Energy Ministry reopens talks to export electricity to Moldova

Kommersant reported this morning that Ukraine’s Fuel and Energy Ministry has decided to resume negotiations on exporting electricity to Moldova. Kommersant estimated the market potential for Ukrainians at USD 170-180 mln per year. Yegor Samusenko: Ukrainian electricity exports to Moldova had been as high as up to 3 TWh per year (1.7% of total electricity output) in 2008. We think the plant closest to Moldova, Ladyzhyn TPP of Zakhidenergo (UX: ZAEN UK), would increase its production by 5-10%, if the contracts are signed. Ukraine stopped exporting electricity to Moldova in early 2009 after Moldova TPP was able to supply electricity at lower prices. This was possible because its shareholders Inter RAO UES and as believed, Dmitriy Firtash, lobbied gas supplies at below market prices. In the mid-term, we think Ukraine could supply 2.5-3 TWh of electricity to Moldova, because Ukrainian electricity is produced on cheaper fuel, while we expect gas prices in Moldova to move closer to market levels.