Opinion: “Rising Gas Bills, Growing Government Hunger”

The day before yesterday, amid the uproar over Moldova’s future under Vasile Tofan, a controversy that has swallowed the entire news cycle, the country’s energy monopolist “delighted” citizens with an announcement of a hefty gas price hike. In its submission to the National Energy Regulatory Agency (ANRE), Energocom requested a tariff increase of 45%, which would push the price to 20.93 lei including VAT, up from the previous 14.42. The current political context has inevitably spawned a number of theories as to why such unpleasant news surfaced so suddenly, not least because the matter was not even discussed at the level of the company’s supervisory board. One view holds that the demand for a price hike is a kind of “gift” to Vasile Tofan on the eve of his confirmation in office – a parting shot from a rival PAS faction that controls the energy sector, allegedly in revenge for yet another defeat in the power struggle. An alternative version also has a right to exist: that the hasty tariff revision notice was, on the contrary, rushed out precisely so as not to darken Tofan’s premiership in the public eye from day one. In that scenario, he will be able to declare his intention to fix the economic and energy mess he has inherited. Be that as it may, all informed sources, both on the supplier side and among experts, explain the situation by a significant rise in the price of gas that has been under way since March due to events in the Middle East. Why, then, has it only been raised now? Most likely, this has to do with the simple fact that Moldova is pegged to the quotations on the Romanian exchange, which serves as both the main benchmark and the platform for purchasing blue fuel. On Thursday, the price there climbed to its highest level in 40 days – 253 Romanian lei per MWh, or roughly 48 euros. The arguments put forward by the management of the country’s energy giant are hard to fault. When the current tariffs were approved, they were based on a price of 38 euros per MWh, or 404 euros per thousand cubic meters. Today, that price ranges from 45 to 55 euros. The logic is clear: tariff deviations have occurred, so the regulator must be approached for an adjustment. What’s more, if the exchange price of gas stood at 30 euros per MWh in February, by March it had doubled to 60 euros per MWh. As a result, Energocom has already racked up losses of 106 million lei. And yet, questions, or rather bewilderment and shock, remain among consumers, whatever their political stripe or social standing, when it comes to the state-owned company. Today, opposition politicians and pro-government journalists alike are lamenting, mocking, or raging. At root, this negativity stems from a fundamental rejection by citizens, who still harbor a residual hope that the state might actually care for them, of the cynicism of the free-market liberal order the ruling regime is pushing. Cold calculations and mathematical formulas cut little ice when the authorities show no understanding, set no example of frugality, and refuse either to tighten their own belts or to forgo ostentatious luxury. The recent scandals, which have laid bare the insatiable appetites of officials and their cronies, have created a critical backdrop against which any unpopular decision triggers an acutely painful reaction and a deep sense of injustice. Our country does indeed have some of the highest natural gas tariffs. For consumers across the Prut, gas costs the equivalent of 11-12 lei in our money; after the proposed adjustment, it would be nearly twice as expensive. True, that is not the 29 lei seen in autumn 2022, but the public is not prepared to swallow the current increase as the lesser evil on purely geopolitical grounds. Here is another point. Last December, Energocom’s management was briskly reporting that it had already purchased the entire required volume of gas for the 2025-2026 season. In other words, those supplies should be available until September. Few people will delve into the intricacies of exchange trading. A certain sense of reassurance about tomorrow had settled in. Now, however, the company is saying that the cost of fuel bought between January and July exceeded the figures baked into the tariff, coming in at 423 euros per thousand cubic meters. So, it turns out there was no fixed purchase price at all. And now, following the exchange indices, we are being forecast a figure of 623 euros per thousand cubic meters. Another crucial element. In 2020, with a tariff of 4.63 lei, the gas component accounted for around 70-72% of the total, while all associated costs made up 28-30%, or about 1 lei. In the current tariff, that share has fallen to 65-67%. In other words, the costs of transportation, distribution, regulatory fees, and contributions to various funds have risen substantially. To put it plainly, the administration of the gas supply chain by intermediary structures is costing us considerably more than it used to. With a sharp rise in the gas price, these discrepancies become painfully noticeable. Had the 2020 tariff structure still been in place, the current increase request would immediately shrink by 50 bani, down to 6 lei. Yet no one among the officials at Energocom or ANRE has so much as hinted at the possibility of reining in their own appetites. The monopoly’s net profit reached 793 million lei last year. It can afford to spend 18 million lei building a new billing platform to replace the existing one, without bothering to explain when it will actually work. Its head, Eugeniu Buzatu, can draw a salary from both the parent company and its subsidiary, Energocom Gas & Power, officially pocketing over a million lei. The salaries of ANRE officials are equally impressive. Presumably, in the public’s mind, such gigantic pay packets are supposed to justify these officials’ efforts in purchasing, calculating, and explaining it all to the population. Yet the real explanation for what is unfolding lies in the authorities’ attempt to preserve or even increase their own management fees at a time of sharply diminished means. Instead of cutting administrative staff and salaries, the impulse is to cash in. When the tariff stood at 5 lei, with far higher consumption volumes and a functioning industrial base, one could perhaps overlook the million-lei incomes of Moldovan officials sitting on the Moldovagaz supervisory board. But at today’s purchase volumes and consumer prices, this attitude on the part of officials becomes deeply infuriating. How much longer will the country’s population abide by the principle drummed into them by their Romanian masters at the start of the last century: “The sword does not strike the bowed head”?