Romania‘s scheme to shield households and smaller businesses from soaring energy bills will cost around 16 bln lei ($3.27 bln), Energy Minister Virgil Popescu said on Wednesday, according to Reuters.
He added that the coalition government was also considering windfall taxes on the entire energy supply chain.
Romania has capped gas and electricity bills for households and most other consumers up to certain monthly consumption levels, and is compensating suppliers for the difference.
But already high prices are set to rise further, amplified by the war in Ukraine and European sanctions on Russia.
The energy support scheme is seen as a major risk for Romania’s already large budget deficit, with the government’s ability to reduce the shortfall a main driver of its credit rating.
Popescu said the country’s independent energy regulator ANRE had initially estimated the support scheme, which will run until end-March 2023, would cost 40 bln lei before revising it down to 16 bln lei.
A previous support scheme, which ran from November 2021 until March cost 4.5 bln lei, ANRE has said.
The government already has windfall taxes in place on gas and electricity producers, but has stopped short of taxing traders and suppliers.
“We are very much thinking about taxing the entire chain: production, intermediaries, suppliers,” Popescu told reporters, adding the government had yet to finalise specifics. “Taxation must be as fair as possible … we tax everybody when profits are very high.”
The leftist Social Democrats, parliament’s biggest party and part of the governing coalition, support replacing the cap-and-subsidy scheme with regulated prices from next year on a short-term basis, but the coalition has yet to agree.
The president of the Romanian association of energy suppliers estimated earlier this week that the government will gain more than 43 bln lei ($8.78 bln) from the energy sector in regular and windfall taxes as well as dividends.