copy the linklink copied!3. Economic analysis of the Clean Public Transport Programme

This chapter summarises the economic analysis conducted to assess the viability of the proposed Clean Public Transport Programme. It begins with a general overview of clean technologies and fuels in the transport sector, as well as a specific review of the energy market in Moldova. It then describes the economic aspects of purchasing and running buses, including options for the local assembly of trolleybuses as opposed to importing them. Finally, it assesses potential sources of government financing available for the programme.

    

Globally, the transport sector relies almost entirely on oil, with about 94% of transport fuels being petroleum products. According to prognoses, these will dominate road transport at least up to 2050 (although the exact fuel mix might vary), even in the most stringent mitigation scenario (Sims and Schaeffer, 2014[1]). There is often a time lag between when new technologies first appear in OECD countries and when they reach developing countries, which mostly import second-hand vehicles. It may take five years or longer before new technologies reach second-hand vehicle markets in large quantities.

In this context, an economic analysis was undertaken to determine the feasibility of the Clean Public Transport (CPT) Programme and its potential focus and scope. This chapter presents its findings, which include an assessment of the market for cleaner technologies and fuels, as well as the options for the domestic production and import of trolleybuses, fares for urban transport, and the available co-financing for investment projects.

For further information, Annex A to this report provides a detailed comparison of the key parameters, as well as advantages and disadvantages, of compressed natural gas (CNG)/liquefied natural gas (LNG), liquefied petroleum gas (LPG) and diesel as transport fuels, and electricity to power buses (see, for instance, Table A.3)

copy the linklink copied!3.1. Overview of clean technologies and fuels in the bus transport sector

This section provides an overview of the three cleaner fossil fuel options available in Moldova:

  • compressed natural gas (CNG)

  • liquefied petroleum gas (LPG)

  • diesel fuel Euro 5 combined with Euro 6/VI engines.

Electricity is also described as a power carrier, and can be produced by the above-mentioned cleaner fossil fuels (natural gas) or renewable energy resources (wind, solar, hydro power).

For a detailed description of each fuel type and its main features, comparative advantages and drawbacks of each technology, and its market penetration, see Annex A of this report. For example, the adoption of CNG may require additional infrastructure in some cities.

3.1.1. Compressed natural gas (CNG)

CNG is used in traditional petrol (internal-combustion-engine) automobiles that have been modified or in vehicles specially manufactured for CNG use. Although vehicles can use natural gas as either liquid (i.e. LNG) or gas (i.e. CNG), most vehicles use the gaseous form. Besides fossil gas (CNG and LNG), methane vehicles can also be fuelled with biomethane or power-to-methane (a concept that converts electric energy into chemical energy using water and carbon dioxide, also called power-to-gas).

CNG combustion produces fewer undesirable gases than other fuels and is safer in the event of a spill, because natural gas is lighter than air and disperses quickly when released.

The energy efficiency of driving on CNG is typically similar to gasoline or diesel, but with a reduction of up to 25% in tailpipe emissions (CO2/km) because of differences in fuel carbon intensity. Lifecycle greenhouse gas (GHG) analysis suggests lower net reductions, in the range of 10-15%, for natural gas fuel systems. This is because methane emissions are largely associated with leakage – i.e. unburnt methane leaking into the atmosphere – from the production of natural gas and the filling of CNG vehicles (in smaller amounts basically throughout the whole supply chain, ranging from 0.2% to 10% ones (T&E, 2018[2]).

In cars, the GHG savings range from -7% to +6% compared to diesel. In heavy duty vehicles (HDVs), the range is -2% to +5% compared to the best-in-class diesel trucks and depending on the fuel and engine technology. Therefore, CNG vehicles perform similarly to petrol vehicles and only slightly better than diesel ones (T&E, 2018[2]).

On the other hand, CNG vehicles require larger fuel tanks than conventional petrol-powered vehicles and the cost of fuel storage tanks is a major barrier to rapid and widespread adoption of CNG as a fuel. Denser storage can be achieved by the liquefaction of natural gas (LNG), which is successfully being used for long-haul HDVs and ships. The indicative average distance between LNG refuelling points for heavy duty vehicles is 400 km (T&E, 2018[2]).

CNG vehicles have been introduced in a wide variety of commercial applications, from light-duty (<3.5t) to medium-duty (<7.5t) and even heavy-duty (>7.5t) vehicles.

3.1.2. Liquefied petroleum gas (LPG)

Also known as propane-butane, LPG is a flammable mixture of hydrocarbon gases used as fuel in heating appliances, cooking equipment and vehicles. In some countries, LPG has been used since the 1940s as an alternative to petrol for spark ignition engines.

