The provisions of GEO 27/2022 regarding the restriction-compensation schemes introduced by the government proved to be beneficial for gas producer Romgaz. According to the preliminary report for 2023, the company announced a profit of 2.81 billion lei for 2023, which is 10%, 4% more than the previous year. In 2022, at the height of the energy crisis, growth was 32.8%. The gains were achieved despite lower gas production and significantly lower turnover.

Another large state-owned company that announced a huge profit for 2023 is Hidroelectrica, which increased by 42%, from 4.4 billion lei to 6.3 billion lei. In the case of these companies, the biggest gainer is the Romanian state, i.e. the majority shareholder. The higher the profit, the more generous the dividends to the state budget.

Much smaller turnover, low production

Romgaz announced a consolidated turnover of 9 billion lei, compared to 13.4 billion lei achieved in 2022.

The decrease in turnover is caused by a 31.31% decrease in revenue from the sale of natural gas, both from Romgaz production and purchased for resale, as well as a 69.41% decrease in revenue from the sale of electricity. In contrast, consolidated revenues from storage services increased by 17.66%.

Decrease in turnover from the sale of natural gas (7.7 billion lei in 2023 compared to 11.3 billion lei in the previous year). An important effect in reducing the turnover from the sale of natural gas by 31.31% was the obligation established by GEO 27/2022 regarding the compensation limitation scheme, according to which Romgaz sold most of the production at the regulated price of 150 lei/MWh (86.43% supplies).

Turnover from the sale of electricity also recorded a decrease (406.9 million lei in 2023 compared to 1.3 billion lei in the previous year). Starting from 2023, Romgaz sold almost all the generated electricity at a price of 450 lei/MWh, according to the provisions of GEO 27/2022.

The turnover related to storage services registered a growth of 17.66% (552 million lei in 2023 compared to 469 million lei in 2022), mainly due to the increase in capacity reserved by customers for natural gas storage.

Estimated production of natural gas in 2023 amounted to 4.8 billion cubic meters, which is 147.4 million cubic meters less than the production achieved in the previous year (-2.99%).

Low overhead, high profit

Romgaz announced an increase in net profit to 2.81 billion lei, which is by 10.42%.

The achieved margins of consolidated net profit (31.24%), consolidated EBIT (54.41%) and EBITDA (59.70%) are increasing compared to the levels recorded in 2022 (19.06%; 29.81% and 33, 93%, respectively).

The increase is due to a lower level of royalties (600.5 million lei in 2023 compared to 1.6 billion lei in 2022) and tax on additional income from the sale of natural gas (889.8 million lei in 2023 compared to from 4.9 billion lei in 2022), after applying the provisions of GEO 27/2022.

According to this decree, the amount of natural gas sold at a price of 150 lei/MWh is exempted from additional income tax, and royalties are calculated and paid at this price, not at the base price, which is reported monthly by the National Agency. for mineral resources.

Total expenses decreased by 54.77% compared to last year after the reduction of tax on additional revenues related to natural gas (-4 billion lei) and royalties (-1 billion lei).

In the period January-December 2022, Romgaz recorded expenses in the amount of 403.8 million lei with additional income tax for the electricity sold, which later became a contribution to the energy transition fund.

Taking into account the sale of electricity at the price of 450 lei/MWh in a share of more than 90%, this contribution is insignificant in the analyzed period, the Romgaz report also shows.