The New Gas Crisis Is Looming Over Moldova’s Head

Sergiu CEBAN, RTA

Our country is on the verge of a new energy crisis round risking to be left without gas supplies during the heating season

The Kazakhstan situation once again proves the instability and mobility of the internal political situation in the post-Soviet countries, which can break out at any moment and compel the leadership to make quick, not always justified, but forced decisions. In addition, increased attention to our regional space and any internal upheavals will have corresponding geopolitical results. Due to the constantly changing energy prices on international markets, in January, according to expert estimates, Gazprom will supply gas to our country at the price at least $ 100 higher than in December. This may provoke another increase in tariffs for the population by 20-25%. Such price mobility is mainly the result of the new contractual terms that our government agreed on in October last year. Experts note that earlier the approach to price regulation used to be more predictable, since it had a quarterly adjustment. Now the tariff can change monthly, so the Russian monopolist keeps us under constant pressure at risk of disconnection in case of non-payment. Individual statements from Kiev do not appear to add any optimism either. It has long been known that the accumulated gas reserves in the neighboring country are clearly not enough to cover all the needs this winter. There are two possible scenarios at the moment: the optimistic one is that Naftogaz will be able to provide sufficient additional imports, the pessimistic – that it will have to take Russian gas from transit highways. It is not that hard to guess what will follow: we have already experienced similar situations in 2009. Therefore, the theoretical cessation of the transit of natural gas through the territory of Ukraine and the termination of the current contract is a very real threat that our authorities must not ignore. Probably, it was the complex of risks accumulated by the beginning of the new year that forced the President to urgently convene the Supreme Security Council in early January. First of all, they addressed the energy situation due to the increase in natural gas purchase prices. As a result, the Government was recommended to take the necessary measures to ensure constant gas supply to consumers. Despite the dry press release, our country actually risks being in an even more unfortunate position than in October and November last year. Moldovagaz representatives have not yet reported any details, throwing “the grenade” to the government, which is also in no hurry with explanations and forecasts at least for this month. It seems that the Cabinet of Ministers was again found between a rock and a hard place – either to raise the tariff for the population again at the risk of an acute social protest, or to find the missing funds to cover the next price upswing by sequestering other budget lines. Suspicions have long been brewing in the expert community that last year’s agreements with Gazprom were, in a sense, a respite for our leadership, so certain provisions of the contract were frankly conceded with an eye on their revision in the future. This is confirmed by Moscow’s extremely distrustful and demanding attitude towards Chisinau in terms of gas payments, while our side is in a peculiar way auditing the historical debt of the right bank and is making strange hints about the lack of authority of the Moldovan delegation which signed a new contract with Gazprom a few months ago. If a non-payment crisis does arise due to the price difference, the worst that the current Cabinet of Ministers could do would be to shift the problem onto the citizens, since that will surely be used by political opponents. By the way, not only the left opposition but also former DA Platform colleagues might do that. They have already accused authorities of covering up the real situation in the energy sector, including prices for the gas which Moldova purchased in previous months and which it plans to buy in January. Some of the platform representatives have gone even further and started to hint at the “Kazakh experience” of expressing social discontent. Noteworthy is the behavior of the left-bank administration which decided to show some spirit and aggravate relations with Chisinau at the end of the year. It is possible that such defiant behavior of Tiraspol is driven by the desire to achieve a new annual power sales contract with the right bank. Notably, higher gas prices and electricity crisis in Ukraine may cause a significant increase in power tariffs, which will consequently enable an extra currency inflow to the regional budget. However, since Tiraspol does not pay for the natural gas it receives, the price increase also gives it the opportunity to shift the ground for certain political reasons. Thus, it is clearly possible that, in exchange for an insignificant increase in the contract price, Pridnestrovian representatives may demand concessions from Chisinau on other issues they have interest in. This whole set of energy problems will most likely hang like a sword of Damocles over us all through the year. Therefore, the government needs to develop a long-term program of measures as soon as possible that would include the redistribution of part of financial resources to enable the rapid relief of shock situations in the energy sector which is still tightly pegged to the international market pricing. Concurrently, it is necessary to continue searching for alternative suppliers who could offer more or less favorable conditions for the natural gas supply at least for quarterly periods. Certainly, authorities can open another session of talks with Moscow and try to agree, for example, on a more profitable gas payment mechanism in order to relieve the burden from the budget and not get into a stressful situation almost every month. However, there is a big risk that this time the Kremlin will be more forceful on political issues traditionally linked by Moscow with energy issues. Therefore, the authorities should find all possible options and identify sources to cover the costs associated with the implemented pro-European course.