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                                                                                                   April 2012



                                  PPIAF Assistance in Romania
The government of Romania requested support from PPIAF in 1999 to assess potential structural and
regulatory reforms in key infrastructure sectors, and to identify approaches and strategies that would
increase competition and promote market-based decision-making in infrastructure provision as part of the
country’s privatization process. Following the publication of the resulting report in June 2000, consensus
was achieved on structural and regulatory reforms that led to multiple divestitures of state assets in the
electricity sector.

Technical Assistance for Romania’s Privatization Process

In 1999, although Romania had made some progress in liberalizing utility sectors, the government
recognized that additional regulatory and structural reforms would be necessary to accelerate market
liberalization and deregulation in these sectors to enhance the country’s economic growth and
development. In particular, international experiences of privatization in the 1990s had demonstrated that
the reform of industry structures and regulatory issues prior to launching the privatization process were
critical to its success. In addition, achieving the public interest goals of privatization would require a
commitment to planning and clearly defining the post-privatization governance and industry structures
ahead of time.

Thus the government of Romania requested PPIAF support to review the structural and regulatory
arrangement of its gas, electricity, transport, and telecommunications sectors. The PPIAF-funded activity
specifically: i) examined the structure of supply in the network utilities of Romania; ii) analyzed further
options for the horizontal and vertical restructuring of these industries to enhance their efficiency, market
responsiveness, and fiscal responsibility; iii) identified areas of market dominance and potential monopoly
abuse, and proposed regulatory safeguards as a transition to an acceptable level of horizontal
competition; iv) identified the major regulatory issues that needed to be addressed and proposed
strategies for addressing these issues; and v) summarized the relevant international experience in the
competitive restructuring and deregulation of the network utilities and evaluated its applicability to the
Romanian context.

The report was utilized to build consensus on major structural and regulatory reforms in Romania’s
infrastructure sectors, and was used by the government to address issues raised under the conditions of
its structural adjustment loans. Following the release of the PPIAF-funded report in June 2000, the
government proceeded with the full or partial divestiture of multiple state assets in the electricity sector,
including distribution, transmission, and generation companies. These divestitures included payment
commitments to the government of over $4.25 billion and investment commitments of over $1.7 billion. In
addition to the divestitures several greenfield and concession projects were undertaken in the
telecommunications, energy, and transport sectors.

                   Results of PPIAF’s Support for Romania’s Privatization Process

Category                             Outputs
Enabling environment reform
                                         Structural and regulatory review of the gas, electricity,
Analyses/assessments prepared
                                          transport, and telecommunications sectors in Romania, 2000

Category                        Outcomes
Capacity and awareness building
                                         Consensus achieved on structural and regulatory reforms in
                                          Romania’s infrastructure sectors. Following the PPIAF report,
Consensus achieved
                                          the government of Romania proceeded with the divestiture of
                                          multiple state assets in the energy sector, 2000–2008




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