LPG has a lower energy density than either petrol or fuel oil, so the equivalent fuel consumption is higher by about 10%. Many governments (not including Moldova) impose less tax on LPG than on petrol or fuel oil, which helps offset the greater consumption of LPG.

LPG burns more cleanly than petrol or fuel oil – causing less wear on engines – and is especially free of the particulates present in fuel oil.

3.1.3. Diesel with Euro V/VI engines

Diesel engines are one of the most common combustion engine choices for buses and other commercial vehicles globally. For the time being, buses that run on diesel and biodiesel – brought to the market mainly by blending with conventional diesel – constitute by far the largest part of the bus fleet.

A standard diesel city bus emits fewer carbon emissions per rider than cars, therefore lower emissions can be achieved by encouraging more passengers to shift to public transport (see Annex A). Since the 1990s, the Euro emission standards – that define the acceptable limits of nitrogen oxides (NOx), total hydrocarbons (THCs), non-methane hydrocarbons (NMHCs), carbon monoxide (CO) and particulate matter (PM) – have considerably reduced pollutant emissions of new vehicles sold in the European Union (EU) and the member states of the European Economic Area (EEA).

The vast majority of Moldova’s minibus fleet is composed of light and medium-duty commercial diesel vehicles. As can be deduced from Figure 3.1, in these types of vehicles, the biggest reductions in absolute terms have been achieved in CO emissions (a Euro 6 vehicle emits 6.2 grams per kilometre less than a Euro 1 vehicle), whereas in relative terms the biggest improvement can be seen in PM emissions (reduction of 98%)1 (see also Table A.1 and Table A.2 in Annex A to this report).

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Figure 3.1. The impact of Euro standards on air pollution from light commercial diesel vehicles
Figure 3.1. The impact of Euro standards on air pollution from light commercial diesel vehicles

Note: N1: commercial vehicle not exceeding 3.5t (light-duty truck); N2: commercial vehicle exceeding 3.5t but not 12t (truck).

Source: DieselNet (www.dieselnet.com).

On the other hand, a shift from Euro V to Euro VI engines for heavy-duty vehicles will require considerable investments by manufacturers and public transport agencies and demand a major outlay by bus manufacturers. Similar to light-duty vehicles shown in Figure 3.1, the shift to Euro VI engines will also have significant environmental impact in the form of reduced emissions of particulates from engine exhaust (in particular, as compared Euro I-IV categories).

Using biofuel blends (such as ethanol, for internal-combustion-engines, and biodiesel for spark-ignition-engines) with conventional fuels (i.e. petrol and diesel) offers large potential for further CO2e emission reductions due to their lower fuel carbon intensity (CO2/megajoule); however, the GHG impact assessment is rather complex.

However, as mentioned in Section 4.5.1, the support for diesel-fuelled vehicles requires strengthening regulatory measures to assure lower negative environmental impact of these vehicles.

3.1.4. Electricity

Due to current limits in battery capacity and in driving range (generally 100-200 kilometres for a small to medium-sized car), electric vehicles are at present best suited to urban and suburban driving. An urban bus can have a range of 200 kilometres per charge, but the full battery electrification of heavy-duty vehicles and long-haul bus and coach fleets is not likely to be a realistic option in the near future. On the other hand, trolleybuses are, at this point, a more viable alternative to an electrically-powered vehicle for reducing emissions. In addition, trolleybuses can be rendered “autonomous” over portions of their route by storing electricity in add-on batteries. This is currently applied on two routes in Chisinau, including from the city centre to the airport (Vlas, 2017[3]).

copy the linklink copied!3.2. Main economic variables in Moldova’s public transport

3.2.1. The energy market in Moldova

This section briefly reviews the energy supply and consumption patterns in Moldova and assesses their implications for the CPT Programme. The concerns over climate change in Moldova are particularly linked to energy security. In fact, Moldova imports around 96% of its energy needs (see Section 6.4).2 Moldova produced 5 000 tonnes of petroleum products in 2017, which was sufficient to cover just 0.5% of its gross domestic consumption of these products (NBS, 2018[4]).

Moldova primarily obtains its refined petroleum from Romania (73%), with the Russian Federation (16%), Bulgaria (4.2%), and Belarus (3.7%) being the other main suppliers. It imports all of its natural gas, with the main suppliers being the Russian Federation (54%), Romania (37%), and Kazakhstan (6.3%), and with smaller shares coming from Belarus and Bulgaria (Simoes and Hidalgo, 2011[5]).

