4. Institutional arrangements and implementation barriers

This chapter proposes some institutional arrangements for managing the Clean Public Transport Programme as an investment programme. It begins by outlining good practice in setting up institutional frameworks for large environmental investment programmes. It then suggests a three-level institutional structure for managing the programme, comprising: 1) a programming entity; 2) an implementation unit; and 3) a technical support unit. The chapter suggests a possible division of responsibilities across these three entities, and describes the minimum operating regulations required to manage the programme. The chapter also reviews the barriers to implementation in the form of regulations and policy distortions, and suggests ways of addressing them.

    

4.1. Good practice institutional arrangements for managing public investment programmes

There are a number of different good practice institutional forms for managing public environmental expenditure. Simple expenditure programmes (e.g. financing research or education, purchasing simple equipment or standard services) may be managed directly by assigning additional responsibilities to existing government institutions at a variety of levels, using their regular staff and routine budget processes. For larger-scale, targeted programmes – in particular, programmes that involve financing capital investments, such as the Clean Public Transport (CPT) Programme – special institutional arrangements are recommended. These special arrangements may take many institutional forms and involve various types of implementing units (OECD, 2007[1]).

Deciding which form is most appropriate will generally depend on a variety of factors related to the sources of finance, the types of disbursements envisaged, and the legal and political culture of governance in a given country. Regardless of the institutional form, public environmental expenditure management should involve institutional structures and procedures that promote environmental effectiveness, embody fiscal prudence, and use financial and human resources efficiently.

Experience shows that these arrangements can take four basic forms:

1. 1. government implementation units

2. 2. environmental funds or a similar public finance institution

3. 3. directed credit or a line of credit to financial intermediaries (such as banks under Option 1 – see Figure 2.9)

4. 4. outsourcing.

Government implementation units are the most common arrangements, and include the following institutional forms:

• government departments with responsibility for procuring goods and services or financing specific projects within the state budget

• project implementation units established in a government department to implement projects within a specific government expenditure programme included in the budget

• autonomous/decentralised government units financed by the budget but created to decouple the delivery of services or administrative tasks from policy formulation.

Government implementation units mainly manage government budget resources, although project implementation units may also manage multilateral or bilateral grant resources. Regardless of the type of government implementation unit chosen, carrying a programme to completion requires capacity for project selection, implementation and monitoring. This means hiring skilled, trained personnel with a dedicated focus on the programme. Environmental programmes of EUR 50 million (USD 57 million) annually and about 200 contracts per year implemented in Central and Eastern Europe generally need staff of more than 20 people. In the case of the programme discussed in this study, given the relatively small number of contracts and homogenous types of investments required, only 5 people will be needed (see Table 2.7 and Table 2.8 for programme implementation costs).

In most instances, the institutional arrangement for large-scale (investment) programmes includes both a management (implementation) unit and a supervisory body. The implementation unit’s management and staff are responsible for the day-to-day project cycle activities (identification, selection, appraisal and monitoring of projects), development of the annual expenditure plan and budget, and monitoring and preparation of reports. The supervisory body usually focuses on taking strategic decisions, and approving internal operating procedures and rules (including eligibility and appraisal criteria to guide project selection). This division of responsibilities provides a system of checks and balances and improves the accountability of the programme. The supervisory body retains the final decision-making authority to approve financing of the individual projects recommended by the implementation unit’s technical staff after the appraisal process (see Section 5.1). In the case of the CPT Programme, supervision will be performed by the programming entity (Section 4.2.1).

Outsourcing or contracting out is another option if the government department does not have the capacities to fulfil its duties as an implementation unit. This allows an implementation unit to enter into a contract with an outside supplier for the provision of goods and services typically provided internally. If this option is chosen, good practice requires that outsourcing be conducted through competitive tendering.

