Page 10 - FSUOGM Week 35 2020

FSUOGM PIPELINES & TRANSPORT FSUOGM

EBRD takes 25% stake in

Moldovan pipe

MOLDOVA THE European Bank for Reconstruction and and, after the capital increase, of the EBRD. As
Development (EBRD) announced that it has any commercial project, it involves risks. Out
The bank will invest acquired a 25% stake in Vestmoldtransgaz of the three challenges identified by Otilia Nutu
in the project, and (VMTG) — the gas transmission company that and Denis Cenusa in their joint working paper
presumably make a is operating the newly built Ungheni-Chisinau in February 2016, the one related to the amounts
return when it sells gas pipeline in Moldova — for €20mn. of gas transferred through the pipeline remains
back its stake in the Given the circumstances and the terms of particularly relevant. At that moment, the finan-
then-fully operational the deal (as disclosed so far), Romanian natural cial structure of the project included €41mn
pipeline. gas transport system operator Transgaz, which loans from the EBRD and European Investment
owns VMTG through its Moldovan subsidiary Bank (EIB), plus a €10mn EU grant.
Eurotransgaz, aims to make the business com- “Gazprom could easily provide gas at sub-
mercially feasible with the help of the bank, in stantially lower prices than that of Romanian
exchange for buying back the stake at a most producers. … The return on investment is the
likely higher price afterwards. At this moment, classic problem of energy infrastructures built
the pipeline only increases Moldova's bargain- primarily for energy security purposes,” the
ing power for negotiating lower prices with authors of the working paper pointed out.
Gazprom while the commercial dividends for An indeed, Moldovan President Igor Dodon
Transgaz are uncertain. met a representative of Moldovagaz — that Rus-
The EBRD said on August 27 that it “has sia’s Gazprom company de facto controls — on
invested €20mn as part of a capital increase in August 25 “to discuss the next three-year con-
Vestmoldtransgaz.” tract” for the gas supplied by Gazprom to Mol-
The deal had been approved by the bank on dovagaz. In the meantime, the outlook for the
December 11 2019. However, it still requires deliveries of Romanian gas on the Moldovan
approval from the shareholders of Transgaz, market remains uncertain.
according to a note sent by Transgaz to investors The other two challenges also relate to Gaz-
on August 24. prom, namely the Moldovan company Moldo-
Furthermore, the deal between Transgaz and vagaz. Moldovagaz is the incumbent transport
EBRD includes a put option that allows the bank system operator, distribution company and
to sell back the stake to Transgaz at a predeter- supplier of natural gas in Moldova, which fully
mined price, according to the note. The prede- depends on Russian gas.
termined price and the terms of the put option Moldovagaz is 50% controlled by Gazprom,
were not disclosed. which also controls another 13% stake through
The documents from the meeting related to Tiraspoltransgaz, a company that owes billions
the deal will be available at Transgaz’s headquar- of dollars for the gas delivered by Russia to the
ters from September 4 between 8:00 AM and Moldovan separatist republic of Transnistria vir-
3:00 PM “or will be made available to the share- tually for free.
holders at request” in accordance with the appli- Firstly, Moldovagaz’s dominant position and
cable laws, the company says in its note. vertical integration threaten the functioning of
The shareholders are invited on October 5 to the natural gas market in Moldova. In February
approve the conclusion of the transaction with this year Gazprom approved the unbundling of
the EBRD consisting of two parts. The first part Moldovatransgaz (until now a part of Moldo-
includes “EBRD’s subscription of a participation vagaz) as transport system operator to operate
interest newly issued by VMTG for the amount separately from Moldovagaz. The plan should be
of €20mn, EBRD thus becoming a VMTG share- implemented by October 1. Moldova is also en
holder with 25% of its charter capital.” route to implementing the Third Energy Pack-
The second part includes “the jointly under- age, as a member of the Energy Community. This
taking by Eurotransgaz and Transgaz of the obli- significantly reduces the regulatory risks.
gation to buy from EBRD the 20% participation Secondly, Gazprom could exert formal and
interest in VMTG at a predetermined price when informal pressures by making use of its $6bn
EBRD exercises its participation interest put claims against Moldovagaz. The private nature
option in VMTG.” of VMTG, furthermore consolidated by EBRD’s
The first part of Romania-Moldova gas con- participation, prevents any negative impact
nection, namely the Iasi-Ungheni interconnec- in this regard — but the independence of the
tor, was a joint project of the Romanian and energy market regulator ANRE remains critical.
Moldovan states, supported by the European The independence of Moldovan public institu-
Union. Meanwhile, the Ungheni-Chisinau tions came under pressure since Dodon gained
pipeline is a commercial project of Transgaz control over the government last autumn. ™

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