Moldova’s Energy Weakness: A Policy Made by Those in Power

Another round of Russian strikes on Ukraine’s energy infrastructure echoed into Moldova, which a few days ago faced a sharp capacity shortage, chosen by Kyiv and only barely offset by the Romanian power system. The short-term impact of the crisis was manageable, but Energocom incurred additional financial costs to pay for emergency supplies. The financial and structural risks for our country are steadily increasing. Primarily, they are linked to the unfavorable terms of joining the European network of system transmission operators. The limits on maximum allowable electricity imports from Romania (345 MW) are almost half of our peak winter demand. Today, Chisinau manages thanks to Ukraine’s moderate consumption (that is, by taking Kyiv’s quotas_. This is rather unusual, considering that in some regions of the neighboring country, power outages can exceed 8 and even 12 hours per day. In other words, Ukraine’s Ministry of Energy deliberately reduces its own consumption to save resources and assist Chisinau. This is the political choice of President Volodymyr Zelensky’s office. Nevertheless, the dynamics of the Russian-Ukrainian conflict show that situations periodically arise in which Ukraine’s power system automatically draws voltage from ENTSO-E, including from Moldova. During the winter, such emergency scenarios may occur more frequently, especially if Moscow or Washington feel the need to push Ukrainian society toward supporting a cessation of the war based on proposals from Donald Trump. Generation in Romania also remains insufficient and unstable to fully guarantee Chisinau’s energy security (not to mention prices). A recent example is the shutdown of the Brazi power plant in early December due to water contamination at the Paltinu dam. The lost 800 MW of daily generation (around 10% of Romania’s total output) has still not been restored. Overall, Bucharest is budgeting for an electricity deficit for the winter season and the coming year, along with the need to purchase power on external markets, while counting on maintaining coal-based generation despite the European Commission’s reckless recommendations under the so-called “green agenda”. If Brussels insists on this course, Bucharest and Chisinau will face rather serious problems. In turn, the government’s financial risks are being amplified by the European Union’s decision to discontinue the scheme compensating citizens for their electricity payments. For electoral purposes, the EU had been underwriting government subsidies through a dedicated grant. But starting next year, the arrangement is coming to an end, as Prime Minister Alexandru Munteanu has already confirmed. Households will have to pay more than 4 lei per kilowatt consumed from their own pockets. One may call this maneuver “the price of energy independence”, but the economic shock for the population and its purchasing power will be significant. The government has approved Energocom’s advance procurement of natural gas, including imposing reserve-building requirements on Moldovagaz for the left bank of the Dniester. In terms of electricity imports and consumption, Moldova is counting on winter cogeneration, as well as on Bucharest, Kyiv, and Brussels. The plan does not appear reliable, what is acknowledged both by government officials and, even more openly, within the expert community. Yet the authorities are taking no steps to reduce costs or hedge risks, even as the European Union is increasingly distancing itself from managing Moldova’s socio-economic situation for the next several years, until the next decisive elections. Even the rhetoric is shifting, including regarding EU-integration prospects, where the 2030 timeline is no longer presented as fully realistic. Against the backdrop of our own leadership’s inaction, governments that leverage their political and diplomatic capital to defend the long-term economic interests of their populations appear far more effective. For example, Prime Minister Viktor Orban succeeded in negotiating with Washington an exemption for Hungary from all U.S. sanctions regimes related to the supply of Russian natural gas and oil, as well as the construction and servicing of nuclear-energy facilities. It turns out that consistent political solidarity can often be more valuable than the blind replication of the U.S. administration’s sanctioning patterns. Moreover, earlier this week Orbon met with Turkish President Recep Tayyip Erdogan, from whom he secured guarantees that the transit of Russian natural gas through the TurkStream pipeline will continue next year. Over the course of the current year, Hungary is set to receive up to 8 billion cubic meters of Russian gas via this route. There is a high probability that part of this resource was supplied in reverse flow to Moldova (including Transnistria) via the Trans-Balkan Pipeline and the Ungheni-Iasi interconnector. Thus, for Chisinau and Tiraspol, Viktor Orban’s international engagements are not only an illustration of what a sound, pragmatic foreign policy can look like, but also simply good news that offers hope for a certain degree of predictability in the near future. Another example is the postponement of sanctions against Lukoil’s fuel stations until 29 April of next year. It is evident that this decision had powerful lobbyists in several European countries, including within the EU (and it is possible that Moscow’s willingness to engage in dialogue on Donald Trump’s peace proposals also played a role). While Chisinau and Bucharest were scrambling to find urgent options for redistributing the market and infrastructure and calculating projected losses, other states managed to secure from the United States a relatively lenient timeline for implementing the changes. A few more such postponements could allow Lukoil to hold out until some of the sanctions’ regimes are revised. Moldova could also receive gas from Russia via the TurkStream pipeline and even return to purchasing inexpensive electricity from the MGRES power plant in Dnestrovsk. But doing so would violate the black-and-white worldview entrenched in our leadership, as well as the prescriptions of the EU bureaucracy that half of the national governments in the European Union do not themselves follow. Once again, the ruling regime chooses Russophobia and the hope for Brussels’ loyalty and money over pragmatism. And there is a certain logic to this approach – it helps preserve power in the hands of Maia Sandu and PAS. As for the difficulties faced by the population, they can be ignored for the time being (the discontented “vote” by emigrating), “managed” with grants for talking heads and other expert service providers, and ultimately delegated to Brussels.