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World Report
Romania
24 JANUARY 2009
EU membership opens
the door to progress
THIS SUPPLEMENT WAS PRODUCED BY WORLD REPORT INTERNATIONAL LTD, WHO ARE SOLELY RESPONSIBLE FOR THE CONTENT
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INTRODUCTION
EU membership and over
a decade of democracy
COVER ILLUSTRATION:
Carmelo Aunión
CONTENTS
03
BRANDY
The hero’s drink that is
now brewed in Romania
04
SEMA PARC
Bucharest is getting a
facelift
06
PHARMACEUTICALS
EU membership gives
the sector new life
07
ENERGY
The country looks to
renewable sources
08
ELECTRICITY
Private sector builds
on competition
ROMANIA PROJECT TEAM:
Project Management:
Axel Favre
Raluca Monac
Maria Eugenia Montefalcone
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for The Independent by World
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‘The European
agenda is now
part of our daily
activity’
n 30 November 2008, Romania’s
voters returned to the polls to
choose a new parliament – the
eleventh free election since the collapse of communism. The poll marked yet
another commitment to reform and democratic values for Romania, the secondlargest economy of the European Union’s
recent eastern entrants. Since EU accession was formally cemented in January
2007, a floodgate of new investments has
followed – including €30 billion in EU
structural funds.
“I would say that the European agenda
is now part of our daily activity,” says Traian Basescu, President of Romania. “European standards and rules are reflected
in our activities more and more evidently,
including initiatives such as the Black Sea
Synergy and European policy for the social inclusion of the Roma minority.”
Entry into NATO in 2004 reaffirmed its
staunch Atlanticism and its unwavering
commitment to advance international security. Romania has contributed to global
peacekeeping efforts in Afghanistan, Angola, Bosnia, Kosovo and Albania. During
the April 2008 Bucharest Summit, top-level NATO officials convened in Romania’s
capital to map out priorities and challenges
for the alliance.
Romania and the United Kingdom enjoy
one of Europe’s most fruitful strategic partnerships. “We are pleased that Great Britain
has been supporting our initiatives concerning the Black Sea, such as promoting
O
www.worldreport-ind.com
2 World Report
democracy and security in the region as a
common objective,” says Mr Basescu.
The relationship is augmented by upward trends in bilateral trade and investment, which peaked at €2.2 billion
in 2007. Close to 4,000 companies with
British capital are active in the country
and the UK holds the ninth place among
all foreign investors active in Romania’s
regions. “I also believe that British investors should pay more attention to less
developed regions in eastern Romania,”
encourages the President. “We need
British expertise for infrastructure, agriculture and transportation, not to mention the IT or banking sector.”
On many occasions, President Basescu has highlighted his nation’s role as
an energy gateway for Western Europe
and continues to advance EU-wide cooperation in judicial and administrative
reform, anti-corruption measures, agriculture, and regional development.
“It is very important that our states
see eye-to-eye on the future of the bilateral cooperation and stress the interest to reinforce our strategic partnership through enhanced dialogue within the EU and NATO,” concludes Mr
Basescu.G
BUSINESS ENVIRONMENT
Building financial strength
24 January 2009
This report can also be
read online:
TRAIAN BASESCU, President of Romania
MUGUR
ISARESCU
Governor of the
National Bank
In a span of just seven years, Romania has significantly
accelerated the pace of economic growth and reform. In
2005, the government introduced a 16 per cent flat tax.
Flagship state-run enterprises were sold off, and a 10
per cent growth in productivity added to
competitiveness.
“The key features of the last seven years were the
reforms that we made, especially in the real economy
and nominal convergence,” says Mugur Isarescu,
Governor of the National Bank. “It was our obligation
to make reforms, but I think the most important thing is
that we were able to finalise them.”
For the first half of 2008, GDP growth clipped along
at a rate of 8.8 per cent – driven by consumption and
investment in energy, pharmaceuticals, real estate and
agriculture. Investment-friendly laws continue to pave
open avenues for foreign direct investment, which is
expected to top €8 billion in 2008. The top five banks,
owned by European financial giants, hold 60 per cent of
total assets. The National Bank is also taking the
necessary steps to adopt the euro by 2014.
