Reorganization of State Gas Utility a Problem Between Serbia and the EU
The restructuring of Srbijagas, the state-controlled Serbian company that holds a dominant position on the national gas market, has brought country’s European integration into question.
The Energy Community has asked Serbia to submit a new Srbijagas restructuring plan by March 12, as the current one is not in line with EU regulations according to the deputy director of the organization’s Secretariat, Dirk Buschle, on January 21.
Belgrade has in the past received warnings over Srbijagas, a company whose debt is estimated at several hundred million euros. “The unbundling of public enterprise Srbijagas is an official condition of the European Commission for Serbia’s further association with the EU,” Energy Community Secretariat Director Janez Kopac said on September 30. The Energy Community has also launched misdemeanor proceedings against Serbia because Srbijagas has not been unbundled into a transmission system operator and a gas supplier.
The Energy Community annual report unveiled in September 2014 also states that the gas sector is the sore spot of the Serbian energy sector. In the report, Serbia is asked to pass a new energy law that will enable the implementation of the Third Energy Package. Responding to that demand, Serbian MPs in late 2014 adopted a new Energy Law which liberalizes the national market. A plan for reorganizing Srbijagas was also passed. However, those changes failed to satisfy Brussels.
“Unfortunately, the Srbijagas reorganization plan at this stage is not enough to eliminate the violation of Energy Community regulations,” said Buschle.
The Serbian government has accepted a plan according to which Srbijagas will turn into a holding with two units – for transmission and for gas supply, but in January the Secretariat of the Energy Community, within which the candidate countries prepare for EU membership in the field of energy, asked Belgrade to carry out the legal and functional unbundling of the gas transmission system operator. Otherwise, Serbia is also facing certain sanctions by the EU.
“The inconsistencies must be removed by July 1, 2015. If that does not happen, the Secretariat is to initiate a procedure wherein it could be determined that Serbia is seriously and continuously violating the obligations from the Energy Community Treaty. The further continuation of inconsistencies could lead to the imposing of sanctions,” said Buschle.
Serbia attempted to link the unbundling in Srbijagas with the construction of a new gas supply route, because its only route now is via Ukraine and Hungary. Brussels showed no understanding for the fact that Serbia’s plans to make that new route, South Stream – the pipeline that would have brought Russian gas to Serbia via the Black Sea and Bulgaria, had fallen through.
Serbian Minister of Energy Aleksandar Antic said that Serbia would accept all suggestions from the Energy Community over the restructuring of Srbijagas. He added that the Ministry was ready to inform the Energy Community and the European Commission about all activities, and to ask them, if necessary, for expert assistance in resolving open issues in the process of unbundling Srbijagas.
”After the end of the first phase, in accordance with the starting points (of the Second Energy Package), we carry on with the restructuring of Srbijagas in compliance with the Third Energy Package, where we still expect help and active cooperation with both the Energy Community Secretariat and the European Commission,” Antic pointed out.
The Second EU Energy Package envisages the legal and functional unbundling of the transmission and supply operations, while the Third Energy Package also includes ownership unbundling. The separation of energy production and supply from transmission is envisaged so as to prevent transmission operators from favoring the energy they produce and their supply companies.
Fellow of the Belgrade Economics Institute Mahmud Busatlija has said he does not expect that Serbia will suffer EU sanctions over the delay in restructuring Srbijagas, and that reorganization takes time. “First of all, financial consolidation needs to be carried out, without which the company cannot be restructured. And time is running out,” said Busatlija.