Experts forecast power price hikes

Experts say that a considerable increase in the price of electricity is unavoidable, as Ukraine’s short-term goal is to increase the tariff to 4 cents per kWh. This would determine the increase of the tariff for the consumers of Moldova up to about MDL 1.2 against the present tariff of MDL 0.78. Economic expert Veaceslav Ionita told Info-Prim Neo that a higher price was expectable, as the price of the power supplies to Moldova had to be adjusted to the region’s supply price. “It is not normal for this zone of Europe that Moldova buys electricity at such a low price, given that the price of natural gas has went up”, the expert says. According to the expert, it is not possible for Moldova to buy the power for 2.7 cents when on the Ukrainian market it is already sold for 4 cents. Thus, it was obvious already last year that Ukraine would demand an increase in price after the expiry of the supply agreement. Until now Ukraine provided cheap power as it had the same problem as Moldova: it had lower electricity generation capacities and was purchasing cheaper natural gas. At present the situation has changed: Ukraine has to create new production capacities, and will purchase natural gas at market prices. Already last year, the experts were warning the authorities that Moldova must find a solution for the energy issue, even in case of a future economic growth. The present production capacities can not ensure an economic growth or Moldova’s energy security as long as there are conflicts with the foreign suppliers. Although at present all the distribution networks purchase about 30% of the necessary energy from the local Thermal Power Plants (CET), they are inefficient, old and require investments of at least USD 300 mln, the expert says. Thus, if Moldova would increase the consumption, investments of about USD 2 bln would be necessary for the increase of the production capacities. Apart of the issue with Ukraine, the price of power delivered to consumers at present by Union Fenosa should grow by at least 20%, Veaceslav Ionita says. According to him, UF has several times asked during the last few years to increase the tariffs in light of the company’s expenses for payment of salaries and purchase of equipment, which have practically doubled in the last four years. Its requests were not fulfilled, even if the supplier had all the legal instruments to ask for an increase. Thus, we can freely say that the prices were politically maintained at the same level during four years, Veaceslav Ionita added, quoted by Info-Prim Neo. The Minister of Industry has recently said that Ukraine insisted on increasing the price of power supplied to Moldova starting July 1. For its part, Moldova proposed to increase the tariffs gradually, during 2 years, in order to avoid the shock. In case Ukraine asks an exaggerated price, the minister said Moldova will ask taxes for the transit of power for the southern Ukraine, for which this country is not paying a cent at present. A delegation of Moldova will leave for Ukraine in the second half of July to negotiate the price of power. Ukraine insists on a tariff of USD 0.31, instead of the current tariff of USD 0.027.

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