While infrastructure development will maintain
economic growth for several years, Mr Isarescu notes
that the expanding external deficit and global
inflationary pressures necessitate continued structural
reforms, especially in the labour market. “We cannot
relax because this is a present day fight. Now that we
have joined the European Union we are working to
reach the same living standards. Our job is to keep the
macro framework stable, reliable and predictable.”
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INDUSTRY
Story of a successful entrepeneur
He who aspires to be a hero must drink
brandy, said Samuel Johnson. Nawaf Salameh
chose to take this one step further and produce it
crease market share and strengthen its aln 1992, Nawaf Salameh met a Greek
ready prolific presence in 10 countries around
investor who produced brandy. Already
the world.
active in the export business in Greece
The company’s development strategy tarand the surrounding post-communist
gets both securing new markets for its own
countries, the entrepreneur decided to join
products, while obtaining the status of sole
him and invest in a spirits factory in Romania.
importer for internationally esAs the country quickly adapted to
tablished brands. In October,
the market economy, business leadAlexandrion sealed a partnership
ers helped to nurture newly-tapped
with Surrey-based William Grant
markets. “Those who invested $10
and Sons, Ltd. to become an exmillion dollars at that time, now
clusive distributor of its Grant’s
have investments valued at around
whisky brand. This move follows
€10 billion today,” recalls Mr
a similar agreement signed last
Salameh, now president of Alexanyear with Italy’s Fratelli Branca.
drion Group. “This has not hap“In the past five years, I
pened only in Bucharest, but in all NAWAF
have started a campaign to sign
the cities of Romania.”
SALAMEH
strategic partnerships,” exAdhering to traditional French
President of
plains Mr Salameh. “We help
and Greek methods of brandy proAlexandrion Group
companies in Romania and
duction, Alexandrion carved out
Greece and they help us in their couna niche as the leading spirits producer in Rotries. This is going to be a major step
mania’s €500 million drinks market. Profor our distilleries because it will help
jecting €92 million in revenues for 2008,
us skip all the process of distributing
a 15 per cent growth from last year, the group
the drinks. Instead, we will have facplans to expand its product portfolio to in-
I
Alexandrion Group uses traditional French and
German methods of brandy production
tories already in their respective markets, all over the world.”
Alexandrion also announced a €12 million investment plan in October to build new
production units – another part of its strategy to become a significant player in the drinks
segment. The group is carrying forward with
plans to invest €5 million in its factory near
Ploiesti to boost market share in Central
and Western Europe.
With its sights beyond the Romanian market, Alexandrion is creating an investment
fund, dubbed NSS Global Investment, to coordinate and manage activities as well as cre-
ate new partnerships. The company enlisted PricewaterhouseCoopers, Ernst & Young
and Alpha Finance to guide Alexandrion for
an initial public offering on the Bucharest
Stock Exchange for Alexandrion’s drinks
segment in the middle of 2009, with the aim
of listing on European and Asian bourses in
the future.
Following its success in the drinks industry, Alexandrion Group is making wide inroads throughout the Romanian economy as
a whole. Its subsidiary Sidera, a construction materials company, operates a quartz
plant in Constanta and plans to invest €30
million in the next five years to expand into
new markets, especially in the UK. In March
2007, Alexandrion inked a €80 million contract with King Long, China’s largest bus manufacturer, to exclusively import vehicles buses to Southeastern Europe.
After purchasing 1.5 million square metres of agricultural land, the company sees
green energy and agritourism in Romania
as its next major growth area. “We are now
negotiating with companies in Portugal,
Spain, Brazil and Greece to generate wind
power and produce bio-diesel,” says Mr
Salameh. “We already have teams there
who are doing studies to learn from their experiences. Romania is a very flexible and accommodating country and it will become a
green energy hub for the area.”G
ESPLANADA
CITY CENTER
BUCHAREST
Esplanada City Center will create a
new multifunctional city center in
the heart of Bucharest – a modern
meeting point for residents –
with a total built area of over
800,000 m2, including a large,
120,000 m2 retail and entertainment
component, 300,000 m2 offices, as
well as hotel, residential, and
cultural buildings, involving a total
direct investment of € 1 billion.
