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Heating, the dearest electoral agent
Iurie Gotisan, February 16, 2007

Government lures population with subsidies and throws heating system on city hallís shoulders...

The introduction of reference prices for the heating supplied to population in the centralised system increased approximately 2.4-fold the price of a gigacalory starting January 1, 2007. Of course, a rise of heating tariffs was expectable after the natural gas prices have grown. Indeed, there were many tries of this kind in the past years. The tariff of 233 lei per gigacalory was established in 1999. Authorities tried to increase the tariff up to 267 lei in late 2000, but the country was on the brink of parliamentary elections and this measure was given up. Other tries to increase the heating tariff followed later, but they finally failed. However, the Chisinau Municipal Council (CMC) gave green light on January 25 to a rise of the heating tariff up to 540 lei per gigacalory. It was also decided that about 220 million lei will be allocated from the municipal budget to cover the difference of price before the new heating season.

The state is subsidising the centralised heating system in almost all European countries because the heating providing service is the most expensive one. For example, these countries practice two forms of indemnities: compensations for vulnerable people and subsidies for heating enterprises. Of course, if these enterprises are efficient and are productive at maximum. Or, our heating system is facing another situation. It is interesting that city hall functionaries said when the new tariff was approved that the municipal budget does not include resources for subsidies and indemnities. It was known for sure that the tariffs will be finally increased and so the city hall administration should think about consequences on summer.

The passing of Termocom from administration of Government to management of local authorities was often followed by turnoffs and huge losses in system. Consumers are not told anything but the fact that the price of a gigacalory is increased in bearable limits. However, all of us pay the subsidy, including those who do not have any connection with the centralised heating system any longer. Local authorities are trying to make an "electoral agent" from heating in terms that the rise of tariffs allowed by reference price will be "controlled" so that not to affect the sympathy capital of population. The negative result of the political equation also affects the system, which may "crack" the next years if not now. And the price of this disaster would be tens of millions of lei thrown in subsidies, not normally invested.

At the same time, the Termocom administration is sure that the higher tariffs will cover all expenses of the enterprise. However, in spite of massive subsidies paid to heating operators in the past years and of those promised for the next 2-3 years, the plants produce energy by suffering losses. The helpless situation of the centralised heating system is firstly linked to the bad management. Local reference prices do not cover at least half (about 40 percent after the rise of natural gas prices) of the production costs of heating because some heating is lost somewhere on the route and nobody knows or wants to stop these losses. If heating producers and providers do not invest in renovation and modernisation of distribution networks, so that to reduce the system losses, no rise of tariffs or granting of state subsidies will resolve their problem. Otherwise, the real cost of a gigacalory will exceed the medium European level after several years because of high gas prices and our energy-consuming and inefficient system.

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