31 May 2020

Gheorghe Russu

Vice-director, The Center for Combating Economic Crimes and Corruption

Parties-Phantoms, Parties - State Institutions, Parties - State Enterprises


20 parties have registered in the current election campaign. Many people say it is a too big number for such a small country as Moldova. At the same time, much more parties could take part in the election campaign.

Last week illustrated

Activists launch Moldova’s first ‘Space Camp’ © Susan Coughtrie

Russian-Ukrainian energy projects extend to Moldova

The recent Russian-Ukrainian agreements for economic cooperation and particularly cooperation in energetics, will have a major impact on Moldova, but also on the entire region, if not the entire Europe. We shall see whether the impact will be positive or negative.
Ion PREAŞCĂ, 17 May 2010, 13:43

So far much of the comments of Western and regional media state that the impact will be rather negative. What can we offer the Russians in return for gas price reduction

At the end of April, Ukraine and Russia have reached an agreement on the reduction in the price of Russian gas supplied to Ukraine, by about 30%,, determined by the extension for 25 year of the time spent by the Russian military maritime fleet in Sevastopol.

In fact, it was not a reduction, it's just that the Russian state canceled the 30% tax imposed at the beginning of 2009, for gas export to Ukraine. Therefore, the gas price for the second quarter of 2010 decreased down to 236 USD, compared to the price of about 330 USD per thousand cubic meters, which Ukraine was supposed to pay. Thus, Moldova has already become a leader in the CIS area in terms of price paid for gas and it will maintain the leadership at least until the end of the year.

We wonder if such a tax applies to Moldova as well. Previously there have been discussions about the fact that Russia applies an 18% tax on the gas export to Moldova, and by 2009 we were virtually the only CIS country this tax applied to. The former communist government, through the voice of Vladimir Voronin or Zinaida Greceanii, frequently mentioned that the Russian ex-President Vladimir Putin promised that the cancellation of this tax will be examined as soon as possible, and then Moldova will buy cheaper gas. For 1, 5 years nothing was heard about this tax, but if the same treatment will be applied as in Ukraine's case, the cancellation of this tax could cause the reduction of the gas price with more than 40 USD per thousand cubic meters.

The question is what can we offer the Russians in exchange? The control over the gas networks? They already have 50% of Moldovagaz, but there have been discussions about the increase of their participation up to 75% plus one share, so that Moldovan authorities could not directly influence the company management. That is what happened in Armenia. where Gazprom controls 80% of ArmRosgazprom shares, for which this country has received and is still receiving cheaper gas than Moldova. Former communist authorities haven't accepted the offers made by Gazprom. It is interesting how the actual authorities will act.

How do we get rid of 2 billion USD debt for gas

The Prime Minister Vlad Filat has denied in an interview given to Moscow newspaper „Kommersant", the possibility of the same scheme as in Ukraine being applied in the, in order to get rid of 2 mln. USD gas debt of the Transnistrian region.

We believe that the pressure on Moldovan authorities will increase, even if Moldovagaz and the gas network of Moldova are not of great interest to Gazprom. The main goal of Gazprom and Kremlin was and is to take over the control of the gas network in Ukraine. No wonder the Russian Prime Minister Putin came with a proposal regarding the fusion of Gazprom with Naftogaz.
A fusion between the two companies would give Moscow control over the major pipelines passing through Ukraine for gas delivery to Europe but also on the deliveries on the Ukrainian market. Being state property, Naftogaz is Ukraine's exclusive gas importer, 80% of the Russian gas being transported through its pipelines, which covers about 20% of Europe's gas demand.

The company also manages gas deposits in the West of Ukraine, which can store over 30 billion cubic meters, ensuring the stability of deliveries to Europe during winter.

Russian gas transit services currently ensure 2 percent of Ukraine's GDP and more than 6% of budget revenues. And these revenues come without too much financial effort on the part of Ukraine. The analysts from the Center for Strategic Studies Stratfor, even state that Naftogaz is Ukraine's most valuable asset. That is why after the collapse of the Soviet Union, the Ukrainian government has opposed the transfer of the company under Russian control.

