Moldovan PM announces new measures to supply market with diesel, protect consumers from price increases

The government will implement additional targeted measures, in order to ensure balance on the oil products market and to protect consumers. Prime Minister Vasile Tofan today announced these measures after a meeting of the National Crisis Management Commission (CNMC). The PM noted that the authorities’ goal was to secure sufficient diesel stocks in the country, while at the same time protecting consumers, including farmers, from unjustified price increases.

The prime minister stressed that it is necessary for the authorities to intervene quickly with preventive measures, before problems escalate.

“We came into government to build, to carry out reforms and to move the economy forward. But a responsible government must also know how to react to crises. And in this period, there are many crises and they appear quickly. We must intervene before problems escalate, not after they begin to affect people. And this will remain a principle of this government,” said Vasile Tofan at a news conference.

Thus, the prime minister announced that the formula for importing diesel would be modified, so that imports remain possible and attractive.

“We will temporarily adjust the formula, so that the import of diesel into Moldova remains possible and attractive. And here we must find the right balance. Today, at the CNMC, we decided that, for a period of 30 days, we will move from FOB Med quotations to CIF Med quotations. The formula will take into account the cost of diesel delivered to our region. Not to a port in the Mediterranean Sea, but to a port in our region. This means switching from FOB to CIF, including transport and insurance costs,” said Vasile Tofan.

Another measure provides for temporarily increasing the commercial margin on oil products for a period of 30 days.

“Also, for 30 days, we will increase the margin by the equivalent of 25 dollars per ton, that is, approximately 0.37 lei per liter. The pressure from importers was for much higher increases. Increases of 1.20 lei, 1 leu or at least 0.60 lei were requested. We cannot allow such an increase. We accept an increase of only 0.37 lei per liter. This measure is taken only for 30 days. We will monitor the situation and then intervene, if necessary,” emphasized Vasile Tofan.

At the same time, the official announced that the ANRE (National Energy Regulatory Agency) decision to increase the commercial margin for fuels by 0.48 lei per liter, which was to enter into force on August 1, would be postponed to a later date.

Vasile Tofan explained that the state of alert in the energy sector had been introduced given that the situation on the market remains complicated and international prices had risen sharply in a short period of time.

“We all see it at the pump, as a result of the incident on the Caspian pipeline, which supplies most of the oil to the refineries in Romania, from where we are supplied. But also because of the war in the Gulf and the Red Sea. Supply routes are under pressure, including due to the low water level of the Danube, which does not allow barge traffic. More countries are taking measures to limit re-exports, which again affects us. Bulgaria has done it and Romania is also expected to do so. And in Moldova, at some stations, we are seeing diesel shortages. The number of these stations is still small, but it is growing day by day,” the prime minister noted.

Vasile Tofan also had a special message for importers, stressing that it is important for economic operators to continue bringing diesel into the country and ensure fuel supplies.

“My message to importers, to all companies on the market, is a direct one. We understand that, for such a period, margins may be lower. We understand that for certain batches and for a short period, some companies may even end up selling at a loss. We understand this. But I ask you to look at the market in the long term. I believe in a free market, but I also believe in responsibility, in long-term thinking and in economic patriotism, if you allow me. I believe economic patriotism matters as well. We are counting on companies to bring diesel into the country and ensure the supply of fuels,” said Vasile Tofan.

At the same time, the authorities have approved other measures to supply the country with oil products. They include priority customs clearance for oil products, dedicated lanes at border crossings for tanker trucks and priority access to rail transport.

“This will simplify things; it is another measure on our part. We will limit exports and re-exports above certain minimum levels. The product brought in for the Moldovan market must remain in Moldova. We are limiting diesel sales in containers larger than 40 liters, so that people do not come to stock up with hundreds of liters, but we will make an exception for farmers, because we know they need to refuel their combines in the fields,” explained Vasile Tofan.

At the same time, the prime minister ordered that public institutions are informed to reduce their diesel consumption by at least 20 per cent.

“I believe it is the responsibility of every each to tighten its belt now that we have a market deficit. The state must set the first example. We do not want artificially low prices and empty stations, but we will also not accept uncontrolled prices and profits made on the back of the crisis,” Vasile Tofan underlined.

The prime minister emphasized that, in the current situation, discipline, coordination and swift action are needed across all state institutions.

“We have a complicated situation; we do not want to downplay its seriousness, but it is manageable. We do not need panic; we need discipline, coordination, and rapid action among all state institutions, including local authorities. We will monitor daily diesel stocks, imports, the situation at filling stations, the Dniester’s water level and water supply. We will intervene before problems turn into bigger crises. This is a responsible governance. Our goal is to protect people, ensure the continuity of services and maintain the normal working of the country. This is what we will focus on,” concluded Vasile Tofan.

According to the prime minister, the regulated model for setting fuel prices applied in Moldova ensures the lowest fuel prices in the region, but it can increase the risk of lower stocks of oil products, which go primarily to the liberalized markets in the region where prices are higher.

“Unlike Romania and Ukraine, Moldova has a regulated market. ANRE sets the daily maximum ceiling for diesel prices. This system has an advantage: it keeps prices low. But it also carries risks, and I want to explain them. Today, diesel costs around 31 lei in Moldova. In Ukraine, the price is 35 lei. In Romania, it is close to 40 lei. For people, for farmers, for transport operators and for the entire economy, this difference matters. It is in our favor. But a regulated market also has a cost. When prices rise, especially when they rise rapidly in our region, diesel naturally goes where prices are higher, which creates risks of diesel shortages at the pump in Moldova. In other words, lower prices protect us, but can increase the risk that Moldova ends up with lower volumes. This is what we see happening today. That is why, we must find a balance. Although there is strong pressure from exporters and from participants in the fuel market, we cannot liberalize the market at this moment. We will remain principled; we will not liberalize the market; we want to remain within the paradigm of regulated prices to protect people, especially now that we are in the agricultural season. We are keeping the maximum price set daily by ANRE,” stressed Vasile Tofan.

The government today introduced, for a period of 30 days, a state of alert in the energy sector, in order to prevent risks to the country’s fuel supply in the context of disruptions on the regional market.