COMMISSION IMPLEMENTING DECISION on the partial suspension of the disbursement of the third instalment of the non-repayable support and the third instalment of the loan support for Romania 

of the Articles of EN 20 EN  a consultative committee set up at the management level by management or supervisory boards members, was closely associated with the recruitment of new members of the boards. NRC’s remit included, but was not limited to, conducting assessments, providing consultations, and facilitating the nomination of members of the management boards. This was carried out, in particular, by defining and overseeing the procedures for the selection of candidates for board positions, whether executive or non-executive, and by playing an active role in the selection and recruitment of board members, including their nomination and remuneration. (86) Based on the evidence provided, actual and potential conflicts of interest and undue political and hierarchical influence were identified in the selection procedures for the board members of 8 out of the 17 SOEs (Hidroelectrica, Nuclearelectrica, Romgaz, Oil Terminal, CONPET, Complexul Energetic Oltenia, Electrocentrale Craiova, and Midia Green Energy). Moreover, for one SOE (CNCIR) the selection and appointment of the management board was conducted prior to 1 February 2020, and for another SOE (SAPE) no full management board is currently in place. Furthermore, for three SOEs (Eurotest, Radioactiv Mineral Magurele and ICSITPML) no selection nor appointment of the management board was conducted. Therefore, for these 13 SOEs, based on the assessment set forth below, it cannot be concluded that the selection and appointment of the members of the management boards were conducted for all SOEs, or that when they were conducted, the process was carried out “on the basis of a transparent and competitive procedure”. (87) In the case of Hidroelectrica, based on the evidence provided by Romania on 6 September 2024, regarding the selection of the supervisory board: – the president of the selection committee for the supervisory board was initially one of the Secretaries of State at the Ministry of Energy. This individual ranked first in the selection by the selection committee of which he was president. – a director at the Ministry of Energy, who was also appointed to the supervisory board of Hidroelectrica, was at the time of his appointment responsible for managing and overseeing the directorate responsible for managing SOEs under the remit of the Ministry of Energy, from which a majority of the selection committee members was appointed. three members of the supervisory board were appointed in January 2024 without undergoing a competitive and transparent selection procedure, whilst the milestone does not provide for such exceptions. While Romania argued that one of those three members was nominated and appointed by the minority shareholders, based on the information and evidence available, the Commission could not conclude that minority shareholders enjoy the right to appoint board members under Romanian law. Moreover, Romania provided no evidence granting minority shareholders the right to nominate and appoint a representative to the board of Hidroelectrica. (88) Regarding the selection of the management board, one of the members of both the supervisory board and the nomination and remuneration committee resigned from the supervisory board, after the selection procedure begun, only to be reappointed to the management board as chief executive officer upon the recommendation of that nomination and remuneration committee of which he was part. (89) In the case of Nuclearelectrica, based on the evidence provided by Romania on 31 July 2024, three out of the seven members of the management board were directly Incorporation and the provisions of the Code of Corporate Governance of Bucharest Stock Exchange, if listed. EN 21 EN  reappointed without undergoing a competitive and transparent selection procedure. Additionally, one of the members of the nomination and remuneration committee was also a candidate in the selection procedure and has been ultimately reappointed to the management board. Furthermore, one of the Secretaries of State at the Ministry of Energy, who alongside the Minister manages the Ministry, was appointed to the management board, being ranked first by the selection committee composed entirely of officials from the Ministry of Energy itself. In the meantime, he resigned to take another position within the Government of Romania. (90) In the case of Romgaz, based on the evidence provided by Romania on 6 September 2024, similarly to the case of Nuclearelectrica, one of the Secretaries of State at the Ministry of Energy was ranked first by the selection committee composed entirely of officials from the Ministry of Energy itself and was subsequently appointed as the president of Romgaz’ management board. Additionally, three members of the nomination and remuneration committee (including the Secretary of State mentioned before) were also candidates in the selection procedure and have been ultimately