Energy governance in Moldova requires deep and completed reforms

Energy governance is essential for making the energy market more functional and predictable. Conditionality on external financial assistance to Moldova should be imposed concerning the progress in the sector.

About this and other aspects of reforms, representatives of the civil society and media from Moldova spoke during the hearings in the European Parliament, organized by MEP Monica Macovei and think tank Expert-Forum from Bucharest, in Brussels, on 8th February.

We propose you to read on shortcomings of the energy governance:

1. Despite the progress on adopting the new primary legislation on electricity and natural gas during 2016 it requires to pass the framework regulatory law on energy in a transparent and participatory manner (See Expert-Grup), taking into account the recommendations of the civil society and other relevant stakeholders in the field (Energy Community, DG Energy).

2. The law on energy should provide for (only) financial auditing from the Court of Accounts; internal and external audits organized under the Agency’s internal decisions, active involvement of the civil society. The application of the law shall be strictly monitored by the international partners and the civil society. They will also follow the procedure for appointments of vacant positions in ANRE’s management and the operation of the regulator in the near future, including its ability to take difficult decisions (market analysis, monitoring tenders for energy, penalizing companies that breach the rules, licensing transparently and only suppliers who meet the legal requirements etc.).

3. A proper implementation of the new energy legislation shall be ensured by improving the institutional capacities, independence and transparency, and performance of the national regulator. This should begin with the appointment of a competent and robust administration in the regulator based on competitive conditions and maximum transparency.

4. Interconnection projects on electricity and natural gas should be stepped up in order to créate the access to the internal market for new suppliers generating more diversification, which can bring more competition, lower prices, better performance in the field and more energy independence. Successful implementation of the interconnection projects and sufficient investments supporting them depends on the credibility and competences proved by the regulatory institution, the latter being seen as one of the biggest weaknesses of the sector in Moldova.

5. Supplies of both electricity and gas should envisage minimizing the costs and ensuring energy security.

  • With regard to electricity this implies transparent and fair conditions for acquistion of electricity included in primary legislation, based on recommendations of the Energy Community, and fighting the participation of entities with dubious offshore presence.
  • In gas sector, this means to clarify and to break the vicious circle of indebtedness belonging to joint-stock enterprise MoldovaGaz towards Russian gas giant Gazprom, accounting for 80-90% of Moldova’s GDP, and caused mainly by unpaid consumption of gas by the Transnistrian region. The potential transformation of these private debts in public ones should be effectively prevented.
  • The interconnections in both electricity and gas sectors are crucial to developing strong energy sector, reducing the inefficiency and by fighting the gray schemes that have been used in the field (See the Report of Expert-Grup and Expert-Forum).

 

Recommendations to the EU:

  • The EU should reassess, jointly with the Energy Community, the interconnection projects between Romania and Moldova in order to raise their status to „projects of interest within the EU which may benefit from increased assistance, including under the Instrument for Pre-Accession (IPA) and the Neighborhood investment Facility (NIF) and providing grants through these instruments. Lastly, EC should consider the possibility to finance with a grant of at least 10% (20 million EUR), like in the case of the gas interconnection.
  • A strong conditionality on direct budget support (about 50 million EUR) on reforms in the energy sector should be established. In particular, it refers to ensuring transparency and independence of the regulator, the effective implementation of new rules for tenders on energy imports procurement. In addition, a transparent technical coordination between European financial institutions (EBRD) and international (World Bank) for financial support for interconnections is necessary, eliminating discrepancies between their strategic priorities to connect the Romanian energy system (electricity).
  • Finally, a considerable role has the direct support for regulation through programs of the Energy Community Secretariat (EU4Energy) and the European Union Delegation, which should advance further and include the monitoring of the progress of reforms in energy.

This text was prepared by political scientist and researcher Dionis Cenușă and partially delivered at the hearings in the European Parliament.

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