcompensation of wind determined already in 2012.” Market players and financing banks are waiting for the report due this June, and a bill amending Law 220 has been forwarded to the Chamber of Deputies. It provides a grace period of overcompensation assessment until 2014.
A first challenge was the entry into force in July 2011 of the main applicable statute - Law 220/2008 (Law 220)1 after three years from adoption and a long authorization process in front of the European Commission
www.business-review.ro Business Review | April 30 - May 6, 2012
10
Renewable energy remains hot in Romania Wind is still the most popular clean source in Romania's renewable sector, recently climbing to 1,222 MW of installed capacity, but there is a window of opportunity for photo-voltaic this year, according to specialists who attended the third edition of Focus on Renewable, organized last week by BR. ∫ OVIDIU POSIRCA At present, Romania is perceived as the country with the friendliest support scheme for renewable energy, according to Valeriu Binig, director of financial advisory services, energy & resources and corporate finance, at Deloitte consultancy. The prices of green certificates (GC) have a minimum limit of EUR 27 per GC in order to protect producers, while the ceiling is EUR 55 per GC to protect consumers. Solar power is granted six GC for every generated MW, biomass three, wind two, while small-hydro has been allotted one or two.
Green fever The largest share of wind projects are located in Dobrogea (south Romania), totaling 1,100 MW, but the Moldova and Banat regions are also starting to attract investments according to Octavia Unguroiu, en-
ergy manager, market monitorization, at Transelectrica, the grid operator. This April, 10,458 MW of wind capacities received grid connection contracts, while 9,416 MW received grid connection technical permits (ATR), although an additional 15,000 MW of installed wind capacities are at the solution study level, according to Unguroiu. Meanwhile, photovoltaic is trailing with 299 MW in contracts and 453 MW in ATR. “We have conducted project studies for 30,000 MW in wind and 6,000 MW in solar,” said Carmencita Constantin, director of the energy & environment division at the Institute of Energy Studies and Development (ISPE).
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Worn-out system Around 13, 500 MW of new installed capacities are needed in the energy system in the next 25 years, in order to replace the outdated ones, according to Constantin.
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1. The renewable market remains sensitive to legal changes, said experts 2. Carmencita Constantin, ISPE 3. Cosmin Stavaru, Bulboaca & Asociatii 4. Octavia Unguroiu, Transelectrica 5. Adrian Borotea, CEZ 6. Silvia Vlasceanu, ACUE 7. Horea Harsan, ABB Romania 8. Ioana Gheorghiade, BCR 9. Ionel David, RWEA 10. Gabriel Mihai, UniCredit Leasing 11. Valeriu Binig, Deloitte
www.business-review.ro Business Review | April 30 - May 6, 2012
The system needs to be protected from instability when the wind stops blowing, warned Horea Harsan, executive director at ABB Romania, which provides power and automation technologies. “The critical elements are the new generation capacities in sources like gas and hydro and new transportation lines,” said Harsan. Transelectrica needs around EUR 500 million to boost the electricity transportation network, but developers could assist the grid operator in enhancing the infrastructure, which could also help advance the renewable energy market in a sustainable manner, according to specialists. Adrian Borotea, corporate affairs director at CEZ, the utility firm, said the wind capacity in Romania could jump to 4,000 MW in the coming years, but transporting power output from Dobrogea poses a challenge, due to the concentration of wind projects there. “In the ATR stage, investments in power lines and infrastructure should be demanded by developers,” said Borotea. Czech utility CEZ will complete a 600 MW wind park located in Cogealac and Fantanele (in the Dobrogea area) this year, following an investment of around EUR 1.2 billion.
Legal turbulence Law 220, which promotes the generation of electricity from renewable sources, was adopted in 2008, but the green certificate support scheme was only approved last November through Ordinance Number 88, which intensified activity in the green sector. However, Order Number 6 approved by ANRE, the energy regulator, which may cut
11 the number of GCs in certain technologies, could send investors and banks back to the negotiation table. “This order led to a freeze of transactions on the market and to mistrust in the legal predictability of Romania,” said Ionel David, public affairs manager at the Romanian Wind Energy Association. Investors in the renewable sector should also be aware of overcompensation, when the Internal Return Rate (IRR), drawn up using the costs and revenue of producers and ANRE forecasts, exceeds 10 percent of the average rate for a certain technology, according to Cosmin Stavaru, partner at law firm Bulboaca & Asociatii. ANRE will conduct the first analysis this semester and if overcompensation is found it will suggest the government issues a decision to reduce GCs for a technology. This would impact capacities that start generation in 2013. Silvia Vlasceanu, general director at the Association of Energy Utilities (ACUE), said that Order 88 should be accepted the way it is at present, although amendments have been put forward to the Chamber of Parliament to keep the support scheme in its current form through to 2016. Despite the crisis, legislation has been passed at a slow rate, and most of the risks remain on the investors’ side, according to Lucian Boghiu, president of ENOL Group, a power supplier. Nicolae Olariu, president at SUN-E, the association of energy efficiency and renewable energy sources, said around 10,000 hectares of marginal land has been identified across Romania, which could be used to develop renewable energy projects.
