ECO-BUS WEEKLY DIGEST November 8-14. Most important Economy & Business news by IPN
MONDAY, November 8
Moldovan gas lesson” examined in Warsaw and Sofia
Moldova’s gas crisis was a warning to Europe of the risks of being too dependent on Russia’s Gazprom, the chief executive of Poland’s state-controlled gas group PGNiG Pawel Majewski stated for the Financial Times (FT), being quoted by Capital of Bulgaria and IPN.
People briefed on negotiations told the Financial Times that Gazprom had pushed for political concessions from Moldova’s new pro-EU government in exchange for cheaper gas. Gazprom denied this and said that the talks were “exclusively on commercial terms”.
According to Pawel Majewski, the episode should serve as a wake-up call to Europe, which gets 35 per cent of its gas from Gazprom, and warned that Gazprom’s newly completed Nord Stream 2 pipeline, which will carry gas from Russia to Germany and is awaiting approval from Berlin to start operating, would make Europe more vulnerable.
Part of corn crop could be lost due to processing bottleneck
Corn harvests have been abundant this year, thrice as plentiful as last year, in fact. But because of high moisture levels, part of the crop may be lost. Producers have to wait in long queues at drying facilities that can barely cope with the demand.
IPN spoke to Igor Grigoriev, president of Agrocereale, Moldova’s largest association of grain exporters. Grigoriev says that ideally corn should be harvested when humidity levels are no higher than 13%. “In previous years, producers used to harvest corn in December, January or even February, when humidity levels were already falling. The problem really is with these producers who decided to harvest corn at this high humidity of 17-19%, and today they have nowhere to take their crop for processing. Before corn, other grains were harvested in large amounts, so today all the warehouses, all the elevators are loaded to the gills”, explained Igor Grigoriev.
NGO asks Ministry of Finance to consider raising tobacco excise tax
The Center for Health Policies and Studies (PAS Center) is asking the Ministry of Finance to consider raising excise taxes on tobacco and related products for the next year as “an effective and important means of reducing tobacco consumption by various segments of the population, in particular young persons”.
PAS Center cites Article 6 of the WHO Framework Convention on Tobacco Control, which recommends governments to adopt tax and pricing policies on tobacco products so as to contribute to the health objectives aimed at reducing tobacco consumption.
TUESDAY, November 2
Natural gas rate for end users increased
The National Agency for Energy Regulation (NAER) on November 9 approved the natural gas rate for end users at 10.260 lei per cubic meter of gas, up from 4.298 lei per cubic meter. The new rate will be applied retroactively, starting from November 1. Taking into account the VAT of 8%, the rate for residential users will be 11.08 lei per cubic meter of gas, IPN reports.
NAER director Ștefan Creangă told a news conference that the tariff deviations for SA “Moldovagaz” total about 1.4 billion lei. The financial pressure faced by the supplier makes the payment of the purchase price of the gas supplied to Moldova impossible. “Since the start of this year, we have witnessed a continuous rise in the average prices of gas each month. In the first quarter, the price was US$124 per 1,000 cubic meters, but in the second quarter it was US$541 per 1,000 cubic meters already,” stated Ștefan Creangă.
WEDNESDAY, November 10
Vadim Ceban: Contract with Gazprom will enable to save US$405m during 14 months
According to the calculations done by Moldovagaz, as from November 2021 during 14 months, the provisions of the contract with Gazprom will enable to save about US$405 million based on the purchase price of gas, against the stock exchange prices, Moldovagaz CEO Vadim Ceban told a news conference.
“2021 was difficult in terms of the evolution of prices and of the volatility on stock exchanges. In the period, we witnessed a global rise of about 700% in gas prices. These fluctuations had an upward trend on the main stock exchanges. We had the same evolutions on the neighboring markets – in Romania and Ukraine. Together with the natural gas, the prices of oil products and coal also rose, by over 200% and about 300% respectively. The electricity prices in the region grew by about 250%. All these upward trends affected the purchase prices of natural gas. In March 2021, the prices were the lowest, while in November they are the highest,” explained Vadim Ceban.
12 gas distribution enterprises will be merged into one enterprise, Moldovagaz
Moldovagaz is reorganizing the gas distribution enterprises so as to reduce costs. By such restructuring, the enterprises contribute to ensuring a lower rate for end users. The decision will be adopted by the administrative bodies of Moldovagaz at the end of November. The reorganization procedure for merging the current 12 distribution enterprises will be then initiated, Moldovagaz CEO Vadim Ceban told a news conference, being quoted by IPN.
This way, the distribution costs will be unified and the cross compensation of these will be avoided. The unified management approaches will lead to savings and to lower distribution charges. There will be only three distribution charges at one enterprise. “This will enable us to centralize the financial resources at one enterprise. The financial, administrative and technical management will be much more efficient,” stated Vadim Ceban.
Government endorses ban on gambling ads
The Government has formally endorsed a bill seeking to ban advertising for all forms of gambling, including lotteries, raffles, sports and non-sports betting, IPN reports.
The ban covers adverts on television, in print press, in movie theaters, in video and online content, through mobile networks, on billboards, transit advertising, or via mail.
Tiraspol’s gas debt cannot be settled without political solution, Moldovagaz head
The issue of Tiraspol’s debt owed to Gazprom cannot be settled without a political solution to the Transnistrian conflict, Moldovagaz president Vadim Ceban told reporters.
When asked a question about Tiraspol’s $7B gas debt, Ceban noted that “this is a quite complicated issue”.
