Romania's Parliament on Tuesday approved legislation introducing a new financing mechanism for water resources that is expected to generate around RON 2.5 billion for flood protection infrastructure over the next 15 years, as part of reforms under the country's National Recovery and Resilience Plan (PNRR).

According to a press release issued by the Ministry of Environment, Waters and Forests (MMAP), the reform introduces a new economic framework for water resources aimed at supporting the modernisation and maintenance of Romania's national water management infrastructure.

'The new mechanism will strengthen the link between the water revenue system administered by the National Administration 'Romanian Waters' and the costs associated with the different categories of water users it serves. The law is based on a World Bank analysis of the condition of the infrastructure managed by the National Administration 'Romanian Waters' and the investment needs for the coming years. At national level, there is a major funding gap for works on dykes, dams and polders, while floods cause significant damage each year, estimated at between 1% and 1.5% of gross domestic product (GDP),' the ministry said.

Under the legislation, the contribution paid by hydropower producers per MWh will be indexed to inflation in 2026. From 2027, water-related contributions, tariffs and penalties applicable to different categories of water users will increase by 2%, except for irrigation charges. Further adjustments will be introduced gradually in 2028 and 2029, bringing the cumulative increase to around 10% compared with current levels.

The additional revenue generated by the new mechanism will be channelled into a dedicated fund for investment in flood protection infrastructure.

The reform also amends Romania's Water Law and related legislation governing the National Administration 'Romanian Waters'. AGERPRES (RO - writing by: Daniel Badea; EN - writing by: Simona Iacob)