To take one example, since 1993 the Austrian Federal Ministry for Sustainability and Tourism (BMNT)1 has delegated the management of the grant schemes for Austria’s Environmental and Water Management Fund to a private consulting company, Kommunalkredit Public Consulting (KPC) GmbH. KPC is also responsible for the Austrian Joint Implementation (JI)/Clean Development Mechanism (CDM) programme and serves as one of the four managers of the newly established Climate and Energy Fund. KPC manages more than 3 000 projects annually. Its role is to advise the ministry during the programme development phase and on the development of support programmes, as well as to provide technical, economic and legal assessment of support and consultancy projects. KPC also advises the decision-making bodies of these institutions – the BMNT in this case – on the drafting of contracts, monitoring of project implementation and management of disbursements. Significantly, when the management of the Environmental and Water Management Fund was outsourced to KPC in 1993, its administrative costs were immediately reduced by more than half and have fallen since 2000 to only 20% of the 1993 cost.

Figure 4.1 presents the management scheme for the Austrian JI/CDM programme.

Figure 4.1. Management scheme for the Austrian Joint Implementation/Clean Development Mechanism programme

Source: Provided to the OECD by Kommunalkredit Public Consulting.

4.2. A proposed institutional set-up for the CPT Programme

In preparing any public investment programme, the public financier needs to ensure that the essential individual elements of the programme are carefully designed and in place before the programme is launched. This section summarises these elements for the green public investment programme in Moldova proposed as part of this study, and explains how and why the project team arrived at these solutions.

Effective programme implementation requires the following elements:

• stable and predictable sources of finance for the programme

• institutional arrangements to manage the programme expenditure, with sufficient resources, qualified staff and instruments to meet its objectives

• well-documented principles, rules and operating procedures for project cycle management (PCM)

• clearly defined and robust criteria for appraisal, selection and financing of investment projects

• clearly defined procurement rules.

To facilitate the implementation of this investment programme, this chapter and the next (Chapter 5) provide detailed information on the following arrangements:

• a proposal for institutional arrangements comprising three levels: 1) programming entity (PE); 2) implementation unit (IU); and 3) a technical support unit (TSU)

• a proposal for PCM procedures, including eligibility criteria, project appraisal criteria, project-ranking procedures and financing rules (Chapter 5).

The institutional set-up needs to ensure that sufficient resources are allocated to meet the programme’s objectives, and that qualified staff and instruments to implement the programme are made available. In general, programming and project appraisal should be strictly separated. Programming is the responsibility of the programming entity in the government agency appointed to manage the investment programme. Project appraisal is a technical process conducted by competent technical staff recruited on a competitive merit basis and held responsible for their decisions. The implementation unit should be operationally and technically independent and shielded from political pressures by rules and procedures developed by the programme’s technical staff.

Importantly, the IU and the TSU cannot be the same entity.

4.2.1. The role of the programming entity

The Ministry of Agriculture, Regional Development and Environment (MARDE)2 is best suited to act as the programming entity. It could use its available staff and resources to undertake its programming duties, while consulting with other relevant government agencies, professional associations, local municipalities and non-government organisations, as appropriate. In addition, representatives of these bodies may be invited to sit on and have an advisory role on the programme’s supervisory board.

The programming entity is responsible for designing the programme, including (adapted from (OECD, 2007[1]):

• Defining priority environmental objectives for the investment programme that are specific, measurable, realistic and time-bound.

• Developing an investment programme that responds to the overall environmental and climate-related objectives. This programme should include specific targets, cost estimates, descriptions of eligible project types and beneficiaries, terms of financing, procedures, principles and criteria of project appraisal and selection, procurement rules, programme timeframe and indicators of performance.

• Determining sources of funds and the size of the financial envelope of the investment programme.

• Selecting the best institutional arrangements for managing the investment programme – in particular, deciding whether the programme can be managed directly by existing government institutions at different levels, or whether special institutional arrangements are required.

• Selecting, contracting and monitoring the implementation unit to manage the investment programme.

• Selecting and monitoring the technical support units required to implement the programme.

