Alarm signal from a large Romanian manufacturer. Cristian Covaciu, IPEC Alba Iulia: We are thinking of moving the company entirely to another country. We do not know what will happen after March 2025 when the energy market is liberalized. Energy suppliers do not make offers, do not sign contracts

The Covaciu family is considering the idea of ​​relocating the IPEC Alba Iulia producer to another country, due to the evolution of energy prices in recent years and the government’s inability to ensure predictability and a fair playing field for Romanian producers, in the ZF Investiți în România show !, made in partnership with CEC Bank.

“Unfortunately, we are not in a better situation than last year. Today we do not know what will happen after March 31, 2025, when the energy market is liberalized. At this moment it is not desired, it is not possible to extend the energy contracts. (…) We have now finished the winter promotions and should prepare for the summer promotions, but we cannot do this, we do not know at what prices to offer”.

IPEC Alba Iulia is one of the largest producers of porcelain plates in Europe, making more than 1% of the plates in the whole world in Alba Iulia. The domestic manufacturer has gradually become one of the most efficient in the world, as it works with around 350 industrial robots and the latest production technologies. The plates reach all over the world, from Europe to New Zealand and Australia, to the USA and even to China.

In 2022, the manufacturer was hit hard by energy price increases, and the energy cost then increased five times as a share of production costs, i.e. from a monthly bill of around 100,000 euros to one of around 1 million.

“Energy accounted for 7% of the costs and the energy cost increased to 33%, after which it decreased a little and now it is increasing again. Compared to the same period last year, the electric current was 500 lei/MWh, and now it is approaching 800 lei/MWh. With all taxes included, we exceed 200 euros/MWh for electricity, while the rest of Europe or our competition in Spain, Portugal, has an energy of less than 100 MWh. We don’t play by the same market rules”.

The lack of predictability regarding the evolution of energy prices and the refusal of suppliers to submit offers and sign contacts generates a state of uncertainty that pushes Cristian Covaciu to think about relocating the company to another country.

“At this moment, as I told the Minister of Energy and colleagues from our area, we as IPEC are looking at whether it is not feasible to move the company entirely to another country, which offers a better energy option. In what world do you think that a cost increase from 7% to 33% over the course of two to three months can be compensated?”.

The entrepreneur has not yet made a decision in this direction, but the situation of producers is expected to worsen with the liberalization of the energy market from 2025.

“There are many interesting countries, for now I would like them to remain at the project level. We asked for some studies to see the situation in other countries, but if you look at the price of electricity, you will find that there are many countries that have a completely different price. Romania still has a very good price for gas, but due to liberalization and the lack of competition and a lack of competence at ANRE, gas could end up being very expensive here too”.

Sebastian Burduja, the Minister of Energy, had meetings with representatives of IPEC Alba Iulia, but failed to come up with answers and solutions for the Romanian producer.

“Although the minister hopes to lower prices, I say they won’t, because there is no real competition. I don’t see who the competitors are. If we look at it, there is only one gas producer, Romgaz doesn’t really matter in this equation as long as it aligns its prices with OMV Petrom, and in terms of electricity we have some very big ones that do everything, like Hidroelectrica or Nuclearelectrica . At Hidroelectrica, when we wanted to extend the contracts, it was not possible”.

The producer IPEC Alba Iulia has invested in recent years to ensure at least part of its energy needs, but the company also consumes electricity and gas, and the investments only marginally cover the energy needs.

“At this moment, we have secured only 7% of the total energy from the electric one. We still have an ever-increasing value for gas, so 2% of the energy we can provide ourselves today. We made an investment of 1 MW in photovoltaic panels, we are making another one this year, we also proposed a 5 MW project that we hope to win and we will reach 7 MW, but think that today we consume three times more a lot of energy, and the sun shines a few hours a day. Otherwise, there is no solution for what we have now”.

Manufacturers and players in the industry are increasingly demanding an Industrial Pact at European level, which is complementary to the European Green Pact, so that the industry has a more realistic transition.

“The problem that I see and that I find very sad is that today we do not protect the European market from the competition that comes from Turkey, from China, from Thailand. Energy prices are at ridiculous levels compared to what we pay. I agree that we must support Europe, we must support the war, we support the Green Deal, we must do everything, but then you must be somewhat protected. That is, we have additional costs on top of additional costs, others do not have these costs and can enter to sell at tax-free prices in Europe and we remain without the object of work”.

In 2023, IPEC Alba Iulia’s turnover was over 143.4 million lei, up by about 8% compared to the previous year. The company currently has over 500 employees.

The company has a new investment planned for a porcelain cup factory, worth 10 million euros, but the investment is on hold due to uncertainty.

“Usually, we always prepare the ground for the next sales in a crisis, and we have always invested. If we look at how many times IPEC has grown, every time the country was in crisis we built a new factory. This time I’m afraid to build another factory because I don’t know what the future will be”.

Source: ZF