Royalties and additional revenue surcharges paid by the oil and gas sector reached a record high in the first half of last year, amounting to 8.1 billion lei, equivalent to 3.7% of total government revenue, a study presented on Thursday showed by Laurian Lungu, co-founder of Consilium Policy Advisors Group (CPAG).
Laurian Lungu during the presentation of the studyPhoto: Hotnews
“We need investments in this sector. Romania, Europe and the whole world are moving towards this climate transition, but the speed of getting there will depend a lot on the purchasing power of consumers. You can have the greenest technologies, but how many of us can afford them? There is a large discrepancy between states or between the purchasing power of the citizens of different states. Time is a little short to achieve those climate goals”, Laurian Lungu also believes.
The dependence rate of Romanian gas imports reached the level of 2008 after a period in which it had decreased. We import more at higher prices and that means pressure on the trade balance, in addition to energy security, added Laurian Lungu.
The surtax on additional revenues from gas sales alone was over 6.2 billion lei in the first half of 2022, equivalent to 2.7% of total government revenues and 10 times more than in the whole of 2020.
These represent considerable sums, having a substantial share of transfers to the rest of the economy, thus allowing the authorities to support the redistributive effects implied by capping energy prices, says Laurian Lungu. Natural gas continues to bear most of this tax burden, supported by high natural gas prices. However, the erosion of domestic natural gas production has accelerated over the past three years, partly due to lower investment, as the overall level of taxation, particularly on gas production, remains high.
The oil and gas sector represented approximately 3.8% of GDP in the first half of 2022. In comparative terms, in the mentioned period, the contribution of the oil and gas sector to GDP represents: more than twice the GDP contribution of the “Financial Intermediation” sector and insurance”, is equal to that of constructions and is half the contribution of the IT&C sector.
See the full study here