4.2.2. Deciding on an implementation unit

The implementation unit (IU) is charged with drafting the programme’s operating regulations, as described in Section 4.3 below. The IU needs to consult with the technical support unit(s) (see below) in drafting and using its operating regulations. Because programming is a political process, it is important that the responsibilities for programming and project cycle management are separate and distinct, with the IU managing the project cycle. The IU conducts marketing activities for the programme, identifies beneficiaries and appraises beneficiaries’ project proposals for eligibility. It would also provide MARDE with information on the planned number of beneficiaries and programme financial needs. The IU would report to MARDE on programme expenditure so that MARDE can monitor the budget implementation for a given year (or programming cycle) and project type (project “baskets”).

The role of IU could be fulfilled by a local bank or banks selected through public tender, and which would sign a co-operation agreement with MARDE. The newly established Environmental Protection Agency is another potential IU (though at the time of writing it was only at the concept stage).

4.2.3. Appointing a technical support unit

The technical support unit (TSU) would give specialised assistance, advice and expertise in the areas of energy and fuel efficiency, compressed natural gas (CNG), liquefied petroleum gas (LPG), modern diesel buses/trolleybuses, and air pollution and greenhouse gas (GHG) emission reductions. The National Agency of Road Transport (Agenția Națională Transport Auto – ANTA)3 under the Ministry of Economy and Infrastructure (formerly, Ministry of Transport and Roads Infrastructure) – could play this role. Other TSUs may be defined as deemed necessary and prudent.

4.3. Fundamental operating regulations

The effective implementation of the programme requires that the implementation unit (IU) define and publicise its operational rules and regulations. At a minimum, the core elements of such rules should include:

• definitions

• general provisions

• definition of eligible projects

• rules for awarding grants

• rules for modifying or terminating a grant contract

• procedures for programme review.

The grant agreement with the beneficiary should include the following terms and conditions:

• amount of grant award (as an absolute value or as a share of total project investment cost)

• start and end dates of the project to be financed, as well as planned environmental effects

• date on which the grant, or its instalments, will be transferred to the recipient

• rights of the IU to control the awarded grant, as well as the method of recovering the grant if the project fails to meet its stated objectives

• grantees’ specific obligations arising under the contract with the programme IU

• conditions under which the contract loses its force

• consequences of contract dissolution.

Typically, the maximum grant for a project should not exceed 50% of the funds earmarked for that type of project in the IU’s annual financial plan. This is to leverage resources from other sources and ensure the commitment of the recipients to implementing the project using their own resources.4

Given the nature of investments to be financed under the CPT programme, it is proposed that the programme should be financed by the state budget within the medium-term expenditure framework (MTEF) process. Financial support should be provided in the form of grants and bank guarantees (see Section 2.3.3).

There are other procedural rules that need to be considered. For example:

• The grant may be transferred to the applicant all at once or in instalments (tranches).

• A portion of the grant may be transferred in advance (up to 20% of the total value of the project), if project start up is impossible without advance funding.

• The recipient of a grant advance should be required to return to the IU any interest resulting from holding the grant in its bank account (or the amount may be deducted from future tranches).

• The dates for making grant transfers are determined by the IU based on funds at its disposal and upon consideration of an applicant’s proposal, as presented in the application.

• Financial resources from the grant are transferred exclusively for the purpose of meeting the payments required by the grantee. The recipient should allow the IU full access to original invoices prepared by contractors or suppliers.

The OECD Handbook for Appraisal of Environmental Projects Financed from Public Funds includes a detailed discussion of all the rules that need to be considered in defining the procedures for the programme IU. It could be useful in further defining procedural rules for the CPT programme (OECD, 2007[1]).

4.4. Promoting the programme

Promotion is essential for the success of the programme and is the responsibility of the IU. The promotion package might include the following elements:

• sending programme information to local administrations and potential beneficiaries

• distributing programme rules to local administrations and potential beneficiaries

• maintaining the IU’s website with information on rules for awarding grants and application forms

• issuing press releases.

