European Commission slashes projects in Romania’s Recovery and Resilience Plan

European Commission slashes projects in Romania’s Recovery and Resilience Plan
By Iulian Ernst in Bucharest April 27, 2021

The president of Romania’s ruling National Liberal Party (PNL), Ludovic Orban, said on April 26 that the European Commission (EC) has not agreed to finance the €600mn project proposed by Romania to connect hundreds of localities to natural gas networks under the National Recovery and Resilience Plan (PNRR).

While Minister of Investments and European Funds Cristian Ghinea, the main official responsible for Romania's PNRR, has a different interpretation of the development, Orban’s comment highlights both the tensions within the ruling coalition and the Romanian government’s struggle to accommodate the EU’s calls for green projects and digitalisation with Romania’s needs for more traditional transport infrastructure (motorways) and energy infrastructure (gas distribution networks).

As reported earlier, the current form of the PNRR includes investments worth €41bn that Romania wants to finance with EU funds, while the EU funds allotted to Romania for this plan are around €30bn.

The gas distribution plan is the second major project rejected by the Commission, after a €3bn project to restore the irrigation system was turned down.

The project was called "Development of natural gas infrastructure mixed with hydrogen and other green gases”, with a visible intention of placing it under the “green” dimension of the Relaunch and Resilience Facility (RRF).

It was also part of the previous version drafted by Orban’s former government last year, and later scrapped by Ghinea.

Commenting on the latest development, Ghinea, of the reformist USR-PLUS, said: "Nothing was rejected since nothing was sent in the first place.”

He announced that the final draft of the country’s PNRR will be submitted at the beginning on May.

The tensions related to the PNRR aimed at securing €30bn of grants and soft loans for Romania are rising as the junior ruling partners in the coalition formed after last autumn’s elections scrapped the Liberals’ draft launched last year and came up with another vision. The financing is key for the country’s fiscal consolidation and its sovereign rating as a result.

"It is a negotiation," Ghinea added.

The Ministry of Energy, supposedly the author of the project, is under the management of the Liberal party, and its junior ruling partner USR-PLUS used the opportunity to point this out.

Cristina Pruna, USR deputy president and Chamber of Deputies' deputy speaker, blamed Energy Minister Virgil Popescu of the PNL for the project rejected by the Commission.

"We need to abandon populism, and the Ministry of Energy must come up with project proposals that meet EU requirements," wrote Pruna in a Facebook post.

She recommended more revolutionary energy sources/technologies such as "hydrogen, carbon sequestration, biofuels, green energy, charging stations for electric vehicles, energy efficiency, digitalisation of the system, encouragement of prosumers [and] battery production”.