Introduction |
Over the past several months, we have focused several articles on
Romania’s potential to attract significant investments in renewable
energy because of the nation’s unique geographic attributes. In our
November article - "Creating Renewable
Energy in Romania" - and our December article - "New
Incentives to Invest in Renewable Energy" – (see The Romanian
Digest™ Archive at www.hr.ro), we
discussed two important and rather specific aspects of the process of
attracting and developing renewable energy projects in Romania. In
addition to the authorizations and licenses required from the National
Regulatory Authority in the Energy Field (“ANRE”), and the
incentives awarded to investors, interested companies face many other
issues in developing a renewable energy project in Romania. For example,
they must secure the land upon which to develop a wind plant or hydro
power plant, and obtain other governmental authorizations in addition to
the ones issued by ANRE. This article focuses upon the major steps to be
taken by a potential investor who intends to develop a wind or hydro
power plant in Romania.
H&R/RMDT Wins High Court Order Forcing Government to Pay Fair
Value for
Restituted Properties it Leases
In 2007, the Romanian
Government issued Government Decision No.343, which unilaterally
reduced, by a substantial amount, the rent that it was paying on
all restituted properties leased by the Government. Our clients,
the owners of Bran Castle, sued and in May 2008 the Court of
Appeals rendered a decision in their favor, partially canceling
GD No. 343/2007 and ordering the Government of Romania to pay to
the owners of Bran Castle the original rental amount.
The Romanian Government and the National Authority for Property
Restitution appealed the decision to the High Court of Cassation
and Justice of Romania. On January 30, 2009, the High Court
rejected the appeal of the Romanian Government and upheld the
decision of the Court of Appeals.
The Romanian Government must now pay to the owners of Bran
Castle the original rental amount. Most significantly, the
decision of the High Court also benefits approximately 2,500
other owners of other restituted properties whose rents were
likewise unilaterally reduced by GD No. 343/2007, and who will
now be entitled to receive rent from the Romanian Government in
an amount much closer to the actual market value.
(The
case was successfully argued by Florentin Timoianu, Esq.,
H&R/RMDT) |
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Securing the Land |
Types of agreements/rights achieved
The first thing that a potential investor must consider is how best to
secure the land on which the wind or hydro power plant will be located,
together with all of the equipment necessary for its functioning and for
the connection to the national electricity grid. If the land is owned by
private owners, the investing company may conclude agreements directly
with those owners, which are usually sale-purchase agreements to acquire
the ownership right over the land, or superficies agreements in which
they acquire the right to use the land in order to erect a certain
building on it, as for instance, the turbine, and the ownership right
over such building. In case of wind plants, the investing company must
obtain the right to install on certain plots of land the wind
measurement equipment, and this can be an ownership right, a superficies
right, or a rental right based on a rental agreement.
In case the land is part of the private domain of a local authority,
then obtaining the title over the land, either through ownership or
superficies, can be done following a public tender. On the other hand,
if the land is part of the public domain, then a concession right can be
obtained over the land through a concession agreement, and such
agreement can also be concluded following a public tender.
With regard to the formal requirements for such agreements, a
sale-purchase agreement for a plot of land must be concluded in
authentic form before a public notary. Also, the ownership right over
the land has to be
registered with the local authorities for fiscal
purposes. The agreement by which the superficies right over the land is
established can be concluded as a private signature deed or as an
authenticated deed before a public notary, the latter alternative being
the one most often recommended.
The investing company must also consider the land upon which the cables
for the grid connection will be placed – underground, above the ground
and aerial right of way, which can be exercised based on a convention
concluded with the owner of the land. Potential investors will also
benefit from a lawful right of use over the neighboring plots of land
for the construction, refurbishment and intervention on the plants, as
provided in detail in the Electricity Law, i.e. Law No. 13/2007, but
this lawful right can only be granted to holders of licenses issued by
ANRE. Therefore, before the company has obtained the corresponding
license from ANRE, it can exercise a right of use over neighboring lands
only on the basis of certain agreements concluded with the owners of
those plots of land.
Registration with the Land Book
Romanian law provides for a sole system of cadastre and land
registration throughout the entire country, by Law No.7/1996, aimed at
harmonizing and unifying the different systems put in place before the
effective date of the law. However, despite legal provisions in force,
in reality, cadastral studies have not, generally, been drafted with
regard to agricultural land located extra muros, which is almost
always the situation of the land where wind or hydro power pants can be
developed.
Therefore, a potential developer in this field must also consider, when
assessing the costs for the entire project, that it will have to have
cadastre studies performed in order to be able to register its right
over the plots of land in the land book pertaining to that parcel.
Notwithstanding the fact that registration in the land book does not
affect the validity of the rights acquired based on different types of
agreements, as mentioned above, such registration is essential as
against third parties. The registration will be done with the competent
regional office of the National Agency for Cadastre and Land
Registration.
The expropriation procedure
A company interested in investing in a renewable energy project can also
make use of the expropriation procedure, according to which, after a
parcel is declared of public utility, with prior and just compensation
to the owner, the company will be able to obtain its concession, for the
duration of existence of the energetic facility. Because this right is
granted to the company seeking an incorporation authorization from ANRE,
at the moment of submitting any request for the commencement of any
procedure, the company doing so must, at a minimum, have previously
submitted a request for an incorporation authorization with ANRE.