Table 3.1 and Table 3.2 present the stocks, inputs and consumption of petroleum products and natural gas respectively in Moldova.

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Table 3.1. Stocks, input and consumption of petroleum products in Moldova, 2015-17

 

2015

2016

2017*

tonnes

Production

12 396

15 232

13 972

Import

797 730

902 785

871 288

Stock change

8 587

-718

-8 166

Export

18 518

15 176

31 085

Gross inland consumption

783 020

903 559

862 342

Refineries

6 189

8 357

17 806

Final consumption

776 831

895 202

844 536

Note: *11 months.

Source: National Bureau of Statistics (www.statistica.md).

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Table 3.2. Stocks, input and consumption of natural gas in Moldova, 2015-17

 

2015

2016

2017*

thous. m3

Production

0

-

-

Import

1 008 519

1 020 660

881 195

Stock change

-1 025

1 569

73

Export

-

-

-

Gross inland consumption

1 009 545

1 019 091

881 122

Note: *11 months.

Source: National Bureau of Statistics (www.statistica.md).

Table 3.3 presents the retail prices for various fuels in Moldova. Natural gas prices for the end user are regulated by the national regulator – National Agency for Energy Regulation of Moldova (Agenţia Naţională pentru Reglementare în Energetică a Republicii Moldova – ANRE). The CNG retail prices are 40-45% lower than in Bulgaria and neighbouring Romania, whereas LPG prices are more comparable, within the 90-110% range (as of mid-2017).3

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Table 3.3. Retail fuel prices in Moldova, 2017*

No.

 

Unit

Retail price, MDL (EUR)

1.

Maximum price according to ANRE for Euro 5 diesel

Litre

16.51 (~0.80)

2.

Maximum price according to ANRE for petrol 95

Litre

18.47 (~0.90)

3.

Euro 6 diesel (assumption)

Litre

16.51 (~0.80)

4.

LPG

Litre

10.60 (~0.50)

5.

CNG

Kg

8.90 (~0.43)

6.

Electricity

Kwh

2 (~0.14)

Note: *July 2017.

Source: ANRE (www.anre.md), Lukoil-Moldova (www.lukoil.md), Bemol (https://bemol.md).

3.2.2. Local trolleybus assembly

As mentioned in Section 2.2, due to the high degree of wear the CPT Programme intends to support the purchase of new vehicles (buses/minibuses and trolleybuses) rather than the modernisation of existing engines in the public transport fleet. EBRD-supported programmes in Chisinau and Balti have shown that creating demand by a public financier may encourage the launch of domestic production in co-operation with a bigger producer (or at least local assembly) as this represents a distinct purchase cost advantage over importing completed buses.

Until recently, Moldova did not have a domestic automobile industry and did not manufacture buses. The city of Chisinau, however, now assembles trolleybuses at the municipal enterprise Chisinau Electric Transport Company (Regia Transport Electric Chișinău – RTEC). The plan in 2018 was to assemble 20 new trolleybuses, including five buses with an autonomous (battery-powered) propulsion system.4

The ability to assemble trolleybuses came about as the result of an agreement in 2010 with the EBRD to support the renewal of the trolleybus fleet in Chisinau. In the end, the project was also supported by the European Investment Bank (EIB) and the European Union’s (EU) Neighbourhood Investment Facility (NIF).5 The total cost was estimated at EUR 13 million, of which EUR 5 million was to be financed by the EBRD, EUR 5 million by the EIB and EUR 3 million by the NIF as a grant (the Chisinau Public Transport Project, see Section 3.3.4 below).

The public tender was won by the Belarusian company Belcommunmash, which delivered 102 low-floor trolleybuses of the AKSM-321 model during 2010, together with maintenance stations and equipment. In 2012, as a follow-on project, the city of Chisinau supported the assembly of the AKSM-321 trolleybuses purchased from Belcommunmash in Chisinau at the municipal enterprise RTEC.6 The parts and components to be assembled were exempted from excise and customs duties. The aim of this project was to phase out all depreciated (older than 15 years) trolleybuses by 2020. However, sufficient financing has not been secured to achieve this.

The project created more than 20 jobs and reduced the price of the trolleybuses. The reported costs of a trolleybus assembled in Chisinau are approximately EUR 135 000, representing savings of EUR 10 000 per trolleybus compared to the price of buying them already assembled from Belarus. Between 2012 and 2016, 88 new trolleybuses were assembled and put into operation. Together with the 102 vehicles delivered as part of the previous project in 2010, 190 new low-floor trolleybuses were supplied between 2010 and 2016.