TRIGRANIT DEVELOPMENT CORPORATION ROMANIA (ESPLANADA)
Crowne Plaza, 1 Poligrafiei Blvd., District 1, Bucharest, Romania
Phone: +40 31 805 92 89 G Fax: +40 31 805 92 92 G [email protected] G www.trigranit.com
World Report 3
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REAL ESTATE
Sema Parc attracts big business to Bucharest
River Invest is creating an American-style
business park featuring luxury residences that will
draw people to the capital
n the early 20th century, the architectural grandeur of art nouveau and
neoclassical styles earned Bucharest
the nickname Micul Paris, or “Little Paris.” Awakening after decades of
drab concrete slumber under communist
rule, Romanian real estate companies are
restoring the city’s architectural canvas
with green spaces, sleek glass and steel.
In 2006, local developer River Invest,
S.A. launched its signature €700 million
Sema Parc project – one of the largest
urban regeneration projects currently underway in the capital. The 42-hectare
mixed-use development offers residential,
office, and commercial space just minutes
from the city centre.
As the Romanian economy continues to
expand this year, construction activities
represent the most rapidly growing segment of the GDP. After European Union
accession in January 2007, the real estate and properties sector in Romania
opened up some of the most lucrative opportunities for investors in Europe. Much
I
4 World Report
of the retail market remains untapped,
and local developers like River Invest are
meeting demand in a market still considered massively undersupplied by European standards.
Located in a rehabilitated industrial
zone along the Dambovita River, Sema
Parc offers logistics infrastructure for
companies seeking to establish or expand
their foothold in southeastern Europe.
The development features strong connections to public transportation and the
main motorway arteries of Bucharest.
As a brownfield developer, River Invest
balances its Sema Parc project by creating an integrated development focusing
on not only residential properties but also its business park. By 2010, the bulk of
residential and commercial construction
will be finished, while additional office
buildings will be completed by 2015. Over
364,000 square metres of ‘class A’ office
buildings will be constructed, as well as
170,000 square metres of commercial
space. Green and spacious, Sema Parc is
setting the standards for future urban renewal initiatives in Bucharest.
“Sema Parc will bring a concentration
of big companies to Bucharest,” says
River Invest President Ion Radulea. “Already, companies have occupied our first
offices there, including high-profile banks.
It is a new project completed to the highest European standards.” The company
has worked in partnership with Austrian-based real estate investment fund Europolis, which acquired two office buildings for €90 million in 2006.
Mr Radulea’s vision for Sema Parc encapsulates a drive to transform residential living in Romania’s most dynamic
city. As a micro-city, Sema Parc emulates
an American-style suburban business park
combined with luxury living – a new trend
in the capitals of the new European Union
member states. The residential space will
cover 122,000 square metres, featuring
over 1,200 high-end flats in close proximity to shopping and cultural centres. Over
14,000 underground parking spaces will
reduce urban congestion.
Collaborating with foreign partners,
River Invest has teamed up with New
York-based Westfourth Architecture on
building designs as well as CB Richard
Ellis on delivering the first phase of the
office buildings. River Invest has drafted
plans in the commercial area of Sema
Parc for a four-star, 22-storey hotel with
world-class shopping, restaurants and
conference centres.
“The project brings new living areas
and a quality of life that exceeds many
other EU countries, mainly because it
is a new project developed according to
the highest European standards,” says
Mr Radulea. “It will be a landmark and
will represent the new face of Bucharest
for many decades to come.”G
The complex will feature
office and retail space
as well as luxury apartments
and parking in the heart
of Bucharest
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REAL ESTATE
Q&A WITH CEO ION RADULEA
‘This is Romania’s moment of maximum growth’
What are your thoughts on Romania’s
recent transformations?
Romania has changed dramatically
since 2000, especially after privatisation and the entry of foreign investors.
The demand for quality services soared
and there was a great need for products in the retail sector. Chains like
Carrefour, Cora and Auchan entered
the market along with many Romanian stores, that greatly needed retail, office and residential spaces. Five years
ago, the real estate market started to
take off in reponse to increased demand from those industries, because
the property market was not well developed at the time.
high incomes, offering them the highest
standards for living. The project will also contain a hotel, conference halls, concert halls, nurseries and secondary schools.
It was designed on a city-in-city concept,
offering all the facilities of a European
city. It will combine a mixture of functions offering the community the possibility to rediscover the pleasure of living
in this town.
What makes real estate in Romania so strong compared to
other European markets?
This is Romania’s opportunity to achieve maximum growth.