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Back to finance Investors willing to take out loans from banks should be ready to secure longterm Power Purchase Agreements (PPAs) and also receive green certificates in order to increase their chances of getting money from financial institutions, according to banking representatives. Ioana Gherghiade, project finance director at BCR, said the renewable market has reached maturity and the lender is now contacted by final investors, whereas some years ago developers were the main actors. She said the contribution from the investor or sponsor is crucial. “There is a minimum expectation of 30 percent contribution in wind and more in solar, due to legal risk,” said Gherghiade. Moreover, the sponsor has to pay for the technical and legal due diligence. Gabriel Mihai, corporate director at UniCredit Leasing, said wind has been the star of implementation but 2012 represents a window of opportunity for solar. Mi-
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11. Panel members addressed an audience of industry executives 12. Silviu Lucian Boghiu, ENOL Group 13. Nicolae Olariu, SUN E hai said environmental permits needed for renewable projects are sometimes obtained quite easily and projects from microhydro sources, biogas and biomass have started to emerge on the market.
www.business-review.ro Business Review | April 30 - May 6, 2012
12 ENERGY LIST
RANK
Consultancy services for renewable projects COMPANY NAME
Bulboaca & Asociatii 1
Deloitte 2
CONSULTANTS/ LAWYERS IN CHARGE
CLIENTS/ PROJECTS
CONTACT DETAILS
Cosmin Stavaru-Partner-coordinator of the Energy & Natural Resources practice within the firm, Adrian-Catalin BulboacaManaging Partner, Raluca Ciocarlan-Senior Associate, Mihaela Cucurezeanu-Associate Nora Ene, Associate
Martifer Group, IMA Partners, Verbund, ImWind, Eurocape New Energy, Grup Industrial Financiar Ascom, Dutch group of investors etc.
Address:UTI Business Center, 9th floor, 31 Vasile Lascar Street, District 2, Bucharest, 020492, Website: www.bulboaca.com, Email: office@bulboaca.com, Phone nr:(40-21) 408 8900
Hein Van Dam - Partner, Financial Advisory Services, Alexandru-Valeriu Binig - Director, Financial AdvisoryServices, Energy&Resources
Hidroelectrica, Nuclearelectrica, Eximprod, Transelectrica, MVM, Enel Green Power Romania, Global Wind Power, CEZ, EGL, TMK Europe, Turceni EC, Rovinari EC, Craiova EC, Electrica.
Address: 4-8 Nicolae Titulescu Road, East Entrance, 3rd Floor, District 1, 011141, Bucharest, Romania, Website: www.deloitte.ro, E-mail: romania@deloittece.com, abinig@deloittece.com, Phone nr: (40-21) 222 1661
Miruna Suciu, Partner, a team of 12 lawyers coordonated by Miruna Suciu
Enel Romania, Enel Green Power, RePower, Martifer, Good Wind, GDF Suez, Emfesz, Eviva Nalbant and Eviva Hidro (subsidiaries of Martifer), Infusion, Statkraft Markets, Ministry of Economy, Trade and Business Environment (MECMA), Hidroelectrica, important Spanish photovoltaic provider.
Address: 43 Aviatorilor Boulevard, District 1, Bucharest, Romania, Website: www.musat.ro, E-mail: general@musat.ro, Phone nr: (40-21) 202 5900
Roxana Dudau-Head of Real Estate & Energy Department, Laura Neacsu-Energy Specialist, Associate
Assisted: producers of solar panel systems on their market entry in Romania, various project developers on all phases of photovoltaic projects to be developed and/or acquired in Romania, major international companies active in the renewable energies sector.
