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Dan Octavian Georgescu

Vice President and CEO, Romelectro

Dan Octavian Georgescu has been at Romelectro, one of Romania’s top energy contractors, since 1984 in a variety of roles including deputy general manager and company vice-president, and was appointed as CEO in 2017. He has been involved in all of Romelectro’s major projects inside and outside Romania, and here, he discusses the company’s strategy for growth and its search for international partners.

Throughout the years, Romelectro has managed to increase its portfolio of projects by expanding and consolidating its presence in highly competitive foreign markets. Within this context, what were the main stepping stones that have allowed Romelectro to venture successfully beyond Romania’s borders?

Romelectro was founded in 1971 as a foreign trade company, with its main mission to manage as general contractor Romanian contracts for power projects outside Romania; most of them overhead transmission lines. Before 1989, we worked extensively in the Middle East and North Africa, developing a good name there – and now we are going back to the region. After the revolution in 1989, we concentrated our activities on the domestic market, increasing our expertise and portfolio of contracts in the power sector, which included generation, and not just transmission. In the mid-90s when the internal market rose seriously, we worked in power generation with coal, gas and hydro, in connection with the entrance of Romania into ENTSO-E, the European electrical grid. In both thermal and hydro, we have been involved in all major projects in Romania since 1994, notably modernization projects at Romania’s coal and gas-fired plants.

Another challenge came with Romania’s accession to the EU in 2007, with the huge volume of investment required to bring Romanian power plants and electrical substations into compliance with European environmental standards and aligned with EU standard levels of emissions. Our technological expertise meant that we played a very important role at that time. In recent years, we have decided to make a comeback in international markets, and we have succeeded in getting contracts. Now we are trying to diversify the contracts we have in energy, as well as in agriculture and irrigation projects funded by the EU. We are also targeting the nuclear sector, and want to upgrade the position of the company in the market as the leader of power projects in Romania.

To summarize, 48 years after our foundation we have a total business income of $3 billion, half in power generation, half in power transmission and distribution. Geographically, the weight of our current contracts is 42% in Romania, 51% in the Middle East and North Africa and 7% elsewhere in Europe, Asia and South America.

Forty eight years after our foundation we have a total business income of $3 billion, half in power generation, half in power transmission and distribution

Traditionally Romelectro has been a strong contender to win auctions organized by national companies for highly complex energy projects. With the local market beginning to show signs of renewed investment, what strategy does the group have in the Romanian energy market?

Romelectro has achieved an impressive portfolio of both public- and private-sector clients. Of course, we prefer large and complex contracts. In power transmission and distribution, for example, we prefer projects over 100kV. Our average value per contract is about €15 million, so this means that we also manage many small contracts.

In terms of the coming years in Romania, we anticipate a generous contract portfolio of large investments as the power sector is key in the Romanian economy. The approach of politicians and the business community is that we should continue to be an important country with a strong power network that is able to export energy to neighboring countries. There is a growing need for renewable energy sources. There is are also important programs to rehabilitate Romania’s hydropower plants built in the 60s and 70s and retrofit the transmission network, which is owned and operated by Transelectrica, a company which is very strong in the market with a solid financial situation and good development projects. If coal-powered plants are struggling to pay CO2 emissions certificates, which are increasing every month, other projects such as gas, hydro and nuclear should play a bigger role. Romelectro is going to concentrate on hydro and combined-cycle projects, which are new in Romania. Romgaz will operate the third combined-cycle plant in the country, and several more are planned for the coming years.

The Romelectro Group also includes ISPE (Institute for Energy Studies and Design). Please expand further on the role of ISPE within the group and how you see its business outlook going forward.

ISPE was founded 70 years ago as the national designer of Romania’s 10-year electrification programs. From a consulting and engineering point of view, ISPE is in fact the author of the whole Romanian National Power System. After 1990, ISPE lost this monopoly role, but remained by far the power sector’s strongest consultancy company. In the last 25 years, ISPE has supported the Economy and Environment ministries to run the processes of compliance with European legislation and approaches to a variety of important issues such as climate change. In terms of public acquisitions, we take care that this consulting role of ISPE does not bring about potential conflict of interest situations, and so far we have succeeded in avoiding any such problems. 

In the coming years, the Romanian power generation sector will launch a larger range of projects, from PV panels on roofs to large nuclear power units. All these investments could reach up to €1 billion per year

As an engineering, procurement and construction (EPC) contractor, Romelectro traditionally works with Romanian companies in terms of construction, finance and at the institutional level. How would you describe the strength and quality of Romanian companies and their workforce?

