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General Government RegulationsRegulatory & Compliance 23 April 2020

Romania: Updated – Price capping and ongoing agreements in the context of Coronavirus Pandemic

COVID -19 Legal Alert
23 April 2020
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Ștefan Botezatu
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act legal Romania

What’s new? – The Presidential Decree No. 240/2020 no longer provides for price capping at the average prices of the three months prior to 16 March 2020. Additionally, in the event of a decrease in the prices of electricity and natural gas, on the regional markets, the Decree provides that the Government will take the necessary measures so that such decrease will be partially or fully reflected in the final price to consumers. However, Parliament Decision No. 4/2020 provides that the restriction of certain rights or freedoms can be ordered only by acts having the force of law.

What is maintained? The possibility of capped prices during the prolongation of the state of emergency for public utility services such as electricity and heat, gas, water, sanitation and fuels is maintained, along with all the measures adopted to enforce the first decree, unless the Presidential Decree no. 240/2020 provides otherwise.

Which price will be applied? Unless other capped prices or tariffs are regulated by the Government, the capped prices at the level existing on 29 March 2020 shall be applied, as provided by the Military Ordinance no. 4/2020.

What’s next? The provisions of the Presidential Decree are very likely to give rise to uncertainty and debate with respect to the capping of the final prices to consumers. It is unclear how the Government will interpret the concept of “regional markets (it should be regarded as referring to EU regional markets only ?) and which measures the Government will take in order to ensure a reflection of the decrease in prices on the regional markets in the final price.

Uncertainty also persists as to how the Government will be able to adopt the restriction of rights; it cannot be excluded that the Parliament intended for the Government to be able to adopt the restrictions only by means of GEO, not by Military Ordinance. In this case, any measures adopted by the Government may be subject to further amendments by the Parliament.

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Article posted on April 4, 2020:

What’s new? Capped prices for electricity and heat, gas, water, sanitation and fuels from 29 March 2020 until the end of the state of emergency. The capping means in this case that the prices cannot increase above the level existing on 29 March 2020, but they can decrease according to supply and demand. This measure was taken through Military Ordinance no. 4/2020.

Who’s affected? The Ordinance does not differentiate with regard to whom the capping measures will apply, meaning that all prices are capped. Therefore, the measure may be applied to producers, distributors, suppliers and end customers. This leads to a certain degree of confusion, since prices in energy are mostly formed on centralized markets such as the Day-Ahead Market (PZU), OPCOM, commodity exchanges, etc.

Which price will be applied? There are inconsistencies between the price caps established under Decree No. 195/2020 and the Military Ordinance. The possibility of price capping for certain goods and/or services was first introduced through presidential Decree No. 195/2020 for declaring the state of emergency in Romania on 16 March 2020. The decree considers the average prices for the three months prior to 16 March 2020. The price capping under the Military Ordinance considers the price levels applicable on the day of the Ordinance – 29 March 2020.

What’s next? The provisions of the Military Ordinance are very likely to give rise to uncertainty and debate with respect to the capping of the prices, since they stray from the provisions of the Presidential Decree for declaring state of emergency.

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Ștefan Botezatu
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act legal Europe - Botezatu Estrade Partners

„This Alert is a source of general information for clients and friends of act legal. Its content should not be construed as legal advice, and readers should not act upon the information in this Alert without consulting our lawyers.“

About the author

Ștefan Botezatu

Managing Partner

'Stefan is Managing Partner and founder of Botezatu Estrade Partners, established in 2016 in Bucharest, Romania. He has strong expertise in energy regulatory matters and we see him as a strategic asset for our team. He is an excellent closer and forward thinker. Stefan is a 'sharp, knowledgeable, pragmatic and efficient lawyer', recognised for his work in competition cases concerning the energy sector. He has extensive experience in Energy, Dispute Resolution, Corporate M&A, Competition and Infrastructure Transactions.'

About act legal Romania - Botezatu Estrade Partners:

Founded in 2016 by Stefan Botezatu (formerly Partner with international law firm Gide and CEE law firm Kinstellar) and Laura Estrade (formerly Associate with Gide and Counsel with Kinstellar).

A team of innovative, result oriented and flexible lawyers, all sourced from top international and local law firms, with an impressive track record of achievements acquired over time in high profile transactions and complex disputes conducted in a wide array of practice areas and sharing the same values and culture.

Ștefan Botezatu

Managing Partner
act legal Romania Botezatu Estrade Partners Bucharest, Romania
Phone: +40 756 049 286
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