For other post-communist countries like Hungary, the real estate market arrived
8-10 years ago, but it is
stagnating. We can say
that Romania is the star
now. Romania’s growth
is more dramatic because it is among the
most recent countries
to join the EU. Development is fast because
we need to reach the level of the other countries.
Romania lies between Europe, the Middle East and Asia. How do you see Romania becoming a business hub for the
region?
We are very close to Turkey and
Ukraine, and Romania’s port in Constanta on the Black Sea is vital for regional trade. Romania will reestablish
its position as a hub for Europe, Asia
and Russia. Large investors in countries
like France and Germany notice this and
have a unique approach regarding Romania on a business and economic level in the international context.
What is the company’s vision
for the Sema Parc mega-project?
On the residential level, we are
targeting those with medium to
Do you have British brands and retailers involved?
We have a special developer that
manages the retail section. There are
many big fashion and retail names from
Great Britain that are already here in
the market, such as Marks and Spencer,
who have been in Romania for some
time. We have some British investors
in Sema Parc in logistics. We have
great expectations regarding the presence of important British names for
our Sema Parc project.
What are your greatest professional
achievements?
The team of professionals that we
managed to bring together are transforming Sema Park from a concept into a reality and this is one of our greatest achievements. In eight years’ time
there will be 40,000 people working
there. It will be a huge challenge for
us and for those who will come here.
We have 42 hectares, which is a huge
area of land.
What closing message would you like
to communicate about the future of the
project and Romania itself?
Romania is a very exciting and interesting area for investors and visitors
who come here. They will see a changed
Romania, one whose values, from an
artistic and cultural point of view, are
much closer to those of Europe. G
World Report 5
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PHARMACEUTICALS
EU integration a
‘shot in the arm’
The pharmacy sector in Romania has
benefited tremendously from the rise in competition,
and standards, inherent in its EU accession
TriGranit’s Plus City Centre was the first shopping centre of its type in Slovakia
TRIGRANIT
Esplanada City Centre
set to transform a
resurging Bucharest
Canary Wharf dominates the
Retail, entertainment, and
skyline of London’s East End.
ample green spaces will
To the west, the Spencer Dock
integrate Esplanda City Centre
urban renewal project is
into a full-scale urban
transforming the Irish capital.
community. Most ambitiously,
Further to the east of Europe,
the developers have pitched a
the Esplanada City Centre is
proposal to establish a branch
emerging as the new symbol
of the Guggenheim Museum
of a resurgent Bucharest.
through a public-private
Announced in 2006 by
partnership finance model.
DAN GHIBERNEA
Hungarian developer
Related investments for
Country Manager of shopping, hotels, entertainment
TriGranit, the €1 billion
TriGranit
mixed-use project integrates
and cultural attractions could
office, residential, and
reach €2-3 billion. Large banks
present in Romania will have their
commercial buildings in an area of 10.7
headquarters at Esplanada.
hectares in the heart of the Romanian
TriGranit’s Romania portfolio totals
capital. The first phase is slated to begin
€2.5 billion and the company is rapidly
in the second half of 2009, while the
expanding outside of Bucharest. Two
final stage will be finished by 2016.
shopping and entertainment centres in
“We wanted a trademark, a landmark
the Transylvania city of Cluj-Napoca and
for TriGranit, so we chose Bucharest
the Black Sea resort city of Constanta
because of the location and its
are under construction. In October,
potential,” says Mr Dan Ghibernea,
TriGranit received the green light to
country manager. “Esplanada is a
develop a shopping mall in Brasov
project with huge potential and all the
featuring cinemas and entertainment.
shareholders are very excited.”
Other cities such as Galati, Ploiesti, and
The opening of the Romanian economy
Timisoara may be home to TriGranit
in the past decade welcomed the entry of
developments in the near future.
fully-integrated foreign real estate
As the era of market speculation in
developers like TriGranit into the
Romania draws to a close, Mr Ghibernea
market. After establishing a foothold in
is concentrating on the growth of mixedHungary, Poland, and Slovakia, the
use complexes. “Six years ago, people
Budapest-based company aggressively
were buying land for nothing and holding
branched out into eleven Central and
on to it for a few years before selling at
East European countries, including
15 times the value. There is now a
Romania.
change in the way people are thinking
So far, TriGranit has delivered 2
and now serious competition exists.”
billion worth of projects in Central and
Meanwhile, Mr Ghibernea is
Eastern Europe, mainly focusing on
confident that the dynamic properties
‘class A’ retail and residential buildings
market in Romania will remain
in up-and-coming urban hotspots. The
buoyant. “The market is far better than
company currently is realising 30
the Western ones,” he says. “Here, 50
projects in the region worth €8.5 billion
– office towers, residential living,
per cent is a good return of investment.
waterfront developments and hotels.
