Moldova’s Energy Uncertainty

Sergiu CEBAN

October 1 will be another fork in the road, when Moldova may be left without Russian gas

The Sor party is enhancing protest activity in Chisinau, building on growing popular discontent. The continuing decline in living standards amid skyrocketing gas prices is forcing more and more people into the streets. Meanwhile, last week ANRE approved new gas tariffs. Thus, from October 1, its price for final consumers will increase by 27% – up to 29.26 lei per cubic meter (including VAT) Today’s statements by Maia Sandu following Saturday’s SCS meeting show that the overall situation is only getting worse. There are a growing number of risks and challenges to which the authorities need to seek solutions. One of the main ones is the energy sector. The President has openly admitted that there is a risk of gas supply cuts starting October 1 this year, as well as electricity supply disruptions. Earlier, Sandu said that Moldova plans to increase the share of renewables from 3 percent to 30 percent within the next three years. All these plans are very good on paper and resonate with the current energy crisis, but, sadly, the reality is more brutal. To illustrate, figures were recently given, according to which, in the three decades since independence, the cost of natural gas in our country has increased a hundredfold – from 30 bani to 30 lei. Amid growing uncertainty, the government is desperately searching for alternative sources to purchase blue fuel with funds from the European Bank for Reconstruction and Development. At the same time, according to Deputy Prime Minister Andrei Spinu, these funds cannot be spent to purchase the necessary reserves from Gazprom. Rumor has it that some volumes may be purchased in Azerbaijan, where the Cabinet of Ministers will go in early October. The not so good environment on the eve of October 1 was most likely further aggravated by the President’s statements at the UN, which in the current circumstances can be perceived by Moscow as an additional provocation. Although, in fact, Sandu said nothing new, drawing attention to the illegal presence of the Russian military in Transdniestria, which violates our neutrality and increases security risks. In addition, there was again a call to liquidate the ammunition depots in Cobasna. By the way, some experts say that the gas price on the left bank of the Dniester has also increased – up to 1 some lei. To our side, it looks like a kind of mockery. However, the situation could change dramatically if the Russian gas supplies really stop. Then the price will be the same for all, moreover, Tiraspol will have to pay for gas in advance. But in such a scenario, it is important to understand what the electricity price will eventually be given such a gas price. Vadim Ceban, who returned from St. Petersburg after a series of meetings with Gazprom’s top executives, has kept an intriguing silence on the results. The impression is that the news is not encouraging. The only comforting thing so far is that we have fully paid Gazprom for the August gas supplies with $9.67 million. Another thing is the advance payment for the first half of September, which amounted to only $2 million (while the total required transfer for this period was $35.89 million). Moldovagaz and the government must be looking for the money so as not to give another reason to Moscow and to preserve uninterrupted supplies. However, it appears that the cash gaps and tariff deviations of 2.04 billion lei, accumulated in January-September as a result of untimely tariff adjustments, have become so large that the management company and the state are simply unable to pay the remaining advance amount. It appears that this is the second time in a row we have failed to meet the deadlines, and either we are testing Moscow’s patience, or we are deliberately pushing the situation in the hope that “foreign countries will help us”. Previously Moldovagaz asked Gazprom to postpone the advance payments for August and September until the end of the fourth quarter. However, speaking to Deputy Prime Minister Andrei Spinu, head of the Russian gas monopoly Alexei Miller pointed to the obligation to pay for gas supplies within the contractual terms and in full. The big picture by the end of September clearly indicates that the risk of stopping Russian gas supplies to our country is more real than ever. The main stumbling block may be the notorious audit of the historical debt, the deadline for which had not been agreed as of late August. Judging by the absence of any mention of this issue in the press, there is no progress on this problem. We can only hope that the Kremlin will in its traditional manner stall uncertainty until the last day and then reveal its decision. The complex regional and international context where our leadership has taken an explicit and principled position does not allow us to think that Moscow is ready to meet us head on. According to the formula included in the last year’s contract, starting October 1, the gas price for Moldova must be substantially reduced, which, in turn, will allow us to reduce the social and political passions in the country. The big question is whether this fits into the Kremlin’s strategic plans for Moldova given the existing desire to continue rocking the “internal political boat”. This week will in many ways be defining. In the next few days it will become clear what “surprise” the Kremlin is preparing for Chisinau this time. However, I would cautiously suggest that there will be no radical scenario yet. Most likely, the decision will be interim in order to hang the current situation with gas supplies on an even thinner thread and not to give a reason to ease pressure on the official Chisinau.