The EU-Moldova Association Agreement: opportunities for the modernisation of the energy sector

The EU-Moldova Association Agreement: opportunities for the modernisation of the energy sector

The Republic of Moldova signed an Association Agreement with the EU in 2014, which involves closer co-operation on a broad range of subjects, including the energy sector. Most of the clauses concerning this sector are taken from the commitments, already assumed by Moldova in the framework of the Energy Community, which imply a gradual integration into the EU’s internal energy market and adoption of the core of the energy acquis communautaire, namely the ‘Third Energy Package’. Why does Moldova need such integration and what benefits can it reap? First of all, it is an opportunity to tackle the problem of import diversification of the main energy resources. This critical topic, driven by the need for increased energy security, stems from the simple fact that only 18.3% of required electricity consumption is produced on the right bank of the Dniester river, the rest being imported from Ukraine and the left bank, uncontrolled by constitutional authorities. Nevertheless, the most sensitive and dominant energy security issue is the 100% importation of natural gas from a single source – the Russian Federation. This problem is becoming all the more important at a time of heightened geopolitical risks and uncertainties. Secondly, the adjustment of national legislation to suit the energy acquis can create a predictable and understandable legal environment for foreign investors. These foreign financial and technical resources are critical for the sector’s modernisation and necessary growth catch-up, capable of compensating the under-investment in capital of the last two decades. Such under-investment exacerbates the performance of the energy sector, resulting in a two-fold discrepancy in energy efficiency between Moldova and the EU, which further [...]

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