The trend is positive.”
6 World Report
INTEGRATION into the European Union
has been a shot in the arm for Romania’s
pharmaceutical industry. Since 2007,
harmonisation with EU directives, a drive to modernise services, and increased
competition from imported generic drugs
have boosted sales and driven demand.
According to industry analysts, the pharmaceuticals market will expand by 9.5
per cent annually to €2.4 billion by 2010
from the current level of €1.6 billion.
These healthy projections follow spectacular annual expansion of 30 per cent
between 2004-06, a period marked by an
avalanche of foreign takeovers. In 2005,
Czech company Zentiva acquired half of
Romanian generics leader Sicomed for
€83 million. In 2006, Germany’s Andreae-Noris Zahn bought 60 per cent of
pharmaceutical wholesaler Farmexpert,
a move quickly followed by a €270 million purchase of Terapia Cluj – the largest
takeover yet. Soon, Iceland’s Actavis entered the market with its buyout of oncology leader Sindan for €150 million.
While the merger frenzy has subsided,
the retail market has matured. Pharmaceutical companies are manufacturing drugs to help curb heart disease, the
nation’s number one cause of death. Last
year, cardiovascular drugs earned €370
million and represented 20 per cent of
retail market share. In terms of value,
retail sales now represent 85 per cent of
the total pharmaceuticals market.
On the distribution market, Romanian companies have achieved annual
revenues well over € 100 million,
piquing interest from European giants.
Distribution companies Mediplus, Relad, Fildas, Farmexim and Farmexpert dominate the segment of around
30 companies, and many have launched
their own network of chemists shops.
While recent global financial turmoil
has curbed craving for consolidation,
mergers and acquisitions of top domestic companies are expected to move
forward in the distribution market in
the years ahead. G
FILDAS
Good prices, good
products, excellent returns
syndicated loan to help finance
In 1991, entrepreneur Anca Vlad
investment plans. The European
introduced a revolutionary idea to
Bank for Reconstruction and
post-communist Romania – to launch
Development also inked agreements
the first network of private
with the pharmaceutical company
pharmacies in the country. Facing
last year for an equity investment
competition from state-owned
worth €12 million. This external
behemoths, her company Fildas
financing allowed Fildas to build
changed the rules and the entire
new warehouses, modernise its
pharmaceuticals industry in the
shops and acquire 40 stores – as
process.
ANCA VLAD
well as compete with international
Through its chain of 200 Catena
Founder and owner
giants making inroads in Romania.
chemists shops, Mrs Vlad created a
of Fildas
“With the help of these financial
reputable brand.“We tried to offer
institutions we will be able to
good prices and also products with
maintain our standards and remain at the top,”
natural solutions,” Mrs Vlad recalls. Fildas
says Mrs Vlad. “We are the face of health in
enlisted French cosmetic group Gattefossé to
Romania and as a wholesaler, we offer the best
supply high-quality raw materials for its
services to retailers and find out all that is new
Naturalis line of beauty products. After just 16
and bring it to them.”
years of operation, Fildas increased sales
Romania’s top businesswoman remains
turnover nearly 100 per cent, marking
committed to her company’s growth. “We want
revenues of €200 million last year.
Commanding an 11 per cent slice of the local
to export our retail products, but there is a lot
pharmaceutical distribution market, Fildas has
more to be done in Romania. On the other
managed to stand apart as an independent,
hand, we will probably move into neighbouring
Romanian-owned company.
markets, like Bulgaria and Serbia in the future.
In 2007, Fildas finalised an €80 million
We want to have a presence in the UK as well.”
