www.infomarket.md: FIA stands against limiting maximum retail prices for petroleum products

The association sent its position on the relevant legislative initiative registered by the PAS MPs to the parliament, government and ANRE. The letter notes that the mechanism for limiting prices for basic oil products contradicts the Constitution, according to which the economy of Moldova is a market one, socially oriented, based on private and public property and free competition. “By creating a restrictive and non-transparent regulatory framework, under the pretext of protecting the interests of only a certain segment of end consumers and without any justification based on macroeconomic facts or indicators, the state is challenging the principles of the market economy. In these conditions, the state independently creates conditions for reducing or even suppressing investments in the economy of Moldova, which may directly affect the reduction in the number of jobs and deterioration of working conditions. A significant part of the operators of the oil products market in Moldova are companies with foreign capital, and the re-introduction of the concept of price limiting will create difficulties in accumulating funds for investment in the maintenance of filling stations and oil product storage facilities in proper technical condition. This increases the risk of foreign investors not returning their investments, damaging their activities in Moldova and violating international agreements on the promotion and protection of foreign investments,” the Association stated. The FIA points out the lack of predictability and transparency in the decision-making process. For example, the methodology for the formation and application of prices for basic petroleum products has changed 16 times over the past 10 years, while changes occur each time during electoral cycles. The Association notes that the maximum price limitation is offered without taking into account important pricing factors: commercial discounts provided to buyers, including within the framework of PPP projects; the cost of stocks of petroleum products at oil depots; periodic closures of refineries; annual growth of the minimum wage in the country and the amount of contributions to the compulsory medical insurance fund and state social insurance; increasing local fees; monopolization of the market for the provision of services to check the quality of petroleum products, etc. The FIA emphasizes that setting prices every two weeks, based on Platt’s quotes for the previous period, will put economic agents at a disadvantage: international suppliers sell petroleum products using Platt’s average quotes for a period up to 10 days, and companies will have to incur financial losses (according to the experience of May-August 2018, when they lost profit). In a situation of economic crisis due to COVID-19, a repetition of such a situation will create irrecoverable losses for companies. The Association points to the lack of a technical and economic analysis, violation of the principles of separation of state power and the principles of independence of ANRE, as well as the inconsistency of the bill with the European legislation. // 15.03.2021 – InfoMarket

source: https://www.infomarket.md/en/analitics/The_Foreign_Investors_Association_FIA_stands_against_limiting_maximum_retail_prices_for_petroleum_products?fbclid=IwAR38q5hgS8LvURY3pxbz761mvqwDPdYaiVtsHDKU-NqHbyN0w3sh0-RiJT0