Getting energy smart
Canada wants to engage with the players in the energy field from the region, as the nation’s Ambassador to Bucharest, Marta Moszczenska, talks to Ana Maria Nitoi
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Canada has huge energy concerns in Romania – its technological expertise was used in the Cernavoda nuclear power station on the Danube, which will soon provide 18 per cent of Romania’s electricity output.
Canadian firms are also planning projects in the gas industry because of the massive number of unconventional gas deposits that are littered in hard to reach pockets around the country.
Last April Canadian energy firm Oracle Energy Corp gained approval to produce gas and other hydrocarbons from a well in Nadlac field, western Romania, which will enter into the main gas transmission line.
Now, Canada wants to engage with the players around the Black Sea.
“That is why we are interested in what Romania is doing in this region, for general security of the region, for energy security, working together with the other partners in the fight against terrorism, organised crime and trafficking,” says Marta Moszczenska, Ambassador of Canada to Romania and Bulgaria.
However, there are complaints from Romania that key-players in the Black Sea, such as Turkey, Ukraine and Russia, are reluctant to be involved in an initiative pioneered by the Romanian Government.
Russia and Turkey last year snubbed Romania’s offer to host all the Black Sea’s leaders at a forum in Bucharest, while last month during a speech in Zagreb on energy, Vladimir Putin pointedly, it is thought, left out any refernce to Romania.
The Ambassador believes there are too many regional organisations trying to solve the problems encountered in the Black Sea region. “There is probably a need to synchronise all these activities,” she says. “It is a challenge for the Romanian Government which has to engage its partners, but its partners need to be engaged as well - which itself can cause a problem.”
In investments, Moszczenska says that the country’s accession to the EU will speed up the interest of Canadian companies in Romania. Traditionally, Canadian investments grow with the same rhythm as EU expansion. There are more inquiries from Canadian companies who want to do business in environment, IT and telecom and the services industry.
But for Romanians wanting to travel to Canada, the situation is not getting any easier. Just like in the USA, it is too soon for Canada to lift its visa regime for Romanians. However, authorities in Ottawa are starting a review process for Romania this year. Canada’s pattern for dropping visas for EU citizens is close to the Schengen criteria. From the 2004 countries, citizens from Malta, Cyprus, Slovenia, and Estonia do not need visas to live and work in Canada. Romania is due to enter the European zone of free movement in 2010 – but this is not a cast-iron guarantee that Canada will eliminate the visa regime.
Romanians can gain residence in Canada, if he or she has a certain profession or skill. Around 175,000 Romanian citizens are now living in Canada. “Canada’s objective is to get rid of the visa regime, but in time,” Moszczenska adds.
Making airwaves
Aerospace is where Canada has noticed that Romania may have untapped skills.
“We have identified in Romania service industries and parts manufactures that are doing outstanding work in the aerospace field,” adds the commercial counsellor of the Canadian Embassy in Bucharest, Francois Lasalle. “We are trying to hook them up with mainline Canadian producers so they conclude joint ventures to compete with larger European players.”
Smart housing is also a sector where a Canadian presence is a possibility – including high quality, low cost and energy efficient buildings. “There is an entire generation of young Romanians who don’t necessarily have the revenues to afford to buy houses,” says Lasalle. “We have technology which offers the same quality, luxury and space for much lower prices. We provide houses that you don’t have to overheat in the winter or overcool in the summer.”
Canada’s biggest client is the USA - which buys 85 per cent of the overall Canadian exports. “What we trade with Romania every year we trade with the USA every hour,” says Lasalle. “That is why it is so difficult to motivate Canadian companies to operate anywhere outside the US.”
GABIEL RESOURCES: Holding out for approval on gold mine
Talking to Alan Hill, CEO of Gabriel Resources, who’s plan to mine gold in Alba County has met with resistance from some defiant NGOs and the Hungarian Government, one is encountered by a man who’s chances of winning the right to drill in the hills of Romania is such a certainty that it has built itself into the fabric of his means of expression.
When he is asked the question: “If the mine goes ahead, will there be a support mechanism for local entrepreneurs?” He pauses, leans over and states quietly but with a touch of menace: “Let me correct your English, when the mine goes ahead...”
But this is still not a dead cert.
The company is waiting for the Technical Analysis Committee (TAC), made up of experts in the environmental and mining fields and state secretaries, to view the firm’s responses and solutions to public fears about the effect the project will have on the countryside and people.