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ENERGY
Contributing to the
growth of the market
In 1994, a group of investors searched
strategy. Since the partnerships began,
for untapped opportunities in the
over 30 clinical trials have been
European pharmaceutical industry.
carried out in oncology, cardiology,
“We set up a business here because we
infectious disease, and other areas of
knew the potential of Romania,”
research. The company projects its own
recalls Mr Cristian Bota, general
sales figures to double by 2010, led by
manager of pharmaceutical company
sales of retail prescription and overRomastru Trading. “It was a situation
the-counter drugs.
where investors were going to emerging
While Mr Bota admits that the
markets and trying to set up a business
average Romanian spends €78 per
capita on pharmaceuticals – a fraction
and make it viable. Since then,
of the EU average – there is plenty of
Romania has adapted to global
room for growth. “The companies who
standards and now provides a stable
come here to invest and acquire local
business environment. There is a very
companies are not arriving as fast as
good climate for investment now.”
expected. We probably need to wait
Romastru Trading and its 160
another five to six years for the big
employees have taken the lead in
companies to come. They are
integrating medical,
simply waiting. That’s why
marketing, and research
the country has a lot of
services. The firm also offers
distributors, like Romastru
wholesale and operations
Trading.”
services including direct
In November 2007,
distribution, warehousing, and
Romastru opened an office in
full logistics services. Racking
Sofia, Bulgaria – a step
up sales of €24.4 million in
2007, Romastru Trading has
signalling its intent to
contributed to the substantial
broaden its geographical
CRISTIAN BOTA
growth of the Romanian
scope. The virgin markets of
General Manager of Moldova and Ukraine are on
pharmaceuticals industry.
Romastru Trading
The firm established its
the radar for future
foothold well before the entry
expansion. While Romastru is
of major foreign pharmaceutical
not presently working with British
companies. “We have around 50-60
companies, Mr Bota is seriously
niche products and we represent the big
looking to tap into that market and
pharmaceutical companies outsourcing
represent UK pharmaceuticals. “We
their sales market activities here,” says
are sending our profile to different
Mr Bota. “Romastru has the local
companies and we are ready for any big
knowledge and big pharmaceutical
company to see the benefit of such
companies save a lot of money by
collaboration.”
working with us. We are practically
Looking beyond the curve, Romastru
doubling the market every year.”
is diversifying its activities, having
In the past decade, Romastru
recently entered the energy sector with
became an exclusive distributor and
a new company called Carusel Energy.
marketing representative for
In the meantime, Romastru aims to
multinationals including Bayer
cement its position as a leading
Pharma, Wyeth Pharma, Abbott and
regional marketing company offering
Klosterfrau – a step that allowed it to
services to pharmaceutical clients
build upon a research and development
across Europe.
Expanding energy
activities
CREDIT: PETROM
ROMASTRU
Hydrocarbon resources have long powered the
country’s growth. Now, renewable energy is taking over
Mariana Gheorghe, CEO of Petrom.
SINCE the dawn of the petroleum age, Ro“Moreover, the regulatory framework’s
mania’s significant reserves of oil, naturreforms are driving this sector and inal gas and coal have powered economic
creasing investment by different players.”
growth. In response to depleting resources
She adds that Petrom, the largest comand rising imports, the government’s Napany in Romania, is investing €1.5 billion
tional Energy Strategy calls for €7 billion in renewable energy investments unannually to become a regional leader.
til 2020.
Capitalising on its geopolitiAlready home to ten of eastern
cal advantage, Romania is posiEurope’s eleven refineries, pritioning itself as a transit hub,
vatisation in Romania has athaving signed onto two major
tracted a fresh wave of investprojects – the €2 billion panments in downstream industries.
European oil pipeline and the
Liberalisation in the natural gas
€5.8 billion Nabucco natural
market has heralded the entry of
gas pipeline. Domestic firm
European capital.
Transgaz is one of the six part“Considering the diversity of
ners in Nabucco, an EU-backed
the energy resource base, it is un- MARIANA
multinational project aimed at
derstandable why experts have GHEORGHE
bringing Caspian gas to Europe
highlighted self-sufficiency,” says CEO of Petrom
via Romania. G
Fildas has built up an excellent reputation in
Romania in the pharmaceutical industry. We are
renowned for our fair pricing, our transparency
and compliance with all regulations and our innovative and modern products and services. Fildas is
Romania’s first private pharmaceutical company,
and we will continue to strive towards making
good health a reality.
World Report 7
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ENERGY
Private injection sparks sector
The second-largest
private electricity
company in the
country, Petprod is
looking to venture into
generation in order to
meet growing demand
n May 2003, Romania’s National Energy Regulatory Authority (ANRE)
granted private electricity trading
company Petprod a supply license.
