Facebook Twitter Instagram Youtube LinkedIn Telegram
Supporters of Socialist and Communist political parties attend a protest in front of the National Agency for Energy Regulation (ANRE) in Chisinau, Moldova, 04 November 2022.
©EPA-EFE/DUMITRU DORU  |   Supporters of Socialist and Communist political parties attend a protest in front of the National Agency for Energy Regulation (ANRE) in Chisinau, Moldova, 04 November 2022.

The energy crisis in the Republic of Moldova. Why Chișinău must compromise with Transnistria and Russia, for now

The Government in the Republic of Moldova has been accused of having given in, once again, to the blackmail of Russia and Transnistria when it accepted to deliver all Russian gas imports to Tiraspol in exchange for electricity. As a matter of fact, for the time being Chișinău authorities don’t have too many alternatives at their disposal in terms of electricity and natural gas supplies, and any projects already launched with a view to diversifying Moldova’s energy sources need time to be implemented.

Despite contractual terms, Gazprom cut back on gas deliveries to the Republic of Moldova

The start of the energy crisis in the Republic of Moldova coincided with the change of regime in Chișinău and the victory of the pro-European Action and Solidarity Party in the July 2021 election.

In August, a new government was sworn in. Shortly afterwards, one of the priorities of the new government was to renew the contract with the Russian energy giant Gazprom, since the existing contract at the time was bound to expire on September 30, 2021.

Negotiations for the new contract overlapped with a difficult period for the entire Europe. Russia started to exert pressure on Europe’s energy system, thus paving the way for its large-scale invasion of Ukraine and for the use of natural gas as a weapon against the West.

In the case of the Republic of Moldova, the Russian energy company refused to automatically extend the contract upon reaching its expiry date, which was standard practice up to that point. Gazprom also limited the volume of gas deliveries to 67% of the Republic of Moldova’s demand. This was exactly tantamount to the typical volume of gas needed by Transnistria, a separatist region controlled by the Kremlin which is home to a couple of large energy-hungry enterprises. Among them, the Râbnița Metallurgical Plant and the power plant in Cuciurgan. At the same time, the Russian energy giant upped the price for natural gas from 550 USD in September last year, to 790 USD, which is approximately four times compared to value at the start of 2021.

It appears the new government in Chișinău did not see that coming. It did, however, manage to take swift action in order to come up with ways of curbing the country’s reliance on Russian gas imports. At the time, Gazprom was Moldova’s only natural gas supplier.

Chișinău soon started buying natural gas on international markets. However, due to Russia’s actions, by that time the price had increased considerably at global level. On October 22, the Republic of Moldova declared a state of emergency in the field of energy, allowing the country to simplify and streamline judicial provisions for the purchase of natural gas from sources other than Gazprom. In fact, this was the first time when a third of Moldova’s gas input originated from a source other than Russia.

At the end of the same month, Moldova’s Minister for Infrastructure and Regional Development, Andrei Spânu, and Gazprom’s executive director, Alexey Miller, signed a new five-year contract for the delivery of natural gas. Payments would be made based on a formula factoring in stock market prices for natural gas, as well as the price of oil products. The formula ensured the lowest price in winter time and a higher one during the summer, when natural gas consumption drops significantly. Andrei Spânu labeled the contract as a success for the government, although some experts and the opposition criticized the move, saying the authorities could have obtained a better price. Nevertheless, no other solution was in sight at the time, because the energy crisis had started to get worse, and the price for natural gas was sky-rocketing on international markets.

Despite this contract, Gazprom continued to threaten to cease gas deliveries to Chișinău at the slightest delay in payments. On October 1, 2022, violating the terms of the contract, Gazprom again reduced gas deliveries to Moldova by approximately 30%, just as it had done a year before, blaming Ukraine for failing to ensure the transport of the entire volume of gas.

This time around, however, Chișinău was more adamant, stating that the region of Transnistria will get merely a third of the 5.7 million cubic meters of natural gas delivered by Gazprom on a daily basis.

