Market Liberalization versus 'National Champions' in Romania's Electricity Sector

After more than a decade of market liberalization initiatives designed to attract foreign direct investment (FDI) to the Romanian energy sector in need of modernization, infrastructure improvement and efficiency increase, the commitment to electricity sector privatization and liberalization has diminished remarkably. Whilst competition has been promoted successfully in the distribution segment of energy market, the government is weighing the merits of creating a domestic, vertically integrated ‘national champion’. In the paper, we analyze the rationale behind this surprising move which calls into question not only the commitment of the government to energy liberalization reforms but also the effectiveness of the EU-wide energy policy of introducing competition in every segment of the electricity market through ‘equal or fair third-party access’ to networks and ‘ownership unbundling’, the separation of generation, transmission, distribution and retail activities once performed by single, vertically integrated energy utilities.