Moldova is a net energy importer with only 3% of demand for primary energy covered by domestic sources. In 1995 primary energy supply was dominated by natural gas (48%).  The main energy suppliers are the Russian Federation (100% of gas imports, i.e. 3 035 million m3 in 1995), Ukraine (with the Russian Federation it accounts for 100% of the country’s coal imports, 1 315 000 tonnes in 1995) and several European countries (oil products totalling 1 466 500 tonnes in 1995).  The Republic annually spends more than US$ 500 million on energy, an amount equivalent to 29% of GNP in 1995.
Some 60% of final energy consumption is in the form of electricity and heat, of which industry is the main consumer (41% and 47%, respectively). Currently, electricity is supplied by only one public enterprise, the “Moldenergo” State Company.  The biggest plant is the Moldovan Thermal Power Plant (MTPP) located on the Nistru left bank (84% of total installed capacity).  MTPP produces 85% of the electricity used in the country.
The energy supply level per capita in Moldova is below the average of OECD Europe and lower than in all neighbouring countries. The consumption of primary energy dropped by more than 50% from 10.3
 
Figure 2.1:  Development of primary energy supply structure                                                 %
 Source:  Prepared from:
1.  Ministry of Economy, Moldovan Economic trends. Quarterly Issue. “Section 9. Energy Issues”. Government of Moldova/European Expertise Service. August 1966, 12 pages.
2.  International Monetary Fund (IMF), Staff Country Report No. 95/73: “Republic of Moldova - Recent Economic Developments”, August 1995, 7 pages.

 

 million toe (435 PJ) in 1990 to 4.8 million toe (203 PJ) in 1995.  Electricity consumption decreased from 12.7 TWh to 5.4 TWh.  There was a significant decrease in heat consumption, from 4 283 000 toe in 1991 to 1 630 000 toe in 1995.

Energy consumption in the residential sector fell between 1991 and 1995, from 2.02 million toe to about 1.18 million toe.  Heat represents 29.3% of residential energy consumption.  About 300 000 flats are connected to district heating systems. The total
 thermal capacity of district heating plants is 7 373 000 Gcal, of which 78% come from combined heat and power plants, the rest from heating plants. The share of final energy consumption by the population in total energy consumption increased from 27.8% in 1990 to 39.5% in 1995.
      Energy consumption in the transport sector decreased considerably, from 1.25 million toe in 1990 (or 17% of total final energy consumption) to 0.35 million toe in 1995 (or 11%).  The share of construction in final energy consumption decreased by 0.7%.

 Industrial manufacturing is the main energy consumer among the economic sectors.  Energy consumption in industry decreased from 2.09 million toe in 1990 to 0.7 million toe in 1995, and that of agriculture from 0.98 million toe to 0.35 million toe.  The share of industry in total final fuel consumption decreased from 28.5% in 1990 to 23% in 1995, while that of agriculture remained almost constant during the same period.

Figure 2.2:  Final energy consumption, 1995
 

Source: Energy consumption in the Republic of Moldova. Trends. Informative bulletin, January 1997.

Considerable changes also occurred in the structure of the forms of energy used.
 

 

Losses of energy

Electricity losses in total energy losses increased from 10.7% in 1990 to 19.4% in 1995.  The energy efficiency can also be shown by the ratio between
 finally consumed and primary energy.  This index decreased during the period under consideration by 11%.  It compares to selected market economies as follows:  Japan - 0.717, France - 0.651, Republic of Moldova - 0.708 (1990), 0.63 (1995).
 

The medium efficiency coefficient in electricity generation in Moldova decreased from 35.5% in 1990 to 30% in 1995, which is equivalent to annual losses of 81 300 toe (approximately US$ 9 million). Heat use decreased by about 50% between 1990 and 1995.  However, total losses in heat transport increased from 120 600 toe to 150 400 toe, that is by 25%.

Energy pricing

Energy prices have increased substantially over recent years.  However, natural gas and district heat subsidies continue to exist, and electricity tariffs are generally significantly below long-term marginal costs.  In particular, cross-subsidies to natural gas, with the industrial and power sectors paying more than households, provide little incentives to substitute natural gas for highly polluting HFO and coal in these sectors.
The prices of petroleum products and coal are now unregulated for private importers, who are currently handling some 30% of the related imports.  For the State sector, a mark-up system, which does not fully cover depreciation, has been adopted.  Increases of electricity and heat tariffs constitute a major problem, as they relate to a high proportion of household expenditures.
According to World Bank calculations in 1995, industry paid more than three times the minimum cost recovery level of electricity, whilst household tariffs were only a quarter of this minimum.  In 1997, consumer tariffs for electricity were just over half the minimum cost recovery, while for gas, consumers were charged about 90% of the cost recovery.  Industrial tariffs were in both cases around 135% of the minimum cost recovery level.

The indebtedness of energy users to suppliers is a major problem.  At 1 January 1996, total  debt in the national economy stood at 2.6 billion Lei.  The debts of the economic agents vis-à-vis “Moldenergo”at 1
January 1996 exceeded 336.7 million Lei, after increasing in 1995 by 53.6 million Lei.  The comparable figure for “Moldovagaz” at 1 January 1996 is 731.3 million Lei, and for “Tirex-Petrol” 86.6 million Lei.  The external debt of Moldova at the end of 1996 amounted to about US$ 471 million and US$ 615 million in the first six months of 1997.
Energy intensity

Before the break-up of the Soviet Union, Moldova’s energy intensity was high by international standards.  Despite a substantial increase in real energy prices, it is still high, but decreased at an impressive average annual rate of 8.25% between 1990 and 1995.  The decrease was primarily caused by the growing share of agriculture in GDP, giving higher weight to the relatively low specific energy consumption in agriculture as compared with industry.  As a result, energy intensity reached a value of 1 279 toe/US$ 1000 of GDP in 1995.  This figure is about twice as high as that for upper-middle income OECD countries:  OECD reported an average energy intensity for such countries of 0.6 toe/US$ 1000 in 1993.  It is likely that the unfavourable economic development during 1996 and 1997 has led to a further reduction in overall energy intensity in Moldova, although at a somewhat reduced rate.

The main reasons for the still unsatisfactorily high level of energy intensity are the lack of investments in improved efficiency in the power plants and district heating utilities, the so far limited scope of industrial restructuring, the lack of incentives for energy conservation in the household sector, primarily due to the lack of metering, and the social unacceptability of cutting off non-paying energy customers from supply.  Nevertheless, a clear downward trend in energy intensity prevails.

Figure 2.4:  Development of primary supply and final consumption per capita

Source:  Calculated from:
1. The Department for Environmental Protection/The National Institute of Ecology/World Bank, The National Strategic Action Plan for Environmental Protection. Chisinau, October 1995.
2. UNECE, Committee on Environmental Policy and Senior Economic Advisers to ECE Governments, Energy prices and taxes in countries in transition: an overview of recent developments.  Document CEP/WG.2/R.17-EC.AD/WG.1/R.40. 14 November 1995, 24 pages.