The TAC will then ask Gabriel Resources a few more questions and, by the end of August and early September, the firm expects TAC to send its findings to the Government. The ministers then make the final decision.
“The best case scenario is that we start construction of the mine in autumn 2007,” says Alan Hill.
Construction will take two years and in autumn 2009, if this goes to schedule, Hill expects the “first pour” of gold. The mine has the tenth largest gold reserves in world and could be largest gold mine in Europe, with 52.3 million ounces on silver and 10.6 million ounces of gold, plus untested resources.
Around 140 of 379 houses in industrial area have been bought or have options on them. The firm will then build new villages in Piatra Alba and near Alba Iulia. This is only a small advance on the situation in June 2006 and is still fewer than half the amount needed. “We started buying again in October last year,” says Hill. “But this was put on hold while we sorted out the cabin issue.”
Some homeowners started building wooden cabins on their land. Their aim was for these to be designated as a habitable domicile and the landowners could ask for more money for their compensation, argues Hill.
But the authorities have ordered the local mayor to declare these illegal. “We will compensate the landowners for the price of the cabin material,” Hill adds. This is pretty much just bits of wood.
In May the firm began starting buying property again. Hill says 98 per cent of the properties have been surveyed and evaluated. “Some may be palpably against the project, but a lot of people have been measured at midnight when the neighbours can’t see what’s happening.” Apart from the one or two per cent who may hold out, Hill says “everyone seems to be a seller”.
If there are one or two homeowners that want to stay put while the mine is built around them, this could happen. Asked if Gabriel Resources will cut off their water and electricity, Hill says “God, no! If there are hold-outs within the area we can make adjustments.”
Last year ‘Blow-Up’ actress Vanessa Redgrave opted to buy some land in Rosia Montana to save it from the development. But she could not purchase it outright unless she set up her own Romanian company, which she has not done. Since then, other celebrities have not bought up the land. Not even Richard Gere or Angelina Jolie?
“No, no,” says Hill.
The firm has also bid for the construction of the third and fourth nuclear reactors at power station Cernavoda. This is still supposed to happen this year. “We are still very interested,” says Hill, who has no personal experience in building reactors, but has worked in uranium deliveries to power suppliers.
Gabriel Resources
Gold-mining corporation
750 million USD deal with potential 100 million USD extra costs funded by 80 per cent debt and 20 per cent equity.
2007 expenditure: estimated to be 200 million USD
J&R Enterprises: negotiating more stores for malls
While large-scale clothes-making industry may be on the wane in Romania, manufacturer J&R Enterprises is moving ahead into retail, with a new opening in Cotroceni Mall and an outlet store in West Park shopping mall on the Bucuresti-Pitesti motorway.
“There is a crisis in our industry in Romania because of the great loss of labour,” says chairman JA Seroussi. “In 2005 and 2006 we lost 1,700 workers and so far this year we have lost another 250 and one third of our production.”
But Seroussi is not interested in hiring workers from Asia, because of the costs in accommodation, food and translation.
From his three Bucharest shop outlets, Seroussi’s No. 36 unit in America House, Piata Victoriei, is the most successful in sales. The chairman is looking for similar city centre locations with a high density of office workers nearby.
“There are 2,600 workers there who are our in-house clients, we have BRD – Groupe Societe Generale next to us with another 4,000 people and Europa House, so they don’t even need to park - they just walk over to us,” says Seroussi.
J&R Enterprises
Clothing manufacturer and retailer
Owner of ‘No. 36’ brand
Stores in Romania: three
Can-do attitude
“There are a multitude of opportunities for foreign investors in Romania,” says recently elected president of the Canadian Business Association (CBA), Steven Pepa. “This is the economy to watch for the next 15 years.”
Canadian-Romanian relations have been long-standing since the Communist country opted for Canadian technology to build its nuclear energy facility at Cernavoda on the Danube in 1984. Some of the CBA’s members have been doing business in Romania for over 20 years and Pepa is relishing the opportunity to head an organisation that combines mature minds and youthful energy.
“I believe that there is always room for improvement and the CBA looks forward to working with all economic and governmental actors that wish to further facilitate this partnership,” he adds.
The new force at one of the most prestiguous foreign business associations in the capital wants to transform the association into a resource, not just a club, for assisting its members do business in Romania.
“Another priority is helping, financially, Romanian non-Government organisations and young Romanian talent, such as artists and musicians,” says Pepa.
Business interviews by
Michael Bird and
Mihai Alexandrescu