Address: 28 C General Constantin Budisteanu Street, District 1, 010775 Bucharest, Romania, Website: www.noerr.com, E-mail: info@noerr.com, Phone nr: (40-21) 312 5888
Delia Vasiliu - Partner - Coordinator of the Energy and Natural Resources Department, Laurentiu Pachiu – Managing Partner, Florin Dobre - Senior Associate, Madalina Boncan – Associate, Stefan Mantea – Associate
E.ON Energie AG, General Electric– GE Energy in partnership with Prowind GmbH, Westwind GmbH, Eurus Energy Europe, Eolica Dobrogea, A major American Corporation active in the oil & gas industry, Lasselsberger Group, Sky Solar, Horia Green, e&tEnergie, Shell Slovenia
Address: 4-10 Muntii Tatra Street, 5th floor, District 1, Bucharest, Romania, Website: www.pachiu.com, Email: office@pachiu.com, Phone nr: (40-21) 312 1008
Ernest-Virgil Popovici-Senior Partner, Vlad Neacşu-Partner, Luana DragomirescuManaging Associate
Filasa International on its investment in 11 wind farms, with a total capacity of 516 MW, and the acquisition of 7 wind farms, with a total projected capacity of 860 MW.
Address: 239, Calea Dorobanţi, 6th Executive Floor, District 1, 010567 Bucharest, Romania, Website: www.pnpartners.ro , Email: office@pnpartners.ro, Phone nr:(40-21) 317 7919
Markus Piuk - Partner, Monica Cojocaru Lawyer, Anca Velicu - Lawyer
European Commission (DG Energy – Renewable Energy Unit), Samsung Deutschland and Samsung C&T Corporation Korea, Bosch Solar Energy AG, Edison S.p.A, Verbund.
Sorin Vlădescu - Partner, Irina Moinescu Partner, Sebastian Radocea - Managing Associate, Mihaela Alexandrescu - Managing Associate
CEZ, Energy Holding, Gestamp Eolica, Gestamp Asetym solar, Energy Rose SEE, EGL Gas & Power Romania, Usitall AB, Tozzi Renewables, Storm Renewable Energy, Banca Comercială Română (BCR), CET Iasi.
Sorin Mitel – Partner, Andrei Stefanovici – Managing Associate
Eurocape New Energy, a company active in the wind energy field, in connection with the proposed development of 200 MW wind projects in Romania of the fully / partially permitted type. Europp Energocons, a company active in the energy field International Wind Energy, a company active in the wind energy field, in connection with securing, zone, planning and permitting legal issues arising from the development and operation of a wind project with an installed capacity of 100 MW.
Address: 143 Calea Griviţei, District 1, 010741 Bucharest, Romania, Website: www.vilaumitel.ro, Email: office@vilaumitel.ro, Phone nr: +4021 314 31 55/57
Cătălin Micu - Managing Associate
Galati Eol Sud; German investor (in respect to the acquisition of a photovoltaic park, with special focus on legal due diligence and green energy regulatory matters); World-class energy player with respect to the potential acquisition of a small hydro power plant; Investor in the energy field with respect to the development of a complex project including a wind farm, a photovoltaic park and a co-generation capacity.
Address: 12 Plantelor Street, District 2, 023974, Bucharest, Romania, Website: www.zrp.ro, Email: office@zrp.ro, Phone nr: (40-21) 311 05 17 (18)
Vestas, Adnovum Poland, KPV Solar, Faracha, Sun Edison, Genesis Partners, ButanGas Romania, Ogis, Electrawinds, Seed Projects GmbH.