Determining whether or not the erection of wind plants is of a national
or a local interest is very important, since the authorities dealing
with expropriation procedures are different, as are the ones determining
the public utility of the objective. The expropriation has to be
performed according to the provisions of Law No.33/1994 and, once such
procedure has been accomplished, the land enters into the ownership of
the state and can be used only after the conclusion of a concession
agreement in this respect. |
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Zoning Regulations, Authorizations and
Approvals |
Zoning
regulations
Once title for the land is obtained, an investor must also obtain
certain zoning regulation approvals, in order to be able to develop the
project. According to Law No.350/2001 on rural and urban planning, an
urbanism certificate must be obtained for the envisaged area, which must
show whether the existing zoning plan for that area permits the
construction of the wind plant or hydro power plant. If no zoning plan
exists, then one should be drafted, and if the zoning plan does not
allow the construction of a wind plant or hydro power plant, which is
usually the case, then the zoning plan must be amended in order to allow
for such plants, together with all their grid connection installations
and equipment and any related infrastructure, such as cable networks and
access roads. A local zoning plan need to be drafted on behalf of the
investor by urbanism experts and needs to be approved by way of a
decision by the local authorities.
However, in order to be able to proceed with the construction, the
investor must obtain a building authorization according to the
provisions of Law No.50/1991 and, in that respect, a plan for the
construction will have to be prepared by technical specialty groups, and
signed by technical and highly trained personnel in the areas of
architecture, construction and building equipment. The building
authorization is actually the document by which the construction of the
applicant’s project is approved and gives the applicant the right to
start actual construction.
Special authorizations and approvals from environmental
authorities
According to the legislation on environmental protection, the competent
territorial environmental agency must issue an environmental permit and
an environmental authorization, which grants their holder the right to
construct the project and the right to the total or partial exploitation
of an installation under conditions which ensure that the installation
corresponds to the requirements for prevention and integrated control of
pollution. The environmental authorization is obtained after the
investment is made, but before commencing its operation. In order to
obtain these approvals and authorizations, the investor must commission
an environmental report for the land in question, which must be prepared
by a certified environmental company.
Authorizations and licenses issued by ANRE
For the conditions applicable to the incorporation authorization and
licenses to be issued by ANRE, as well as for the corresponding
procedure, please visit The Romanian Digest™
Archive, i.e., the November
Digest article – “Creating Renewable
Energy in Romania” – on our web-site at
www.hr.ro .
Special authorizations and approvals concerning the legal water
regime (Law No.107/1996)
Companies interested in establishing hydro power plants must also
observe the legal water regime. An interested company must obtain a
location approval which establishes if the proposed project has the
required degree of safety and observes the technical norms and standards
for the location and the environmental protection necessary for the site
conditions. Moreover, it must obtain a water management approval which
is the document which permits a new project or equipment/installation
related to waters, including the building of a new hydro-power plant, to
commence construction. The water management authorization is the
document on the basis of which any project or equipment/installation
related to water, including new hydro-power plants, is set up and
operated. |
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Connection to The Public Interest Network,
et al. |
The connection to the grid is another important step that must be
considered, and this is done by way of two approvals: the location
approval and the grid connection technical approval. Furthermore, for
the sale of electricity, the producer must conclude a sale purchase
agreement for electricity with the company dealing with the distribution
and supply of electricity.
In order to obtain green certificates and transact them on the green
certificates market, the renewable energy producer must undertake
certain steps, detailed in The Romanian Digest™ Archive Article
from December 2008 – “New Incentives
to Invest in Renewable Energy” – available on our web-site at
www.hr.ro .
Other issues related to hydro power plants
For the purposes of using water resources in order to produce
electricity, it is necessary that the producer conclude with the
National Administration “Romanian Waters” an agreement for the use of
water resources. This actually is a framework agreement approved by an
Order of the Minister of Environment no. 798/31.08.2005, and the fees
for the use of the water are established by the same order. Each hydro
power plant needs to be registered with the Office of the Trade Register
as a secondary headquarters of the investor. For registration as a
secondary headquarters, the investor must obtain approvals from the fire
department, labor authorities and public health authorities. |
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Conclusions |
A
potentially successful business such as the development of a wind or
hydro power plant in Romania must take into consideration the steps as
well as the duration of time that it will take to conclude agreements
with owners of land located in rural areas where cadastre studies still
need to be performed, and with the need to obtain a significant number
of authorizations beyond merely the ones specifically related to energy
issued from ANRE. Considering this, a company interested in investing in
renewable energy in Romania must objectively bear in mind the cost and
the time that will be required in order to develop their business
efficiently and wisely. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2009 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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RUBIN MEYER DORU & TRANDAFIR
societate civila de avocati
Str. Putul cu Plopi, Nr.7, Sector 1
Bucharest, Romania
Tel: (40) (21) 311 14 60
Fax: (40) (21) 311 14 65
E-Mail:
office@hr.ro
VISIT OUR WEB SITE:
http://www.hr.ro
The Romanian Digest Archive
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