Moldova resumes electricity imports from Transnistria

Moldova resumes electricity imports from Transnistria
By Iulian Ernst in Bucharest June 7, 2017

Moldova resumed imports of electricity from Transnistria on June 4, after having switched to importing from Ukraine on April 1 in a move that severely hurt the finances of the pro-Russian separatist republic. Moldova will import 70% of its electricity from Transnistria, with the other 30% will be imported from Ukraine until April 2018.

Moldova imports 80% of the electricity it needs and, until March 2016 it had imported electricity from Ukraine. However, in March 2016 Chisinau decided to sign a contract with Transnistria’s Cuciurgan after Ukraine reduced its capacity and temporarily discontinued its supply due to a scarcity of coal supplies from the conflict-struck eastern parts of the country. But on April 1, it switched its supply back to Ukraine claiming better pricing was the reason, but there were accusations that the move was politically motivated.

The news of the switch back to Transnistrian supplies came unexpectedly, although Moldovan state-owned power company Energocom claims that negotiations with both Transnistrian and Ukrainian suppliers had been ongoing for some time.

The Transnistrian gas-fired power plant in Cuciurgan, owned by Russia’s Inter Rao, offered a price that is 10% lower than the price charged by Ukrainian supplier, Energocom explained. Furthermore, the imports from Transnistria offer more predictability of electricity supply, the company said.

The Transnistrian imports will be made directly by Energocom from Cuciurgan power plant and not through Interkapital – the intermediary company that imported Transnistrian power in the past. Interkapital was suspected of being operated jointly by former Transnistrian President Evgheni Shevchuk and politicians close to the senior ruling Democratic Party (PD) in Moldova, who are reportedly business partners of PD president Vlad Plahotniuc. 

In this respect, the new contract might be perceived as a double success for pro-Russian forces in Moldova: firstly it provides some financial stability to Transnistria and it also weakens the position of the pro-EU politicians supposedly behind Interkapital. The motivation for the switch was most likely economic and not linked to the actions of President Igor Dodon, but the pro-Russian president could still use the opportunity to demonstrate his effectiveness to Russian officials. Moldova’s contract with Ukraine in April was seen as partly directed against pro-Russian Transnistria.

Moldova’s imports of electricity from Cuciurgan have been the subject of speculation and media investigations, and there were allegations of massive fraud during the recent presidential campaign in Transnistria which saw Shevchuk ousted from his position. Shevchuk, who also served as head of the executive and was formally in charge of handling Russian aid, was accused by his rival Vadim Krasnoselsky and by the opposition Obnovlenie party of siphoning off around $100mn. His opponents claimed Shevchuk used Energokapital, the company that intermediates the import of gas from Russia and the export of electricity to Moldova. Shevchuk denied the allegations.There has also been speculation that Plahotnuic was involved in the alleged scam.

Power producer MoldGres, which operates the Cuciurgan power plant, is 100% controlled by Russia’s Inter Rao. Energokapital, an offshore company with unclear ownership set up in 2014, imports the gas from Russia and pays MoldGres to use it and produce electricity, then it sells the electricity to Moldova.

Energokapital was reportedly paying $75 per 1,000 cubic metres of gas to Transnistria’s budget. Traditionally, instead of paying for the gas received from Moldovagas (a Moldovan company controlled by Gazprom), Transnistrian users pay part of the market price to the budget, into an account named “Russian humanitarian aid”. Usually this amount is $150 per 1,000 cubic metres, but Energokapital was given preferential terms, according to Alexander Harichkov, head of a Russian investigation committee supervising important matters related to the pro-Russian separatist republic.

After Shevchuk lost the elections, the authorities in Tiraspol asked Energokapital to sell some of its foreign currency revenues to the central bank in exchange for Transnistrian rubles.