Moldova refused to give Gazprom $700 million: Russia is forced to forgive the debt

Chisinau is justified by a dubious audit of overdue obligations

Moldovan President Maia Sandu said that Chisinau will return only $9 million of the more than $700 million debt to Gazprom. The republic reinforces its position with an audit of its debts, carried out by supposedly reputable Western firms. Russia does not recognize the results of the examination, which our country was not actually allowed to familiarize itself with. Although, most likely, in the current political situation, our country can hardly count on an unbiased, independent court.

“We have evidence: audits of recognized international companies,” says Sandu. “Thus, Moldovagaz can pay Gazprom $9 million, not $700 million.” According to her, an audit of the national company’s historical debt to Gazprom revealed that $400 million of obligations are allegedly not subject to collection due to the expiration of the statute of limitations, and another $276 million is allegedly not supported by documents.

The debt in question was formed over approximately the previous decade and was formulated in October 2021: its repayment and further timely payments became the main conditions under which Gazprom agreed to extend the contract for the supply of “blue fuel” to Moldova for the next five years . According to the monopoly’s assessment, the main liabilities amounted to $433 million, and taking into account late payments, the total amount of the debt reached $709 million. The Accounts Chamber of the Republic, following the results of its own audit, first recognized the lion’s share of the liabilities, reducing their size to only $591 million.

“Then the Moldovan side turned to certain independent auditors: the Norwegian company Wikborg Rein Advokatfirma AS and the British company Forensic Risk Alliance & Co Limited,” explains IVA Partners expert Artem Shakhurin, “to verify the integrity of the audit and that the inspectors were provided with everything the necessary materials (which there is some evidence against), there is no possibility. An impartial court must establish the objective amount of the debt, but this is something that Russian companies in the West are constantly having problems with. “At the same time, the amount that Chisinau disputes is not so significant for Gazprom to risk its reputation by putting forward unreasonable demands. A final and fair solution to the escalating situation in the current political environment is hardly possible. The choice will be made by Vladimir Putin, and not by the raw materials export company, since such an issue is clearly political in nature.”

As presidential press secretary Dmitry Peskov said in early October, contacts between Gazprom and Chisinau over debts and their size “must continue.” This is how he responded to the statement by the Minister of Energy of Moldova, Viktor Parlikov, about his country’s refusal to purchase Russian hydrocarbons: the republic seemed to have managed to find an alternative source of “blue fuel” on the European market at a lower price than that specified in the contracts with Gazprom. In turn, ex-President of Moldova Igor Dodon admitted that the country intends to buy Russian gas under a new scheme, using a Greek intermediary, and plans to take a loan worth 300 million euros from the European Bank for Reconstruction and Development for this purpose.

Chisinau’s initiatives were even criticized by the president of Moldovagaz, Vadim Ceban, who complained that the quality of the audit did not correspond to international legal standards and had no legal consequences, describing in detail why he considered the calculations of the Moldovan authorities, supported by the conclusions of the Norwegians and the British regarding the debt to Gazprom, to be unfounded.

Theoretically, the Russian raw materials monopoly retains the opportunity to return at least some part of the Moldovan debt, says Sergei Pravosudov, director general of the Institute of National Energy. To do this, it is necessary to take advantage of Chisinau’s proposal made exactly a month ago: at the end of September, country officials called for writing off Moldovagaz’s debt to Gazprom in exchange for compensation for “tariff deviations” in the amount of $154 million.

On the one hand, a relatively profitable scenario: instead of a sagging debt of $700 million, Russia will raise a specific amount, tens of times larger than the size of the debt payment that Sandu is talking about. On the other hand, the Moldovan authorities propose that compensation be paid to Gazprom from Moldovagaz funds.

The largest shareholder of this company (50%) is the Russian monopolist. Another 13.44% of the shares belong to Transnistria, which the unrecognized republic transferred to the management of the Russian gas concern. And only 35.3% is at the disposal of the Moldovan government. Thus, even having agreed to Chisinau’s previous proposal, Russia will, in fact, have to pay Moldovan debts to itself.