The government of Moldova has averted an impending halt in Russian gas supplies by issuing an emergency loan to Moldovagaz, allowing the national gas importer and distributor to pay outstanding arrears for gas supplies to Gazprom.

But Moldova’s President Maia Sandu also urged the population and business to reduce natural gas consumption due to budgetary constraints on shielding Moldovagaz from higher gas prices.

Earlier this week, authorities declared a two-month state of emergency for the country’s energy sector in an effort to address fears of gas supply disruption.

According to Moldovagaz, a last-minute government payment to the company on Thursday permitted the importer to send over $34 million to Gazprom to pay in full for Russian gas deliveries between 1 January and 20 January.

However, Moldovagaz may be required to seek new financial assistance from the government in the second half of February to make a next payment to Gazprom, according to local media reports.

On Friday, Moldova's parliament voted for an increase in heating bill payments to households in line with a recent proposal from Moldovagaz.

According to the approved bill, authorities will pay up to 80% of the difference in heating bills compared with the amount that people had to pay in October, the last month of a long-term gas supply contract between Moldovagaz and Gazprom.

Two opposition parties have called for President Sandu to resign after criticising an agreement, struck with Gazprom in November, that led to a significant increase in the purchase price of the Russian gas and locked Moldovagaz as a sole importer for the next five years.

Earlier, Moldovagaz said that domestic gas sales at the government-regulated price are not sufficient to generate sufficient financial resources because it had to buy gas from Gazprom at a more expensive price under the new contract arrangement.

This new price arrangement is closely linked to European spot gas prices while the previous contract was mostly indexed to an oil and products basket, according to Moldovagaz, which has Gazprom as a 50% shareholder.

Banks in Moldova have been reluctant to provide bridge loans to Moldovagaz because of its precarious financial position and its large historic debt to the Russian gas monopoly.

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