29 October 2020

Gheorghe Russu

Vice-director, The Center for Combating Economic Crimes and Corruption

Parties-Phantoms, Parties - State Institutions, Parties - State Enterprises


20 parties have registered in the current election campaign. Many people say it is a too big number for such a small country as Moldova. At the same time, much more parties could take part in the election campaign.

Last week illustrated

Activists launch Moldova’s first ‘Space Camp’ © Susan Coughtrie

Voronin commanded, ANRE obeyed

The latest decision of the National Agency for Regulation in Energetics (NARE) to reduce natural gas tariffs was the less criticized decision of this type in the last 5-6 years. But also the less broadcasted and less discussed. Some media even ignored it. Despite the fact that this is the first decision on the reduction in gas tariffs for the last 6 years.
Ion PREAŞCĂ, 15 September 2009, 18:09

So far the tariffs were just increased, never reduced and during the communist governing they increased four times.    

However, we are not interested in the tariffs, but in the lack of transparency and principle, as well as of uprightness of NARE management. Even if they know that president Voronin and Greceanai government are on their way out, NARE management accepted to have the president dictate the gas tariffs. During a meeting held in the presidency, which “all decision makers from the energy sector of the country” participated in and where problems related to natural gas tariffs were discussed, Vladimir Voronin declared that the price of gas for household consumers would decrease by 10%. Among the factors determining such a situation Voronin referred to: reduced prices of gas supplied to Moldova by other countries, stable currency exchange rates, as well as lack of inflation. Meaning there was no need for NARE meeting and for the arguments of specialists about the need to change the tariffs.

This is another indication of the lack of independence of NARE when it comes to making decisions about energy resources tariffs.

It is not the first and, probably, not the last time when NARE is obeying the president’s orders. By the way, how the communist presidency perceived the role of NARE was obvious from the way in which certain orders from the president and presidential councilors were formulated “Nujno ideino-ekonomiceskoe reshenie” (which could be translated as “we need an ideological and economic decision”), as a notorious former presidential economic councilor wrote in a letter to NARE. Thus, besides economic aspects the regulation authority should also think of ideological ones. This makes us think that the time was coming when the Agency would have declared that “Only due to the communist party Moldova has gas!”.

Disobedience was harshly punished by communists. For example, in July 2003, because the tariffs were not coordinated with the presidency, the general manager of NARE, Nicolae Triboi, was fired and the Agency was forced to reconsider its decision.

Given the situation, I do not exclude the possibility that after the installation of the government of the Alliance for European Integration, its representatives will try to exert pressure on NARE management to make certain convenient decisions. It could happen as in the case of public televisions: NARE could tell the world that it is an independent authority and the AEI should not interfere in its business.

Thus, the previous obedience of the management could play a dirty trick on the entire Agency. The more so as the Government appoints and dismisses the managers (including the general manger) of this authority. At the same time, the Government has the right to approve NARE budget and, thus, to exert political control. There is a draft law in the Parliament which, if enacted, will exclude the intervention of the Government in the process of NARE budget formation. Even if the draft was developed mostly according to USAID recommendations the parliamentary majority has the right to request a report on NARE expenses and could discover that the former general manager (now manager in Moldtelecom) has traveled way too much on public money.  

Another phenomenon is the transparency of decisions regarding the calculation and approval of tariffs. Nobody knows about the way new tariffs were calculated, what Moldovagaz asked for and what NARE considered suitable to accept. By the way, until now, there were often cases when the managers of certain energy enterprises were informed about changed tariffs and the tariffs suggested by the Agency only during the NARE meeting.  

As for the argument of NARE in favor of new tariffs, it is at times dragged in. For example, Vadim Ceban, general manager of NARE, stated that the Agency decided “for social reasons to maintain the preferential tariff for household consumers”. We are talking about monthly 30 cubic meters of gas, for which household consumers, whether rich or poor, pay 10% less then the real tariff. 

This is nothing more than a “socialist” relic and it is not the Agency’s, but the Government’s business to think about social protection. The statements about the care for the needy consumer are just propagandistic tricks. For, this tariff is paid both by the consumer who has a 500 lei pension and the one who has 50,000 lei monthly income. In summer, for example, a pensioner does not use more than 10 cubic meters of gas, while those who have their own heating system can consume those 30 cubic meters. A simple calculation proves that the pensioner benefits from subvention that is 3 times smaller than that of the citizen with a considerable income. In this case “social protection” is nothing but an illusion.

Another example could be the fact that NARE did not announce why it increased the tariff for gas transportation services two times and the tariff for distribution and supply of natural gas through the pipes serviced by an Ltd from within Moldovagaz by 4.3%.

Preferential tariffs for certain consumers lead to the discrimination of entire economic sectors. For example, the cement factory from Rezina with a gas consumption that equals to an electric plant must pay a tariff 60% higher than an electric plant. Thus, in 2008 the factory was forced to give up using gas and start using coal in the production process. Otherwise the cement would not be competitive on the market. 

In the calculation of other tariffs there is no sign of an approach according to market relations, or the principle stated by NARE, according to which “each category of consumers must cover entirely the expenses related to the service provision, expenses that depend on the level of pressure in the gas pipes, which the installations are connected to”.

International experience demonstrates that direct interference of the state in tariff setting, with all sorts of preferential tariffs, has only negative effects. 



Readers' comments
Recent comments:
iannn, 21 October 2009, 0:24
The relationship between Government and directorship of individual company may have led to the politics of ransom democracy. The minutes of meetings of directors, who was present, and agenda discussed; is standard democratic policy when the people are billed for product. Minister of energy is responsible to democratic parliament; and by constitutional definition, the people.
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