RTEC reports the following benefits from the trolleybus replacement project:

  • reduced average journey time thanks to the use of low-floor trolleybuses, which reduces passenger boarding time

  • greater comfort (modern design and access for disabled passengers)

  • greater average revenue (reported as 12% higher for the AKSM-321) compared to other models in use

  • less time for technical repairs (10 times fewer breakdowns than in 2010)

  • reduced maintenance costs

  • reduced electricity consumption (20-30% lower than older models).7

After supplying Chisinau, the plan is to provide assembled buses to Tighina, Tiraspol and Balti, and then for export.

3.2.3. Domestic bus prices and fares

Other than the trolleybuses assembled in Moldova under licence, the country does not manufacture any private or commercial vehicles. Therefore, Moldova’s public transport operators must purchase vehicles, either new or used, at world prices. Table 3.4 shows the prices of buses purchased in Moldova in recent years.

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Table 3.4. Actual purchase price of buses, 2010-18

#

City

Year of purchase

Model of bus

Country of origin

Type of engine/motor

Price per unit, EUR thousand

Units purchased

Note

1

Chisinau

2010-2011; 2012-2016

Trolleybus AKSM-321

Belarus

Electric

135-150

10

102 (purchased);

88 (assembled)

2

Chisinau

2017

n.d.

China

Electric

200 (est.)

4

Public procurement

3

Balti

2014

Trolleybus

-

Electric

200

23

Public procurement

4

Balti

Various

20-seat

Various

Diesel

15

1-2

Purchased directly by private carrier (not a public procurement); inter-city buses. Purchased used buses (10-15 years old)

5

Cahul

Various

Minibus Mercedes-Benz, 20 seat;

Etalon, 21 seats;

PAZ, 28 seats

Various

Diesel

6-11

3

Public procurement; used (at least 5 years old)

6

Chisinau

Various

Mercedes-Benz Sprinter

Various

Diesel

8.5

1-2, as needed

Purchased directly by private carrier (not a public procurement); used (typically 5-10 years old)

7

Chisinau

Various

Mercedes-Benz Sprinter

Various

Diesel

1-18

1-2, as needed

Purchased directly by private carrier (not a public procurement); used (typically 7-9 years old)

8

Chisinau

Various

MAN LS 233 E3, 26 seats;

MAZ 230069 E5, 28 seats

Hungary, Germany, Russia,

Belarus

Diesel

250

165

As needed

Public procurement

9

Chisinau

Various

MAZ 230069 E5, 28 seats

Belarus

Diesel

165

As needed

Purchased directly by private carrier (not a public procurement); used (5-10 years old)

10

Edinet

Various

Mercedes-Benz 412, 18 seat

Germany

Diesel

8–12

As needed

Public procurement; used (typically 5-10 years old)

Source: Data collected by OECD from individual carriers.

As part of the design of the CPT Programme, average and reference prices for new and used buses were defined based on market data from actual purchases in Moldova (Table 3.4), as well as reference prices.

The following unit prices were assumed in the design of the CPT Programme:

  • new trolleybus (domestically assembled): EUR 135 000/MDL 2.8 million

  • new trolleybus (with “autonomous” capability), reference price (imported): EUR 255 000/MDL 5.2 million8

  • new CNG bus, reference price (imported): EUR 255 000/MDL 5.2 million

  • new LPG bus, reference price (imported): EUR 232 000/MDL 4.73 million

  • new diesel Euro VI bus, reference price (imported): EUR 222 000/MDL 4.52 million

  • new Euro VI minibus, reference price (imported): EUR 99 000/MDL 2.02 million

  • new LPG minibus, reference price (imported): EUR 99 000/MDL 2.02 million.

The CPT Programme will not include used minibuses.

Passenger fares (solely or in combination with an operational subsidy) should be set at a level that ensures profitability for private bus operators (since these are not subsidised, unlike municipal operators). Currently, a single ride ticket is as low as USD 0.11 in both pilot cities, often combined with further discounts (see lists below). The last tariff adjustments took place in 2009 in Chisinau (for private operators even in 2007) and in 2013 in Balti.

The following fares for single rides apply in the pilot cities and can be used to estimate fare schedules in other cities (2018 figures):

Chisinau – based on Municipal Council Decision No. 8/8 of 15 September 20099:

  • standard trolleybus: MDL 2 (USD 0.11)

  • standard diesel bus: MDL 3 (USD 0.16)

  • monthly pass: MDL 180 (USD 9.73)

  • reduced rate monthly pass (e.g. students): MDL 70 (USD 3.78)

  • reduced rate monthly pass (e.g. socially vulnerable families): MDL 50 (USD 2.7)

  • minibus: MDL 3 (USD 0.16)

  • various exemptions (veterans of the Second World War and Transnistrian conflict, pensioners, police, intelligent office, members of municipal council): free.

