Identifier
Created
Classification
Origin
08CHISINAU272
2008-03-12 12:12:00
CONFIDENTIAL
Embassy Chisinau
Cable title:
GOM WILLING TO BUY ELECTRICITY FROM TRANSNISTRIA
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHCH #0272 0721212 ZNY CCCCC ZZH R 121212Z MAR 08 FM AMEMBASSY CHISINAU TO RUEHC/SECSTATE WASHDC 6414 INFO RUEHBM/AMEMBASSY BUCHAREST 4285 RUEHKV/AMEMBASSY KYIV 0596 RUEHMO/AMEMBASSY MOSCOW 3264
C O N F I D E N T I A L CHISINAU 000272
SIPDIS
SIPDIS
STATE FOR EUR/UMB
E.O. 12958: DECL: 03/12/2018
TAGS: ECON ENRG PGOV PREL PBTS MD
SUBJECT: GOM WILLING TO BUY ELECTRICITY FROM TRANSNISTRIA
Classified By: Ambassador Michael D. Kirby for reasons 1.4(b) and (d)
C O N F I D E N T I A L CHISINAU 000272
SIPDIS
SIPDIS
STATE FOR EUR/UMB
E.O. 12958: DECL: 03/12/2018
TAGS: ECON ENRG PGOV PREL PBTS MD
SUBJECT: GOM WILLING TO BUY ELECTRICITY FROM TRANSNISTRIA
Classified By: Ambassador Michael D. Kirby for reasons 1.4(b) and (d)
1. (C) SUMMARY: Minister of Industry Vladimir Antosii said
that the Moldovan Government (GOM) was willing to buy
electricity from Transnistria (TN) and that price, not
politics, would drive any future decision to do so. Antosii
confirmed that Moldova's contract with Ukraine for supplies
of electricity remained in force and allowed for a gradual
price increase. He also spoke positively about a planned
U.S. investment in power generation. We've advised the
American investor about the challenges of investing in
Moldova. END SUMMARY.
IMPORTS OF UKRAINIAN ELECTRICITY (ASSURED FOR NOW)
-------------- --------------
2. (C) On March 7, econoff met Minister Antosii to discuss a
potential U.S. investment in the energy sector and Moldova's
energy imports. Antosii confirmed that Moldova's July 2007
agreement with Ukraine on electricity imports, which included
a gradual price increase of 0.1 cent per kilowatt hour (kwh)
per month, remained in force. He said this agreement gave
Chisinau time to increase domestic consumer tariffs and also
met Ukraine's demand to (eventually) increase prices to the
Ukrainian wholesale price. Antosii expected a consumer
tariff increase this summer.
GOM WILLING TO BUY ELECTRICITY FROM TN
--------------
3. (C) Antosii said the GOM had followed through on
commitments to facilitate the export of electricity from the
Russian-owned Moldavskaya GRES power plant in Cuciurgan. He
noted that the plant was currently producing 350 MW,
supplying 250 MW to TN and exporting 100 MW to Romania.
Anotosii said the plant had the capacity to export more, but
cited technical limitations in the transmission lines. When
asked about purchasing electricity from Cuciurgan, Antosii
said the GOM was open to the idea and that such a decision
depended only on price. As long as Ukraine provided
electricity at below-market prices, he noted, Moldova would
buy from Ukraine.
POSSIBLE AMERICAN INVESTMENT IN POWER GENERATION
-------------- ---
4. (SBU) Antosii was aware of a Moldovan-American joint
venture plan to build a privately owned 120 MW natural gas
fired power plant on the grounds of the state-owned utility
"CET-1" in Chisinau. He said he had signed a memorandum of
understanding with the investors, moving the project through
the government bureaucracy and gaining the blessing of the
Prime Minister. He expected a government decision approving
the project by the end of March. He added that Moldova's
three state-owned power plants were open to foreign
investment targeted at increasing existing capacity (not
privatizing these assets). He said the return on these
investments was guaranteed because current Moldovan
legislation required power distributors to purchase all
locally produced energy first, and local production only
covered about 30% of Moldova's needs.
COMMENT
--------------
6. (C) It seems that for now Moldova's contract with Ukraine
for electricity supplies remains in place, allowing a gradual
price increase to Ukrainian domestic market levels, but
keeping prices low. Because of the interconnected
transmission systems, Ukraine cannot suspend exports of
electricity to Moldova without affecting the Odessa region.
