Moldova, one of the most vulnerable countries in the world due to its lack of energy security, is attracting unwanted outside attention from Russia. Moldova imports 100% of its natural gas, 99% of its oil, and relies on a single power plant in Russian-controlled Transnistria for 80% of its electricity. Russia’s Gazprom owns 51% of Moldovagaz, the country’s natural gas monopoly, and there is almost no foreign investment in the energy sector. Before the Russian invasion of Ukraine, Kyiv was helping Moldovan President Maia Sandu and her government achieve energy independence, but this is no longer tenable. Chisinau is now reforming its commercial and rule of law institutions to become attractive to foreign energy investment and the international community is readying to support Moldova’s energy sector.
The US government has given $40.5 million in energy-related funding and $30 million in budget support since the Russian invasion of Ukraine. The EU and international finance institutions have also been supportive. However, this money has gone mostly to “capacity building” and technical assistance instead of structural reform. Critics have likened it to the proverbial pouring water into a leaky bucket, rather than a wholesale restructuring of Moldova’s energy sector to free it from legacy Soviet inefficiencies and from modern Russian meddling.
Priorities should include construction of a power plant outside Transnistria, ending Gazprom’s stranglehold on Moldovagaz, building Moldova a power market, and diversifying the energy mix. Moldova has demonstrated little capacity to tackle structural reforms, such as empowering an alternative agency to be the vehicle for natural gas contracts at the expense of Moldovagaz.