The costs of programme promotion should be included in the programme costs envelope.

4.5. Eliminating policy distortions

Various regulatory barriers may complicate the implementation of even a well-designed investment programme. It is important that before a programme is developed and financed, the Government of Moldova reviews the relevant regulatory basis and eliminates any barriers to the extent possible. Combining such regulatory improvements with financial support from the state is more likely to lead to the modernisation of the bus fleet in Moldova and result in significant reductions in air pollution and GHG emissions.

One of the biggest obstacles for an investment programme in the public transport sector in Moldova is the very limited creditworthiness of bus operators. There are several reasons for this, including weak pricing signals for new technologies and fuels (which ultimately favour the old type of buses), a fare system for urban public transport that does not allow for covering the capital cost of new buses, and a tender system that favours short-term contracts and makes it difficult to invest in a new bus fleet.

These distorted policies explain why the bus operator market is fragmented and dominated by small companies that lack creditworthiness and that are not attractive to international financial institutions (IFIs), such as the European Bank for Reconstruction and Development (EBRD). Eliminating these barriers is key for the success of the programme; however, not all of them have to be addressed at the same time and some are interchangeable. For example, a better fare system and long-term contracts will help to increase creditworthiness, but this can also be achieved through loan guarantees or a higher level of public support provided by the CPT Programme.

Some of the key actions needed to remove implementation barriers are presented below.

4.5.1. Strengthen technical regulations in transport

Many of the policy and regulatory barriers identified by this study are comparable to challenges experienced in other countries. To ensure the programme’s successful implementation, the government will need to:

• Strengthen (diesel) engine emission norms and bring them closer to European standards. Moldova has still not adopted modern emission norms for passenger cars and heavy-duty truck and bus engines. The equivalent of the Euro IV emission standard, introduced in the European Union (EU) in 2005, has not yet been adopted in Moldova (see Chapter 3 and Annex B). In 2014, the European Commission (EC) adopted Euro 6/VI vehicle emission standards (see Table B.16 and Table B.17 in Annex B). Moldova has only introduced requirements for buses and coaches to meet Euro I norms starting on 1 January 2020. However, the Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 suggests a restriction on the movement of all vehicles older than 15 years and a ban on importing vehicles older than seven years and below Euro 5 standard (GoM, 2018[2]).

• Strengthen (diesel) fuel standards. Latest diesel engine emission norms cannot be introduced if the available fuel does not meet certain standards. Modern engines include equipment sensitive to low-quality fuel, and sulphur dioxide (SO₂) emissions directly depend on the fuel’s sulphur content. Although diesel fuel available in Moldova meets Euro 5 standards (and seems to be sufficient for a country-wide fleet upgrade), the legal requirements are based on post-Soviet standards that are incompatible with the EU standards (see Section 1.1).

• Strengthen technical inspection standards. Although buses and minibuses in Moldova must pass technical inspections, these inspections are not strict on emissions. Technical inspections have become a mere formality, with the fault detection rate range between 4 and 8% in 2013-17, compared to 30-40% for cars older than nine years in Germany or Great Britain. In Moldova, however, more than 50% of registered vehicles are over 20 years old (Ghiletchi, 2018[3]).5 The weak inspection system means that public transport operators have no incentive to comply with emissions standards. The existing standards for technical inspection need to be better enforced.

4.5.2. Introduce adequate financial and pricing signals

Regardless of how the CPT Programme is co-financed, their limited creditworthiness means that bus owners will need to use loans or leasing for their co-financing. Cities – which are also owners of the public transport fleet (i.e. Chisinau and Balti) – have already been financing bus purchases by loans and their creditworthiness is limited. One solution is for the CPT Programme to provide bank guarantees (Chapter 2).

