North Macedonia will soon open a tender for the construction of an interconnector with Greece in an effort to create alternative sources of gas for the country and the wider Western Balkans region, as a means to reduce reliance on Russian gas.

This was confirmed by Minister of Economy Kreshnik Bekteshi, during an interview with the Voice of America.

He also clarified that the recent government decision to increase VAT does not include everyday consumer products such as bread or milk.

Voice of America: At the beginning of this week, the government approved an increase in the tax from 5% to 10%. You mentioned only a few products whose prices are expected to rise after this decision… but it was not mentioned whether everyday consumer products like bread, cheese, and milk will be included. Can you tell us which products are being referred to?

Kreshnik Bekteshi: Surely, currently, it is one of the most important topics in the Republic of North Macedonia regarding the economic aspect and one that directly relates to the citizens’ standard of living. It is a reform that we have announced almost a whole month since the beginning of the energy crisis, and at the moment, public discussions have been held with all Economic Chambers, consumer protection organizations, as well as directly with the citizens. We have decided that for basic and general consumer products, the VAT will remain at 5%. However, for certain other products that currently have a VAT rate of 5% and are considered non-daily consumption products, it will be increased to 10%. We believe that it is a fair and equal step for citizens who have the opportunity to purchase such products and also for citizens with lower incomes or a lower standard of living, the funds collected will be used to assist them in various ways, starting with the social measures implemented by the Government of North Macedonia, as well as other measures such as direct assistance.

Voice of America: One of the concerns is whether the tax on hygiene products will be increased. Can you tell us if this will happen?

Kreshnik Bekteshi: As for hygiene products, during this period, we have had almost zero duties on those products through so-called autonomous measures in the Trade Law, with the sole purpose of preventing negative effects on the prices, which have increased as a result of global markets, especially the European market. There will be no drastic change in this area of products, although it is the right of the deputies and the appropriate committees in parliament to approve such measures or changes, which will undergo an open and transparent debate.

Voice of America: You mentioned that there will be no drastic change. Can you clarify what kind of change is being referred to?

Kreshnik Bekteshi: The lists are determined by the Ministry of Finance and other institutions involved in their preparation. In this process, consumer protection organizations are also involved, as well as the Statistical Office of the Republic of North Macedonia. Based on previous data or the analysis of price trends for the mentioned products, a decision is made. Within the framework of the law on determining the VAT rate or percentage to be implemented for specific products, the new legislation will provide an opportunity to bring government decisions that can be proposed by the Ministry of Finance, depending on the price trends of different products, directly through various periods. We hope that it will be approved, depending on the flow of prices for different products.

Voice of America: Since the COVID-19 pandemic and the start of the Russian aggression in Ukraine, there have been price increases that have affected not only North Macedonia but the whole of Europe. Do you think it is the right time to increase taxes when price hikes continue to burden the citizens of your country?

Kreshnik Bekteshi: Without being immodest, the Republic of North Macedonia is a leader in the region in terms of price levels compared to the Republic of Serbia, Kosovo, and especially the Republic of Albania for food products, as well as derivatives. Mostly, the countries in the region have VAT rates of around 20%, and the Republic of North Macedonia has had a 5% rate for daily consumption products for many years, and the same rate will remain for those products. However, we cannot include products that are not consumed on a daily basis with the same tax rate because we consider it unfair to citizens with lower incomes or a lower standard of living.

Voice of America: One of the effects of recent crises that Europe has experienced was the energy crisis. Has your government taken any measures to prevent a recurrence of such a crisis in the country during the upcoming winter?

Kreshnik Bekteshi: North Macedonia has undertaken all the preparations for the upcoming winter, starting from securing various energy resources for the full operation of capacities within the Republic of North Macedonia for electricity generation, but not only that; considering that the city of Skopje uses natural gas for heating, we have taken the necessary measures to ensure affordable natural gas for the citizens, taking into account that companies need to demonstrate reasonableness regarding their work. I believe that we will not have any specific problems during the coming winter.

Voice of America: When you mention natural gas, where will you get the natural gas from?

Kreshnik Bekteshi: The Republic of North Macedonia has only one gas pipeline, with the Republic of Bulgaria, and unfortunately, both our fate and Bulgaria’s fate, the capacities of the same pipeline are reserved until 2030 by Gazprom. However, after the efforts and excellent work of Nomagaz led by Bajram Rexhepi, and other involved institutions, a significant part of the same capacities have been released, and based on the auction, all natural gas traders will have the right to participate and most likely supply the Republic of North Macedonia, which means that we will have natural gas that does not come from Russia, and that is our trend.

Voice of America: In fact, all European countries have made efforts to achieve independence from Russian gas since the start of the Russian aggression in Ukraine. In this aspect, North Macedonia has signed an agreement with Greece to build an interconnector, but this agreement was signed last year. A year has passed, and there is no sign that the project has even started to be implemented.

Kreshnik Bekteshi: On the contrary, there has been an open tender, which has been closed regarding the selection of the company that will supervise the project because every infrastructure project has a tender procedure that selects the supervisor.

Voice of America: When was this done?

Kreshnik Bekteshi: The tender has been concluded. We had bidders, and now the appeal deadlines are almost over, within not more than two or three weeks, which will pave the way for the publication of the tender for the construction of the interconnector with the Republic of Greece. This will be an additional opportunity not only for the Republic of North Macedonia but also as a strategic investment for the entire Western Balkans region.

Voice of America: But why was there such a delay then?

Kreshnik Bekteshi: It was due to procedures, and it is not the fault of the state-owned company in the Republic of North Macedonia, which is responsible for this project, but it also relates to the procedures that need to be implemented within the loan agreement, as well as with the EBRD (European Bank for Reconstruction and Development) and the European Investment Bank, but also with the approval of various mechanisms and elements by the regulatory authority of the Republic of Greece… Once they are completed, then all the procedures will be carried out. The first phase regarding supervision has been completed, and soon the tender for construction will be announced regarding the gas pipeline in the part of the Republic of North Macedonia.