January 5, 2015

Serbian Minister Presents New Energy Law Draft to Assembly

BELGRADE -- Serbia's new energy law will "throw the door open wide to investors to put money in the energy sector in Serbia," Aleksandar Antic said in the parliament Friday.

The new law will significantly improve the investment climate in the energy sector, and it will also help create new jobs, which is a priority for the government, the minister of energy and mining said while presenting a draft.

"There are a lot of investors from the EU, the U.S. and Russia interested in investing in Serbia’s energy sector," Antic said, adding that Serbia would soon begin construction of a new power plant in Kostolac and that there were plans to invest in the Stavalj thermal power plant and mine, with the possibility of large investments in renewable energies thanks to state incentives, all with the aim of reaching the 2020 target of 27 percent of electricity from renewable energy sources. 

Starting from January 1, 2015, under the new energy law, Serbia will be fully implementing all measures of the European Union’s Third Energy Package relevant to the sectors of gas, electric power and renewable energy sources, which will make Serbia the first country in the region to implement all these provisions, Antic said. 

The new law will ensure security and efficiency of supply of energy products to consumers, improve the investment climate, improve operation in the gas and electricity markets, and ensure the participation of foreign entities in the electrical energy market and implementation of European legislation in this area, the minister said. 

Antic stressed that the government and the Energy Ministry led a responsible social policy in that area, pointing out that in the coming year, RSD 700 million dinars would be set aside for those who could not pay for electricity, and they would get 120-240 kilowatt hours of electricity per month and certain quantities of gas for free.

"In line"
The energy bill the parliament will discuss on Friday should bring Serbia's regulations in that field in line with EU legislation, Tanjug reported. 

The new bill is proposed in order to harmonize Serbian legislation with that of the EU in a comprehensive and efficient way and solve problems noticed in practice, according to the argumentation for the bill. 

The bill includes all the measures from the Third Energy Package of the EU related to the gas and power supply sectors, while renewable energy sources are only indirectly covered, because of the changes in the way the power supply sector works, Aleksandar Antic said earlier. 

The bill brings more accurate and better organized administrative procedures while also removing the faults related to how energy licenses are issued and how the privileges power supplier status is gained, Antic underscored. 

The bill is expected to help increase the number of power and gas suppliers on the market, which will raise competition and make the market, which opens on January 1, 2015, operate more successfully, according to the argumentation. 

This creates the possibility of having new suppliers appear on the market, increasing competitiveness and allowing consumers to choose suppliers freely, based on the conditions they offer. 

According to the Energy Agency, there are currently over 80 licensed power suppliers and 33 natural gas suppliers. 

The bill allows foreign companies to obtain power supply licenses as well. 

The proposed act defines much of the administrative procedure, which creates the conditions needed for investing in energy production facilities that use renewable sources. 

The bill improves the procedures related to renewable energy production, which provides better conditions for investors, since renewable energy needs to reach a share of 27 percent in Serbia's total energy consumption by 2020. 

This document needs to be adopted urgently because Serbia has agreed to incorporate the directives from the Third Energy Package into its legislation by January 1, 2015, as well as to open its power and gas markets completely, so all consumers, including households, would be able to choose their supplier freely.

The USAID Business Enabling Project previously expressed "serious concern" over the draft law on energy, as proposed by the relevant ministry. 

The organization stated that adoption of this law would "largely undo the positive progress made by adopting amendments to the Law on Planning and Construction," which recently came into force. 

A statement issued on Wednesday further said that the number of procedures has increased, as well as the number of days required for obtaining usage licenses, while investors' legal safety would be compromised. 

The law on energy insists on the act of approval of connections to the network that the Law on Planning and Construction does not provide. 

This act would be adopted in administrative procedure, which was described by USAID as "a very retrograde solution bearing in mind it is a contractual relationship between a company (providing electricity) and investors." 

"We especially emphasize the utter inappropriateness of the deadlines: 30 days for a decision on approval of connection by the power company, and connecting within a further 15 days after fulfillment of all conditions, including that the investor submits a supply contract to the operator," the statement was quoted by the media. 

USAID added that it was "particularly harmful from the standpoint of legal certainty and irrational from the standpoint of efficiency that the investor should learn about the conditions and costs of connecting to the network only after the building permit has been issued." 

Aleksandar Antic addressed the issue on Friday saying there was "public controversy" about the compliance of the solution found in the energy law draft with the deadlines for issuing construction permits under the Law on Planning and Construction, but that "it is not possible to now abolish the obligation to issue a decision on the connection to the network." 

"We recognize the need to provide investors with all the benefits, but we were not able to simply accept the abolition of the issuing of a decision, because it guarantees a safe and high quality power supply," said the minister. He pointed out that in the period up to the full enforcement of the Law on Planning and Construction this issue would be "harmonized at the government level," but would remain in force until March 1 because otherwise, he said, nobody would be able to connect to the electrical grid. 

"This is a serious question that should not be answered that by a politician or by an interest group, but only by the profession, and it stands fully behind this solution," said Antic. He stressed that the new energy law creates the conditions to set up an electricity exchange and protect all customer categories, "but especially the energy-vulnerable customers, as the government leads a responsible policy and continues to subsidize people who are socially disadvantaged."

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