Energy availability prospects, which have unsurprisingly taken center stage and the interest of governments, investors, and organizations across the world, are the strongly dominating priority in Romania, according to NNDKP Senior Partner Adriana Gaspar.
“Each day has brought a heavy load of transformative challenges, for over 30 years, like elsewhere in the region, and I have always felt that living in such a dynamic environment was a real privilege,” Gaspar begins. “Last year’s dynamism has been replaced by a blind struggle with unpredictability – which is hard to contain in financial models or strategies – to come out on top.”
Illustratively, Gaspar flags a matter that, while initially coming as good news, “unveils a real concern for EU countries. In 2020, Romania secured long-term financial packages to support the much-needed investments in energy and infrastructure, catalyzing carbon-neutral energy independence, and the achievement of the European Green Deal commitments. Notably, the US Government agreed to replace China’s commitment to financing the refurbishment of an existing reactor and the building of two new reactors for Romania’s Cernavoda Nuclear Power Plant,” Gaspar reports.
Just as the first US EXIM Bank letters of interest for USD 3 billion “advance the nuclear cooperation plans towards fruition, the compatibility of nuclear power (and fossil gas) with the EU climate change deterrent policies is placed under long-term precariousness,” she explains, adding that Romania is not alone with such questions. “Austria has recently taken legal action before the ECJ against the European Commission’s condoning of nuclear (and gas)-powered electricity generation as sustainable, and many environmental NGOs have launched their own greenwashing challenges. Enthusiasm for investment in the Cernavoda plant could be tempered from now on,” Gaspar explains. “US-backed small modular reactor projects might also be inhibited.”
Moreover, the National Resilience and Recovery Plan included up to “EUR 80 billion that could be directed to energy, infrastructure, and digital – including to a mix of renewable sources and gas new generation capacities – but, also, energy efficiency, energy storage, and intelligent networks, coupled with better interconnection with the neighboring countries’ energy infrastructure that could position Romania as a regional energy hub,” she continues. “Unless and until a negotiated solution settles Austria’s and the NGOs’ claims, the future of those projects is foggy and certain versatility might need to be embedded in the engineering strategy for new capacities, to secure good use of the investments.”
Generally, regarding public procurement contracts, Gaspar believes that they need “significant adjustments, in consideration of the current environment.” She says that “as much as Romania has kept on passing legislation aiming to allow price adjustments under these contracts, this is insufficient. The presently applicable legal and contractual frameworks were not designed for the trying times we live in.” According to Gaspar, ongoing and future contracts are not fully protected under a price adjustment formula, which often fails to cover all unavoidable cost increases, and they also face unbudgeted delays, the scarcity of previously available materials, disruptions in supply, and distressed subcontractors.”
“Inflexible, anachronistic public contracts practice taboos will not get those projects done. We need to open up to a real – and transparent – partnership between authorities and contractors to pursue the projects in the new reality,” she concludes.