The public lighting service in Romania, a market worth tens of millions of euro a year, does not comply with minimum competitive conditions.
The public lighting service in Romania, a market worth tens of millions of euro a year, does not comply with minimum competitive conditions. The assignment agreements for this service should have been concluded, according to European regulation, for a duration no longer than 5 years. However, this rule does not apply to Romania, when this duration even goes beyond 20 years. Moreover, the difference between the prices paid by the public authorities per one kilometer of public lighting are six times greater compared to most cities, although the tenders are won by the same companies.
Companies with expired permits
According to the National Authority for the Regulation of Community Services (ANRSC), the Romanian public lighting market currently has 92 licensed operators, of which few are operational. There are cases where this service is provided by companies with expired permits, such as the company providing public lighting in Dărmănești, Bacău County. Constal Electric SRL’s operating permit expired in 2013.
The duration of an assignment agreement radically differs only in the major cities of the country, from 12 years in Iași to 25 years in Arad. The calculation of the returns is also an expression of the lack of uniformity, of an objective and transparent formula for calculating the benefits of the public authorities from operating the services. Thus, the returns vary from little over 6.500 lei per year in Oradea to 10.000 lei per year in Targu Jiu, or to 110.000 lei in Alba Iulia, according to a report made by the Institute of Public Policies.
Municipalities pay, but don’t know exactly what for
National Regulatory Authority for Energy (ANRE) supervises public lighting systems and performs, according to the law, field controls for energy efficiency in municipalities. ” Currently there are situations where the City Hall pays for lighting, but don’t know exactly what they’re paying for, as they have no control mechanisms. It’s important for municipalities to manage all elements of public lighting through contracts and to have clear clauses regarding the obligations of the statutory undertaker and of the concessioning authority “, declared Eugen Bujoreanu, Director of the ANRE General Control Directorate for the RCIJ.
60% of the public lighting services are under concession, and the market has been divided between two major players: Luxten Lighting Company and Flash Lighting Services. The first one operates this service in 8 municipalities: Brăila, Constanţa, Deva, Drobeta Turnu Severin, Iaşi, Oradea, Piatra Neamţ, as well as Timișoara, through AEM SA, where we find the same shareholders as in Luxten: Olimpia Moica, Ionel Pepenică and Claudiu Nicolae Rădulescu, often found in the Romanian billionaires charts. The second one provides public lighting in other 8 municipalities: Alba Iulia, Botoşani, Braşov, Buzău, Călăraşi, Constanţa, Iaşi and Tulcea. The company has concluded 2014 with a profit exceeding 2 million lei, for a 41 million lei turnover, up from 2013, when it had profit of 1.46 lei and a turnover of more than 30 million lei.
Politics makes the law
Luxten concluded 2014 with a profit of almost 39 million lei and a turnover of 202 million lei, up from 2013, when it had 36 million lei in revenue and 186 million lei in turnover. The company has been a regular in receiving public money for years, but they really made it big on the public lighting market in 1997, when it got its agreement with the Bucharest City Hall, signed by former General Mayor, Viorel Lis. The contract was continued by Traian Băsescu, Adrian Videanu and Sorin Oprescu, the last one extending the agreement in 2012.
Luxten was also on the list of “smart guys” from the energy sector, after acquiring cheap energy from Hidroelectrica. The success of the lucrative contracts also attracted among its employees some famous names, such as Vasile Blaga, the former Minister of Interior Affairs, as well as president Traian Băsescu’s younger daughter, Elena Băsescu. This Member of the European Parliament, the young daughter of the former presidential family, had a 7.000 lei monthly salary in 2008, being employed part-time, as economist. Elena Băsescu’s relations with her former co-workers remained close, even four years after she left the company. The evidence appeared in the press, when several Luxten employees helped the president’s daughter to move into her new home. They unloaded furniture from the company car and took it to the villa where Elena Băsescu moved in 2012.
Another famous “friendship” is the one between the company’s major shareholder, Claudiu Nicolae Rădulescu, and the former Minister of the Industry, Dan Ioan Popescu. The two were party colleagues, both PSD fervent supporters, as well as business partners. Dan Ioan Popescu sold to Rădulescu all his businesses when he became minister. General Mayor Sorin Oprescu, arrested by the DNA for accepting bribes, not only verified the Bucharest City Hall’s contracts with Luxten, but also had businesses with another associate of this company. Oprescu announced with fanfare that he’ll solve the stray dog problem by creating a city for them in Uzunu, Giurgiu County. The project, which was worth 100 million euro, was adjudicated by several friends of his son’s, helped by the son of the other Luxten shareholder, Ionel Pepenică. Pepenică’s company, Marco Vet, was supposed to cover the medical aspect and the food for the thousands of stray dogs in the shelter t.
The light in Radu Mazăre’s deals
The other giant on the public lighting market is, as stated before, Flash Lighting Services. One of its shareholders is Bogdan Gabriel Sandu, a close friend of the former mayor of Constanța, Radu Mazare. The two are currently investigated in a case involving illegal retrocession, together with the former prefect of Constanța, Nicușor Constantinescu, and the former Dinamo shareholder, Cristian Borcea, who is imprisoned for another case.
The prosecutors of the the National Anticorruption Directorate indicted 37 defendants for the illegal return and allocation of extensive areas of land, beach and cliff in Constanţa municipality. The acts of the group brought damages to the Romanian state estimated by the prosecutors to over114 million euros. The Competition Council admits that the public lighting market does not comply to even the minimal rules regarding competition.