Role of RCC in developing regional cooperation in energy and infrastructure, and Serbia’s contribution Interview with Mr. Miroslav Kukobat, Senior Expert on Energy and Infrastructure, Regional Cooperation Council Secretariat

7. November 2011. / Uncategorized

RCC is the main regional interlocutor of the European Commission and other key players, since regional cooperation is a key element of the EU enlargement policy and complementary segment of national European policy agendas. Energy,transport and environmental infrastructure are considered to be main infrastructural sectors. Energy Community – process of the implementation of the Energy Community Treaty – is the major framework for regional energy cooperation.

Well-developed Infrastructure is a key prerequisite for the overall social, economic and environmental development, reaching sustainability, peace, stability and prosperity of the region. Serbia is an active participant in regional energy and infrastructure cooperation, contributing to its various segments, including an initiative to prepare a regional energy strategy.


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Interview with Mr. Miroslav Kukobat, Senior Export on Energy and Infrastructure, Regional Cooperation Council Secretariat

Mr. Miroslav Kukobat, RCC, Senior Expert

Serbia-energy.com: Regional Cooperation Council (RCC) is an international organization, successor of the Stability Pact for South Eastern Europe. Can you tell us more about the organization, its goals, realized progress and importance for the region of SEE?

Mr. Miroslav Kukobat * MK* : The mission of the Regional Cooperation Council is to promote mutual cooperation and European and Euro-Atlantic integration of South East Europe in order to inspire development in the region to the benefit of its people.

The work of RCC focuses on the priority areas of economic and social development, infrastructure and energy, justice and home affairs, security cooperation, building human capital and parliamentary cooperation. The main operational document guiding the RCC work is the Strategy and Work Programme 2011-2013, endorsed by the SEECP Summit held in June 2010 in Istanbul.

RCC is the main regional interlocutor of the European Commission and other key players, since regional cooperation is a key element of the EU enlargement policy and complementary segment of national European policy agendas. Numerous benefits can be reached by a regional approach, particularly in energy and infrastructure where the countries from the region can benefit from economy of scale, increased security of infrastructural products and services supply, extended overall competitiveness, etc.

The organization encourages SEE countries to better use the support available for regional cooperation, primarily through the EU’s Multi-beneficiary Instrument for Pre-Accession Assistance (MB IPA), by being active participant in MB IPA Strategy Working Groups. It also participates in the International Financial Institutions’ (IFI) Advisory Group and the Western Balkan investment Framework (WBIF) Steering Committee, which strengthens the region’s links with donor community and other instruments of support.

Major RCC achievements so far include mapping of national priorities regarding regional cooperation in SEE; coordination and streamlining of SEE regional initiatives and structures; improved exchange of information, data and expert knowledge; bringing together all relevant stakeholders when addressing specific issues which results in increasing cooperation efficiency and decreasing related costs; initiating the networking process among RCC Secretariat, RCC members from SEE, European Commission and IFIs; launching and supporting projects of regional relevance, etc.

RCC membership consists of 46 countries, organizations and international financial institutions. RCC has a Secretariat based in Sarajevo, Bosnia and Herzegovina, headed by Secretary General Hido Bišcevic. Apart from the Sarajevo headquarters, the Secretariat has a Liaison Office in Brussels with European and Euro-Atlantic institutions.

Serbia-energy.com:Energy and infrastructure sector in the region are below the EU standards, after the decades of poor investment and maintenance it started its reforms. Can you tell us your opinion on the level of completed and necessary steps for reaching the EU standards?

MK: I agree that regional infrastructure is in a very bad condition, missing appropriate investments and maintenance in the past. In addition, there are not yet cost-reflective tariffs for infrastructural products and services determined by the Independent National Regulatory Bodies in a socially acceptable way not only to make utilities economically viable but also to create a competitive level playing field and to support infrastructure investments. This is making much more difficult necessary reforms that are market oriented as well as reaching the necessary EU standards.

Energy, transport and environmental infrastructure are considered to be main infrastructural sectors. Energy Community – process of the implementation of the Energy Community Treaty – is the major framework for regional energy cooperation. South East Europe Transport Observatory, expected to evolve to Transport Community, is the major framework for regional transport cooperation, while the Regional Environmental Network for Accession that has recently replaced the Regional Environmental Reconstruction Programme is the main regional environmental cooperation framework.

In spite of obvious progress in the operation of these frameworks and approximation of the region towards EU requirements, there is still a need for enormous efforts for reaching EU standards in all these areas. The mentioned frameworks strongly backed by the EU support endeavors of the countries from the region to harmonize their legislative, regulatory and institutional frameworks with EU requirements and evaluate the level of compliance.

The RCC role is complementary to the operation of the key sectoral initiatives in energy, transport and environmental areas. RCC works to fill recognized gaps alongside the active involvement of the key infrastructural initiatives. In that respect, RCC launched and supported activities of regional relevance – sustainable energy development, integrated infrastructure development planning, Climate Change Adaptation Initiative, South East European (SEE) Aviation Cooperation in terms of expanding aviation links in the region, establishing Expert Networks, strengthening inclusion of parliamentarians in addressing infrastructural issues, mobilizing ’bottom-up’ stakeholders particularly civil society and local authorities. In the forthcoming period and in accordance with the RCC Strategy and Work Programme 2011-2013, the focus will be on ’green economy’, as a tool for structural changes bringing to the region a variety of benefits, and the public-private partnerships (PPP), as the most promising innovative scheme to support development of regional infrastructure.

