Serbia: Gas sector liberalization level is an issue for EU, electricity market reform solid

26. September 2014. / News Serbia Energy

Serbia is making good progress in harmonization with European legislation in the field of energy, especially in electricity sector, but the gas sector is its weakest spot. Domination in the market of one state public company, supplied by only one external supplier on the basis of a long term contract, which probably violates European regulations on protection of competition, calls in question Serbia’s generally good progress in harmonization in the field of energy.

This was stated in Energy Community’s (EC) Annual Report on implementation of European regulations.

In 2013/2014 report it is indicated that Serbia, although with good legislative and regulatory framework for gas, is in retard with its implementation, what represents a serious obstacle for opening of the market and entry of competition.

Domination in the market of one state public company, supplied by only one external supplier on the basis of a long term contract, which probably violates European regulations on protection of competition, calls in question Serbia’s generally good progress in harmonization in the field of energy, is added in the Report.

‘’In other words, chapter on Gas is Achilles’ heel of Serbian energy sector. Unduly refusal to do the separation (transmission and supply) in Srbijagas demonstrates how urgent substantial reform of that sector is, Energy community thinks’’.

In the Report it is claimed that Srbijagas has also the problem of great indebtedness, and that high import price of gas, together with low level of debt collection ‘’made situation reach the critical point’’. It is estimated that Serbia will have to resolve problems in the gas sector, as soon as possible, yet this year, and in addition that The Secretariat of EC expects substantial reforms in the gas sphere in Serbia after the meeting of Ministers of Energy Community, which will be held on 23rd September 2014.

Serbia, although has opened its electricity market in line with the plan, should take necessary steps in order for market to come alive in practice, like electricity price deregulation and establishment of electricity stock exchange, it is stated in the Report.

It is also evaluated that Elektromreža Srbije (EMS), considering its regional significance, cannot stay out of regional initiatives for allocation of transmission capacities, like the Coordinated Auction Office for South East Europe (SEE CAO).

The Report also indicates the need for making of so-called inter TSO agreement between EMS and Kosovo operator KOSTT that is going to resolve technical issues, after making framework agreement in February, and which was signed in the meantime on 16th September, after the Report has been finished.

Energy community considers that Serbia must adopt the new Law on Energy until the end of this year, in order to transfer in its legislation a new set of European regulations, the Third energy package.

In the field of petroleum, Serbia is making progress in harmonization with European regulations on petroleum and petroleum products reserves, but it’s important that Serbia passes sublegal deeds in that area, and also to work on improvement of existing refineries and storage capacities, it is stated in the Report.

It is estimated that Serbia will probably not fulfill goals for 2020. in the field of renewable energy sources, and it is added that The Secretariat of EC could demand revision of National action plan for renewable energy sources, if the production from renewable energy sources doesn’t increase. Adoption of the Law on efficient energy use represents an important step forward in transferring of European legislative heritage, but it is also important for sublegal deeds to be passed, and Serbia needs to establish a sustainable system for financing of energy saving.

Serbia invested major efforts in harmonizing with regulations on environmental protection in the field of energy, but it also needs to transfer in its national legislation Guideline on sulfur and fuels, which has the purpose to decrease emission of sulfur dioxide (SO2) during fossil fuels’ combustion.

Energy Community initiated proceedings against Serbia in February 2013. for missing to harmonize with that guideline.

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