Rise in tariffs between political tricks and economic impotence. Info-Prim Neo analysis

After the democratic forces joined efforts and the Communists lost power, the water and sewerage charges and the bus and trolleybus fares in Chisinau have been raised. A part of the Chisinau residents, including those who voted for a change of power on July 29, are convinced that it was a necessity and do not hurry to disappoint themselves in the new authorities. The others are concerned about the pensioners and walk around, uttering the “I told you” phrase. The recent rise in tariffs in Chisinau aroused negative reactions all over the country, including in the settlements where the water charges are higher than the new charges approved in Chisinau. Some people are optimistic, others are pessimistic, while the rest are indifferent. But very few can explain the situation. The trust in the Moldovan politicians during 20 years has diminished critically, being replaced with sentiments and emotions. The political speculations about the tariffs transformed the rise in the trolleybus fare in Chisinau by 1 leu into a national problem. We cannot doubt the economic vulnerability of the largest part of the Moldovans, denying the negative effect of any increase in tariffs. Therefore, in order to accept them, we want to be sure that they are justified. Not even the most optimistic persons dare to explain the rise in tariffs by a possible and necessary increase in salaries, pensions and student awards in the near future. This is a an economic approach to the problem, but the Moldovan economy in the present situation is unable to provide such a solution. The 'optimists' agree to pay more because they are aware of the financial crisis that hit the water supplier Apa-Canal, the Electric Transport Company and the Urban Bus Company and because they prefer to pay more rather than not drinking water or walking on foot if these companies go bankrupt. [Unpopularity versus necessity] The local councilors who voted in favor of rising the tariffs say in unison that it was an unpopular, but necessary decision. Councilor Oleg Cernei provides even figures to support this assertion. According to him, over 120,000 people have benefited from free public transport services. This cost the local budget 145 million lei a year. Prosecutors, judges, customs officers and other servants enjoyed such concessions alongside pensioners and invalids who receive pensions of 400 – 500 lei. “This is said in laws. We cannot abolish them, but the Parliament will modify them in the near future and will annul the concessions for these groups of people.” Cernei said that the elderly people, invalids and persons on low incomes will benefit from compensations of 70 lei a month and will not be seriously affected. However, those that can afford will have to pay the full fare as they receive rather large salaries. According to him, 70 lei a month means more than the possibility of traveling free of charge. “Until present, the pensioners travailed by the trolleybus 2-3 times a month. Now they will receive by 70 lei a month and will be able to pay for 35 trips or use this money in a different way.” “The tariffs had to be raised as the Communist and Christian-Democratic councilors, who formed earlier a majority, did not want to increase them gradually. If the tariffs had started to be raised gradually 3-4 years ago, we wouldn't have had such a situation today. I hope that the legislation on public utilities will be modified soon and and the National Agency for Energy Regulation will be empowered to set the tariffs for public utilities as this should not be within the competence of the local Council. A national authority should adopt them according to a relevant methodology so that the issue of tariffs is not transformed into a political matter. The Chisinau Council was forced to take such a decision,” Cernei said. He promised that the water and sewerage charges and the bus and trolleybus fares will not be raised during the next two years at least. Meanwhile, conditions will be created for attracting investments . “Nobody wants to invest in a company that cannot cover its costs. Now we will have the possibility of raising a loan from the European Bank for Reconstruction and Development and will be able to implement different public management methods, including by introducing ticket-nippers instead of the 400 conductors who have three pockets – one for the Electric Transport Company, another one for the conductor and the third for the driver. The rise in tariffs is the first step, while the modification of the management will be the second.” Another councilor, Oazu Nantoi, said that when the legislation on the local public administration was adopted, the tariffs remained within the competence of the local decision makers. “During many years, the power in the Chisinau Municipal Council was held by the Communists. The democratic alliance formed in the Council in 2007 was destroyed by the Communists, who in fact controlled the situation. They avoided raising the tariffs for over 10 years. But Apa-Canal took out a loan from the European Bank for Reconstruction and Development and must repay it in accordance with the contract, including by increasing the charges. Over many years, the Municipal Council, in the person of the Communists, pursued a populist policy as a result of which both Termocom and Apa-Canal degraded. After the balance of forces in the Council changed following the July 29 elections, the new major group assumed responsibility and raised the tariffs so as to prevent the failure of these systems. We will yet see what the central authorities will do and how the dialogue with the local authorities will be like. It is absolutely incorrect to reduce everything to rises in tariffs. The situation is much more complicated. There had been an eight-year war between the city and the central power. The Chisinau residents did not want to vote for the Communists and the bill on the status of the municipality of Chisinau remained blocked in the Parliament. These problems should be tackled systemically,” Oazu Nantoi said. [Moldovans' mentality] Some of the councilors who voted for rising the tariffs on September 15, earlier refused to do it. The draft decision gathered dust in the City Hall's drawers for a long time. We can only guess what caused the change. “It is a coincidence,” said councilor Vasile Parasca. He considered that the rise in tariffs is a coincidence, but does not say why the same argument was not valid before July 29 and what made him change up his mind. “Many consultations had been held. We considered all the possibilities. It is a symbolical rise as it should be even higher. It was decided so. The councilors examine this issue every year. We try not to hit the deprived groups that cannot pay. A commission was set up to analyze all the possibilities. Before the elections, we had a meeting with representatives of all the factions, except the Communist one, and considered solutions”. [Looking for better solutions] Not only the Communist councilors did not vote in favor of the rise in tariffs. Councilor Oleg Onishchenko did not vote for higher fares as he considers that better solutions could be identified in this case. He said that about 1 million lei a month would have been saved if the conductors had been replaced by ticket-nippers and the fares could remain unchanged. For his part, councilor Valery Klimenko said that a clear compensation mechanism should be worked out for those who need compensations for water. “A simple procedure should be formulated for pensioners and invalids so that they do not need to look for difference receipts for several years to get these compensations.” The statements made by the Communist politicians strengthen the pessimists' conviction that the rise in tariffs was an irresponsible act done by incompetent persons who took power. Former Minister of Economy Igor Dodon said that the increase in charges and fares is the simplest solution. According to him, the management of the companies should be improved so that they can cover their costs without raising the price of the services. Asked how this could be done, Dodon said that there are a lot of methods that can be used to improve management. “They will soon increase the heating charge as they cannot solve the problem otherwise. It is wrong to raise the tariffs without introducing a system of nominative compensations as the population's incomes did not increase. What will the pensioners do? The compensation of 70 lei a month is too small.” Meanwhile, representatives of the vulnerable groups took to the streets and protest against the rise in tariffs. On their own initiative or directed by somebody from outside, they defend certain political forces and go against other forces. But nobody told them that they should ask for higher salaries and pensions to pay the higher tariffs, which grow and will grow in the whole world. Maybe they should first demand that more new workplaces be opened, where the salaries are higher. The new government can present the issue of tariffs as an ordinary thing. The political tricks hide the direct connection between the value of the salaries and pensions and the ordinary people's ability to pay the tariffs. Maybe the people should clarify first of all who is responsible for the value of the pensions and salaries and who is in charge of the value of tariffs.