“No one ever said that the (Moldovan) Government must assume responsibility for that debt. It’s a commercial debt owed by Moldovagaz. It’s for the first time (in recent years) that we have concentrated on the debt formed on the eastern side (of the Nistru)”, said Ceban during a press conference.
THURSDAY, November 11
Tiraspol says amount of Moldovan lei in Transnistrian region is too high
Trade between the left and the right sides of the Nistru will contract in the near future because the amount of Moldovan lei in the Transnistrian region is too high, said the first vice president of the region’s Central Bank Alexei Melnic, being quoted by IPN.
According to him, the Transnistrian companies that sell goods to the right side of the Nistru get Moldovan lei instead. But they sell more than the consumers from the left side of the Nistru buy from suppliers from the right side. “The difference amounts to about US$135 million a year, the equivalent in Moldovan lei. This sum in lei is larger than the region needs at present. This money cannot be exchange for another currency because the banks in the Republic of Moldova refuse to do it,” Alexei Melnic stated for a local TV channel.
Gas rate of 11.10 lei can be decreased, but can also be maintained for a long period
The president of the Administration Board of SA Moldovagaz Vadim Ceban told a news conference that if the quotations on stock exchanges follow positive dynamics next year, the current gas rate of 11.10 lei can be reduced. “We hope the amounts of gas will also be higher. If the situation on the market changes and stock exchange quotations are lower, if the price of oil declines, we will act depending on the decline and will ask NAER to lower the rate,” said Vadim Ceban.
Wineries wait for guests on World Wine Tourism Day marked on November 14
The wine industry of the Republic of Moldova for the first time celebrates World Wine Tourism Day on November 14 so as to revitalize the tourism industry. Tourists who are willing to familiarize themselves with the tradition and culture of regions associated with winegrowing and winemaking are invited to mark World Wine Tourism Day together with winners. They should yet have a COVID-19 vaccine certificate or a negative test result on them.
In a news conference at IPN, Sergiu Manea, president of the Employers Association of the Tourism Industry of the Republic of Moldova, said World Wine Tourism Day has been celebrated since 2009 on the second Sunday of November. Its goal is to highlight the culture and traditions of the cities and regions that are associated with winegrowing and winemaking. Wine tourism consists in the tasting, drinking and buying of wine directly from the winery and can include visits to wine cellars, vineyards, famous restaurants and wine festivals. In the countries with developed wine tourism, the economy recovers gradually after the pandemic.
MoF publishes draft amendments to annual budget and fiscal policy
The Ministry of Finance proposes that next year the standard personal exemption be increased from 25,200 lei to 27,000 lei, and the additional exemption from 18,900 lei to 19,800 lei. Also, it is proposed to double the exemption for dependents from 4500 lei to 9000 lei. This is included in a set of draft amendments to the 2022 budget and fiscal policy that has been put up for public consultations, IPN reports.
Another proposal is to set the reference value date for the real estate tax at January 1 so as to reduce the costs and simplify the tax administration process by the local public authorities. It’s also proposed to allocate 100% of the road tax to the local budgets and abolish the 1.5% tax on mobile telephony services, among other things.
Parliament approves ban on gambling adverts
Over 1.3 million lottery tickets are sold daily in Moldova and supporters of a ban on gambling advertising say most of them are bought by low-income people. “Gambling creates victims and addiction, while this industry is being promoted through aggressive marketing and publicity campaigns”, argue the sponsors of the bill, which today passed the first reading in Parliament.
FRIDAY, November 12
Hospitality industry anticipates 30% price rise for hotels, restaurants and cafes
The hospitality industry forecasts that the prices in hotels, restaurants and cafes will increase by over 30% following the increase in gas rates and in utility prices, which will have an impact on the prices of products, IPN reports, quoting a press release of the National Association of Restaurants and Leisure Facilities of the Republic of Moldova (MĂR).
According to MĂR, theoretically, if the costs are added to the price of food, the public eating places will be able to cover the exorbitant sums they will have to compensate. They will maintain the working capacity, but will have fewer visitors. The citizens need to cover the primary costs, especially during the cold period of the year, such as public utilities, food and clothing. A person now spends 4% of the incomes on recreation, including on eating in public places. Now that consecutive prices rises are expected, the number of consumers and average consumption will decrease.
SATURDAY, November 13
Road toll will be fully distributed to local budgets
The tax for the use of roads by motor vehicles registered in the Republic of Moldova, which is levied in accordance with the fiscal legislation, will not be a source of incomes for the road fund. This will be fully distributed to the territorial-administrative units of the first level and will this way be transferred to the local budgets. This is provided in the draft budgetary-fiscal policy document for 2022, IPN reports.
Amendments were also proposed to the Road Fund Law. The notion “local road” will be replaced with “roads of district/municipal interest” so as to make it clear for what category of local public roads money from the road fund will be distributed depending on the length of administered distances.
Fiscal policy for 2022 introduces excise duties on electronic cigarettes
The draft budgetary-fiscal policy for next year regulates the application of excise rates on cartridges and refills for electronic cigarettes and on preparations intended for the use of cartridges and refills for e-cigarettes. The excise duty will be 1.957 lei for 2022 and will rise to 2.055 lei in 2023, IPN reports.
The draft provides that in 2022, for cigarillos, including those with the cut end, and for cigars that contain tobacco, the excise rate will be, as in 2021, 41%, but not less than 959 lei. In 2023, the excise rate will also be 41%, but not less than 1,103 lei. The rates are similar for other types of cigarillos and cigars that contain tobacco substitutes.