Moldova strikes power supply deal with Ukraine’s DTEK

06 April 2017, Week 13 Issue 854

Moldovan electricity provider Energocom has struck a deal with Geneva-based DTEK Trading to receive Ukrainian electricity over a 12-month period.

The latter, a subsidiary of Ukrainian energy giant DTEK, secured the contract at auction after fending off a rival bid from the Kurchugun thermal power plant (TPP) in Moldova’s breakaway region of Transnistria. In a statement, the Moldovan Energy Ministry said DTEK had agreed to provide power between April 1 this year and March 31, 2018 at US$50.2 per MWh. According to the ministry, the Kurchugun TPP placed a higher bid of US$54.4 per MWh, which was itself a discount on a previous offer of US$58.5 per MWh.

The ministry did not disclose how much electricity it intended to buy, although it did say that the new contract with DTEK would save Energocom some US$15.39 million during the one-year period.

Moldova currently secures 80% of its electricity from the 2,520-MW Transnistrian station, which is owned by Russian power giant Inter RAO. In turn, the plant generates energy using gas supplied by Russia’s Gazprom. Chisinau relies on imports from Romania and Ukraine for the rest of its power needs.

In 2016, Moldova bought 3.3 million MWh of electricity from Transnistria, up 0.4% year on year. It paid US$68 per MWh for the power until April 1 of that year, after which it paid US$50 per MWh. This came to a total bill for the year of US$178 million.

Over-reliance on the TPP in Transnistria has caused problems for Moldova.

The self-proclaimed republic accounted for two-thirds of the 3 bcm per year of Russian gas delivered to Moldova last year, with the bulk of this gas being used at Inter RAO’s power station. Transnistria does not pay Moldova for this gas, however, causing the latter to accumulate a debt of US$6.5 billion to Gazprom.

Authorities in Chisinau have called for the debt to be divided between the arrears of Transnistria, estimated at US$6 billion, and Moldova proper, valued at US$500 million. But Gazprom has refused to distinguish between the two, likely because the impoverished Transnistrian administration would be unable to settle the arrears on its own.

Moldova is also 100% dependent on Russian gas. It sought to curb this reliance with the launch of a 1.5 bcm gas link with Romania in August 2014.The Lasi-Ungheni pipeline cost 26.5 million euros (US$28.3 million) to build, with the EU and Romania covering 80% of this sum. However, the interconnector still sees limited use, as it is not commercially feasible unless extended all the way to Chisinau, which accounts for 50-60% of gas consumption in Moldova (excluding Transnistria).

On the electricity front, Moldova is looking to strengthen its connection with the Romanian power grid by constructing a transmission line between Isaccea in Romania and Chisinau, via the Moldovan town of Vulcanesti. The project, earmarked to cost 140 million euros (US$149 million), would allow Moldova to ramp up power deliveries from Romania from their current level of 150 MW to 650-800 MW.

Joseph Murphy

Edited by

Joseph Murphy

Editor

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