Maia Sandu warns of rising energy prices and announces compensation plans
The Republic of Moldova needs to be ready for the "worst-case scenario" if the drought continues. This situation could result in reduced energy production, potentially leading to higher electricity tariffs. President Maia Sandu issued this warning during an interview on Radio Moldova.
The head of state noted that the Government is preparing support measures for the population, including compensation, but the value of these measures will be determined by available resources.
The price increases for natural gas, electricity, and fuels cannot be controlled within the Republic of Moldova, as the country is dependent on developments in external markets and the energy situation in the region.
According to the president, the drought is affecting hydroelectric power production, and there are also problems with the operation of some power plants in the region. Also, the war in Iran and regional instability are affecting the oil products market and natural gas supply.
"The worst-case scenario would mean that the drought continues, namely that there is less electricity production, and when there is less production in the region, this means that prices also increase. These are all external factors and, somehow, they are all on the negative side for certain prices or for certain energy resources. Prices have already been influenced," said Maia Sandu.
"We have made significant efforts to increase the production of renewable energy, and now we are focusing on storage solutions. Without adequate storage, we sell energy cheaply during the day and then have to buy it back at a higher price in the evening. However, if we can manage our consumption during peak hours when prices are highest, we can alleviate some of this financial pressure," stated Maia Sandu.
The head of state explained that price fluctuations depend on various factors, including regional hydrological conditions and the operational status of power plants. Additionally, the ongoing war in Iran and regional instability are impacting the oil and gas markets.
"There are multiple factors at play: on one hand, drought has affected the operation of several hydropower plants in the region, and nuclear power plants are also currently out of commission. On the other hand, we face issues with diesel and gasoline due to the war in Iran, as well as disruptions in the Black Sea where petroleum products can no longer be transported to Romania for processing before being brought to the Republic of Moldova. Regarding natural gas, supplies have decreased due to the war in Iran, and the situation remains uncertain with respect to the reopening of the Strait of Hormuz," added the head of state.
Maia Sandu emphasized that if climate conditions improve, the pressure on prices could diminish. The Republic of Moldova will continue to invest in renewable energy and storage capacities to reduce its dependency on the regional market.
"If weather conditions improve and we experience more rainfall, there will be an increase in electricity generation, leading to lower prices. We will invest further in storage capacities and renewable energy, and I hope that in one or two years, we will achieve greater energy independence. Nevertheless, we will still rely on purchasing electricity from the market to maintain balance, depending on whether we face ongoing droughts in the fall and winter or if rain returns and the Danube levels normalize," Sandu concluded.
Compensation for the population
The head of state announced that the Government is currently calculating potential compensation for the population and will determine the support it can provide and to whom. As in previous years, priority will be given to low-income households.
"The Government is working to identify financial resources for compensation. They are making all the necessary calculations and will inform us at the appropriate time about the amount of assistance available and the groups that will benefit. As usual, the focus will be on those with lower incomes. It is evident that energy costs represent a significant portion of household expenses in the Republic of Moldova, and the rising prices are affecting more people," the president stated.
Maia Sandu emphasized that the authorities will look for funding both domestically and from international partners. However, she acknowledged that securing external support may be more challenging, as many countries are facing similar issues.
"In previous years, a substantial amount of the funding for compensation came from our external partners, particularly EU countries and the European Union. The situation is different now because everyone is dealing with their own problems, including the recent drought, high temperatures this summer, rising prices, and the ongoing conflict in Iran. These factors make it more complicated to mobilize resources from abroad. Nevertheless, we will do everything possible to assist as many people as we can," Maia Sandu concluded.
We remind you that on Friday, August 21, the National Energy Regulatory Agency (ANRE) will hold a session to approve a gas tariff increase. As a result, household consumers in the Republic of Moldova may face an increase of nearly 6 lei per cubic meter of natural gas starting September 1 of this year.
ANRE has published a draft decision outlining the new regulated prices for natural gas supplied by Energocom, proposing 20.3 lei per cubic meter, including VAT. This represents a significant increase from the current price of 14.42 lei, approximately 40.8%.
According to the draft, ANRE proposes a tariff of 18.79 lei per cubic meter, excluding VAT, for household consumers, compared to the current tariff of 13.35 lei per cubic meter, excluding VAT.
This measure follows Energocom's July 15 request for an even higher price increase, proposing 19.3 lei per cubic meter excluding VAT and 20.93 lei per cubic meter including VAT. The company cites rising acquisition costs and accumulated financial deviations of over 106 million lei as justification for this price adjustment.
The request for tariff adjustment is in accordance with ANRE's methodology and is largely influenced by the fluctuations in international market prices.
