RCE (the Romanian Commodities Exchange) has been established in 1992. Its portfolio includes more than 1,500 clients, both public and private, and the turnover in 2018 amounted to a total of €2.8 million.
What are the key commodities traded on the Romanian Commodities Exchange and how does energy fit in your portfolio?
ID: Our team of specialists handle several rings which include natural gas, electricity (for the retail sector only, since OPCOM has a monopoly on the wholesale market), as well as petroleum, cereals and any other commodities that are eligible for the centralized market. We have a portfolio that includes more than 1,500 clients, both public and private, and the turnover in 2018 amounted to a total of EUR 2.8 million. About 40% of our activity is represented by natural gas - we transact approximately 70% of the total national consumption, and in terms of volumes last year we traded 71 TWh on the gas market, and 2.1 TWh on the retail electricity market.
The trend was upward in 2018 compared to previous years, and we believe this is directly connected to out client focused approach. We managed to keep customers close by providing them with permanent consultancy, for example in preparing their files and the bidding documentation; most bids in the electricity and natural gas market are electronic, and we have dedicated personnel for each market. Going forward, we want to diversify our portfolio and figure out strategic directions that can protect us from sudden changes in legislation, such as GEO 114/2018, which had a direct and negative impact on the volumes traded since its release.
Can you please expand on how GEO 114/2018 has impacted RCE’s activity?
GP: The GEO was passed at the end of last year and as a result of this measure no gas transactions were made in the first trimester of 2019. We noticed a slight recovery after the publication of GEO 19/2019 which abolished the capping of gas prices for industrial consumers, but the volumes remained very low.
To further the issue, ANRE has passed a series of instructions that are full of contradictions and market participants are unsure about what they can or should do. This uncertainty is reflected for instance in the fact that all transactions in this period have been done exclusively on the spot market. This is in fact the biggest problem that has come out of this ,situation; everybody is in a state of confusion and distrust. We expect it will take at least one year until the market will return to a normal pace.
RCE Gaz Day-ahead platform, for the spot market, was launched last year. What was the rationale behind this and what other significant projects have been initiated since?
GP: Many transactions happen on the spot market, and they are done by a variety of companies, including producers, distributors, suppliers and traders. Initially, the intention was to grant a monopoly on the centralized gas market to a single operator, OPCOM, but as most gas transactions were already done on RCE, it was finally concluded that competition between operators could in fact be beneficial for the market. We launched the platform successfully and we are collaborating with BCR (the Romanian Commercial Bank) to ensure that all transactions are guaranteed through financial instruments.
ID: Further to our current activity, we have become active on the balancing market; just recently we have managed to win the bid that was launched by Transgaz. More specifically, this means that we will act on behalf of Transgaz for the balancing market activities, a positive news that we expect will contribute to the growth and diversification of our portfolio.
What objectives is RCE pursuing next, especially from a portfolio diversification perspective?
ID: One initiative that is underway is the development of futures for the natural gas and electricity markets, a strategic direction that we designed based on the needs that we have identified and analyzed in the market. The need is clear but it is very important to have a contract with a clearing house in order to offer the full service, and for this we are already engaged in advanced discussions. It is worth mentioning that the Bucharest Stock Exchange has initiated an ambitious project for creating a local clearing house, an initiative that we support and we are happy to contribute to, through our expertise and in-depth analysis performed in the field.
RCE is already accredited by both ANRE and the Financial Supervisory Authority because we have a department for financial services, and this will facilitate a multilateral trading platform without which we would not be able to trade on the futures market. The file is now in the final stage of approval and we aim to have everything settled this year, hopefully we will not be delayed by outside forces.
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