The decision appeared to cause serious problems for the separatist administration in Tiraspol. It should be mentioned that, starting 2005, Transnistria has stopped paying for its natural gas consumption, and the delivery of this resource became a way of funding the regime of this breakaway region: Russia delivered gas for free to Tiraspol, which was used to generate electricity at the Cuciurgan power plant (owned by Russian company RAO EES) and subsequently sold to the territory controlled by Chișinău authorities. After Chișinău refused to deliver the entire quantity of gas to the region of Transnistria, where Russia’s influence is overwhelming, heat distribution was limited to a few hours in the mornings and evenings in Tiraspol, whereas the schedule of trolleybuses was also restricted to mornings and evenings.

The Republic of Moldova’s current energy infrastructure makes the country dependent on the region of Transnistria

One major obstacle to overcoming the energy crisis in the Republic of Moldova is the existing infrastructure, which by and large dates back to the Soviet era. Whereas in terms of natural gas, Chișinău succeeded in securing an alternative source, namely the Iași-Ungheni-Chișinău pipeline, rendered fully operational in 2021, which recently imported the first volume of natural gas from the trans-Balkan network, electricity is an entirely different matter. Moldova’s electricity grid has not been modernized since the Soviet period and is still connected to the one in Ukraine. Of the few high-voltage lines linking the Republic of Moldova to Ukraine, only one is directly connected to the territory controlled by Chișinău authorities, the others cross Transnistria. Similarly, the only line linking Moldova to Romania, in Isaccea, first crosses the territory of Ukraine, then the breakaway region of Transnistria, from where the electricity is then redirected to the left bank of the Dniester.

Therefore, the Republic of Moldova remains extremely vulnerable in terms of electricity supplies, and ultimately relies on the separatist regime in Tiraspol, which at any time can suspend deliveries to the territory under Chișinău’s control.

To remedy the situation, the government in Chișinău signed a contract for the construction of a 400 kV high-voltage line that would link Isaccea to Vulcănești and then Chișinău, bypassing Ukraine and the region of Transnistria. The public tender for the construction of this line was won by a company from India, which many pundits consider to have been a mistake for Chișinău authorities, given that the company in question has a shady reputation, and that another company from Romania also participated in the tender, putting in a slightly higher offer, exceeding the Indian company’s bid by a few tens of thousands of dollars. The authorities claim legal provisions forced them to choose the company from India, since its bid was the lowest in the tender. Some analysts believe, however, that the Government should have opted for the Romanian company, because it would have been easier to convince to speed up the construction process, unlike the Indian company.

Andrei Spânu recently announced that the technical project for the new line is 80% complete, and construction works per se are expected to kick off next spring.

Until the new line is rendered operational, the Republic of Moldova remains reliant on Tiraspol’s goodwill, as the separatist regime can cease electricity deliveries from the power plant in Cuciurgan at any given moment.

Evidence of that is last month’s energy crisis. In mid-October, the plant in Cuciurgan, which at the time supplied 70% of Moldova’s energy input, announced a 27% drop in the volume of electricity delivered to Chișinău due to a shortage of natural gas. In November, the plant stopped deliveries altogether. One may assume this was an attempt by the Kremlin to pile up more pressure on the current administration in Chișinău, prompting it to soften the tone in relations with Russia and dial back on its European integration aspirations. All this time, authorities in Chișinău had to buy electricity from Romania and from thermal-electric power plants in Chișinău and Băți (which cover a maximum of 17% of Moldova’s total electricity demand). Most of the electricity bought from Romania was purchased on the stock market as a matter of urgency, at times prices exceeding 400 and even 600 EUR per 1mgW/h. A price that very few consumers in the Republic of Moldova could afford, Minister Andrei Spânu claimed.

Has Moldova given in to pressure from the Kremlin and Tiraspol or made a necessary compromise?

The solution chosen by the government in Chișinău was provided by the same power plant in Cuciurgan. As pressure continued to build up on both sides of the Dniester for a whole month (Chișinău limited the volume of gas delivered to Transnistria, whereas Tiraspol stopped delivering electricity to Chișinău), it appears a compromise has been reached. Minister Andrei Spânu announced on December 3 the signing of an agreement with the power plant in Cuciurgan which will cover 53% of Moldova’s electricity input for the month of December, at a price of 73 USD per 1mgW/h. The remaining 47% will be bought from Romania. The agreement in question might be extended to cover March-January, 2023. In exchange, Chișinău will be delivering to Tiraspol the entire volume of natural gas bought from Gazprom. According to Andrei Spânu, the right bank will be using the stockpile of natural gas from Romania and Ukraine to cover domestic consumption for two months this upcoming winter, while the rest of the gas is expected to be purchased on the international markets. Minister Spânu says that, at any rate, this agreement is more economically lucrative than the current policy of purchasing most of the electricity from Romania as a matter of extreme urgency.

