Weekly Roundup - Part 1
October 13, 2022
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Author’s Note: It’s another big news week here in Moldova. In order to not have another marathon Weekly Roundup and to focus more specifically on the really important energy implications of the week’s news we’ve split the newsletter into 2 parts. In this first part, we’ll look more at the Russian attacks in Ukraine and missiles flying across Moldova earlier this week that we covered in the previous Quick Hit article. We’ll also dive into the energy implications for Moldova. In Part 2 we’ll take a look at other political and economic news (most likely out over the weekend).
Missile Bombardment Across Ukraine
As we discussed in the Quick Hit article earlier this week, Russia unleashed a terror bombing campaign all across Ukraine this week in retribution for the strike against the Kerch Bridge connecting occupied Crimea to Russia. We are now getting a better idea of just how widespread these missile attacks were with cities all across Ukraine, including many that had not been attacked before, being hit. Targets were primarily civilian infrastructure including places people live and gather as well as energy infrastructure. The Ukrainian army published this map of the missile strike paths:
Radio Free Europe (Romanian language service) published this map zooming in on the 3 cruise missiles that flew across Moldovan airspace to hit targets in western Ukraine.
The Romanian Ministry of Defense confirmed the missile flight paths with their radar monitoring and said that the missiles likely originated from either sea or land launch bases on the west coast of Crimea.
Responding to the attacks against Ukraine, Prime Minister Gavrilita stated:
“I strongly condemn these acts of barbarism. My thoughts go out to all those who have lost loved ones due to rockets that fell in Kyiv and other cities. Such atrocities must stop immediately! […] In addition, it is unacceptable that three Russian missiles aimed at Ukraine flew over Moldova, creating a threat to civil aviation, and hence to human lives on the territory of our country. This is a violation of the sovereignty of our state, which seriously contradicts international law,”
Moldovan Minister of Defense Anatolie Nosatîi was asked by the press why the Moldovan Armed Forces did not shoot down the missiles. He responded that the government "has not invested in equipping the army for years." and that “As a result, we have what we have - outdated, partly non-working equipment.” He was also asked why no air raid sirens were activated during this airspace incursion? In response he said that the Army’s competency is to identify incoming threats and notify other state agencies - which they did. It is up to the “General Inspectorate of Emergency Situations” under the Ministry of Internal Affairs to decide to activate air-raid sirens. Apparently they did not chose to do so, perhaps because the missiles were already gone by the time this decision making process worked out.
For now, the Government has chosen to keep Moldova’s airspace open for commercial aviation. At the same time, these attacks are set to majorly exacerbate Moldova’s already serious energy crisis.
Energy Crisis Deepens
The missile strikes in Ukraine damaged around 30% of the country’s energy infrastructure causing rolling blackouts all around the country. Power is being kept on right now only be reducing consumption (voluntary and rolling blackouts) and it will take weeks to repair the damage. In order to stabilize the electrical grid, Ukrainian authorities abruptly suspended energy exports to Moldova and the EU. According to Minister of Infrastructure Andrei Spinu, Moldova was importing 30% of its power consumption from Ukraine which was cut off at 3 am October 11th. This resulted in the country abruptly becoming 100% reliant on local power generation, of which around 75% comes from the MoldGRES plant in Transnistria. The plant was unable to up production by itself so MoldovaGaz allocated emergency reserves of 0.8 million cubic meters of natural gas per day to the plant to produce the necessary power.
Earlier this month, GazProm reduced gas supplies to Moldova by more than 30% to 5.7 million cubic meters / day. This means that in order to make up for the loss of Ukrainian electricity Moldova had to allocate nearly 16% of the already reduced daily gas supply to the Transnistria MoldGRES plant. Even so, demand is now exceeding supply in peak hours. This has lead Minister of Infrastructure Spinu to make the following appeals to the public:
Reduce electrical consumption as much as possible during peak hours 7 - 10 AM and 6 - 11 PM.
Use LEDs and energy efficient light bulbs if possible. Shut lights off when you’re not in the room.
As much as possible, use appliances outside of peak hours (washing machine, dish washer, hair dryer, electric heaters, electric water heater, etc)
Unplug appliances when not in use that use standby mode
Charge phones, computers, etc during non-peak hours
Minister Spinu also announced that during those peak hours the Parliament and Government building would turn the lights off to conserve energy. The town of Ungheni also announced that they would turn street lights off between 11:30 and 5 am to conserve energy.
Last week, authorities already began stocking the Termoelectric plant in Chisinau with fuel oil as an emergency backup. As of October 11th the plant switched to fuel oil and is burning this instead of natural gas to produce electricity and power Chisinau’s central heating systems.
Analysis - Understanding the Politics
In Moldova, the destruction of so much of Ukraine’s energy infrastructure and the disruption to exports has exacerbated a situation that Russia has been intentionally creating since before the war began. The 30% reduction in gas supplies this month has already hit Moldova hard and is a constant talking point of the Shor and Socialist Parties in their opposition to the PAS government. To take advantage of the situation, the Socialists this week began collecting signatures on a petition to prevent the government from cutting energy off to people who can’t pay this winter. We’ll dive more into these political destabilization efforts, as well as actions by the non-Shor opposition to unite against PAS in Part 2 of the roundup.