Serbia-energy.com: Infrastructure development is one of the key preconditions for socio-economic development, can you tell us your opinion on current regional infrastructure projects? What would be your recommendations? Does the state can handle the financing or seek other partners or use some PPP model?

MK: Well-developed Infrastructure is a key prerequisite for the overall social, economic and environmental development, reaching sustainability, peace, stability and prosperity of the region. Infrastructure investments of national and regional importance are quoted in relevant documents prepared by the previously mentioned major regional cooperation frameworks in the energy, transport and environmental areas.

Infrastructure investments are very demanding in terms of necessary financing but also the needed time for its completion. Countries mainly cannot afford financing and that is why some other available financing mechanisms should be used. The Western Balkan Investment Framework (WBIF) is an important tool to support financing of the infrastructure development. Under this framework, it is possible to provide grants for infrastructure projects preparation (technical assistance for feasibility studies or detailed design preparations) but also financing for the construction of infrastructural projects based on blending grants from the European Commission and commercial loans from international financial institutions.

RCC significantly contributed to establishing the SEE PPP network in order to support financing infrastructural projects, amongst others. There are ideas from Serbia that PPP schemes could be based on different private sector inputs including capital of insurance companies, investment funds and even private savings. In planning the infrastructure development, RCC recommendation is to include different levels (supranational, national, regional and local) and different stakeholders (governments, parliaments, business, civil society, think/thanks, universities etc.) because this approach can ensure reflection of different interests and reaching the balanced development. Moreover, RCC recommends more holistic approach – integration and concentration in planning different sectoral infrastructures (energy, transport and environment) which in the end demands strengthened cooperation between the major regional infrastructure cooperation frameworks. Such an approach can ensure numerous benefits and address the raising regional and global challenges, in particular climate change.

Serbia-energy.com: Water transport corridors were neglected for years when it comes to necessary investments and upgrading, RCC has to contribute to the preparation and implementation of the EU Strategy for the Danube Region in accordance with its Strategy. Can Serbia seek additional incentives within this project managed by EU?

MK: RCC contributes to preparation and subsequent implementation of the EU’s Strategy for the Danube Region (SDR) primarily when it comes to the mobilization of ’bottom-up’ stakeholders and ensuring adequate representation of the SEE region in the Strategy. Inland waterways have important potential to make transport more economically viable and more environmentally friendly. That is a very important dimension of the EU SDR. It is based on three NOs meaning: no new legislation, no new institutions and no new financing. Attracting financing will depend primarily on the quality of project proposals; meaning that successful project proposals should offer quick and visible results, be cost-effective, have impact on the Danube region on the widest possible scale, etc. I hope that some projects proposed by Serbian authorities will fit into these criteria.

Serbia-energy.com: What are the main RCC initiatives in transport sectors?

MK: Taking into account a huge number of road traffic accidents, level of fatalities, injured people and material damages, RCC recognized a need to focus more on road safety issues with the rationale to increase road safety in the region by promoting the integrated approach and involvement of different level stakeholders from different areas (transport, internal affairs, education, health, etc.).

RCC also initiated activities to explore potential for expanding the number of air transport links between the cities in South East Europe. So far, five RCC members from SEE expressed interest to participate in this initiative (Croatia, Bosnia and Herzegovina, Montenegro, The Former Yugoslav Republic of Macedonia and UNMIK/Kosovo).

Serbia-energy.com: The European policy 20/20/2020, how do you evaluate Serbian efforts for harmonization in this process? The use of Renewable energy sources, incentive feed-in tariffs and new Energy law that is in the procedure of public hearings?

MK: I believe that Serbia is the first country in the region to reflect EU 20/20/20 in a national document. That endeavor is appreciated by the European Commission and other countries are invited to follow this approach. Serbia is an active participant in regional energy and infrastructure cooperation, contributing to its various segments, including an initiative to prepare a regional energy strategy. It is also active in the Energy Community process, the Energy Community Renewable Energy Task Force and is following the predominantly used incentive in the region that is feed-in tariffs. The Energy Community Secretariat is the institution responsible to evaluate compliance of the new Energy Law with the Energy Community Treaty acquis. Before sending the draft law to the Parliamentary procedure it is planned to have the law positively assessed by the Energy Community Secretariat.
Serbia-energy.com: Networks are in the constant process of modernization, Serbia is starting the implementation of Smart Grids also. How do you evaluate the current status of Serbian Network when it comes to efficiency and effectiveness?

MK: The basic RCC function is to support and initiate regional cooperation and regional projects that include at least three regional countries. So, national projects and even bilateral ones are not in the very focus of the RCC. The Serbian Transmission System Operator EMS, that is responsible for the upgrade of the electricity transmission network, is very advanced in meeting Energy Community Treaty requirements. In that respect, I have no doubt that technical expertise is sufficient for the implementation of the Smart Grid concept but it could be jeopardized by the lack of necessary investments that could not be provided solely by the utility.

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