reappointed to the management board. (91) In the case of Oil Terminal, based on the evidence provided by Romania on 6 September 2024, two directors at the Ministry of Energy, who were also appointed to the management board of Oil Terminal, were, at the time of their appointments, managing the services within the Ministry of Energy from which selection board members were appointed. Additionally, one member of the nomination and remuneration committee was also a candidate in the selection procedure and has been ultimately reappointed to the management board. (92) In the case of CONPET, based on the evidence provided by Romania on 11 September 2024, one director at the Ministry of Energy was, at the time of his appointment, in a hierarchical relationship with the members of the selection committee. Romania submitted that on the basis of a statement of concerns expressed in the Commission services’ observation letter of 28 June 2024 38, the board members of CONPET have submitted their draft resignation letters 39. (93) In the case of CE Oltenia, based on the evidence provided by Romania for the selection of the supervisory board, there is an overlap between three members of the nomination and remuneration committee and the successful candidates who were ultimately appointed to the supervisory board. Additionally, one of the members of the supervisory board was appointed without undergoing the selection process. While Romania argued that this member was nominated and appointed by the minority shareholder, based on the information and evidence available the Commission could not conclude that minority shareholders enjoy the right to appoint board members under Romanian law. Romania provided no evidence granting minority shareholders the right to nominate and appoint a representative to the board. Furthermore, in the process for selecting the management board, two candidates that had previously served on the management board – involved in selecting and contracting the independent expert – were (re)appointed to the new management board, being selected by the independent expert. 38 Letter from the Romanian Energy Minister to the Director-General of the Recovery and Resilience task Force, dated 23 August 2024. 39 Romania submitted that four of the selected members submitted their draft resignation to the Minister of Energy, with the request to be registered and to produce effects, upon receiving the letter on the assessment of M121. EN 22 EN  (94) In the case of Electrocentrale Craiova, based on the evidence provided by Romania on 31 July 2024, three members of the nomination and remuneration committee were also candidates in the selection procedure and have been ultimately reappointed to the management board. (95) In the case of Midia Green Energy, based on the evidence provided by Romania on 31 July 2024, the Secretary General at the Ministry of Energy, who was in a hierarchical relationship with the members of the selection committee, was appointed as President of the management board. Additionally, two members of the nomination and remuneration committee were also candidates in the selection procedure and have been ultimately reappointed to the management board. (96) In the case of CNCIR, the selection and appointment of the management board was already conducted prior to 1 February 2020 and the company did not reappoint a board in line with the milestone requirements. In that respect, Romania has indicated that a new procedure for the selection and appointment of the management board would start in August 2024. (97) In the case of SAPE, to date, Romania has not provided evidence that the selection and appointment procedure of a new board member for filling the position left vacant by the resignation of a previously appointed member has been initiated. Thus, there is currently no full board in place. (98) In the case of Eurotest, Radioactiv Mineral Magurele and ICSITPML no selection and appointment procedures have been carried out. Based on the evidence provided by Romania on 11 July 2024 the authorities also expressed the intention to either merge or transfer ownership of these SOEs to other entities within the Romanian State that will exercise the State ownership rights. However, the Commission notes that Romania has not provided conclusive information and evidence that these three SOEs should be excluded from the scope of milestone 121, which refers to all national SOEs under the remit of Ministry of Energy. (99) Romania has acknowledged 40 the actual or potential conflicts of interest, and instances of undue political and hierarchical influence in the cases mentioned above and set out its intention to take the necessary steps, including re-running the procedures, where necessary, based on the amended legal framework for corporate governance 41, with the assistance of Agency for Monitoring and Evaluation of State Owned Enterprises Performance – AMEPIP, to address the shortcomings identified. The Commission took note of these intentions. (100) Therefore, for the above-mentioned 13 national SOEs under the remit of the Ministry of Energy, the Commission considers that the selection and appointment of the members of the management and/or supervisory boards was not conducted for all SOEs, or that when they were conducted, the process was not carried out “on the basis of a transparent and competitive procedure”. (101) Second, Romania has not demonstrated that the members of management and supervisory boards for all the 17 national SOEs under the remit of the Ministry of Energy have a 4-year mandate as required by the milestone. The Commission took a 40 See: Romania’s reply dated 29 July 2024 to the Commission third observations letter of 3 July 2024. Letter from the Romanian Ministry of Energy to the Director General of the Recovery and Resilience Task Force dated 23 August 2024. 