The analysis showed that the average price of CNG and LPG fuels is much lower than the average price of petrol and diesel (Chapter 3), which are also subject to an additional excise tax (see Section 7.1.6). Given that there are significant efficiency gains to be realised from replacing ageing and inefficient diesel and electricity-powered vehicles, the programme should provide financial incentives to attract investment into the sector.6

Although CNG and LPG fuels are cheaper than diesel, CNG and LPG-fuelled buses are more expensive (as they require the installation of additional equipment). Bus operators have not been given clear signals to shift to cleaner fuels (either from renewable resources or cleaner fossil fuels). The government could thus consider introducing targeted tax exemptions (including value added tax and import duties) for CNG/LPG vehicles and for owners of refuelling stations.

The experience of EU countries shows that the uptake of fossil gases in transport is highest in countries with the lowest tax rates, i.e. where CNG or LPG enjoy tax rates below the EU minimum. In some countries (such as Italy) this can make them half the price of diesel. This support has continued despite the declining EU domestic fossil gas production and increasing dependence – similar to Moldova – on energy imports from Russia7 (T&E, 2018[4]).

The Government of Moldova has already acquired considerable experience with such fiscal instruments.8 The Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 foresees the use of tax incentives for importing electric and hybrid motor vehicles, as well as the development of national infrastructure for electric cars (GoM, 2018[2]). Until critical mass is achieved (for the system to become profitable), such fiscal measures could complement state support mechanisms such as grants, loans or loan guarantees.

4.5.3. Adjust the fare system for urban public transport

Fares should be aligned with good international practices and designed to maximise the social welfare of both passengers and public transport providers (subject to budget and capacity constraints).

The benefit for public transport service providers can be defined as revenues minus costs. The benefit for the user of such services can be expressed as the generalised price citizens are willing to pay before switching to non-public transport alternatives, minus the actual generalised price of the ticket. To some extent, the producer’s benefit and user’s benefit may be negatively correlated.

Given the economic and financial situation of public transport providers in Moldova, the focus should be on the providers’ benefit. The users’ benefit should be minimised as much as possible (possibly close to zero).

Apart from single fares, subscription fares could also be considered. This option is usually favoured by passengers who do not own a car and are therefore less price sensitive. On the other hand, in developing countries, people who do not own a car usually belong to lower income groups than in the developed world.9

In the case of Moldova, almost all public transport operators are private – with the exception of three municipal operators (one in Balti for buses and trolleybuses and two in Chisinau, separately for buses and trolleybuses). Private operators work for profit, and passenger fares need to cover capital and operating costs. At the same time, fares for public transport are low in Moldova (see below). Consequently, the quality of service provided by private operators is rather low, with operators using very old buses to allow them to minimise capital costs (and depreciation).

Given that the CPT Programme may be financed via loans or with the use of bank guarantees, a fare increase is obviously needed (Box 4.1). The current single-journey fares of MDL 2 (USD 0.11) for a bus/trolleybus and MDL 3 (USD 0.16) for a minibus are extremely low (see Section 3.2.3). They do not guarantee that fleet operators can repay their loans (according to information from private entrepreneurs in public transport, 70% of the revenues cover only operation and maintenance costs). Thus, if fares are kept at their current level, the programme and the public budget will be exposed to default by operators and will have to consume the guarantee, which implies significant costs for the programme.

Box 4.1. Sensitivity analysis

An increase in transport fares could theoretically be used to co-finance the CPT Programme. Conducting a sensitivity analysis on how many new buses/trolleybuses could be bought by increasing single-journey fares by MDL 2 (USD 0.11), for example, could be very informative. Generally, the sensitivity analysis should take into account the fact that an increase in the price of tickets may discourage people from using public transport and may make them switch to using private cars, resulting in higher levels of air pollution. In economic language, public transport fare increases lead to an exposure-response relationship with a high price elasticity of demand – i.e., a price increase leads to a decrease in demand for a given service. The analysis also depends on local circumstances, including the length of routes and the number of passengers. All these issues make conducting a sensitivity analysis a rather complex exercise which should be carried out as part of a separate study as it requires significant additional data collection and discussion with the government and municipal authorities.

