ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of February 5, 2013 No. 102

About the Energy strategy of the Republic of Moldova till 2030

The government DECIDES:

1. Approve the Energy strategy of the Republic of Moldova till 2030 it (is applied).

2. To the ministries and other central administrative authorities involved in accomplishment of the measures provided in the Energy strategy of the Republic of Moldova till 2030 to inform on the taken measures of times a half-year to the 15th following the accounting period, the Ministry of Economics which, in turn, will submit to the Government the report on accomplishment of this resolution.

3. To assign monitoring and coordinating of process of accomplishment of the Energy strategy till 2030 to the Ministry of Economics.

4. Declare invalid:

The order of the Government No. 958 of August 21, 2007. "About approval of the Energy strategy of the Republic of Moldova till 2020" (The official monitor of the Republic of Moldova, 2007, No. 141-145, of the Art. 1012);

Item 13 of appendix No. 2 to the Order of the Government No. 485 of August 12, 2009. "About approval of the Regulations on the Agency on geology and mineral resources" (The official monitor of the Republic of Moldova, 2009, No. 124-126, of the Art. 536).

Approved by the Order of the Government of the Republic of Moldova of February 5, 2013 No. 102

The energy strategy of the Republic of Moldova till 2030

I. Introduction

1. The energy strategy of the Republic of Moldova till 2030 (further - Strategy) contains accurate specifying of way of development of the energy sector in the Republic of Moldova for the purpose of creation of the basis necessary for ensuring economic growth and increase in welfare of the population. This document Government of the Republic of Moldova represents the vision and determines strategic opportunities of the country in the energy context subject to bystry changes in geopolitical space which covers Central and Southeast Europe, Russia and the Caucasian region. In strategy the priority problems of the country requiring the urgent solution, and also change of scales of effective objectives according to need of ensuring optimum balance between are allocated: the internal resources (used at the moment and predicted on the future) and urgent needs of the country, tasks of the European Union, Energy community and national tasks, and also the international obligations within agreements, agreements and programs (including neighbourhood policy) which party the Republic of Moldova is. General strategic tasks for the period from 2013 to 2030, and specific strategic tasks on intermediate intervals of time (2013-2020 and 2021-2030) are determined, measures for their implementation are provided.

2. On the geographical location, on configuration of regional transportation networks and potential of development of electrical energy the Republic of Moldova always had strategic advantage which was insufficiently demanded in the last decade. Thus, the Government of the Republic of Moldova offers as Strategy priorities:

a) strengthening of the special status of the transit state for electrical energy and natural gas by means of mutual strengthening of transport opportunities;

b) construction new and retrofitting of the existing generating capacities for strengthening and complete commercial use of internal potential of production of electrical energy.

3. In the sector of natural gas regional transport infrastructure faces process of diversification of transit ways and change of their priorities. Development of this process will be constantly estimated and predicted for the purpose of preserving and consolidation of the existing energy alliances and providing the transport infrastructure necessary for participation in alliances, irrespective of the happening changes, and also for rendering, reasonably, influence on the specified shift of priorities. New options of supply of natural gas will also be studied and used in process of receipt of new specific results within the carried-out or planned international projects. The status of the transit country will be supported and become stronger on the basis of the international policy opened for future reference certain regional technical configurations in the energy sector. Reversible communication of transport system of natural gas with system of thoroughfares of the European Union for natural gas which will be fully complete in 2013 will give alternative opportunities of providing with gas in emergency situations and to promote achievement of the long-term strategic objective consisting in access to existing (in Hungary), under construction (in Bulgaria) and planned (in Serbia 1) to networks of connection which Romania has. In subsequent, during the period till 2020, in process of development of gas highways of the Southern Corridor and South Stream (South Stream), the possibility of additional connection not only to the countries of the Balkan region will appear.

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1 Energy strategy of Energy community.

