Hands in tanks: a new energy crisis is raging in Moldova
By the end of March, a large-scale energy crisis broke out in Moldova. Prices at gas stations are breaking new records every day, transport stops running, and farmers are talking about the failure of the sowing campaign. European markets are experiencing price spikes and supply difficulties due to the war in the Middle East. The situation is aggravated by the abandonment of Russian energy resources. Read more about the crisis in Moldova in the Izvestia article.
Prices are breaking records
In Moldova, the cost of fuel is regulated by the state. The maximum retail prices are set by the National Energy Regulatory Agency (ANRE). It focuses on current quotes, as well as adds excise taxes, VAT and margin for gas stations. According to the agency, in March, diesel fuel rose in price by a third, gasoline jumped by 20%, approaching the psychological mark of 30 lei per liter (140 rubles).
The head of the ANRE, Alexei Taran, warns that price increases will continue in the coming days. Analysts believe that the next psychological barrier will be around 50 lei per liter (232 rubles). It is important that some types of fuel — diesel and diesel — are simply not available at some gas stations. The fact is that wholesale prices are already higher than the retail prices set by the agency, so gas stations refuse to trade at a loss.
The Moldovan authorities are sounding the alarm in this regard. Back in early March, the government of the country introduced a high-alert regime in the energy sector. The Cabinet of Ministers then ordered to limit the export of petroleum products, replenish state reserves and protect the interests of ordinary consumers. Officials also promised to investigate cases when gas stations impose limits on the sale of fuel.
By the end of March, it became clear that the measures had not worked. President of the Republic Maia Sandu said that the country remains vulnerable to energy shocks.
"We have analyzed potential scenarios, because it is one situation if the crisis of prices and energy resources ends in a few weeks, and another if the crisis takes months. We must prepare for the worst—case scenarios," she warned.
From the words of the Moldovan leader, however, it becomes clear that in reality Chisinau has no solution.
"We have no oil, no natural gas, rising prices will affect both households and the economy.… The Government will propose measures within our capabilities. Obviously, no one can fully compensate for the losses caused by the crisis, but there are certain solutions," Sandu stressed.
Buses are not running, farmers are in shock
Two areas have suffered the most from the current crisis. One of them is transportation. Due to the sharp rise in prices, many routes have become unprofitable, so intercity bus services are being reduced. Rural areas that remain cut off from the world are particularly affected.
Oleg Alexa, Chairman of the Association of Employers of Motor Transport, says in this regard that carriers cannot cope with costs. The Moldovan government declares its support, but in fact, according to him, it only demonstrates professional dysfunction and the inability to carry out even basic calculations. Some of the cancelled routes are unlikely to be restored in the future, and many villages will remain without regular transport links, the expert adds.
The second area is agriculture. The total cost increase is estimated at 20-30%, while farmers cannot buy fuel for sowing even at the new cost, because suppliers are holding back the goods in anticipation of a further price spike. In such conditions, many farmers will not be able to carry out spring work on time, while others will carry it out partially, says Alexander Slusar, head of the Association of Agricultural Producers.
The Moldovan government promises to compensate farmers for the excise tax on diesel fuel, but at the same time, an upper ceiling of 200 thousand lei (more than 928 thousand rubles) has been set, which many will obviously overcome. Besides, they promise to return the money only at the end of the summer.
"If urgent measures are not taken, fruits, vegetables and even bread will turn golden, if at all," warns farmer Victor Raileanu.
It is clear that all this is generally disastrous for the Moldovan economy. The National Bank planned to keep price growth at 5% this year, but now forecasts have to be adjusted. The Ministry of Finance says that the figure may exceed 10%. Experts recall 2022, when, against the background of a similar energy crisis, inflation broke the anti-record, exceeding 30%.
It is characteristic that the Moldovan authorities themselves provoked the current situation in many ways. In recent years, they have consistently refused to supply Russian energy resources. Chisinau supported Ukraine, which stopped pumping gas through its territory, and at the end of last year, following the United States, imposed sanctions against Lukoil. As a result, the country is now completely dependent on the European market.
Moldovan opposition politicians are now demanding that the government resign or establish a dialogue with Russia. Igor Dodon, the former president of the republic and head of the Party of Socialists, says that it was his supporters who proposed restoring relations with Moscow during the last parliamentary elections.
"This would mean cheap resources and new markets for our economy. But another model was chosen — loans, Russophobia and irresponsible government. And the situation in the country is only getting worse," he complains.
Former Moldovan Prime Minister Vlad Filat stresses that Moldova is facing an economic downturn and a spike in inflation.
"Unfortunately, the government is going with the flow. There are insufficient reserves, no clear strategic plans, and no preventive measures have been prepared. There are only delayed reactions and after-the-fact explanations. We are entering a crisis without proper protection, and citizens will have to pay for it," he notes.
"Huge problems await us"
The current government of the country has chosen a single-vector development, Moldovan political scientist Alexander Korinenko is convinced. According to him, the authorities have fundamentally refused to purchase Russian energy resources, as a result of becoming dependent on the European direction.
— In addition, no fuel reserves have been created in the country, and officials are talking about the critical situation, but they are not doing anything. The plan, apparently, is to wait out a difficult period, they don't seem to be going to take any ideas or decisions of their own. But if this crisis drags on, it's hard to imagine what will happen to our economy," the expert warns.
Former deputy of the Moldovan parliament Zurab Todua also links the current crisis with the refusal of the current authorities of the republic from Russian energy resources.
— I also note that at the same time, the ruling party is seeking the country's withdrawal from the CIS, namely, many Moldovan farmers supplied their products to the markets of the post-Soviet states. Now farmers find themselves in an extremely difficult situation — there are more expenses and fewer sales markets. I think we're in for huge problems. The population will become even poorer, the flow of emigrants will increase, thousands of people will be drawn to leave the country," he predicts.
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