Romania’s Transgaz reportedly eyes Moldovan peer

Romania’s Transgaz reportedly eyes Moldovan peer
By Iulian Ernst in Bucharest October 31, 2017

A top Romanian official has hinted that the country's power grid operator Transgaz is considering a takeover of Moldova’s Vestmoldtransgaz — the company supposed to operate the key transport route Ungheni-Chisinau in the neighbouring country. 

This would be first of several energy cooperation projects discussed between the two countries, with the others being related to the unification of the power grids.

Romanian ruling majority leader Liviu Dragnea indicated that Transgaz enjoys the state’s support for a possible takeover of the Moldovan company which has recently been put up for sale by the government in Chisinau, reported. 

Plans to privatise Vestmoldtransgaz prompted surprise in Moldova, but the steps taken so far, and the recent statements, indicate it is likely to be a procedure initiated with the aim of passing the company into the ownership of Transgaz — a company that already handles large projects on Romanian territory and would thus be able to push forward the construction of the strategic route supplying industrialised areas around Chisinau with Romanian natural gas. 

Romania’s Ambassador in Chisinau Daniel Ionita has said that the route will be ready by the end of 2018, reported on October 30. At the same time Dragnea spoke in Bucharest of “political support” for the takeover; Transgaz is controlled by the Romanian government.

“A Romanian company in the energy sector has political support” in his pursuit for an acquisition in Moldova, Dragnea stated on October 30. He mentioned that this was one of the strategic topics discussed with Prime Minister Mihai Tudose. Other topics were related to the construction of motorways in Romania. Dragnea added that Romania’s government will soon meet representatives of international financial institutions (IFIs) including the World Bank and the European Investment Bank (EIB).

The plans announced by Moldova’s government to privatise Vestmoldtransgaz also gave rise to speculation, as reported by Mold Street, that the government could be selling the company in order to avoid excessive public indebtedness. The Ungheni-Chisinau project will be developed just as it is designed at this moment, but the government can not increase its indebtedness, the head of energy policies within the Moldovan ministry of economy, Calin Negura, told Mold Street.

Mold Street also commented about a specific provision in Vestmoldtransgaz’s tender book, under which the bidder must demonstrate experience in the management of networks operating under ENTSOG (European Network of Transmission System Operators for Gas) regulations, a provision that according to the daily would not be met by Russia’s Gazprom.

Speaking of the financing of the Ungheni-Chisinau pipeline, already discussed with IFIs by the Moldovan government, the Moldovan official hinted that draft loan contracts must be canceled. However, it is very likely that Transgaz would get financing from exactly the same IFIs for the project after taking over its Moldovan peer. The Romanian company has already received grants from the European Union and loans from the EIB and the European Bank for Reconstruction and Development (EBRD) for projects within Romania. Dragnea’s mention of planned talks with IFIs for more financing hint that the topic might be discussed at least unofficially at this moment.

Vestmoldtransgaz, which was one of the companies included in the Moldovan Public Property Agency’s new privatisation round announced for November and December, owns the natural gas interconnector with Romania and was set up by the Moldovan government in order to avoid the involvement of Moldtransgaz in the country’s energy strategy. 

The other natural gas transport company Moldtransgaz, is controlled by Gazprom and brings Russian gas to Moldova. Moldtransgaz is also handling the problematic $5bn overdue bills owed by the separatist republic Transnistria for the natural gas not paid over the past decades — an indirect form of financing from Russia for Transnistria.