The Romanian Government will renew the 'cap and subsidy' energy aid scheme for households and small businesses after its expiration in March, Social Democrat leader Marcel Ciolacu implied in a Reuters interview on January 16.

"If prices remain capped, why cut the VAT rate?" he stated.

The continuation of the Government's scheme has a significant impact on the headline inflation, expected by the National Bank of Romania (BNR) to peak at 11.2% YoY in April unless the authorities continue the scheme dedicated to households and small businesses.

However, even if the scheme is continued for another three months, the inflation will exceed 10% YoY some three months later.

Ciolacu also said Romania needs to invest in new power production and become energy-independent within three years.

He also confirmed parliament would approve changes to an offshore tax that has stymied Black Sea gas projects.

The tax is the last remnant of a series of energy sector restrictions introduced by the Social Democrats in a previous cabinet in 2018.

"I am firmly convinced we will find the correct solution ... for the Romanian state in terms of taxation and for investors to do these projects, definitely in this parliamentary session, it is one of the priorities."

(Photo: Marcel Ciolacu Facebook Page)

andrei@romania-insider.com