41 Law no. 187 of 28 June 2023 for the amendment and completion of the Government Emergency Ordinance no. 109/2011 on the corporate governance of public enterprises. EN 23 EN  preliminary view that this requirement applies to the boards as a whole, rather than to their individual members, to be appointed for a 4-year mandate. This is due to the fact that, in the event of a vacancy in the boards, it is mandatory for the new board member to be appointed for the remainder of the existing term of the board 42. However, this requirement has not yet been fulfilled for eight SOEs, as shown by the evidence provided by Romania by 6 September 2024. A Romgaz board member who was appointed at the same time as others, had a mandate longer than four years 43. Moreover, in the case of CE Oltenia, Nuclearelectrica and SAPE, documentation for the mandate of members of the boards was missing. Furthermore, in the case of CNCIR, Eurotest, Radioactiv Mineral Magurele and ICSITPML no valid mandates were provided. Thus, there were 20 problematic durations out of 104 mandates, in 8 SOEs out of 17, and the Commission could not conclude that the boards were appointed with a mandate of 4 years, as required by the milestone. (102) Third, the evidence provided by Romania by 6 September 2024 does not demonstrate that the system of remuneration of the SOEs’ board members is based on quantitative and qualitative objectives (‘key performance indicators’ – KPIs) related to financial (such as revenue and return, involvement of state budget, cost efficiency) and service performance (such as peer reviews, customer feedback, market share, customer retention) of the SOEs as required by the milestone. In particular, Romania has not provided the signed addenda to the mandates of the new board members, which set out the KPIs, for seven SOEs (Nuclearelectrica, CE Oltenia, SAPE, ELCEN, Electrocentrale Craiova, CONPET and CE Valea Jiului). Similarly, no KPIs are present in the case of CNCIR, Eurotest, Radioactiv Mineral Magurele and ICSITPML. Thus, for 39 members of management boards out of 104, in 11 SOEs out of 17, the Commission could not conclude the remuneration of these board members was based on quantitative and qualitative objectives related to financial and service performance, as required by the milestone. (103) In its observations of 15 November 2024 with regards to the requirements of ‘selection and appointment of the members of the management and/or supervisory boards of all national state-owned enterprises (SOEs) under the remit of Ministry of Energy (e.g. Hidroelectrica, Romgaz, Nuclearelectrica) on the basis of a transparent and competitive procedure, with a mandate of 4 years and a remuneration scheme based on quantitative and qualitative objectives linked to the financial (such as revenue and return, involvement of state budget) and service performance (such as based on a representative customer satisfaction survey by an independent body) of the undertaking’, Romania stated that they ‘provided a series of observations/clarifications regarding the process of selection and appointment of members of the Management Board of state-owned companies in the energy sector’. (104) Notwithstanding these observations, which are mainly a reiteration of the arguments and justifications Romania had put forward at the time of the suspension letter, the conclusions of the Communication to Romania of the Commission’s assessment of the third instalment of non-repayable support and the third instalment of the loan support in accordance with Article 24(6) of Regulation (EU) 2021/241 of 16 October 2024 remain unchanged. 42 See Article 8(1) of GEO No. 109/2011, which stipulates that ‘The term of office of the members of the board of directors is established by the act of establishment and cannot exceed 4 years. […] the mandate of board members appointed as a result of the termination, in any form, of the mandate of the original members coincides with the remaining term of the mandate of the administrator who was replaced’. 43 https://www.romgaz.ro/en/consiliu-administratie. EN 24 EN  (105) First, Romania reiterated that the selection and appointment of board members followed a transparent and competitive process. Romania also reiterated that the role of the NRC in all selection procedures was limited; Romania argued that the documents related to the s