At a macro level, analysts in Moldova speculate that by constricting electrical supply and making Moldova more reliant on the MoldGRES plant in Transnistria the Kremlin is acting to contain the government’s agency in the case of a gas cutoff. Previously, Moldova could say that in the case of a full gas cutoff Transnistria would have to buy gas shipped from Romania at market prices. Now, because of the reliance on this one plant Transnistria has cards to try and force Chisinau to subsidize Transnistrian gas in the event of shorter supply. Further, the Kremlin may be willing to call Chisinau’s threat (bluff?) by further reducing or cutting gas supplies and seeing if the government would put Transnistrians (who are Moldovan citizens) into a position where they can’t afford heat at all this winter. It’s unclear what exactly the balance of threats is right now, but it is very clear that the tug-of-war over energy with the Kremlin has taken another sharp turn.
International Diplomacy to Find Energy
While these events unfolded, Prime Minister Gavrilita was on a working trip to Baku Azerbaijani discussing purchasing gas from that country. It is reported that she is discussing the amount of 300 million cubic meters, which is the total amount Moldova needs for the winter, but no decisions were announced.
Most importantly, the Romanian government announced that they would provide subsidized electricity to Moldova at a price of 90 euros / MWh. Minister Spinu announced that the Romanian government made this decision and that a contract was signed for up to 100 MW of power at this subsidized rate to start from the evening of October 13th. This will provide for 30% of Moldova’s electrical needs and replace the power imported from Ukraine - though even with subsidies the price is higher by around 20%. This is a massive showing of solidarity from Romania and the speed that the Moldovan government was able to get this contract signed and start electricity flowing shows just how fast previously massive contracts are being concluded and starting action in this fast paced crisis.
Author’s Note: There isn’t very clear reporting on the total capacity of Moldovan electrical connections to Romania right now. We’ll clarify details on this front as soon as we have more information.
Meanwhile, the President of the European Parliament Roberta Metsola announced she would be making a trip to Chisinau. In a statement she said (quote selections from Newsmaker):
“I think that Moldova should be given special attention. (…) Not only because it is in the most vulnerable position because of the border with Ukraine (…), but also because, for known reasons, it can no longer rely on electricity from Ukraine. Now it relies on electricity from Romania and pays the market price for it. This is a situation where at any moment another, very hostile opposition can come forward. We are very proud of our decision to grant Ukraine and Moldova the status of EU candidate countries,”
This signals both solidarity from the EU as well as a recognition of the dire situation Moldova is in right now.
Registration for Household Gas Subsidies Launches
In addition to scrambling to guarantee the supply of energy, the government is also scrambling to make sure people can afford energy at the massively increased prices likely to dominate the market by next month. The Ministry of Labor and Social Protection launched the website compensatii.gov.md where citizens and residents can apply for subsidized electricity for the cold season. The government is asking people to apply through the site before November 15th in order to be included in the compensation scheme.
The mechanism for calculating and awarding subsidies is dizzyingly complicated taking into account household statistics such as number of persons, income, energy costs, mortgage liabilities and more. This is put into a formula with a dynamically calculated basket of goods titled the Minimum [household] Expenditure which is updated over time. Based on this formula, people are assigned levels of vulnerability and subsidies will vary month to month based on changing conditions. The actual amount of subsidies granted to each level of vulnerability has not yet been announced, but should be public by November.
In the first days of operation, the site has had major problems crashing or freezing as public demand exceeded the server’s capability of keeping up. The Ministry asked everyone to keep trying as the initial demand subsides - they note that everyone has until November 15th to register.
Meanwhile, specialists who build masonry heaters (sobas) continue to report demand massively exceeding their building capacity with more than half of all requests for a home wood fire stove having to be scheduled for next spring. What has surprised builders is that there has been a large increase of requests for stoves by home owners in towns and cities - not just in small villages without gas connections.
For context, the National Bureau of Statistics says that 680,000 families in Moldova heat their homes with wood or coal ; 285,000 use natural gas ; and 165,000 are on municipal central heating systems. The government is using a multi-pronged approach to assure supply across this energy mix. Subsidized wood for homes with wood burning stoves, the gas subsidization scheme for households with gas heat, and fuel oil and alternate sources for central heating. But even with prices spiking everywhere it seems that people who use natural gas are most worried and are seeking wood stove options.
From a high level view, we can see a massive tug of war between the Moldovan government and the Kremlin over energy this winter. This week marked the beginning of what is likely to be a major stress test in the coming weeks and months. Moldova will be tested in terms of existing infrastructure, ability to find international support, government preparation over the summer and critically, the ability of Moldovan society to come together this winter. Either to voluntarily decrease demand, or accept as necessary mandatory reductions.
From now until March, Moldova will endure a national trial, testing the mettle of this small country as well as the commitment of her friends.
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Wishing the government luck on the gas subsidies: looks like they're trying very hard to be fair. I'd say the internet growing pains aren't as important as audit controls to verify registration facts and levels of vulnerability. (The U.S. Federal Government is pretty bad at this itself: it's the final piece of a safety-net system which rarely gets implemented.) It helps if the funds can only go to electricity - that would have to be set up on the billing side.
While Moldovans are ingenious when it comes to finding fuel for sobas and greenhouses, I still worry about mature trees in forest areas. My village had a small oak forest which I suspect wasn't that old, maybe 200 years or less (they claimed 400 years; I don't remember the trees being that huge.) Who knows, maybe it gets cut down every few centuries in times of real hardship.
Just rambling to show you're appreciated, David and again, hoping that the upcoming winter is a mild one! - Connie McClellan M28 2013-2015