The only producer of gas in Serbia, Naftna Industrija Srbije, NIS AD, majority owned by Gaspromnjeft of Russia, produced some 19% of gas supplies in 2015. The remaining supplies come from the Russian Federation via a long-term agreement with Srbijagas, which is also a licensed transmission system operator under long-term oil-indexed contracts with Gazprom, through the vertically integrated company Yugorosgaz. Srbijagas is 100% owned by the state. Yugorosgaz is under the ownership of Gazprom (50%), Srbijagas (25%), Central ME Energy and Gas Vienna (25%). Yugorosgaz also owns Yugorosgaz Transport. Thirty-two licensed distribution system operators are active. Banatski Dvor, 51% owned by Gazprom and 49% owned by Srbijagas, is a licensed storage system operator.
State of Compliance
Serbia did not resolve the major non-compliance issue that constitutes a persistent and serious breach of its Energy Community Treaty obligations – the unbundling of Srbijagas and Yugorosgaz in line with the Second Energy Package.
Serbia continued to align its secondary legislation to the new Energy Law, albeit with a number of shortcomings, including security of supply rules, general conditions for gas delivery and all acts that should have been developed by the transmission system operator.
Serbia transposed the requirements for unbundling transmission system operator. The Certification Rules adopted by the ministry describe the procedures which a candidate transmission system operator must follow before the regulator’s certification. Three models of transmission operator system unbundling were foreseen.
The Energy Law sets the deadline for unbundling of transmission system operators as of 1 June 2016, while stipulating that a certification procedure shall be performed until 31 December 2016. Yugorosgaz Transport applied for certification but then revoked its application before AERS adopted a preliminary decision. Srbijagas continues to hold license for and performs the function of transmission system operator and supplier of natural gas in Serbia, without being unbundled in accordance with the Second Energy Package. It has neither adopted nor applied compliance programme as required by the Energy Law and Directive 2009/73/EC. Both Srbijagas and Yugorosgaz are not functionally unbundled as prescribed in Article 9 of Directive 2003/55/EC. It is unlikely that the certification procedure will be finalised in the timeframe stipulated by the Energy Law.
Third Party Access
The Energy Law requires non-discriminatory network access to transmission, distribution system and storage facilities, as well as to upstream pipelines. Detailed rules on access to the transmission network have been included in the network codes of Srbijagas and Yugorosgaz and distribution codes of distribution system operators. Banatski Dvor, the storage operator, did not adopt a storage code. The regulatory authority approves network tariffs based on its methodologies defined and published in advance. Access to storage in Serbia is regulated via a storage tariff methodology adopted by AERS. However, Banatski Dvor does not perform storage activity based on the adopted tariff methodology.
The eligibility right to freely choose a supplier is guaranteed to all customers as of 1 January 2015.
Market Opening and Price Regulation
Only two traders – NIS and Srbijagas – are active on the wholesale market. The wholesale market in Serbia is based on bilateral contracts among suppliers and between suppliers and a producer. The existing intergovernmental agreement on gas supplies signed between Serbia and Russia in 2012, with a validity period up to 2021, includes anticompetitive clauses.
The balancing regime is theoretically in line with Article 21 of the Regulation (EC) 715/2009. The code envisages a virtual point for trade. The code of Yugorosgaz Transport does not include provisions on commercial responsibility of system users nor the transmission system operator’s obligation to publish information on balancing status, and is thus not in line with the acquis. In practical terms, the balancing rules are not being applied.
Security of Supply
Serbia complies with the provisions on security of supply required by Directives 2009/73/EC and 2004/67/EC. The security of supply provisions were transposed by the Energy Law and the Decree on Conditions for Natural Gas Delivery. Serbia transposed a few essential provisions required by Regulation (EC) 994/2010 in the law.
Customer Protection and Protection of Vulnerable Customers
The Energy Law complies with customer protection provisions from the Third Energy Package. The Government’s Decree on the Protection of Vulnerable Customers defines vulnerable customers, who receive a discount on gas supply for which suppliers are compensated from the state budget.
Conclusions and Priorities
Serbia made a great leap towards transposition of the Third Energy Package into national legislation. It also made initial efforts to rectify the breach from the Second Energy Package related to lack of Srbijagas unbundling. However, this reporting year saw a complete annulment of the previous year’s work and total lack of progress on this issue. Only the secondary acts for which the regulator was responsible were updated. Progress related to construction of the interconnector between Serbia and Bulgaria was made. The highly concentrated share of Srbijagas in the market explains the company’s obstruction to unbundling and making space for new entrants.