4. The same 2020 is established by Strategy as deadline for completion of connection of electric utility system of the Republic of Moldova to the European network of operators of systems of electricity transmission (ENTSO-E) by application of the most effective technical solutions according to analysis results of economic feasibility of project implementation.

5. For achievement of this ambitious, but quite achievable goal, connection of national electrical power network and transport system of natural gas to systems of the European Union, financing of the corresponding projects, depending on the conclusions drawn in the report on economic feasibility of the project will be performed in the shortest possible time and with the smallest costs, using, as necessary, grants, long-term loans, attracting private investors all possible options, including the European tool of the neighbourhood and partnership (2007-2013), etc. Will be considered and methods of its development within the European policy of the neighbourhood, the help of international financial institutions, other sources of subsidizing stimulating regulation and private investments. On the other hand, the companies of energy complex which are in property of the state will regulate the cumulative debt representing now burden for them and undermining confidence of the country in the opinion of investors.

6. The Republic of Moldova has the considerable potential of internal production of electrical energy correlated with the flowing and predicted consumption exceeding from the point of view of this ratio, the potential of stranuchastnitsa of Energy community. Three main directions of strengthening of energy potential are:

a) the combined production of electrical and heat energy that assumes refusal of present technology and carrying out reconstruction on new technological basis, with considerable expansion of production capacities;

b) integration in transportation networks and distribution of new capacities, including on the basis of renewable sources of electrical energy;

c) consolidation of the capacity established by the Moldavian state district power plant, due to increase in technological efficiency and deliveries of additional amounts of the made electrical energy to the regional market.

In sectors of the combined production of electrical and heat energy and renewable energy resources, directives of the EU allow (for the combined production) and require (for renewable sources) ensuring priority access (the scheme of support and scheduling) that is the best guarantee provided to investors, and the Government of the Republic of Moldova, in particular, National regulation agency in power, will provide attractive, transparent, non-discriminatory and predictable regulatory framework. The actions for strengthening of connection to ENTSO-E network expected short-term outlook will be activated and optimum specifications for functioning of this connection (the agreement on operation and maintenance of air-line of electricity transmission of VL 400 of kV of Vulkenesht-Isakcha) are created; expansion of the power supply network and connection to ENTSO-E will be provided in the medium term, in the long term financial instruments for the purpose of price guarantee 2, according to the legislation of Energy community will be used. These actions will stimulate investments into production capacities. Only if the above-stated mechanisms will not lead to attraction of private investments, owing to need of improvement of quality and delivery reliability of electrical energy, the possibility of use of government guarantees for investors, on condition of compliance of conditions of guaranteeing to the requirements stated in directives of the EU will be considered.

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2 Regulation "contract taking into account difference of the prices" and, respectively, determination of the contract party.

7. Basis for the strategy the Republic of Moldova established accurate line item of integration in the EU and in its domestic energy market. The request for accession to Energy community and successful accomplishment of stages of accession is the indisputable proof of this opportunity. Within Energy community the West Balkan region has limited and obsolete capacities for production of electrical energy and, owing to this factor, is less attractive to the Republic of Moldova as the closest source of receipt of electrical energy in comparison with Central and Eastern Europe. At the same time the structure of sources of receipt of the electrical energy developed in the West Balkan region 3, almost completely based on water resources, does possible transfer of auxiliary flows within the block created in the Republic of Moldova in which production of electrical energy is based, preferential, on use of natural gas, and Ukraine in which use of coal and nuclear energy possesses considerable share in structure of production.

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3 Power generation from water resources constitutes in Albania 96% while in Bosnia and Herzegovina and Croatia this indicator constitutes about 60%.

8. Process of integration of the markets of electrical energy and natural gas of the Republic of Moldova in the domestic market of the European Union is expected the long term while power system of the country, its economy and the population will live in transition period. Strategy provides complete integration into domestic energy market of the EU in 2020. According to this task, it is necessary to bring timely the legislation of the country into accord with requirements of Energy community and the European Union law, having provided thus, legislative and normative compatibility with the specified markets.