Even the Ukrainian President Leonid Kuchma, known for being a russophile, refused to allow Moscow's access to Naftogaz and to the gas transit system. Kuchma knew that if it will be ever handed over to Russia - it would be the end of Ukraine's independence. Therefore, it should be clear what the fusion perspectives of Gazprom with Naftogaz are. Taking control of Ukraine's gas network, along with the control it has over the networks from Belarus and Moldova, would actually mean the return to the situation before 1992, when the former USSR gas system was controlled by Moscow.

EU authorities have reacted ambiguously and anemically to these projects. Only last week the Energy Community Secretariat asked the government from Kiev to give within a month a clear answer whether it adheres to this structure or not. At the same time, it required Ukraine to adopt a law on natural gas, which would correspond to EU directives. We remind that Moldova adhered to the Energy Community on March 17, 2010, and Ukraine was planning to do so shortly after that. The implementation of Russian-Ukrainian common energy projects could postpone the adherence of Ukraine to the Energy Community.

Russian-Ukrainian cooperation in energy, is extending on the nuclear and hydroelectric plants as well. For example, „RusHydro" company signed a memorandum of cooperation with the enterprise „Ukrhydroenergo", which stipulates joint commissioning of five generating units at the Novodnestrovsk plant, located on the Nistru River at the border with Moldova and joint selling of electricity produced here. This station is the subject of an older dispute between Moldova and Ukraine, and the Moldovan authorities have claimed a share of this strategic objective.

Russians want to block the integration of Moldova and Ukraine in the EU energy system

At the same time, Russians also want to convince Ukrainians to accept the construction of the so-called back-to-back power plants, at the border of Ukraine with the EU states, in order to be able to jointly export electricity.
Russians intend to do so with Moldova as well. Last year, for instance, Inter RAO UES announced that it would be interested in building such a station in Isaccea (Romania) 400 kV power line of 400 kV CERS Moldoveneasca (Cuciurgan plant)- Vulcanesti - Isaccea.

Several specialists stated that the construction of the back-to-back plant (direct current coupling station) represents a threat to the Moldovan energy system integration, but also of the Ukrainian one, into the European system. Besides the fact that it is very in operation, the construction of such stations would mean delaying or even blocking the Moldovan energy system integration into the system of the European Union.

Usually, a back-to-back plant is built on the same site of an ordinary power plant and is used, for example, in case of coupling of different frequency electrical networks (but also coupling of two electrical networks that have the same frequency, but without a stable relationship between phases; the existence of a difference between the frequency and the number of phases of the two networks, networks with different operating modes).

The current frequency of the Moldovan energy system (and of the post-Soviet territory) differs from that of the EU energy system and it would be better for us to pass to EU energy standards and to integrate into this system.

Without real support from the EU, Moldova will not be able to deal with Russian energy expansionIt is nor clear yet how far the Kremlin plans go. Vladimir Socor states in an analysis from „Eurasia Daily Monitor" that Putin's proposal actually goes beyond the natural gas sector. „They target the oil industry of Ukraine and the energy transit routes to European consumers. We are witnessing an unprecedented escalation of Moscow's ambitions: The Kremlin doesn't want an „energy consortium" with a formal involvement of European companies, but an energy union with Ukraine. Vladimir Socor states that "Moscow decided, apparently, to push the process to its final stage."

So far, Ukraine was acting as a kind of buffer between us and Russia, now it is gone as well. Anyway, without a real support from the EU, Moldova will not be able to stand up to the Russian energy expansion. However, an attempt to oppose Russia's intentions on our own could lead to huge gas prices, imperative requests to pay the billion gas debts and with the perspective of bankruptcy of the whole energy sector.

In any case, it is an unenviable situation for AEI government, but also for the future of the country.



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