Balti – based on Municipal Council Decision No. 2/4 of 28 March 2013:

  • standard trolleybus: MDL 2 (USD 0.11)

  • standard diesel bus: MDL 3 (USD 0.16)

  • monthly pass for (e.g. students): MDL 100 (USD 5.4)

  • reduced rate monthly pass (e.g. socially vulnerable families): MDL 70 (USD 3.78)

  • minibus: MDL 3 (USD 0.16)

  • various exemptions (veterans of the Second World War and Transnistrian conflict, pensioners, police, intelligent office, members of municipal council): free.

copy the linklink copied!3.3. What co-financing is available for investment projects?

Large-scale investment programmes in public transport in Moldova have been financed by international financial institutions (IFIs), donors, public money, and private investment. This section reviews some of the potential financing sources for the CPT Programme.

3.3.1. The Road Fund

The Road Fund was established by Law No. 720 of 2 February 1996, in order to finance road-related activities in Moldova, including maintenance and repair of public roads. While the Road Fund cannot be used to replace vehicle fleets, it can be used to increase road and traffic safety. This may include accompanying measures such as dedicated bus lanes.

The Road Fund has a special designation for the repair and maintenance of national and local public roads included in the "National and Local Public Road Lists", approved by Government Decision No. 1468 of 30 December 2016. Amendments approved by Law No. 24 of 4 March 2016 allowed 50% of the road tax (paid by the owners of motor vehicles registered in Moldova) to be used to fund road repairs.

These funds can be used by the local public administrations (based on number of inhabitants in the respective territorial-administrative unit) to maintain and repair the communal roads and streets they administer (applies to both levels of local public administrations, local and rayonal, i.e. district).

According to the State Budget Law for 2016, No. 154 of 1 July 2016, and subsequent modifications and completions, the volume of the Road Fund was set at MDL 1 000 million (USD 54.1 million). According to the provisions of the Transport and Logistics Strategy for the years 2013-2022, approved by Government Decision No. 827 of 28 December 2013, the volume of the Road Fund in 2016 was planned to be MDL 1 650 million (USD 89.2 million) (GoM, 2013[6]). In fact, during 2016, the Road Fund was MDL 1 837 million (USD 99.4 million). In 2018, however, the Road Fund was planned for MDL 972 million (USD 52.5 million) (GoM, 2018[7]).

According to the Law on the Road Fund, the revenue sources for the Road Fund are as follows:

  • excise duties on gasoline and diesel fuel (at least of 80% of total)   

  • road toll for vehicles not registered in Moldova

  • road toll charged by vehicle owners registered in Moldova

  • fees for importing old cars (older than 10 years)

  • fees for using natural gas as fuel in cars

  • fees for issuance of international transport authorisations

  • fines for passenger transport infractions, damage to roads etc.

3.3.2. The National Ecological Fund

The Report on the Environmental Audit of Air Quality in the Republic of Moldova points out that while the National Ecological Fund was financed with a total of MDL 786.1 million (USD 42.5 million) from 2014-2016 (Table 3.5), no projects were funded to address air pollution Moldova (GoM, 2018[8]),.

For 2018, the fund approved projects worth in total MDL 382.8 million (USD 20.69 million), mainly in the areas of water supply and sanitation, waste management, and environmental and biodiversity protection.10

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Table 3.5. Revenues of the National Ecological Fund, 2014-16
(MDL mln)

 

2014

2015

2016

Total

Total revenues, of which

250.8

233.8

301.5

786.1

- air pollution charges from mobile sources (1%)*

32.5

25.2

15.4

73.1

- environmental pollution charges*

-

-

241.6

241.6

- transfers of 30% of environmental fines

2.8

3.6

-

6.4

- payments of imported goods (including automobiles)

215.5

205.0

-

420.5

- state budget financing

-

-

43.2

43.2

- Other payments for environmental pollution

-

-

1.3

1.3

Note: *Mobile air pollution charges are calculated as a % of the sold fuel whereas environmental (stationary) pollution charges are based on actual emissions.

Source: (GoM, 2018[8]), Environmental Audit Report on Air Quality in the Republic of Moldova, http://lex.justice.md/UserFiles/File/2018/mo18-26md/raport_65.doc, based on data from the Ministry of Environment of Moldova.

