Energy Deindustrialization of Moldova

Energy independence and integration into the European Union’s energy market, which the authorities are striving for, are in practice resulting in deindustrialization and a constant need for EU subsidies

Just before the official start of the election campaign, the head of the Ministry of Social Protection and Labor, Alexei Buzu, announced the decision to extend the program of compensations for energy use for the upcoming cold season. Last time, 720,000 families received support, amounting to 2.69 billion lei. The system will remain application-based and will provide subsidies for the use of gas, solid fuels such as firewood and coal, as well as centralized heating and electricity. For the first 100 kWh of electricity, compensations will be paid in monetized form until December of this year. Undoubtedly, the news is positive, but in the current reality it has been received without much enthusiasm. This is understandable, as it does not meet the expectations of the population and businesses regarding the reduction of the burden of high tariffs, which, unfortunately, have become a given in our country. Firstly, the funds for the subsidies are provided by the European Union, and like any external financing, this assistance is politically conditional. The risks of suspension or complete cessation of such financial transfers are significantly higher than in the case of state subsidies. It is no coincidence that the authorities remain silent about the possibility of extending electricity compensations beyond December 2025, noting that further decisions will depend on tariff levels and available resources. Secondly, even this support is insufficient given the volumes of electricity consumption. It does not cover all residents and economic actors affected by “European” prices. Thirdly, high tariffs have a negative impact on the manufacturing sector. For the economy, such conditions mean only rising costs and declining competitiveness. Businesses have few options: either reduce production or shut down. The observed decline in exports amid a persistent recession is the main evidence of the dire situation in the country. It is worth noting that compensations for entrepreneurs for consumed energy resources are clearly not a priority for our authorities or external partners. Recently, relevant statistics were released. They show that from January to August 2025, the relevant entrepreneurship development authority reviewed and approved 356 out of 442 applications submitted by manufacturing companies for electricity cost reimbursements. A total of 5.63 million lei was allocated for these purposes, with an additional 8.79 million lei to be disbursed in the next period. Overall, entrepreneurs have received around 87 million lei since the beginning of the year. Even when comparing the amounts allocated to the population and to businesses – billions in one case, millions in the other – the symbolic nature of such measures becomes evident. The statistics are unforgiving. Out of all active enterprises in the country (around 40,000), in reality, less than one percent of entrepreneurs received compensations. Many potential beneficiaries simply could not participate in the program, which was not designed for broad coverage from the outset. It goes without saying that energy consumption at any enterprise – whether in the manufacturing or agricultural sector – far exceeds the household needs of the population. Advising businesses to economize on electricity is hardly recommended – they simply won’t understand. The state-owned enterprise Energocom cheerfully reports that two-thirds of the country’s required electricity is steadily purchased from neighboring countries at a price of 110–120 euros per MWh. Of course, the rapid growth of green energy production in the country should be acknowledged and encouraged. Long-term contracts between local wind and solar power producers and Energocom are very attractive. The average tariff for renewable energy ranges from 60 to 80 euros, almost comparable to what the Kuchurgan Power Station (MGRES) once offered. This is a significant contribution to the development of the domestic generation base, but, as Romania’s experience shows, it is clearly insufficient. The active development of green energy across the Prut River has not enabled Romania to overcome its energy deficit. In the summer, during evening hours, the country consistently faced a shortfall of around 1,500 MW, while in the mornings the deficit was about 1,000 MW. Bucharest purchases this volume from neighboring countries at significantly higher prices than it sells back during the day. In the first five months of the year, Romania exported 5.7 million MWh at an average price of €99.8/MWh, while over the same period, it imported 7.8 million MWh at an average price of €113/MWh. There is a shortage of both base-load and balancing capacities, which is why Romanian authorities are actively defending coal-fired generation against EU criticism. And what about us? Without taking the Kuchurgan Power Station (MGRES) into account, our base-load generation includes only the combined heat and power plants (CHPs) and the Costesti Hydroelectric Power Station, which produce up to 20 MW in summer. To assess the level of our electricity tariffs, it is appropriate to compare the situation with that of our western neighbors. Currently, in Moldova, the lowest tariff for household consumers is charged by Premier Energy at 3.59 lei per kWh (with Fee Nord charging up to 4 lei), which at the current exchange rate equals roughly 0.93 Romanian lei. In Romania, the current tariff, including VAT, is 1.55 lei per kWh (equivalent to 5.95 Moldovan lei). There is a difference, of course, but it is worth noting that Romania only recently abolished the government-imposed price cap on electricity, which nearly doubled the tariff. Until July 1, Romanian consumers paid 0.68 lei/kWh for consumption up to 100 kWh and 0.8 lei/kWh for consumption between 100.01 and 255 kWh. In Moldova, however, even before the recent pre-election tariff reduction, the minimum price was 4.10 lei per kWh, which equals about 1.07 Romanian lei per kWh. In other words, for a long time, consumers across the Prut were paying significantly less for electricity than we were. Comparing our natural gas tariffs with those in Romania is also quite revealing. The maximum price for natural gas for household consumers in Romania is capped at 0.31 lei/kWh (including VAT), which would be equivalent to about 11.5 Moldovan lei per cubic meter. The government support program for gas payments was extended under the cabinet of Marcel Ciolacu until March 31, 2026. This price is among the lowest in the European Union. For any investor in the manufacturing sector, the difference is obvious. The decision on where to open a business – in Romania or Moldova – is primarily based on production costs, where energy resources play a key role. In our case, this is not just about an unfavorable investment climate, but also about the simple relocation of the remaining production from Moldova to the neighboring country. It is also worth noting that the Romanian authorities were forced to revise their support measures for the population and businesses due to the budget deficit, but the requirements for its reduction were imposed on Bucharest by Brussels. In other words, EU structures care little about the fact that such measures negatively affect the production potential of a member state. In our case, European development partners themselves allocate funds for population subsidies, fully aware that our state is unable to secure the necessary resources, even through loans. The political undertone is clear: shock therapy for the population is not the best way to maintain a positive image of Brussels and the current PAS government, which is loyal to it. However, no one intends to subsidize Moldova’s economy indefinitely. Even from the standpoint of strengthening the EU’s negotiating position in the event of a hypothetical accession process, this would be highly unreasonable. However, the clearest example of Brussels’ politically driven strategy of deindustrializing its eastern neighbors is demonstrated on the left bank of the Dniester. Since the beginning of the year, the proposal for financial assistance to Tiraspol has been conditioned on the inadmissibility of using these funds to support the region’s industrial sector and overall economy. At first glance, this seems contradictory, given that we are constantly told that 70–80% of Left Bank exports go to EU countries. Logically, the EU should be interested in maintaining this trade, but in practice, the opposite is happening. As a result, the entire industrial sector has been effectively halted since the start of the year. Consequently, the regional authorities rejected the proposed €60 million and are, for now, managing through intermediary schemes. However, in the long term, the outlook for Tiraspol is far from optimistic. While the right bank has not yet experienced such an immediate and targeted blow to its industrial base, an analysis of the dynamics and statistics suggests that the EU’s strategy of economic dismantling, already applied to the Left Bank, is being steadily and fully implemented on the right bank as well.