Exclusive interview offered to Energynomics by Andrei Spînu, Deputy Prime Minister, Minister of Infrastructure and Regional Development of the Republic of Moldova.
”My country’s transition to green energy, with a target of 27% share in total energy consumption in 2030, is a priority. In addition to the current energy efficiency projects in the public sector, we propose to develop a new Energy Efficiency Fund for residential buildings, as well as its future expansion for business and other economic sectors of regional importance. We want to create regional eco-energy centers through the use of renewable energy resources, but also the interconnection of Moldova-Romania power systems and the creation of joint natural gas deposits,” told us Andrei Spînu.
How does the war in Ukraine affect the investments of the main investors in the Republic of Moldova? What is the current situation of the main economic indicators – inflation, unemployment and what are the prospects?
Unfortunately, the Republic of Moldova bears the economic and energy consequences of Russia’s illegal and unjustified war against Ukraine. With the outbreak of military operations in the neighboring country, our country has had to face a number of challenges, starting with rapidly rising energy prices, the security of supply and managing refugees from Ukraine. These are added to the energy crisis that began in October 2021 when Moldova was among the first countries to be limited in the amount of natural gas supplied by Gazprom. Also, in the last year, Moldova bears colossal energy prices in relation to the monthly income of Moldovans. Then came the refugee crisis, where the Government in Chisinau made every effort to help those fleeing the war in Ukraine. For example, we have optimized rail, air (via special charter flights) and road transport to streamline the large flow of refugees. Moreover, we ordered the construction of the railway section Basarabeasca (MD) – Berezino (UA) as quickly as possible, which will soon be used for the transport of goods to our country and other EU countries, as well as the floating bridge from Leova (MD ) – Bumbata (RO). Many other infrastructure projects are to be initiated and developed with the help of European partners. I am particularly referring here to the development of the Solidarity Corridors, intended to connect the EU countries with Ukraine and Moldova by rail and road to ensure the export of agricultural products from Ukraine.
Of course, this whole situation of energy crisis and security in the region influences the process of attracting foreign investments in this period: capital is afraid of war and postpones decisions that would otherwise have meant new projects and new jobs in the Republic of Moldova. It is important for us, in this context, to keep the investors we have and the jobs. Regional insecurity also caused an increase in inflation, practically the highest in Europe. According to NBM data, the inflation rate is 35%, unlike last year when it was 14%. It is a difficult time and an unfair situation for our citizens. That is precisely why the Government has allocated money for direct compensation in Moldovans’ energy bills; we did this last winter and will continue to do so this winter. It is a painful period for Moldova, which, in addition to blocked foreign investments, is also facing difficulties generated by high energy prices, which affect the entire economic activity. On the other hand, the unemployment rate is decreasing, a sign that Moldova has great potential for economic growth. The population is increasingly integrated into the workforce and it is gratifying that some sectors of the economy, such as domestic trade and transport, are leading to increased employment.
We are in a risk zone, and the fragile recovery also depends on how quickly the armed attacks in Ukraine will end. At the same time, in the last year and a half, the resilience of the state and the economy has increased in Moldova. Today, we have a very clear direction in the energy sector, a field that contributed to this crisis. My country’s transition to green energy, with a target of 27% share in total energy consumption in 2030, is a priority. In addition to the current energy efficiency projects in the public sector, we propose to develop a new Energy Efficiency Fund for residential buildings, as well as its future expansion for business and other economic sectors of regional importance. We want to create regional eco-energy centers through the use of renewable energy resources, but also the interconnection of Moldova-Romania power systems and the creation of joint natural gas deposits.
In the medium term, we expect to accelerate economic growth in the context of European integration, the reduction of import prices, the relaxation of monetary policy, the reduction of the budget deficit from 2024. As a result, we anticipate an acceleration of economic growth to 2.5% in 2023 and to 4% in 2024. This administration has a solid plan for the economy and we want to see it through without further regional turbulence.
What kind of gas and electricity energy contracts are affected by Russian pressure? What is the current status of payments and what is required by Russian-controlled providers? What are the solutions?
The Republic of Moldova no longer receives electricity from the Cuciurgan power plants (MGRES) or from Ukraine, as was the case until October 31, 2022. Since November, we purchase electricity mostly from the wholesale market in Romania. For 3 weeks already, we have been providing the country with electricity from the day-ahead market organized by OPCOM and through two contracts with Romanian producers. Energocom is working to be able to access other markets, such as Bulgaria’s. This is possible after we synchronized with the European network, ENTSO-E, after the outbreak of the war.
