Page 17 - FSUOGM Week 21 2021

FSUOGM NEWS IN BRIEF FSUOGM

itself sometimes pays its own bills with July 11 elections — most likely to be led for the Eurasian Economic Union (EEU)
some delay. In effect, the gas deliveries — by Sandu’s Party of Action and Solidarity member states.
for which Moldovagaz is expected to pick — is not expected to recognise the debt as Speaking at a meeting of the Supreme
up the tab — are a form of Russian aid for sovereign debt (as the past governments Eurasian Council on May 21, Pashinian
the Moscow-backed breakaway region. more or less officially did), Gazprom might said prices for natural gas transportation
President Maia Sandu made clear this have to eventually use the provisions set for domestic consumption by the EEU
is not Moldova’s debt and the debtor aside for the $7bn worth of gas delivered to members—Armenia, Russia, Belarus,
(Moldovagaz) has to settle the issues with Transnistria and write off the claims already Kazakhstan and Kyrgyzstan—should be
the parent company on its own. provisioned as “expected loss from lending”. formalised in an international agreement.
Gazprom owns 50% of Moldovagaz, In its turn, Moldovagaz claims that “the "We attach great importance to the
the Moldovan government 35% and the complex reorganisation plan of Moldovagaz formation of a single natural gas market
authorities in Transnistria just over 13%. also provides for the improvement for the EEU. We consider that gas pricing
Gazprom’s claims against Moldovagaz, of the legal framework regarding the and transportation tariffs should be set by
which sometimes the Russian company establishment of the mechanism for paying an international agreement on the basis
and authorities ambiguously refer to as “the debts to Gazprom. … the basic principle of transparent and non-discriminatory
debt of the Republic of Moldova”, reached is the assumption of the responsibility for approaches," ARKA News Agency quoted
RUB508.62bn ($6.88bn) at the end of the repayment of these debts by the entities Pashinian as saying.
2020, according to the Russian company’s directly responsible for their accumulation,” Armenia is almost entirely dependent on
financial statements. The unpaid gas bill was according to Moldovagaz’ manager Vadim Russia for gas supplies..
$220mn in 2020. Gazprom has sent yearly Ceban.
invoices for the unpaid gas since 2007. In simpler words, Moldovagaz’ manager
The claims, classified by Gazprom under says that the debt is not its debt, but Fitch revises outlook
IFRS as “expected loss from lending” Tiraspoltransgaz’ debt. Which, from a legal
accounts for the gas transferred by and accounting perspective, makes little on Azerbaijan’s SOCAR
Moldovagas to Tiraspoltransgaz, the gas sense but is an attempt to make the issue
company of the unrecognised pro-Russian part of the Transnistrian frozen conflict to stable in line with
Transnistria region. Although Russia — therefore relevant for the Moldovan
does not officially recognise Transnistria government. This has worked so far, but sovereign
as a state, its officials visiting Tiraspol may not after July 11.
(Transnistria’s so-called capital city) speak Fitch Ratings on May 19 revised its outlook
of the gas transfers as “brotherhood aid”. on the State Oil Company of the Azerbaijan
Tiraspoltransgaz charges a low price to local Republic's (SOCAR’s) Long-Term Issuer
gas consumers, but delivers the money to CENTRAL ASIA & SOUTH Default Rating (IDR) to Stable from Negative
the so-called government in Tiraspol, as and affirmed the IDR and senior unsecured
revenues to the budget. CAUCASUS rating at 'BB+'. The Recovery Rating is 'RR4'.
To make the situation even more Fitch said: “The rating actions follow the
complicated, among Transnistria’s gas Armenia’s Pashinian revision of the Outlook on the sovereign
consumers is the Cuciurgan gas-fired rating of Azerbaijan (BB+/Stable). SOCAR
power plant, which supplies almost all the renews call for EEU to form is fully owned by the state and its rating is
electricity consumed by Moldova proper. equalised with that of Azerbaijan under
The power plant is controlled by the Russian single natural gas market Fitch's Government-Related Entities (GRE)
company Inter RAO. Rating Criteria. This is underpinned by state
All the previous 15 lawsuits ended with Armenia's Acting Prime Minister Nikol support provided to the company in the form
the claims being confirmed. But as the new Pashinian has reiterated his call for the of financial guarantees, cash contributions
government in Chisinau to be installed after creation of a single natural gas market and equity injections, as well as SOCAR's

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