Maintaining close relations with wholesale electricity generators – including national grid operator Transelectrica and
power operator OPCOM – Petprod represents one of the strongest players in the
post-liberalised energy sector.
In 2007, Petprod earned turnover of
€82 million and the electricity trader expects to maintain its profit margin of
around 3 per cent of total sales. Commanding a 4 per cent market share, the
company is now the second-largest private electricity supplier on the Romanian market.
Liberalisation and integration of the
Romanian electricity industry, which began a decade ago, allowed the private
company to embark on solid and profitable
business relationships with some of Romania’s top industrial heavyweights. In
November 2004, Petprod signed its first
major contract with ArcelorMittal, the
world’s number one steel maker. Petprod
currently supplies 130 megawatts to
ArcelorMittal’s facilities at Galati, Iasi,
Hunedoara and Roman – the backbone of
Romania’s steel industry. Major chemical producer Chimcomplex SA Borzesti
is another key client of Petprod.
As the price of energy continues to rise
amidst international financial turmoil,
industrial consumers are bracing for prices
to soar to €54 per megawatt hour in
2009. In response, Petprod is looking to
I
8 World Report
The government’s National Energy Strategy targets a 33 per cent share for renewable
energy of the country’s total energy consumption by 2010
invest in energy generation by 2013 to introduce much-needed competition into an
energy-hungry market.
Through its National Energy Strategy,
the government of Romania aims to boost
the share of renewable sources to 33 per
cent of gross energy consumption by 2010.
Petprod is actively involved in identifying
clean energy sources, such as hydroelectric and wind power stations to set an example in the national power industry.
“We are looking to the green energy
field as a very important target for the
next years,” says Jack Cutisteanu, General Manager of Petprod. “But there are
challenges, considering that there are
only two areas ideal for wind power in
Dobrogea near the Black Sea coast and
south of Moldova.” Setting goals for a
low-carbon future, the company is also
looking to replace coal and crude oil with
natural gas.
With its expertise of electricity market
mechanisms, and continuous investment
in state-of-the-art technical endowment,
Petprod is providing its customers with a
wide range of services. One of its integrated
supply services is the Energetic Management Centre, a system in which industrial consumers can track consumption levels and costs and further optimise
energy use. Through its subsidiary S.C.
Aichhorn Energetic Mechanic Assembly
SRL, Petprod assembles turbines, generators, piping systems and other technical
equipment.
Petprod has become an active participant on the regional electricity market.
Starting in 2005, the company oversaw
transactions both in Romania and abroad,
handling electricity imports from Ukraine
and Bulgaria, and exporting power to
Hungary and Serbia. Looking ahead, Mr
Cutisteanu encourages future international collaboration.
“I invite British companies to invest here
because Romania has the financial resources and expertise, and offers lots of
opportunities. Petprod has a great knowledge of the energy market and we are a
qualified partner for foreign investors
coming to Romania.” G
Q&A
‘We cannot
compete without
becoming a
generator’
What are some of Petprod’s milestones?
The first contract we
signed with a big industrial consumer in the metallurgical field was a
strong point for us. In
2005, all ArcelorMittal
subsidiaries in Romania
JACK
became part of our portCUTISTEANU
folio and thus we became
the second most impor- General Manager of
tant private energy sup- Petprod
plier on the market. The
contract was split between us and another supplier for safety reasons, but we supplied 130
megawatts.
How is liberalisation affecting electricity distribution?
The consumer market is divided between corporate and private users. Supply to consumers is
entirely liberalised, but distribution has only been
50 per cent liberalised because state-owned electricity distribution and supply company Electrica still owns three distribution subsidiaries.
Production is still state-owned, but companies
can choose their energy supplier.
Where will Petprod be five years from now? Are
there plans for expansion outside Romania?
Big companies in Romania are interested in
building their own power plants, and Petprod
wants to have its own generating unit. The
generation sector is still state-owned for now
and we cannot compete without being able to
generate our own energy. I am looking very
seriously for partnership of any kind for this
plan and I’ve been talking with foreign partners. We already have a presence in the import-export area and have developed good
relationships with multinational companies
like E.ON and Enel. We do some exporting but
we do not supply electricity directly to the final consumers on the other side of the border.