4.5.4. Change public tenders for providing public transport in urban centres

Public transport is provided by city-owned and private operators under short-term contracts (one to three years). This approach encourages a short-term perspective and encourages operators to minimise their outlays and to make quick a return on their investment. As a result, private operators tend to favour cheaper, older and thus more polluting minibuses.

Using medium to long-term contracts (at least 10 years) would encourage operators to invest in a modern minibus fleet, especially when backed up by an adjusted fare system, regulatory improvements and financial support from the state.

The review of the urban public transport system as part of this study (see Section 6.2) showed that there are 32 service providers operating urban public transport in Chisinau and Balti; 29 of them are private entities, while the other 3 are municipally-owned companies. In 2016, private entrepreneurs transported 36% of all passengers using public transport (see Figure 6.6). This indicates that most of the programme financing needs will have to be tailored to the private sector, or at least to public-private partnerships (PPP).

4.5.5. Encourage (energy) efficiency in public transport

Public transport in Moldova is dominated by minibuses, which are generally less energy-efficient (in terms of megajoule/passenger-km) than regular buses. However, currently regular buses service only a small number of urban and inter-city routes in Moldova.

The plan to reduce the number of operators and provide larger buses in the urban centres (which can carry up to five times more passengers) – outlined in the Promotion of Green Economy in the Republic of Moldova for 2018-2020 (see Section 1.3) (GoM, 2018[2]) – is not clearly communicated to all stakeholders (including information on possible future routes, transport means used, number of buses needed, number of buses provided by city-owned operators, etc.).

It does not make economic sense to invest in public transport if streets are congested with traffic. More specifically, if there were more single-journey fares than subscription tickets sold in Moldova, it would not be financially viable for public transport operators. The Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 suggests regulating the entry of motor vehicles into cities and in the centre of cities to reduce traffic jams and air pollution.

Journey time (and related fuel) savings can be further achieved by increasing efficiency in the operation of public transport. For example, dedicated bus lanes could reduce the need to use inefficient mechanical braking. In Moldova, this is primarily applicable to Chisinau and Balti (for example trolleybus lanes are often blocked by waiting or even parked cars). Eco-driving – a driving awareness technique that can reduce fuel consumption – could be taught to trainee bus drivers.

A recent initiative is the introduction of an “autonomous” trolleybus line (which can operate independently from the power network for short periods/distances) from the Chisinau city centre to the Chisinau International Airport in the summer of 2017. While the airport bus service has attracted the biggest attention – as the airport transfer had been provided solely by minibuses before – the city has also introduced another wireless trolleybus route from the Vatra suburb to the city centre (Vlas, 2017[5]). The fare remains the same as for all buses and trolleybuses, i.e. MDL 2 per person (USD 0.11) and ride (without transfer).

4.6. Conclusions for the CPT Programme

While there are several possible institutional set-ups for managing the programme, the optimal institutional set-up should be selected only after all elements of the programme are clarified and consensus has been reached on its priorities.

Regardless of the type of institutional set-up, the programme management should involve an institutional structure and procedures that promote environmental effectiveness, embody fiscal prudence, and use financial and human resources efficiently. Subsequently, the government needs to ensure that resources, qualified staff and instruments are sufficient to implement the programme.

Not least, it is advisable for larger (investment) programmes – such as the CPT Programme – to also appoint a supervisory body to adopt strategic documents and undertake strategic decisions, as well as oversee the implementation capacity of the management in terms of project selection, implementation and (EU, 2009[6]) monitoring (project cycle management).

Importantly, both the management and the supervisory body should be protected from political pressures by adopting operating rules and procedures. The Government of Moldova should also aim to eliminate the policy and regulatory barriers that could hamper the implementation of the CPT Programme. A reflection on other countries’ experience could provide an indicative checklist of measures and approaches to tackle these problems.

