Expert: Gas Market Liberalization Is Over Before It’s Even Started

Christian RUSSU

Having deprived the Moldovan-Russian company Moldovagaz of its monopoly on the gas market, the authorities have instead established their own monopoly, dismissing any outside players

In recent weeks, the country’s leadership, and especially the Minister of Energy, had to repeatedly conduct interviews to explain the plans of new companies to enter the Moldovan market and the prospects of lowering gas prices for final consumers. Victor Parlicov’s general message was that any alternative gas supply projects to the current ones are absolutely frivolous and that the supply system established by the authorities is flawless. Meanwhile, assessing the ruling regime’s reaction to such proposals over the last month and a half, it is easy to notice inconsistency, nervousness and contradictions in the officials’ arguments, which raises questions about their validity. And some facts highlight the desire to preserve the gas supply scheme built in the interests of a narrow range of participants at any cost, rather than concern for the population. In early September, the Turkish state publication Anadolu and Reuters reported that Turkey would export 2 million cubic meters of natural gas per day to Moldova from October. The agreement was reached between the Turkish company BOTAŞ and the Moldovan SRL East Gas Energy Trading. Confusion prevailed among our officials and experts at that time. No one could explain how businessmen engaged in air transport (FlyOne) managed to agree with Turkey on gas supplies, and even in volumes that cover all the current consumption in the country. After all, the authorities had tried to do so before, but had failed. Then Parlicov justified that according to the new rules after liberalization, participants in the unregulated gas market do not have to coordinate their plans with his institution. He even rather foolishly tried to credit the interest of new players in the Moldovan market to the “reformist authorities”, by which in fact recognized the possibility of such supplies. As a result, our officials did not openly oppose Turkey’s plans to expand its energy presence in Europe at the expense of Moldova, introducing the situation as a misunderstanding. Turkish gas at a price of 300 euros did not arrive in Moldova in October, but it is obvious that both Parlicov and the functionaries from Energocom were scolded for such an omission. At that time, officials were actively engaged in dashing the citizens’ hopes for a possible reduction in the gas tariff, and the sudden offer for the entire volume for the country’s right-bank part at half the price of Energocom was very unfortunate. The demand of Vestmoldtransgaz to raise tariffs for gas transportation and transit through the country further complicated the situation. Chisinau expectedly did not refuse the Romanian operator, and at the end of October the cost of these services increased several times (from 26.2 and 38.8 lei to 220.6 and 235.3 lei). In such a situation, can we talk about some kind of tariff reduction? Victor Parlicov and even Prime Minister Dorin Recean began to reassure people that there was enough gas at good tariffs, that there would be no interruptions in supplies, but, however, we should not expect prices to decrease yet. Sometimes in the statements of officials there were figures explaining the situation. Thus, Moldova finished the 2022-2023 heating season with 200 million cubic meters of “expensive” gas. Then we bought more, bringing the “gasbox” up to 600 million cubic meters. The average price of these volumes cannot be lower than the 750 US dollars per 1000 cubic meters set in the current tariff. However, the population still has no demand for such expensive gas. Consumption in October-November is actually two times lower than planned, which means that the current tariff’s reduction will have to be postponed indefinitely. The ruling regime was once again troubled by the reports of Sor’s representatives on the eve of the local elections about a gas agreement with the Turks with a price of only 10 lei for the final consumer. The Minister of Energy no longer tried to evade responsibility by referring to the norms of the current liberalized gas market, but simply started “berating” the troublemakers with politically incorrect terms and explaining the impossibility of such cheap gas. On the other hand, Maia Sandu admitted that such “politically conditioned” deliveries to certain parts of the country might take place and threatened to seize them in the state’s favor. Apparently, it was more important for the President to demonstrate to electorate the firmness of her position against Sor and his political projects on the eve of the elections, even at the cost of destroying the argumentation base built by the relevant officials. Sandu’s harsh message reached all the executors and had an impact even on the Moldovagaz management, which previously tried to maintain the image of protecting the interests of its parent company. Vadim Ceban demanded to investigate the allegations of the natural gas market’s manipulation by private supply companies, because the latter tried to formalize contractual relations with Moldovagaz subdivisions in Gagauzia. These scenarios obviously conflicted with the role adopted by the company’s management as a diligent distributor of blue fuel from the sole supplier Energocom and with Ceban’s own political ambitions in the autonomy. Government and Energocom officials decided to stay on track. From 1 November, their Romanian partners were asked to completely shut down supplies to Moldova from the Trans-Balkan route, so that certainly no “extra” gas would enter either Moldova or Ukrainian storages. It goes without saying that this decision has nothing to do with market logic. After unpleasant results for the authorities at the local elections, the ruling party seems to have decided not to stand on ceremony and finally stop all games of market liberalization. The legislation’s revision has already been announced to tighten the procedure for issuing licenses for activities in the energy sector.