The Moldovans understand this and have refused to pay any
drastic price increase. We've briefed the U.S. investor
about the challenges of doing business in Moldova, noting
government interference, corruption and rule of law issues,
and specific problems in the energy sector. We've discussed
the end of USAID assistance to the national regulatory agency
because of a lack of transparency and independence and some
of the challenges faced by foreign investor Union Fenosa.
The investor commented that Antosii had promised that the GOM
could "force" the power-distribution companies to purchase
all the electricity generated by the new plant. While such a
requirement exists under current Moldovan law, the tone of
such statements is worrisome. END COMMENT.
KIRBY
SIPDIS
SIPDIS
STATE FOR EUR/UMB
E.O. 12958: DECL: 03/12/2018
TAGS: ECON ENRG PGOV PREL PBTS MD
SUBJECT: GOM WILLING TO BUY ELECTRICITY FROM TRANSNISTRIA
Classified By: Ambassador Michael D. Kirby for reasons 1.4(b) and (d)
1. (C) SUMMARY: Minister of Industry Vladimir Antosii said
that the Moldovan Government (GOM) was willing to buy
electricity from Transnistria (TN) and that price, not
politics, would drive any future decision to do so. Antosii
confirmed that Moldova's contract with Ukraine for supplies
of electricity remained in force and allowed for a gradual
price increase. He also spoke positively about a planned
U.S. investment in power generation. We've advised the
American investor about the challenges of investing in
Moldova. END SUMMARY.
IMPORTS OF UKRAINIAN ELECTRICITY (ASSURED FOR NOW)
-------------- --------------
2. (C) On March 7, econoff met Minister Antosii to discuss a
potential U.S. investment in the energy sector and Moldova's
energy imports. Antosii confirmed that Moldova's July 2007
agreement with Ukraine on electricity imports, which included
a gradual price increase of 0.1 cent per kilowatt hour (kwh)
per month, remained in force. He said this agreement gave
Chisinau time to increase domestic consumer tariffs and also
met Ukraine's demand to (eventually) increase prices to the
Ukrainian wholesale price. Antosii expected a consumer
tariff increase this summer.
GOM WILLING TO BUY ELECTRICITY FROM TN
--------------
3. (C) Antosii said the GOM had followed through on
commitments to facilitate the export of electricity from the
Russian-owned Moldavskaya GRES power plant in Cuciurgan. He
noted that the plant was currently producing 350 MW,
supplying 250 MW to TN and exporting 100 MW to Romania.
Anotosii said the plant had the capacity to export more, but
cited technical limitations in the transmission lines. When
asked about purchasing electricity from Cuciurgan, Antosii
said the GOM was open to the idea and that such a decision
depended only on price. As long as Ukraine provided
electricity at below-market prices, he noted, Moldova would
buy from Ukraine.
POSSIBLE AMERICAN INVESTMENT IN POWER GENERATION
-------------- ---
4. (SBU) Antosii was aware of a Moldovan-American joint
venture plan to build a privately owned 120 MW natural gas
fired power plant on the grounds of the state-owned utility
"CET-1" in Chisinau. He said he had signed a memorandum of
understanding with the investors, moving the project through
the government bureaucracy and gaining the blessing of the
Prime Minister. He expected a government decision approving
the project by the end of March. He added that Moldova's
three state-owned power plants were open to foreign
investment targeted at increasing existing capacity (not
privatizing these assets). He said the return on these
investments was guaranteed because current Moldovan
legislation required power distributors to purchase all
locally produced energy first, and local production only
covered about 30% of Moldova's needs.
COMMENT
--------------
6. (C) It seems that for now Moldova's contract with Ukraine
for electricity supplies remains in place, allowing a gradual
price increase to Ukrainian domestic market levels, but
keeping prices low. Because of the interconnected
transmission systems, Ukraine cannot suspend exports of
electricity to Moldova without affecting the Odessa region.
The Moldovans understand this and have refused to pay any
drastic price increase. We've briefed the U.S. investor
about the challenges of doing business in Moldova, noting
government interference, corruption and rule of law issues,
and specific problems in the energy sector. We've discussed
the end of USAID assistance to the national regulatory agency
because of a lack of transparency and independence and some
of the challenges faced by foreign investor Union Fenosa.
The investor commented that Antosii had promised that the GOM
could "force" the power-distribution companies to purchase
all the electricity generated by the new plant. While such a
requirement exists under current Moldovan law, the tone of
such statements is worrisome. END COMMENT.
KIRBY