3.3.3. The National Regional Development Fund

The National Regional Development Fund (NRDF) is the main source of financing for Regional Development Agencies (RDAs) in implementing projects for promoting regional development (see also Section 6.1). Under law, the NRDF has a designated line in the state budget for its financing (1% of budget revenues).

The financial operations for investment projects are administrated by RDAs via territorial treasury branches; RDAs serve as secretariats to Regional Development Councils (RDCs), which themselves are advisory bodies on regional development policy. All approved projects are included in an annually updated unified (generic) programme. Road infrastructure projects do not include upgrading the vehicle fleet (Table 3.6). Therefore, this fund cannot be used to finance such projects either (see also Section 6.1).

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Table 3.6. National Regional Development Fund expenditures by sector, 2013-15

No.

Sector

2013

2014

2015

MDL mln

%

MDL mln

%

MDL mln

%

1.

Road infrastructure

99.92

54.2

121.79

64.6

102.4

69.7

2.

Water supply and sanitation

40.15

21.8

17.2

9.0

17.9

12.2

3.

Environmental improvements*

19.13

10.4

2.4

1.3

0

0.0

4.

Tourism

22.38

12.0

22.74

12.1

9.0

6.1

5.

Business support

2.92

1.6

24.43

13.0

17.6

12.0

6.

Total

184.5

100.0

188.38

100.0

146.9

100.0

Note: *These include mainly air pollution, solid waste management and nature conservation measures

Source: (MRDC, 2016[9]), Report on the Implementation of the National Strategy for Regional Development for 2013-2015, http://madrm.gov.md/sites/default/files/Raport%20privind%20implementarea%20SNDR%20pentru%20anii%202013-2015.pdf.

3.3.4. International financial institutions

As discussed earlier (Section 2.2), the European Bank for Reconstruction and Development (EBRD) has been involved in financing the public transport sector in Moldova through the following projects:11

  • Balti Trolleybus Company (2013-2015): Public Transport Twinning Partnership and Public Transport Modernisation Project in Balti. These projects involved the purchase of 23 new trolleybuses using a EUR 3 million loan from the EBRD to the company, under a municipal guarantee, and a EUR 1.6 million grant from the EU’s Neighbourhood Investment Facility (NIF). The projects also involved support to the company to prepare a corporate development plan and to finalise a public service contract between the city and the company. No state budget funds were used to finance these projects.12

  • Chisinau Municipality (2010-2013): Chisinau Public Transport Project. This project involved the purchase of up to 102 new trolleybuses (90 were delivered) using a EUR 5 million loan from the EBRD, under a municipal guarantee. The investment was co-financed by a EUR 5 million loan from the European Investment Bank (EIB) and a EUR 3 million grant from the EU's NIF. The project also involved preparing a public service contract between the city and the company. No state budget funds were used to finance these projects (TTK and Metroul, 2016[10]).13

3.3.5. Other types of financing

Other types of financing that could be considered are:

  • Local banks: local banks can provide loans as part of the financing mix. Moreover, these banks can manage the project cycle as an implementation unit (see Section 4.1).

  • Loan guarantees: the Ministry of Finance can provide loan guarantees to private and municipally-owned public transport enterprises (PTOs) and municipalities can provide loan guarantees to private PTOs.

  • Interest rate subsidies: public money can be used to cover the difference between the interest rate a commercial bank would need to charge in order to be involved in a given project and the interest rate the borrower has the capacity to pay.

copy the linklink copied!3.4. Conclusions for the CPT Programme

Given that the majority of buses – except for the new trolleybuses purchased under the EBRD projects in Chisinau and Balti – are old and diesel-powered, a support programme aimed at replacing the ageing public transport fleet is justified. The CPT Programme could build upon the previous projects in this sector and, with its programming approach, facilitate blending public and private financing. Since Chisinau and Balti already have experience with replacing the trolleybus fleet under the EBRD co-financed projects, their replacement by new models should continue.

Apart from a municipal enterprise in Chisinau that assembles Belarusian trolleybuses, there is no domestic production of buses. This assembly, however, represents a distinct purchase cost advantage over importing completed buses. The reference prices of new vehicles, as well as the socio-economic benefits linked to assembling vehicles in Moldova, provide an argument for the domestic production (assembly) of public transport vehicles as a preferred option to importing them. However, Moldova’s capacity for assembling trolleybuses needs to be expanded.

The market analysis reviewed various options for replacing the public transport fleet. Our analysis shows that buses with modern diesel, CNG or LPG-powered engines are a suitable replacement for the outdated and fully depreciated diesel models currently in operation in Moldova. New models of diesel, CNG or LPG-powered buses have lower operating costs than old diesel-powered models due to their lower maintenance costs and fuel prices.