As for natural gas, we receive from Gazprom only 51% of the total consumption in November. We adapted to this reduction by switching large consumers, such as Termoelectrica, to alternative fuels. Thus, fuel oil is now used in Chisinau for the production of thermal and electrical energy in cogeneration. We continue to increase fuel oil reserves, and the coal reserve is already at 100%. Our efforts were greatly supported by Romania, by the EU, without which we would not have been able to resist Russia’s unfair decisions and face the winter that has just begun.
We have been under enormous pressure all this time, and energy has been Russia’s most handy tool to weaken us as a state and question European integration. But it didn’t succeed. As the saying goes: What doesn’t break you makes you stronger. I am very grateful to the EU countries that were very open to welcome us into the European community by offering the EU candidate status. It is a positive and promising step for our citizens and for the European future of the Republic of Moldova. I consider it the best solution for the development of the country. Now, for the first time in many years, we have a purpose and a way forward. In Europe, we will all live better, this is the great desire of the government.
What should the Romanian state do to help Moldova with energy? What has already been done (I have seen some contracts) and what can be done next?
Romania is our reliable friend. It was open every time we needed it. We received the necessary quantities of fuel oil, we received electricity at a much lower price than on the EU market. It is permanently connected to the realities across the Prut: without Romania’s support, Moldova’s electricity supply would have been seriously threatened.
Our efforts now must be focused on long-term solutions where we can build a strong energy system, interconnected with Romania and Europe. The interest of the Moldovan Government is to sign a long-term agreement with Romania, with Romanian companies regarding the delivery of natural gas, which would solve the problem not only for this winter, but for the following years. Moldova can no longer continue with half measures, it can no longer be the helpless victim of energy blackmail from Russia. It must move firmly towards strengthening energy security and integration into the EU’s internal energy market in the coming years. On the electricity side, we have already started discussions with OPCOM for the creation of a market operator in the Republic of Moldova and a future coupling with the short-term centralized markets in Romania and, through Romania, with those in Europe. On the natural gas side, we are already using the Romanian experience, BRM having a gas trading platform approved by ANRE Moldova. We are working on the diversification of the energy supply, which will lead to a decrease in the price paid by Moldovans, but also to the security of supply.
What funds should the Republic of Moldova receive from the European Union be able to go well in winter, from an energy point of view?
We already have 300 million euros from the EBRD to complete natural gas reserves and buy emergency gas if necessary. We received from the German state 30 million euros that will be used to grant compensations for citizens on the electricity and natural gas invoices, within the governmental program “Aid for meters”. With the same compensation destination directly on the invoice we also received budget support from the EU. All this financial support was also discussed at the third support conference on Moldova, on November 21, which took place in Paris, where French President Emmanuel Macron announced a new international package of 100 million euros to help our country cope with the consequences of the Ukraine war. It is a generous support for which we are grateful to all EU partners which have shown solidarity in these difficult times. In fact, together with European countries we are stronger and more prepared by any crisis situation. Moreover, we understand the situation that our citizens go through, which supports the consequences of increasing the unprecedented prices and their support is a priority of the government this winter. We thank our European partners which allowed us to intervene and help the people.
What are the next steps of the access of the Republic of Moldova in the European and Euro-Atlantic structures? How can Romania help?
We have a mission assumed in our process of integrating the country into the EU, a mission that is both of the governors and of the citizens. It is not an easy way, but it is the way that will change the lives of our citizens for the better – and this desire is one that we will keep with all our strength. We have will and trust that things will change in the Republic of Moldova, after years and years of corrupt and broken governments. The nine recommendations made in the opinion of the European Commission and all the obligations that we must fulfill in the coming years are for a more prosperous future of the Republic of Moldova. We will boldly continue the reforms we started, and here Romania is our great partner. Important now is for Moldova to receive more European support, including non-reimbursable funds that would help us overcome the difficult situation we are in and would help us carry out the reforms. Certainly, the efforts of the Government of Chisinau will be focused on results with direct impact in the lives of our citizens. It is important that people, all this time since the EU integration is on the table, understand and feel the effects of a better life as quickly: with quality roads and transport, with correct justice, better social services, health systems and healthy education, Moldova is consolidating economically and democratically.
