March 25, 2023

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Large consumers are not keeping pace with energy prices. They fear that they will have to send their employees into technical unemployment

Romania’s economy is seriously affected by the ever-increasing energy prices. Gas consumption by industry fell in the first nine months by 63%, a European analysis shows, and is the biggest drop in the Union.

Large consumers, such as fertilizer producers and in the metal industry, have partially or completely closed production lines. There are other manufacturers who fear that they will have to send employees into technical unemployment. Under these conditions, Romania’s economy could be headed for recession.

From January to September, Romania’s gas consumption decreased by 11%.

However, the industry recorded the largest decrease in the Union, of 63%, according to an analysis that included all European states, carried out by the Bruegel think tank.

Much of the nation’s gas consumption is household consumption, which fell by just four percent in the first nine months of the year, and electricity production is even on the rise.

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Gas consumption in industry is still lower, however, compared to the average of the same month between 2019 and 2021.

Large consumers have been forced to shut down production lines due to rising bills.

The largest producers of fertilizers in Romania, Azo Mureș, Alro Slatina or Chimcomplex are among the companies that made such announcements.

Sorin Elisei, Energy Expert, Deloitte: “In the account we are talking about those consumers who have a very important share in the operational structures, this cost of natural gas in the first place. We are talking about chemical fertilizers, we can also talk about the wood processing industry, maybe also the building materials industry. From the industries that are big consumers of gas, that’s where the decrease comes from. “

And the electricity bills are hard to bear. For example, one of the largest producers of pal and mdf in Europe has made investments to continue producing without using gas but now it is difficult to pay the electricity bills. Especially without state support.

Oana Bodea, general manager of a wood processing company: “We stop the lines alternately. Also, with certain machines that are big consumers, we only operate in certain hours when we know that the daily price is lower.. Stopping the lines affects us a lot because we have a total of 800 employees in Romania and we will reach the level of that starting in November or December we will alternatively have to send our people into technical unemployment.”

Radu Burnete, Confederation of Employers Concordia: Most companies are trying to survive. We have members, there are many companies in the furniture industry, who tell us that in two to three months if something doesn’t happen they will have to close their doors. Likewise, in the automotive industry there are many companies in the middle of the chain, the ones that make all kinds of components, that are up to their necks in water.”

The negative effects in the economy are inherent, analysts say.

Dragoș Cabat, economic analyst: “Romania’s economic decline, so the gross domestic product will probably slow down considerably. It’s hard for us to have another recession this year, but probably early next year, the first quarter or the first two quarters we’ll be in recession or very close to zero gross domestic product.”

On the other hand, reduced demand for gas and electricity could lead to lower prices, energy experts say.

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