Address: Bucharest Corporate Center (BCC), 58-60 Gheorghe Polizu Street, Floor 12-13, District 1, 011062, Bucharest, Romania; Website: ww.wolftheiss.com, Email:bucuresti@wolftheiss.com, Phone nr: (40-21) 308 8100
Musat & Asociatii 3
Noerr 4
Pachiu & Associates 5
Popovici Nitu & Asociatii 6
Schoenherr & Asociatii 7
Tuca Zbarcea & Asociatii 8
Vilau & Mitel 9
Zamfirescu Racoti Predoiu 10
Wolf Theiss 11
Bryan Wilson Jardine, Managing Partner, regional coordinator of the energy group Ciprian Glodeanu, Partener,local coordinator of the energy group · Andreea Poenaru, Counsel · Ileana Glodeanu, Counsel · Radu Simion, Senior Associate
Address: 30 Dacia Blvd, 7th floor, District 1 010413 Bucharest, Romania, Website: : www.schoenherr.eu, Email: office.romania@schoenherr.eu, Phone nr: (40-21) 319 6790 Address: 4-8 Nicolae Titulescu Ave., America House, West Wing, 8th Floor, District 1, 011141, Bucharest, Romania, Website: www.tuca.ro, ww.noulcodcivil.ro, Email: office@tuca.ro, Phone nr: (40-21) 204 8890
www.business-review.ro Business Review | April 30 - May 6, 2012
13 PARTNER CONTENT
Wind of Change in the E-RES Field – Amendments of the Support Scheme under Debate in the Chamber of Deputies
Laura Neacsu, Energy Specialist, Associate, Noerr
Romania has opted for promoting the production of electricity from renewable sources by implementing a support scheme based on the issuance of green certificates for each MWh generated from certain renewable sources, and which are considered eligible for the support scheme. This measure was backed up also by establishing a mandatory quota combined with the trading of green certificates (hereinafter “GC”), following the pattern of other states such as Poland, Belgium, Sweden, and such taking distance from the system of the “feed in tariff" commonly spread into a large number of European states (e.g. Germany, France, Denmark). In view of obtaining the approval of the European Commission with regard to the compliance of the national legal provisions with the CE legislation applicable in this field, in 2011 the Romanian Government issued the Emergency Ordinance No. 88/2011 (hereinafter “EOG 88/2011”) which amended the Law no. 220/2008 establishing a system for the promotion of the electricity generation from renewable sources (hereinafter “Law 220”). At the moment the law which should approve the EOG 88/2011 is under the Parliamentary debates (it already passed through the Senate debates) and it is expected to bring more clarifications and better legal solutions aimed to improve the existing legal framework on energy field.
ADVERTORIAL
Overcompensation The EOG 88/2011 introduces the concept of overcompensation when the rentability rate exceeds with 10% the value valid for that technology at the
time when the supporting scheme has ing an analysis of the overcompensation, support scheme applicable to the rebeen approved. Moreover, the overcomnewable energy from biomass are also would result an internal rentability rate for pensation leads to the possibility of being introduced. The opportunity to benefit a certain technology reaching less than reduced the number of GC granted for a from a new GC granted at the moment 10% than the reference value. An increase certain technology. for each MWh produced and delivered of the number of the granted certificates The values of the internal rentability rates in the network of plants which use the is, however, unacceptable, as this would taken into account for each technology biomass from the so-called energetic lead to the necessity of a new prior apupon the authorisation of the support cultures has been extended also with proval at Community level, which is very scheme are listed by the Decision for Auregard to the biomass resulted from unlikely to happen, especially due to the thorisation of the European Commission С wood waste. This opportunity can be considerable amount of time spent for the (2011) 4.938 regarding the State Aid SA. first approval. The methodology does not granted, however, only after this bene33134 (201 1/N) as of 13th July 2011. fit is authorised by the European Comcover also the case when, during two conThe procedure of monitoring the promomission. secutive years, the analysis would reveal tion system is regulated by the Order of the an overcompensation in one year and an Romanian Energy Regulatory Authority – ”under-compensation” in the other year. Sale of electricity at regulated prices ANRE - No. 6/2012 regarding the approval The possibility to sell electricity proThe first analysis of overcompensation will of the methodology for monitoring the sysbe performed in the first semester of 2012, duced from renewable sources at regtem for the promotion of the energy from ulated prices acknowledged at present whereas the measures will be applied renewable energy sources by green certo the plants with installed powers of starting with 1st January 2013. The Law for the approval of EOG 88/2011 tificates. The aforementioned methodology maximum 1 MW, without the applicabilaims to clarify this adjustment system by stipulates inter alia, the procedure for deity of the support scheme with GC, will mentioning that the measures taken after termining the indicators which would rebe applied also to the cogeneration the analysis will not be applied earlier than veal the effects of the support scheme, the plants of high efficiency from biomass 1st January 2014. This provision aims to enreturn on the investments and the impact with installed powers of maximum sure the stability of some forecasts/busion the price of the electricity at the end 2 MW. ness plans which were already made by consumers. the existing active investors. The methodology contains also detailed Connectivity of the renewable energy If the aforementioned amendment of the provisions with regard to the monitoring of plants to the network bill of law will not be approved by the the costs and incomes of the energy proAt the moment, according to the legisChamber of Deputies (as the second ducers in view of reanalysing the support lation in force, the plants producing Chamber of the Parliament) the investors scheme and adapting it to the real market electricity from renewable sources can should implement the investment project conditions. be connected to the electrical network