Where CNG and LPG are not available, improved diesel fuels, such as Euro 5 and 6, offer viable alternatives. However, Moldova needs to introduce European standards for diesel fuels. Presently, the only requirement is that new buses and trucks must be Euro 0 or Euro I-compliant by 2020. It is also important to point out that diesel buses need special equipment to ensure that emission reductions are met. This equipment increases operating costs, leading some operators to dismantle the equipment. This practice should be discouraged and avoided.

Since Moldova does not have natural gas reserves, the use of electricity in transport in cities should be considered alongside the use of cleaner buses.

Given that the purchase cost of CNG and LPG-powered buses is higher than new model diesel-powered buses, the programme should provide enough assistance for the project to become profitable. This is defined as the point at which the net present value (NPV) of the investment is equal to zero from the point of view of the investing entity (see 6.5. Annex B). This approach provides an opportunity for direct assistance to the service provider (for example, in the form of a grant) together with a loan, for example from the EBRD or a local bank or banks.

The review also revealed that there are public financing mechanisms available in Moldova that could be used for funding the CPT Programme. In the past, IFIs and donors have played key roles in the modernisation of the public transport fleet in Moldova. State budget financing, either directly through the budget or from special funds – such as the National Ecological Fund – has not been used. Municipal guarantees were provided to public transport operators in order to secure their creditworthiness.

If the reviewed domestic financing sources – such as the National Ecological Fund, National Regional Development Fund and the Road Fund – cannot be used directly to provide purchase subsidies (grants) for new public transport vehicles, they could perhaps finance necessary accompanying measures (e.g. infrastructure and technical assistance).

References

[8] GoM (2018), Environmental Audit Report on Air Quality in the Republic of Moldova (in Romanian), Government of Moldova, Chisinau, http://lex.justice.md/UserFiles/File/2018/mo18-26md/raport_65.doc.

[7] GoM (2018), Programme of Means Allocation of the Road Fund for National Public Roads in 2018 and the Programme for the Regular Repair of National Public Roads (within Localities), Local, Communal Roads and Streets (in Romanian), Government of Moldova, Chisinau, https://gov.md/sites/default/files/document/attachments/intr18_120.pdf.

[6] GoM (2013), Transport and Logistics Strategy 2013-2022, Government of Moldova, Chisinau, http://www.google.md/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=2ahUKEwi_j9XMg93dAhXDp4sKHaelDVsQFjABegQICBAC&url=http%3A%2F%2Fwww.serviciilocale.md%2Fpublic%2Ffiles%2Fdrumuri%2FSTL_2013-2022_eng.doc&usg=AOvVaw0NAzZML9QD8Ip-Lcl.

[9] MRDC (2016), Report on the Implementation of the National Strategy for Regional Development for 2013-2015 (in Romanian), Ministry of Regional Development and Construction of Moldova, Chisinau, http://madrm.gov.md/sites/default/files/Raport%20privind%20implementarea%20SNDR%20pentru%20anii%202013-2015.pdf.

[4] NBS (2018), Statistical Yearbook of the Republic of Moldova, National Bureaus of Statistics of Moldova, Chisinau, http://statistica.gov.md/public/files/publicatii_electronice/Anuar_Statistic/2018/Anuar_statistic_2018.pdf.

[5] Simoes, A. and C. Hidalgo (2011), The economic complexity observatory: An analytical tool for understanding the dynamics of economic development, Scalable Integration of Analytics and Visualization: Papers from the 2011 AAAI Workshop (WS-11-17), Association for the Advancement of Artificial Intelligence, Cambridge, MA, https://pdfs.semanticscholar.org/7733/68ce1faa36d9ac833b3c3412d136033b91c1.pdf.

[1] Sims, R. and R. Schaeffer (2014), “Transport, In: IPCC, 2014:”, Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, [Edenhofer, O. et al. (eds.)], Cambridge and New York, pp. 599-670, http://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_chapter8.pdf.

[2] T&E (2018), CNG and LNG for vehicles and ships – the facts, European Federation for Transport and Environment, Brussels, http://www.transportenvironment.org/sites/te/files/publications/2018_10_TE_CNG_and_LNG_for_vehicles_and_ships_the_facts_EN.pdf.