To act as an EPC contractor is the main mission and vocation of Romelectro. It is able to guarantee competent contract management (including the financial component), competent engineering (by ISPE) and execution (partially by Electromontaj Sibiu, another company belonging to Romelectro Group). What is left – the equipment supply – is assured by our partners and subcontractors, who can be Romanian or from other countries, such as Germany. It is clear that the capabilities of Romanian companies in the fields of engineering, manufacturing and construction have been reduced greatly in the last 10 years due to the lack of investment. At the same time, we have discovered plenty of companies adopting survival policies and new technologies, and thus being able to compete efficiently, not only in the local market but also outside Romania. One of our missions is to identify such ventures and to make them more profitable in the Romanian and international markets. There are shortages in terms of a qualified workforce, with so many Romanians having left the country to live elsewhere in the EU – somewhere between three and four million, we believe. It is a big challenge for us to bring back expert workers to be able to undertake the new projects that are in the power sector pipeline over next the five to 10 years. If we solved the workforce issue, we would be able to strike a better balance between exports and local business. But as things are, we are facing trouble to find specialists for local business, although this is not an exclusively Romanian problem; all over Europe, in particular, the competition to attract a high-skilled workforce is difficult.

This situation obliges us to be much more attentive to the competitiveness and profitability of a business. Previously, factories and business moved west to east in Europe due to competitive salaries, but now the differences are not so great. People are coming back to Romania, and are looking for better pay conditions. We are looking towards other markets for qualified people, including Asian countries such as Vietnam and Thailand.

What kind of opportunities could develop for Romelectro in the Romanian energy sector in the medium term?

Romania is a rich country in terms of energy resources. We are still exploring on-shore and off-shore for new reserves of natural gas. In renewables, the wind potential is almost completed, but in the area of photovoltaics and especially of biomass–biogas, there is a huge potential for new investments. In the coming years, the Romanian power generation sector will launch a larger range of projects, from PV panels on roofs to large nuclear power units. Other investments will be promoted at the power grid level, interconnection with neighborhood systems, improvement work for system stability, digitalization, and extension. All these investments, private or public, could reach up to €1 billion per year. This is why, just looking at the domestic market, we are not concerned about our contract portfolio in the future.

Romelectro is a market leader and it is looking to join capabilities and energy to create synergies with large companies in the German power sector

How much are you looking for cooperation with German and other international companies?

Major European companies, including German ones, are looking to us mainly as they consider the Romanian market, but also to propose joint projects elsewhere. Some of them prefer just to be technology or equipment suppliers, while others assume the role of EPC contractor and need a partner to lead the work on site. The most representative example of this kind of cooperation in recent years was with Siemens in Egypt for the Burullus combined-cycle plant. The German conglomerate supplied 12 power units of 1200MW each ongas; we commissioned one of these units under contract with the Egyptian company Orascom. We have a long tradition of cooperating with German companies starting with Siemens, but also with many others. For coming projects, we are looking forward to joining in international consortiums. Of these, Siemens is the most important in power generation and transmission, it has a big presence in Romania, and Romelectro is constantly looking for cooperation with this company. Our participation in the Burullus plant was a very important step for us as our first power generation project outside Romania.

What is your vision of the company for the future? What would you say about your leadership style and benchmark models?

In terms of EPC contractors, there are many benchmark models in the energy world. We try not to copy them, but to grow our own features, which differentiate us in comparison with our competitors, while also consolidating us as a project integrator and business developer.

Since 1984, we have wanted to be a leader in the power sector, increase turnover and to try to match the other leading companies in former eastern bloc countries, and this was a real challenge for us. Romania had a different political approach compared to countries such as Poland or the Czech Republic, and a different structure in the power sector. We wish to strengthen our portfolio of projects as much as possible with a long-term strategy and be able to make a major change, possibly to look at acquisitions and merger activity to boost our portfolio and increase our adaptability to a fast-changing market. German companies are always foremost in our mind as suppliers, contractors and partners. We will probably approach a German company that is familiar with the Romanian market. They will give us better visibility, both inside and outside of Europe.

Do you have a final message for readers of Die Welt and German investors?

Romania is a country with a great future. The program and strategy over the coming years for the power sector is challenging. Romelectro is a market leader and it is looking to join capabilities and energy to create synergies with any large companies in the German power sector, so they could come and join forces. We are open to discussing any cooperation. We have experience and expertise in consortium work, and, in particular, we like to share the technical and financial expertise of big companies in such joint projects.

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