Once the deal was struck, several analysts and political opponents have accused the Moldovan government of making concessions to the Kremlin and Tiraspol. They insist that Government officials should have amped up the pressure on Tiraspol and stopped delivering gas altogether.

Other experts say this is a reasonable compromise that will allow Chișinău to avoid mass-disconnections from the country’s electricity grid. We should see the full picture, also from the perspective of the critical situation at regional level in terms of energy supplies. Secondly, we should neither overlook how the emergency energy Moldova is purchasing might affect the economy and the performance of Moldova as a state, experts say. Economic journalist Ion Preașcă says that, if the situation had remained unchanged, energy bills would have continued to soar, which would have inevitably sparked social unrest.

In turn, energy expert Ion Muntean pointed out that this agreement also helps ease pressure on Romania, which had to cover 90% of the Republic of Moldova’s electricity demand for a whole month.

“We need to understand that Romania itself is currently importing electricity, particularly at peak hours, and we have so far benefited and continue to receive electricity from Romania. But the situation will get even more complicated as consumption and the energy demand at European level will go up, including in Moldova”, Ion Muntean argued.

The Moldovan expert believes that, come spring, the situation will improve on the regional market, and energy prices will go down, thus allowing the Moldovan government to revert to small deliveries of gas to the region of Transnistria.

Maia Sandu is keen on restructuring Moldova’s energy sector

Beyond all that, the contract signed with the power plant in Cuciurgan, and particularly the way the contract was announced – on a Saturday evening, on the Telegram account of Minister Andrei Spânu, followed by a day and a half of complete silence – seem to have disgruntled president Maia Sandu. On a visit to the United States, the president published on her Facebook account a message asking the government to provide swift and clear explanations regarding the latest developments in the energy field.

“Energy security is a key constituent of the country’s security, and each citizen has a right to be informed about decisions taken in this field. The government must explain clearly and without delay every action undertaken to ensure electricity and natural gas supplies for December and the upcoming period, so that society should understand the circumstances and conditions that justified taking these decisions. The situation in the energy sector is getting more intricate, and the need to expedite the elaboration of medium and long-term solutions once again confirms the need to restructure the activity of the government in this sector […] I call on the government to submit solutions to restructure the energy sector in due time. The government must channel additional efforts towards the energy sector”, Maia Sandu’s message reads.

In the upcoming period, we may likely see what Maia Sandu meant by “restructuring the activity of the government”.

Until then, it is clear the Republic of Moldova remains reliant on Tiraspol and by extension on the Kremlin in terms of electricity supplies, although the country is now less dependent than ever on Russian gas imports, since it succeeded in stockpiling enough gas in advance and securing access to international markets.

Tags: Russia , Energy , Transnistria , Gazprom , War in Ukraine
Propaganda de Razboi - Razboi in UCRAINA

Article made for project
Fake News - Fake reality: Social resilience through critical thinking.

The project is carried out by the Association of Social Alternatives in partnership with the Association of the International Alliance of Romanian Journalists and the Center Iași County of Resources and Educational Assistance and benefits from a financing amounting to 148,055.00 euros, through the Active Citizens Fund Romania program, funded by Iceland, Liechtenstein and Norway through the 2014-2021 EEA Grants. The contents of this material do not necessarily represent the official position of EEA and Norwegian grants 2014-2021; for more information access www.eeagrants.org.

We work together for a green, competitive, inclusive Europe.