[10] TTK and Metroul (2016), Chisinau Public Transport Project, Regulatory and Regulatory Consultancy Programme for Restructuring of Public Transport, Chisinau Municipality Transport Strategy (in Romanian), Transport Technologie Consult Karslruhe GmbH and Metroul S.A., Karslruhe and Bucharest, http://www.chisinau.md/public/files/anul_2014/strategii/strategie_transport_chisinau_2014.pdf.

[3] Vlas, C. (2017), “New (wireless) trolleybus route from Chisinau Centre to Chisinau International Airport for only 2 lei”, news portal Moldova.org, 29 June, http://www.moldova.org/en/new-wireless-trolleybus-route-chisinau-centre-chisinau-international-airport-2-lei (accessed on 18 July 2017).

Laws and regulations

(Listed by most recent date of adoption – all are in Romanian/Russian)

Government Decision No. 225 of 12 March 2018 on Approval of Programme of Means Allocation of the Road Fund for National Public Roads in 2018 and the Programme for the Regular Repair of National Public Roads (within Localities), Local, Communal Roads and Streets, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=374689.

Court of Auditors Decision No. 65 of 30 November 2017 on the Environmental Audit Report on Air Quality in the Republic of Moldova, Official Monitor No. 18-26 from 19 January 2018, Art. 4, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=373833.

Government Decision No. 1468 of 30 December 2016 on Approval of the Lists of National and Local Public Roads in the Republic of Moldova, Official Monitor No. 60-66 from 24 February 2017, Art. 133, http://lex.justice.md/md/369028.

State Budget Law for 2016 No. 154 of 1 July 2016, Official Monitor No. 230-231, of 26 July 2016, Art. 486, http://lex.justice.md/md/365958.

Law No. 24 of 4 March 2016 on Amending and Completing Some Legislative Acts, Official Monitor No. 100-105 of 15 April 2016, Art. 192, http://lex.justice.md/md/364216.

Government Decision No. 827 of 28 October 2013 on Approval of the Transport and Logistics Strategy 2013-2022, Official Monitor No. 243-247 of 1 November 2013, Art. 933, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=350111.

Balti Municipal Council Decision No. 2/4 of 28 March 2013 on Approval of Travel Fares in Municipal Passenger Transport, http://balti.md/wp-content/uploads/2017/12/decizia-2.4-tarife-md.pdf.

Chisinau Municipal Council Decision No. 8/8 of 15 September 2009 on Establishment of Public Transport Tariffs within the Chisinau Municipality, https://chisinau.md/download.php?file=cHVibGljL3B1YmxpY2F0aW9ucy85OTk0MDhfbWRfOF9fXzgucGRm.

Law No. 720 of 2 February 1996 on the Road Fund, Official Monitor No. 247-251 of 17 December 2010, Art. 753, http://lex.justice.md/md/336995.

Notes

← 1. See EU emission standards for passenger cars and light-duty trucks at: www.dieselnet.com/standards/eu/ld.php.

← 2. Moldova’s energy mix is dominated by imported natural gas – supplied entirely by Gazprom from the Russian Federation and prospectively by OMV Petrol from Romania.

← 3. For CNG retail price development, see http://cngeurope.com; for LPG retail price development, see: www.mylpg.eu.

← 4. For Chisinau’s municipality production plan for 2018, see www.chisinau.md/libview.php?l=ro&idc=403&id=20915&t=/Presa/Comunicate-de-presa/Asamblarea-troleibuzelor-la-Chisinau-in-anul-2018/%20.

← 5. European Investment Bank (www.eib.org), Neighbourhood Investment Facility (https://ec.europa.eu/europeaid/tags/neighbourhood-investment-facility-nif_en).

← 6. See Project "Renovation of passenger electric transport in the Republic of Moldova": www.rtec.md/116-proiect-transport-public-chiinu.html.

← 7. Chisinau Electric Transport Company (http://rtec.md).

← 8. The autonomous trolleybuses serving the airport from the city centre were imported from China and included an assembly of batteries.

← 9. Discussions were going on in 2018 as to whether to increase these rates.

← 10. National Ecological Fund of Moldova (www.madrm.gov.md/ro/content/fondul-ecologic-na%C8%9Bional; in Romanian).

← 11. See Aid Management Platform of the State Chancellery of the Government of Moldova: http://amp.gov.md.

← 12. See Project "Balti Trolleybus Company – Twinning Partnership in Public Transport": http://amp.gov.md/aim/viewActivityPreview.do~public=true~pageId=2~activityId=6094~language=ro.

← 13. See Project "Chisinau Urban Transport Upgrade": www.ebrd.com/news/2012/a-transport-revolution-in-the-moldovan-capital.html.

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3. Economic analysis of the Clean Public Transport Programme