9. Till 2020 - the period established by the time span necessary for implementation of transport interrelations for natural gas and electrical energy and also for ensuring their complete functioning - the Republic of Moldova uses for development, from the legislative, institutional and materialnotekhnichesky points of view, the functional liberalized energy market, realizing at the same time that only one access to the markets of electrical energy and natural gas of the European Union will not lead to simple permission of all complex of the energy problems existing in the country. During this period the Government of the Republic of Moldova will coordinate implementation of political actions and implementation of the technical legislative measures necessary, on the one hand, for determination and use of the most reliable sources of receipt of energy on the existing channels, and, on the other hand, for reducing the period necessary for strengthening of interrelations and creation of the competitive markets.

10. The period from 2013 to 2020 will represent also stage in which the first results of implementation of less costly measures for increase in energy efficiency for decrease by 2020 in energy consumption for 20% and to use of renewable energy resources, the closest to the cost of conditional fuel, for the purpose of providing their 20 percent contribution to energy balance of 2020 are expected. These measures will coexist along with still vulnerable method of purchase of natural gas and electrical energy in connection with limited number of sources of alternative purchases. In addition to operation of wind and solar resources which will be added to traditional operation of the biomass used for heating active investigation of natural resources of hydrocarbons, including nonconventional natural gas will promote decrease in energy dependence of the Republic of Moldova.

11. Development of the energy sector of the Republic of Moldova from 2021 to 2030 will rely on successful implementation of measures and the actions planned for preceding period that is for the period from 2013 to 2020. The beginning of this new stage will be favored by realization of the improvements planned within energy balance, reducing consumption and increase in efficiency of development, transportation, distribution and consumption, connection to more powerful networks, use of more diversified sources, the real competition in energy supply and smaller concentration of the market, determination by means of competitive market mechanisms of the transparent price, responsible and fair management with the high level of professionalism against the background of higher social availability. All these achievements will provide reliable platform for transition to the new stage of development of the Republic of Moldova which is characterized by operating control of energy consumption and effective integration into network of the small, distributed power sources. These characteristics are fundamental in the concept of smart grid and are based on implementation of more advanced technologies which to this stage will reach competitive level for implementation costs. Till 2020 present, insufficiently competitive production technologies, based on renewable energy resources, will receive time for achievement of higher level of competitiveness, and new production technologies and storages of energy, and also, perhaps, technologies of catching of carbon which are in stage of experimental development now will acquire the size of large-scale savings.

12. Strategy considers the period from 2021 to 2030 from a bit different line items in comparison with the period of 2013-2020. In the European Union the global plan based on specific indicators which achievement is planned by 2020 and for 2021-2030 is approved there are only forecasts in the form of sketch of the road map, for the purpose of ensuring smooth continuation of reforms outside the tough threshold provided 2020.

During the period from 2013 to 2020 the Republic of Moldova will have complete idea of all above-stated models and will continue their implementation, including 2020 by reference point for complete integration into energy market of the EU. After 2020 the Republic of Moldova will follow the same directions in which the EU will follow, dividing with its state members uncertainty, risks and benefits of wide trade space.

II. The current situation and the revealed problems

13. This Strategy is based on the data obtained from external sources, generally on the latest data published by Statistical service of the European Union (EUROSTAT) and Head department of the European Energy Committee (the status of the observer of the market) on the internal data provided by National bureau of statistics, National regulation agency in power, JSC Moldovagaz, GP "Moldelectrica", and also documents the politician of the country. In case of identification of discrepancies between internal data because of use of different sources or different methodology of data processing, it was preferred as data of National bureau of statistics. Approval of methodologies of collection, record, processing and forecasting of national statistical data represents the main direction of actions throughout the period of implementation of the purposes of Strategy.

Power sources and distribution of consumption

14. The Republic of Moldova is net importer of energy, at the same time procurement of natural gas is conducted from the single source gasoline supplies (appendix No. 1, tables 1.1 and 1. 2, figure 1.1).

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