before 1st January 2013 for the already Thus, taking into account certain economic only if the safety of the National Elecstarted projects in order to protect the inindicators stipulated for each type of techtroenergetic System (hereinafter vestment and to avoid the reduction of the “SEN”) is not affected. This represents a nology, but also a series of forecasts which number of granted GC. ANRE prepares with regard to the net consensible subject, as the generic phrase In case the investment cannot be imple- “SEN safety” can leave room for abusive sumption and the gross internal consumpmented before 1st January 2013, then this tion of energy, ANRE performs the interpretation. cost-benefit analysis at cumulated level, risk of reduced GC should be also considThe bill of the law for the approval of ered when preparing the business plan for each type of technology, which leads to EOG 88/2011 stipulates the replaceand the analysis of the bankability of the a new internal rentability rate. If it is asment of this provision with a another project. certained that this rate exceeds with more provision stipulating that the possibility than 10% the value of the internal rate of of connection will be limited to ensurCumulating the granting of GC with the rentability used as term of reference, it will ing the reserves of capacities aimed to be considered a case of overcompensation. state aids a rapid compensation of the variations Pursuant to the Law 220, in case the inAn overcompensation would not be howof the production of electricity from revestors apply also for state aid which is cuever reached if the internal rentability rate newable sources. mulated with the GC for the same project, In order to conclude, we consider that would range between 9.9% and 11.8 % deANRE will adjust the number of granted pending on the various types of renewable the market of the investments in the reGC, by reducing the reference value of the sources (for example for the solar energy newable energies in Romania will revive investment / MW with the value of the state the internal rentability rate is forecast at after the enactment and entry into force aid received / MW, keeping also the value 11.5%). of the Law for the approval of the EOG of the internal rentability rate as initially In case of overcompensation ANRE will 88/2011. notified to the European Commission at make proposals to the Government for the Str. General Constantin the time when the support scheme was reduction of the number of GC applicable Budisteanu nr. 28 C, sector 1 authorised. The bill of law approving the for that technology whereas the reduction 010775 Bucuresti / Romania EOG 88/2011 grants the option for the benof the GC should be approved by GovernT +40 21 3125888 eficiaries of state aid to choose between ment decision. Nevertheless, the amendF +40 21 3125889 the number of adjusted GC and the numment of the support system would be laura.neacsu@noerr.com ber of GC when the application for financapplicable only for the future and only for ing has been submitted. the energy capacities placed into operation after the amendments become effective. Production of renewable energy from Moreover, neither the methodology nor any biomass relevant normative deed have taken into More detailed provisions regarding the consideration the situation when, follow-
14 IN TOUCH
www.business-review.ro Business Review | April 30 - May 6, 2012
RESTAURANTS
FILM REVIEW
Mica Elvetie has big plans
Poliss Marja-Leena Hukkanen ©Sputnik Oy/Independenta Film
program. A thematic culinary show will be held every Thursday evening, when guests can enjoy pasta, salad, risotto and grilled dishes. There will also be an interactive element, with diners invited to take part in proceedings. Hausmann is working on plans to open a new location in the center of Bucharest, aimed at a slightly different demographic. “With the opening of this new restaurant we will target a younger audience. The menu Swiss role: restaurant Mica Elvetie will be tailored to this target. But the quality of the food will stay the same. The menu will be changed with the seasons, drawing pmarket international restaurant on fresh ingredients at fair prices,” said the Mica Elvetie has marked the official chef. opening of its summer terrace at a The new location will be run by Hauslively culinary event, hosted by chef and mann’s gastronomic consultancy firm, Gasmedia personality Jakob Hausmann. The troexpert. The company is currently openSwiss, also the owner of the eatery, entering a sister restaurant in Craiova. Through tained guests with an al fresco cooking his company, the Swiss has also advised demonstration, whipping up an insalata more than 11 other locations including the Caprese (a Capri-style mozzarella, tomato Alpine Hotel, Clasico, Old Time in and basil salad) while also cooking broccoli Tulcea and Black Tulip. Hausmann has presoup, both of which were promptly delivviously opened a franchise in Silistra, Bulered to guests for on-the-spot tasting. garia. The comestibles were intended as samMica Elvetie was opened in 1998 and ples of Mica Elvetie’s new seasonal menu. moved to its current location in 2006. Last The restaurant promises “refined dishes year, it posted revenue of EUR 35,000. made with fresh ingredients. You can eat Hausmann, a lifelong fan of the culinary a gazpacho, a salad, sea bass fillet in beer arts, graduated from chef school in Zurich. sauce and, of course, a chilled dessert Since moving to Romania in 1991 he has esdusted with limoneta or pineapple carpaccio.” The garden terrace is at the back of the tablished himself as a celebrity chef with restaurant, at 64 Strada Sandu Aldea, where various media appearances as well as his diners can enjoy “a lawn, flowers and own TV show, Come On, Let’s Cook (Hai Sa fresh air”. Bucatarim). In 2008 he became a Master in The opening event also offered a preCulinary Art. ∫ view of the restaurant’s entertainment Debbie Stowe
U
BUSINESS AGENDA May 10 ∫EVENT 18:00 BR organizes the third edition of the British Investors Forum at Grand Continental Hotel. By invitation only. May 23 ∫EVENT 09:00 BR organizes the first edition of Focus on Agriculture at Ramada Grand Plaza Hotel. Stelian Fuia, minister of Agriculture and Rural Development, will attend. By invitation only.
