Romania Hopes To Turn Moldova Further Away From Russia By Providing Cheap Energy

By Ahmed Adel, Cairo-based geopolitics and political economy researcher

After Ukraine decided to reduce the export of electricity, Moldova found cheap energy sold by Romanian state-owned hydropower producer Hidroelectrica. In fact, Hidroelectrica is selling its energy to Moldova at a massively reduced price. This is in the hope of pulling Moldova further away from Moscow and towards the EU and NATO.

Hidroelectrica and Moldovan energy trader Energocom signed on October 13 a 100 MW supply contract. Speaking at the signing, Romanian Energy Minister Virgil-Daniel Popescu said: “Tonight, the supply of electricity for the Republic of Moldova begins. We were, we are and we will be with the citizens of the Republic of Moldova.”

The legislative framework was ensured by the adoption of an emergency ordinance, which states: “in exceptional security situations in the electricity supply to the Republic of Moldova caused by the effects of the war in Ukraine, electricity producers have the obligation to conclude bilateral contracts, within the limits of available quantities, primarily with electricity traders/suppliers’ designated by the Government of the Republic of Moldova.”

Popescu also disguised a subsidy as a genuine energy price by declaring on Gorj TV that “individuals in our country can benefit from a price of 280 lei ($55.60) net per Megawatt/hour compared to the 450 lei ($89.40) that citizens from Moldova will pay.”

However, Romanians paying that price do so because of the cap imposed by the state, which subsidises the difference between the supply price to household customers and the purchase price (which cannot exceed 1,300 lei ($258.20)/Mwh). Effectively, nothing prevents Moldovan authorities from introducing a similar aid scheme for small and medium-sized enterprises and household consumers so that they have energy as cheap as the Romanians.

The price of 450 lei/MWh, with which Moldova now buys the energy available from Romania, is only an increase of slightly more than 10% on the tariffs applied by Ukraine, which, in the conditions of the energy crisis in Europe, is a huge assistance.

“Electricity from Romania will have a lower price than the market prices and will provide the 30 per cent that we can no longer receive from Ukraine, starting from October 14. This is possible because we succeeded in synchronising our system with the European electricity system back in March,” said Moldovan Deputy Prime Minister Andrei Spinu at the time.

Russian bombings severely damaged Ukraine’s energy infrastructure in the aftermath of the terrorist attack on the Kerch Bridge in Crimea. The damage caused by Russian bombings led to a massive reduction in Ukraine’s energy exports to Moldova and European Union markets.

In the gas sector, because of the war in Ukraine, Russia’s Gazprom is only able to supply Moldovagaz – Moldova’s gas distribution company – with only 67 per cent of the agreed 80 million cubic metres that the country requires, including for its breakaway region of Transnistria.

As Moldova is still dependent on Russian gas, Romania is hoping to back the neoliberal pro-EU/NATO government in Chisinau against the mass protests and criticisms by supplying cheap energy. Romania produces 80 per cent of its gas consumption and has its gas storage facilities filled to almost 90 per cent for this winter, and for this reason it is confident it can supply Moldova.

Regarding electricity, the supply from Transnistria is cheaper since the breakaway region does not pay for Russian gas, but it is extremely limited. Therefore, due to the supply issues from Russia, Romania is attempting to leverage this situation by strengthening anti-Russia forces in Moldova through cheap energy.

Tens of thousands of people in Moldova, a significant number considering the country’s entire population is 2.6 million, have been protesting for weeks on end because of high energy prices and the economic crisis. Protests are continuing to this day despite police removing on October 10 more than 100 tents set up by protestors between the presidency building and parliament on the busiest road in Chisinau, Stephen the Great Boulevard.

With Moldovan President Maia Sandu pandering to the EU and NATO by imposing sanctions on Russia, naturally, just as happened across Europe, the Moldovan economy is now struggling with inflation, high energy prices and a cost-of-living crisis. Although Romania’s delivery of electricity will somewhat alleviate the energy crisis in Moldova, it will not solve it, nor will it contribute to easing the boomerang effects of anti-Russia sanctions.

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