Transdniestria increase in gas fees to pay off huge debt

The local Gazprom headquarters in Tiraspol. Now Pridnestrovie will have to raise fees to pay its gas bill

TIRASPOL (Tiraspol Times) - The government of Transdniestria will raise end user gas fees to the same level as Russians pay, announced Helen Chernenko, Minister of Economy of the new and emerging country.

" - Between 2010 and 2012, the price of gas in Pridnestrovie will reach the same level as commercial deliveries for Russia", she declared, using the constitutional shortform name of the republic.

According to Helen Chernenko, the Ministry of Economy and the Ministry of Industry have jointly worked out a blueprint for a tariff policy which is aimed to balance the need for paying gas supplies and the need for meeting social expenditures and other obligations of the republic's budget.

" - Today, we need fees that will cover the amount of gas provided to our republic", underlined the minister.

$1,3 billion in the hole

The Minister of Economy recognized that the need for increasing the fees was due to the fact that Transdniestria wants to settle its debt with Gazprom.

" - Our debt to Russia for gas is currently five times higher than Pridnestrovie's annual budget," she said. "This debt can only be controlled if we manage to pay the current gas deliveries on time, and if we do this in one year," noted the minister. According to the PMR Ministry of Industry, as of 01 January 2007 the republic's debt to Gazprom stood at more than 1,3 billion U.S. dollars. The principal of the debt amounts to $684 milion for actual gas supplies, and another $670 million in interest and late penalties. Transdniestria (officially Pridnestrovie, but also known as Transnistria or Trans-Dnestr) has 550,000 inhabitants.

" - We are ready to cooperate with Russia in order to restructure this debt, but Moscow won't negotiate with us until we start to at least pay for our current deliveries on time," Chernenko was reported by official Russian agency RIA Novosti as saying on Monday. As a result, the gas fees in Transdniestria will now begin a sliding increase towards full commercial market rates. The first increase will take effect on 01 January 2008, and by 2010 to 2012 the full rates will take effect over various sectors - both private end users and factories - until 100% of the market rates are reached.

" - The fees which we will apply as of January 1, 2008, will correspond to approximately of 80% of what is paid for similar usage in Russia", said Chernenko.

From 2008, water, gas, heating and electricity bills will increase by an average of 20% in Transdniestria. End users will pay $192 per 1000 cubic meters of gas.

No aid from Russia

The government of the Pridnestrovskaia Moldavskaia Respublica has had serious problems paying its gas debt. Cashflow constraints led its government to dip into $14 million of Gazprom-earmarked money earlier this year: The money, which was scheduled for payment of gas supplies, was instead used to cover pensions, wages in the education sector and other social obligations.

Pridnestrovie is currently not receiving any kind of foreign aid from any government source whatsoever. During 2006, after Moldova tightened its economic blockade, Russia stepped in to help the country with an estimated $77 million. For 2007's budget, Pridnestrovie's parliament counted on continued financial assistance, but the last transfer from Moscow took place in December 2006.

Since 01 January 2007, no more money has been forthcoming and Pridnestrovie has financed all of its official expenditures entirely from tax receipts and other local, self-generated government income. (With information from RIA Novosti)

See also:
» PMR Govt dips into $14M of Gazprom debt
» Gazprom signs direct energy contract with PMR, bypassing Moldova