Napoca. The event will also address the impact of the new Civil Code and the new Civil Procedure Code. By invitation only. May 31 - June 3 TIBCO, the Bucharest International Fair for Consumer Goods, is organized at Romexpo Exhibition Center.
May 30 Law firm Tuca Zbarcea & Asociatii organizes a seminar on the fiscal implications of enforcement obligation and the assignment of debt at City Plaza Hotel, Cluj-
June 11 -12 Bancpost organizes the delegation and business forum Go International, entitled Greece-Romania: At the Confluence of Regional Commercial Synergies, at JW Marriott Hotel. The event is supported by the Chamber of Commerce and Industry of Romania and the Hellenic-Romanian Chamber of Commerce and Industry. By invitation only.
ISSN No. 1453 - 729X
FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi ART DIRECTOR Alexandru Oriean PHOTO EDITOR: Mihai Constantineanu PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu
Cop out: life as a child protection officer is examined in Maiwenn’s gritty story
DEBBIE STOWE
The jaded cop propping up a bar during the daytime and sadly reflecting on how his stressful career has cost him his family and his peace of mind, while saying, “Give me another one, Moe” to a sympathetic bartender, is a common sight in US police procedurals. Yes, it’s a tough ol’ job protecting and serving while keeping the scum off the streets. Cannes prize winner Poliss transposes this familiar theme to the mean streets of Paris, following the work and play of officers from the Child Protection Unit. Director Maiwenn drew her inspiration from real cases, and the film is overwhelming in its verisimilitude – it feels like this is pretty much what you’d see if you wandered around such a department and followed it on its operations. The banter between the hardboiled cops rings true. Aside from Hollywood alumna Maiwenn herself (the ex-wife of Luc Besson, she acts in the film too) and charismatic rapper Joeystarr, the cast is entirely lacking a silver screen veneer. The scenes are choppy, and appear almost randomly selected and ordered. The only narrative drive is a blossoming romance between Maiwenn and Joeystarr’s characters, but
this is by no means the focus and heart of the film. It is the wider group dynamics, the personal lives of the officers – often tainted by the disturbing nature of their work – and their interaction with the perpetrators and victims of child abuse that concern the filmmaker. The latter, above all, is immensely powerful. In both the delicate interviews with young children describing where they’ve been touched and the dramatic raids where the team storms in and removes vulnerable youngsters from dangerous parents, the bare-bones realism sharpens the effect. With their days spent wading through a swamp of the most disgusting human behavior, it’s little wonder that the officers’ relationships suffer and that their black humor often descends into inappropriate territory – which provides a few uncomfortable moments of what passes for comic relief. Thanks to this dark subject matter, Poliss is not easy viewing. It’s not easy listening either – the bitty and haphazard nature of the scenes often makes it difficult to follow what’s going on, leaving some of the plot strands and characters feeling underdeveloped. An incongruously artificial ending then strikes a strange note after all the naturalism. But whatever its flaws and confusion, Poliss’s believable performances from a strong cast, its persuasive moral message and a noble desire to present the truth and avoid pandering to audience expectations explain its Cannes kudos.
PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Ana-Maria Stanca SALES & EVENTS Ana-Maria Nedelcu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat
ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 Fax: 031.040.09.34 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro
Director: Maiwenn Starring: Maiwenn, Joeystarr, Karin Viard On: Cinema City Cotroceni, Grand Cinema Digiplex Baneasa, Hollywood Multiplex