Economic analyst recommends Chisinau authorities to claim their rights over Termocom JSC in Constitutional Court. Analysis by Info-Prim Neo

“The Chisinau City Hall can appeal to the Constitutional Court against the law on administration and denationalisation of public property, which is quite probable to be declared unconstitutional, through the agency of an MP,” economic expert Veaceslav Ionita told Info-Prim Neo. The law envisages the inclusion of Termocom JSC in the list of facilities that cannot be privatised, contrary to the supreme law and to the principle of local autonomy. Ionita says that the central authorities can ban only the privatisation of the property that belongs to them, but not that of the local authorities. According to the expert, all the facilities administered by the authorities are considered private property, meaning they can be sold and bought, on condition that they are not declared public property. Termocom is municipal property and only the local authorities, by the vote of the Chisinau Municipal Council (CMC), can decide on changing its status from private property into public property of the municipality. Only CMC can ban the privatisation of the company. [With no free market, investments are useless] Speaking about the possibility of the local public authorities taking over Termocom JSC from the Creditors’ Council, Veaceslav Ionita said that there should be a scheme for reforming the company, a privatisation programme that will contribute to the creation of a free heat market and will ensure an efficient regulation of the heating charges. According to Ionita, the Chisinau administration should think about the possibilities of attracting investments because it will not manage to reform Termocom on its own. Investors’ money will be used to put into service a new management system at the company. The old Soviet-time system is inefficient and does not allow decentralising and demonopolising the company. In the absence of a free heat market in the municipality, any investment is useless. The market can be created on the basis of the 20 thermoelectric plants of Termocom, of CET-1 and CET-2, where the consumer-supplier relations should be direct, with Termocom levying only transportation taxes from the suppliers. [A sum of 1.5 bln EUR is needed to reform Termocom JSC] The inadequate pricing policy made many economic agents give up the centralised heating system and set up autonomous stations. When the price of natural gas goes up, Ionita says, the economic agents could return to the centralised heating system. This will mean larger amounts of heat, which the suppliers cannot provide owing to the outdated production technologies. About 700 mln EUR is needed to renovate, reequip and create new production capacities in the municipality of Chisinau, at least 300 mln EUR to renovate the mains, and some 300 mln EUR to repair the distribution networks. In such a way, the investment in reforming Termocom will total 1.5 bln lei, said Veaceslav Ionita, quoted by Info-Prim Neo.