BMI's Executive Summary

[TOP]

The new Romania Power Report from BMI forecasts that the country will account for 3.33% of Central Eastern Europe (CEE) regional power generation by 2011, and to remain a net exporter of electricity to neighbouring states. BMI's CEE power generation estimate for 2006 is 1,995 terawatt hours (twh), representing an increase of 3.39% over the previous year. We are forecasting an increase in regional generation to 2,398twh by 2011, representing a rise of 19.4%.

CEE thermal power generation in 2006 is estimated by BMI at 1,230twh, accounting for 61.6% of the total electricity supplied in the region. Our forecast for 2011 is 1,440twh, implying 17.1% growth that reduces the market share of thermal generation to 60% – in spite of environmental concerns and rising interest in renewables, hydro-electricity and nuclear generation. Romania's thermal generation in 2006 is estimated at 33.6twh, or 2.73% of the regional total. By 2011, the country is expected to account for 2.78% of thermal generation.

For Romania, gas is the dominant fuel, accounting for 39.1% of primary energy demand (PED), followed by oil at 28.3%, coal at 17.8%, with hydro having an 11.5% share of PED. Regional energy demand is forecast to reach 1,676mn tonnes of oil equivalent (toe) by 2011, representing 18.1% growth over the period. Romania's estimated 2006 market share of 2.95% is set to rise to 3.18% by 2011. Romania last year accounted for an estimated 1.62% of regional nuclear energy consumption, with a forecast market share of 2.61% by 2011.

Romania's overall business environment can be considered fairly attractive in a regional context, with moderate long-term political risk countered by above-average long-term economic risk. Capacity and demand growth are high in a regional context, while imminent EU inclusion means good progress towards deregulation. The degree of energy import-dependency is also below the regional average. In the BMI Business Environment Ranking matrix, Romania receives a composite score of 31, which ranks the country fourth out of nine states included in the CEE region.

BMI forecasts Hungarian real GDP growth averaging 5.4% per annum between 2006 and 2011, although this year's forecast is 6.4%. The population is expected to contract from 21.6mn to 21.3mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly. The country's power consumption is expected to increase from an estimated 49.7twh last year to 61.5twh by the end of the forecast period, while exports should rise from an estimated 10.3twh in 2006 to a forecast 18.5twh in 2011, assuming 5.2% annual growth in generating capacity.