Building Natural Gas Distribution Network in Romania: Challenges and Perspectives

by Eugen Calin Popa, Design Department Coordinator, METAN GRUP

Co-author: Ioan Gheorghe Popa, General Director, METAN GRUP

Romania is in the process of modernizing its gas distribution infrastructure by adopting new types of smart gas networks. This technological evolution, especially through the POIM 8.2 program promoted in 2020 (estimated budget 235m EUR), brings multiple benefits, expected for quite a long time, in addition to increased safety in operation and the financial resources allocated by the European Union to promote it.

There have been two ways of establishing new distributions in Romania since 1990, namely:

a) During the period 1990–2000, gas distributions contracts were carried out through public tender with financing from the government. After completion the networks were handed over for exploitation to one of the two regional operators of distribution systems of that period (Distrigaz Nord or Distrigaz Sud).

b) Starting in the 2000s, the Romanian government have granted distribution systems by concession agreement to authorized companies that would implement those by their own financing.

In the first period, when funds were allocated by the government, the number of new distributions was relatively high. Once the transition to the concession model occurred, the development of natural gas supply systems in our country significantly decreased. In this context, the POIM 8.2 program, along with funding from the Anghel Saligny national investment program, promise an increase in activities related to the establishment of new natural gas distribution systems.

POIM 8.2 program comprises the design and execution of “intelligent and sustainable electricity and natural gas transport systems”. Smart gas distribution networks are a significant evolution in this field, combining traditional gas distribution infrastructure with advanced communication and monitoring technologies. These sensor networks, monitoring devices, and data analysis are used to manage and control the flow of gas in the network. They allow suppliers to obtain real-time information about the network, including gas pressure and quality, facilitating rapid intervention, and reducing gas losses.

• Benefits of POIM 8.2 program

The main advantage of this program is the access to the financial resources offered by the European Union in order to establish new distributions in Romania. This brings great benefits both to the beneficiaries of these projects and the contractors, recalling the period when this type of system was put out for execution by public tender.

• Issues arising in the implementation of this program and build-up of new distribution networks

The program runs from September 2020 till December 2023, so the biggest problem may be the time to complete it. The actual program started with the first stage in September 2020 when approximately 24 potential investments were submitted for analysis. The result of the evaluation of these potential investments was published only in mid-2021. The signing of the financing contracts followed in order to move on to the set-up of design and execution tenders for the selected works. It was thus necessary to complete the work in the remaining 18 months to avoid losing the funds.

The second stage of the program allowed to file the documents in December 2020, with the results (the winning bids for qualified works) published only in February 2022. There are thus investments where the design and execution must be completed in less than a year.

Under those conditions, we consider there is little chance the selected investments can be completed by the end of this year, and as a result the allocated funds for this program might not be accessed in full.

Identified issues during first stage, bidding

One issue has been the lack of experts to create a proper framework for conducting auctions. In the specifications, one may notice many requirements that have nothing to do with the specifics of the works to be performed, more precisely with natural gas supply systems. These requirements have allowed access to this kind of tender to companies involved in water supply works, although Law 123 clearly stipulates that in the field of natural gas only ANRE authorized companies may function. At the same time, these requirements have allowed access to companies with numerous similar contracts yet having significantly less technological complexity.

Another issue consists of feasibility studies drawn up incompletely or filed partially or truncated so that it may be impossible to establish the exact way of realizing the natural gas supply system. A feasibility study should be a ‘project’ without a construction permit. During those procedures, many studies without the necessary certificates requested by urban planning were approved, and those can change to a great extent the way to build a natural gas network.

Issues identified during the execution stage

Duration of project stages can be mis-estimated. The authorization process and getting necessary approvals for such a project can be complex and delay its implementation. Regulations and technical standards must be closely followed to ensure the safety and reliability of the distribution system. In most cases, 90 days are suggested for the design project. Good collaboration between the beneficiary and the designer, as well as a proper feasibility study to serve as a starting point for the design are necessary to avoid problems. For example, the minimum period required to obtain an approval for a water course sub-crossing is 45–60 days, while getting a discharge from the INMH requires 30 days, and an approval from CFR 2 to 3 months. Having got those, it is necessary to get the execution authorization, for which another 30–60 days are needed. That may not be obtained without the above-mentioned approvals. Thus, one may have only 90 days to work out an effective solution for implementing the system, while delays are possible because of long waiting times for necessary approvals.

A better collaboration between the public and private sectors may be one answer to those issues. Public authorities and the companies that are going to execute the projects need to work together to simplify and speed up the authorization process. Clear and coherent regulations reduce administrative delays and are needed to stimulate these fixed-time investments.

The establishment of natural gas distributions in Romania may be accompanied by certain obstacles that hinder the normal progress of the project, but good will and cooperation between all parties involved may render significant benefits for the country and its people.