Energy security: between Russia and Ukraine. Economic commentary by Info-Prim Neo

A possible takeover of the Moldovan energy assets (power plants CET-1, CET-2 in Chisinau, and CET-Nord in Balti) by the Russian giant Gazprom may weaken even more the energy security of the country. The Moldovan economy is dependent on ensuring the energy power supply – both in terms of guaranteed quantities, and on some stable price. For the last years it was stricken by electricity or natural gas supply blackouts. In July 2007, Ukraine officially halted the deliveries to Moldova, and in the late 90s Russia’s state-owned Gazprom cut the gas for several days. The Russian gas monopoly and the Ukrainian electricity monopoly, supplying some 70% of the power consumed by Moldova, blackmailed the Moldovan authorities several times with raising the prices and halting the exports. Moldova’s energy security is actually between Russian and Ukraine. In terms of energy, the Moldovan economy is even more vulnerable, since it depends 100% on the Russian gas and 70% on the Ukrainian power. The situation is the same in fuel area, in 2007 some 64 % of the needed fuel oil was imported from Ukraine, 77 % of the gasoline and diesel fuel was brought from Romania, as 66 % of the coal was imported from Ukraine. The recent ultimatum given top the Moldovan plants by the Moldo-Russian company MoldovaGaz, in which Gazprom holds a 50% stake, emphasized even more Moldovan energy vulnerability. MoldovaGaz warned it would start “restrictions in gas supply till the complete halt of deliveries" to the Chisinau power plants and the heat supplier Termocom in case they did not pay up a total amount of 1 billion 362 million 257 thousand lei, over 850 million from which are owed by power plant CET 2 from Chisinau. After concluding a fragile memo, impelled by the Government, MoldovaGaz postponed to enforce this warning. Though it is surprising that MoldovaGaz states that Gazprom would have allegedly asked for ensuring “the discipline regarding the running payments for gas" after the Moldovan authorities had repeatedly stated that the running payments are honored fully. Last week Termocom resumed warning about a possible energy crisis in case the memorandum is not honored. As the debts for the gas consumption exceed one billion lei, Gazprom’s intention to take over the Moldovan power plants (after either willing, or hesitating to do so for the last few years) seems to become true more than ever, as the plants are the biggest debtors for the Russian gas and don’t have money to discharge the payments. Although if earlier, the three power plants were on the list of the companies to remain in the state’s ownership, meaning that they could not be privatized, now the Government is intent to sell everything that is badly managed, in its opinion. A number of experts ask: the power plants may have lost the strategic importance for the government, and why did that happen? How is the energy security going to be ensured in case the same company would monopolize the electricity sector, after it controls the whole gas supply sector? In May 2007, statements were made in the parliament that the power plants were put on the list of companies not liable to privatization because they have “a strategic importance for the Republic of Moldova.” It certain, however, that neither the plants, nor the government have money to modernize and enhance the capacity of the thermal power plants, owned and run by the state. The experts keep asking: why is it that the arrears issue is publicly and categorically tackled namely now, if the debts of these plants represent only ten per cent of the running debts to MoldovaGaz, the rest of the debt having been gathered during the past years? May it be a game pursuing to prepare the public for their privatization by Russian companies, because of their debts? For the last ten years, Moldova has adopted three energy strategies, but their results have been more than deplorable, since those strategies have not had financial coverage, as the objectives to build new facilities and technically rehabilitating the thermal power plants failed to be accomplished. The announced projects, although some were endorsed by the government, were not even longed, because of some reason or another. The objective to supply, from own resources, 80 % of the domestic consumption of electricity has remained but a mere intention. Several years ago, an international study on the energy security of the countries from the East and South-East of Europe showed that Moldova was in the worst situation and had no chances to change the situation in the near future. The forecasts of the study unfortunately become true: the situation does not change indeed.