Details about the project here:

SOCIAL ALTERNATIVES
Other articles
Viktor Orbán’s wager on Vladimir Putin and illiberalism was a losing bet: instead of prosperity, Hungarians got themselves an economic crisis

Viktor Orbán’s wager on Vladimir Putin and illiberalism was a losing bet: instead of prosperity, Hungarians got themselves an economic crisis

Hungary has a “preferential” contract for its gas imports from Russia, but has now ended up paying more than other European states. Prices for fuel and Diesel have skyrocketed, and inflation has hit the highest mark at EU level. Besides, Budapest’s bypassing European regulations and values has prompted the European Commission to freeze €7 billion worth of EU funds to Hungary. All that spirals into an economic crisis generated, for its most part, by Viktor Orbán’s policies.

The Czech Republic is looking for a president to replace pro-Russian Miloš Zeman

The Czech Republic is looking for a president to replace pro-Russian Miloš Zeman

For almost ten years the Prague Castle, the seat of Czech presidents, was one of the most pro-Russian and pro-Chinese places in the European Union. Miloš Zeman will leave office on March 8. It is too early to say who will succeed him, but we can already certainly say that the style and content of the presidency will change fundamentally.

Populism, Russia’s toxic influence and the rise of the far right in Europe

Populism, Russia’s toxic influence and the rise of the far right in Europe

The far right has had a remarkable year in a number of European countries, obtaining good results – and actually winning – elections held in countries such as Italy, Sweden, France and Portugal. The rise of the far right was facilitated by a plethora of factors, including demographic changes, major events or crises and Russia’s manipulations. Are we truly headed towards a Europe dominated by the far right, or is there a limit to this growing phenomenon?

Corneliu Rusnac

08 Dec 2022

Updated at: 09 Dec 2022 13:40:22
Corneliu Rusnac

Follow us on Google News

10 minutes read
A year after the outbreak of war, Bulgaria still lacks a clear strategy for integrating Ukrainian refugees
A year after the outbreak of war, Bulgaria still lacks a clear strategy for integrating Ukrainian refugees

Nearly one year after the onset of the Russian invasion in Ukraine, Bulgaria is still undecided on how to integrate the Ukrainian refugees. Activists, however, strive on. Most Ukrainians move on.

Svetoslav Todorov
Svetoslav Todorov
06 Feb 2023
Viktor Orbán’s wager on Vladimir Putin and illiberalism was a losing bet: instead of prosperity, Hungarians got themselves an economic crisis
Viktor Orbán’s wager on Vladimir Putin and illiberalism was a losing bet: instead of prosperity, Hungarians got themselves an economic crisis

Hungary has a “preferential” contract for its gas imports from Russia, but has now ended up paying more than other European states. Prices for fuel and Diesel have skyrocketed, and inflation has hit the highest mark at EU level. Besides, Budapest’s bypassing European regulations and values has prompted the European Commission to freeze €7 billion worth of EU funds to Hungary. All that spirals into an economic crisis generated, for its most part, by Viktor Orbán’s policies.

Ioana Dumitrescu
Ioana Dumitrescu
03 Feb 2023
Petr Pavel, the general who wants to redefine the Czech presidency after the pro-Russian Miloš Zeman era
Petr Pavel, the general who wants to redefine the Czech presidency after the pro-Russian Miloš Zeman era

The Czech presidency seems poised for a major shakeup, as retired general Petr Pavel is preparing to take the office from Miloš Zeman. Unlike his predecessor, a pro-Russian and pro-Chinese politician with a knack for challenging the country’s Constitution and governments, Pavel is staunchly pro-Western and he vowed to cooperate with the equally pro-Western government. The president-elect also expressed his support for Ukraine, and caused a (for now) minor row with China.

Michael Švec
Michael Švec
02 Feb 2023
From Z to Saint Javelin: symbols of the two sides of the war in Ukraine
From Z to Saint Javelin: symbols of the two sides of the war in Ukraine

The letter Z, written in paint on Russian tanks, a mural of “Holy Javelin” on a block in Kyiv, “babushka Z” coming out to meet the Russian army or the insult “Idi nahui” addressed to the invading forces – these are some of the symbols associated with the war in Ukraine. Moscow uses symbols to justify its invasion and convince Russian men to enlist; Ukraine, to raise the morale and determination to resist, but also to strengthen the population’s feeling of national identity.

Marin Gherman
Marin Gherman
01 Feb 2023