Moldovan PM orders preparing energy company Moldovagaz nationalization

Moldovan Prime Minister Dorin Recean has ordered preparing a legal framework for nationalizing the assets of Moldovagaz, an energy company a controlling stake in which belongs to Russia's PJSC Gazprom.

Speaking at a government meeting on Monday, Recean described Gazprom's decision to halt gas supply to the Transdniestrian region starting January 1, 2025 as outrageous.

"This decision has been made in breach of a valid contract between Moldovagaz and Gazprom on the pretext of a historical debt of over $700 million. An international audit has shown that there's no debt whatsoever. Perhaps those funds were spent on journeys and yachts, but it's unacceptable to place this debt onto Moldovan citizens' shoulders. We'll handle this situation, as we've handled Russia's energy blackmail before," Recean said.

In this context, Recean instructed Justice Minister Veronica Mihailov-Moraru to draw up amendments to national laws to provide a legal basis for nationalization of businesses.

"Ms. Mihailov-Moraru, I am asking you to prepare the necessary legislative amendments so that nationalization could be accomplished. We should act in strategic sectors. By the way, those assets [Moldovagaz] were also forcibly taken away from us in the past, and we should return them to the state's ownership," he said.

As reported, Gazprom said it would halt gas supplies to Moldovagaz starting January 1, 2025 "because of the Moldovan side's refusal to settle its debt for gas supplies."

"Moldovagaz regularly fails to fulfill its payment obligations under the current contract, which is a material breach of its terms and conditions," Gazprom said.

Since December 4, 2022, all gas in the amount of around 5.7 million cubic meters a day that Gazprom supplies under a contract with Moldovagaz has been delivered to the Transdniestrian region, which does not pay for this gas. As a result, its debt to Gazprom has topped $10 billion. At the same time, as a condition for continuing gas supply to the left bank of the Dniester river, Gazprom has demanded that Moldovagaz repay its historical debt, which Gazprom estimates at $709 million. The Moldovan government does not recognize this debt, citing the findings of an international audit conducted in 2023, according to which the debt just slightly exceeds $8 million.

If Transdniestria does not receive enough gas, the Cuciurgan Power Plant, known also as Moldovan GRES located in Transdniestria, will be unable to generate electricity for the right bank of the Dniester river, thus triggering a severe energy crisis in the whole of Moldova.

Moldova currently buys around 80% of the necessary amount of electricity from Transdniestria at $66 per MW. If gas deliveries are halted, Moldova would have to buy electricity from Romania at nearly twice the price.

Until lately, Russia has supplied gas to Transdniestria via Ukraine under a contract that expires at the end of 2024. Kiev has warned categorically that it will not extend the gas transport contract. Some reports suggested that Russian gas might be supplied to Moldova via the TurkStream gas pipeline, Bulgaria, and Romania; however, Gazprom has not booked the required capacity for that.

Moldovagaz, the biggest energy company in Moldova, was set up in 1999. Gazprom owns 50% plus one share, the Moldovan government has 35.33%, the unrecognized Transdniestrian republic's property management committee 13.44%, and legal entities and individuals 1.23%. The Transdniestrian region's shares are under Gazprom's trusteeship.