Bogdan Tudorache

The gas industry has barely managed to regain ground after the crisis, says university professor Cristian Păun. The gov’t overcharged it, leaving little money for much needed investment.

“They saw in the gas industry a dairy cow and milked it more than it could give,” says Paun, in a debate organized by the Association for Economic and Social Studies and Forecasts (ASPES).

In addition, in Romania the private operator that produces goods and services “is undesirable, is regarded as a class enemy”, says Păun. “There has been a lot of talk of ‘slaughterhouse’ (hint to a gov’t official statement that a dog doesn’t slaughterhouse -e.n.) … and the rulers have not understood that we are all governed by profit. A business is not a charitable activity,” said Păun.

Thus, the turnover of the gas sector has stagnated in recent years, waiting for new resources. The sector supplies about 2.5% of GDP, thus covering more than half of Romania’s deficit. But the net profit of the sector does not increase, but rather stagnates in the downturn. The average profit per turnover is only 6%, and the return on invested capital (return on equity, ROE) is stagnating, at around 8%, below the national average of 14%, under the IT sector – where the figure is over 27%, and below the total banking, 22% (sources from energynomics.ro in the banking environment state that the segment of large corporations has an ROE of about 10%).

“The return on capital invested in the gas sector is half the national average. At the same time, the return on assets (ROA – n.r.) is 5% per year. The net profit per employee is 16,000 euros, decreasing (2017 vs 2016), while in the last nine years the number of employees has increased by 270%,” said Păun.

The monthly average salary reached over 8,000 lei per employee, and the turnover per employee, about 200,000 lei per month, and the net profit per employee is about 12,500 lei per month. The fiscal contribution of the sector was over 1 billion euros in nine years (2009-2017), in the perspective that the contributions, other than those to the budget of social insurance and social protection, accumulate 650 million euros.

“The calculations show that the share of payments to the budget is equal to the net profit margin, of about 6%,” says Păun. “Fact due to which GEO 114 and GEO 19 represent an economic crime, and could not generate results without a thorough economic analysis.”