Transparency International Moldova presents the study „The Energy Sector: Corruption on Bad Governance?”
Issued by Transparency International Moldova
On February 9, 2010, in the premises of Info-Prim Neo news agency, Transparency International - Moldova presented the study "The Energy Sector: Corruption or Bad Governance?".
The author of the study, Nicolae Mogoreanu, a PhD Associate at the Electricity and Energy Department of the Technical University of Moldova and chairperson of the Association of Energy Consumers of Moldova, noted that the research was aimed at analyzing various corruption-generating phenomena in the energy field as well as presenting proposals and recommendations for preventing corruption in this area.
Mogoreanu noted that over the recent years, the Moldovan energy sector faced a variety of manifestations of corruption, which were caused by an imperfect legal framework and the involvement of interest groups managing energy imports and exports. Furthermore, there was limited competition and lack of transparency, including decision-making for approvals and justifications of energy tariffs, by covering up schemes to establish illegal financial flows in energy supply, transportation and consumption. The following shortcomings and gaps were mentioned in particular:
- Imperfections in the field’s legal framework (neglecting the international experience in the connection and extension of electricity grids and the quality of energy supplies); the presence of contradictory clauses regarding the responsibility to extend the electricity networks; an ambiguous interpretation or absence in the law of important concepts such as “connection”, “inlet”, “embranchment”, “extension”, “universal service”; the presence of discriminatory provisions concerning the extension and connection of electricity and natural gas networks, which stimulate corruption and disadvantage consumers; the presence of clauses that allow for schemes of absconding energy resources based on a discretionary assessment of certain "special needs"; the adoption by the National Energy Regulation Agency (ANRE) of bylaws that allow energy providers to obtain additional income, particularly by relocating or replacing meters or covering losses at the network portions held by enterprises, etc.;
- The lack of transparency at the conclusion and carrying out of energy supply and transportation contracts;
- The inclusion, under the influence of interest groups, of intermediaries in the transportation, supply and exports of energy resources;
- A deficient policy of establishing tariffs ( “augmentation” of tariffs by including excessive normative losses in electricity and gas networks, excessive return rates, and the cost of servicing loans contracted by energy providers);
- Maintaining the practice of favouring energy supplies by ruling out regional tariffs thereby incurring additional costs to electricity producers and disadvantaging enterprises that are energy consumers;
- Cases of intimidation and pressure on behalf of representatives of electricity suppliers on consumers during the examination of cases of fraudulent energy use;
- The existence of contractual relations between energy suppliers and expertise organizations, which raises questions with regard to the objectiveness of their provided expertise in cases of fraudulent energy use;
- Cases of technical and scientific expertise that violates legal standards;
- Issues within the ANRE with regard to transparency and ensuring access to information; the non-publication in the Official Gazette of the Republic of Moldova of certain regulations approved by the Agency; lack of information on the results of checks of license holders; absence of information on the Agency’s budget;
- Insufficient awareness of energy consumers of their rights and obligations.
The Mogoreanu also noted that the legal gaps and deficient practices mentioned contribute to the proliferation of corruption in the energy sector, which undermines the effort to attract foreign investments and aid from international organizations, further undermining competitiveness and the country's economic and energy security. The alleviation of corruption in this sector should include the following measures:
- Adjusting the legal framework in the field to international standards, establishing an economic and financial justification of the need and compliance of regulations with international standards, and a thorough monitoring of the enforcement of the laws;
- Further transparency of energy supply and transportation contracts, and of their carrying out;
- Reducing the number of intermediaries in energy transportation, supply and exports;
- An active cooperation between public institutions, the civil society and the business community in the examination of draft laws and bylaws to exclude ambiguous and contradictory provisions and reduce the risk of corruptibility; organization of public debates and discussions at various stages of development of draft regulations;
- An effective monitoring by ANRE of license-holders: a continuous verification of economic and financial reports, establishing a database for operative control, prompt reactions to sudden developments of their economic and financial indicators, rapid communication with the public on the deficiencies identified in the outcome of ANRE-operated checks;
- Increased transparency of ANRE decision-making: posting draft regulations, draft decisions on tariffs, ANRE checks’ results and information on the development and implementation of ANRE’s budget on the Agency’s website;
- Streamlining the petitioning system at ANRE: training of the staff involved in receiving and dealing with complaints, a clear outline of the responsibilities of persons involved in this process, informing the public on the procedures of submission and review of petitions, conducting internal verifications in the context of examination of petitions, informing the public on the measures taken to eliminate violations found;
- Continuous awareness campaigns among energy consumers, particularly those in rural areas, on their rights and obligations.
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