Increases to fares, coupled with the introduction of separate bus lanes and smart traffic lights, could improve the overall management of the public road transport sector in Moldova.

References

[8] EC (2018), EU Energy in Figures: Statistical Pocketbook 2018, European Commission, Brussels, https://publications.europa.eu/en/publication-detail/-/publication/99fc30eb-c06d-11e8-9893-01aa75ed71a1/language-en/format-PDF/source-79929745.

[6] EU (2009), “Directive 2009/40/EC of the European Parliament and of the Council of 6 May 2009 on roadworthiness tests for motor vehicles and their trailers (Recast)”, Official Journal of the European Union, L 141/12, pp. 12-28, https://eur-lex.europa.eu/eli/dir/2009/40/oj.

[3] Ghiletchi, S. (2018), “Cars in Moldova: Safer than in the EU? (in Romanian)” Analytical Note No. 2/2018, Institute for European Policies and Reforms, Chisinau, http://ipre.md/2018/08/20/inspectia-tehnica-in-moldova-a-devenit-o-formalitate-si-nu-raspunde-adecvat-obiectivelor-de-siguranta-rutiera-si-protectia-mediului-inconjurator (accessed on 24 June 2019).

[2] GoM (2018), Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 (in Romanian), Government of Moldova, Chisinau, https://gov.md/sites/default/files/document/attachments/intr05-1_0.pdf.

[7] OECD (2018), Inventory of Energy Subsidies in the EU’s Eastern Partnership Countries, Green Finance and Investment, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264284319-en.

[1] OECD (2007), Handbook for Appraisal of Environmental Projects Financed from Public Funds, OECD Environmental Finance Series, OECD Publishing, Paris, http://www.oecd.org/env/outreach/38786197.pdf.

[4] 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.

[5] 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).

Notes

← 1. Known as the Federal Ministry of Agriculture, Forestry, Environment and Water Management (BMLFUW) until January 2018. Its website is at www.bmnt.gv.at.

← 2. Ministry of Agriculture, Regional Development and Environment of Moldova (www.madrm.gov.md).

← 3. National Agency of Road Transport (https://anta.gov.md).

← 4. Given the nature of the projects to be financed, the grant should be determined at a level at which the net present value (NPV) for the project is equal to zero (see Section 3.4 and Annex B).

← 5. A new regulation on periodical technical inspections conforming to requirements imposed by the Association Agreement with the EU (Directive 2009/40/EC) is still in the inter-ministerial co-ordination process (EU, 2009[6]). This would, among other things, prohibit the removal of the diesel particulate filter (DPF). See also: http://autoblog.md/moldova-vrea-sa-treaca-la-normele-de-poluare-europene-masinile-vor-fi-verificate-cat-de-mult-polueaza-mediul (in Romanian).

← 6. Unlike these (cleaner) fossil fuels, electricity-powered vehicles have the advantage of cheap electricity (OECD, 2018[7]).

← 7. In 2016, the EU imported 86.7% of its petroleum products and 70.4% of its natural gas, so its energy dependence on natural gas is not significantly smaller than on oil, especially given the larger share of natural gas imports coming from Russia (39.9%) than oil (31.6%) (EC, 2018[8]).

← 8. Unlike in the other EU Eastern Partnership (EaP) countries, most of the government support (especially in energy sector) in Moldova is a result of reduced taxes and tax exemptions (OECD, 2018[7]).

← 9. Usually, a single or monthly ticket fare system is considered more operator-friendly, and a distance-dependent fare system more customer-oriented (and more technically demanding for the operator). A single or monthly ticket fare system is generally more attractive for passengers travelling longer distances, and a distance-dependent fare system more attractive for passengers travelling shorter distances. Finally, with a distance-dependent fare system, the operator can gather information both on the number of trips per route over a defined period and the average length of the route that a passenger travels in a given period. This information may be useful for making better management decisions.

4. Institutional arrangements and implementation barriers