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Serbia - Delays in Issuance of Regulations Necessary for Implementation of the New Energy Law

As we reported back in August 2011[1], the Serbian Parliament adopted the new Energy Law in July 2011 introducing very important changes in the area of renewable energy sources (RES). Most importantly, the law now explicitly prescribes that the RSE generators are entitled to the feed-in tariff (including the mandatory take-off of electricity under fixed guaranteed prices and the priority in access to the grid). Furthermore, the new Energy Law finally addresses the main concerns of investors and financiers in the sector by introducing the possibility for generators of wind and solar energy to be granted the preliminary status of a privileged producer and the ability to conclude a preliminary PPA prior to the finalization of the construction of production facilities.

However, the benefits introduced by the new law will only be available to investors in RES once the Government has issued separate regulations for their implementation. The new regulations should also provide more detail as to the real content of the changes introduced by the law as well as the terms under which they may be utilized. The Government was required to issue such regulations by December 2011, but as of now, it has not issued necessary regulation and there is no information as to when their issuance may be expected. 

New Deals

—      20 December 2011 – European Bank for Reconstruction and Development (EBRD) approved a loan in the amount of EUR 45 million to the Electric Power Company of Serbia (EPS). The loan is intended for the reconstruction of 15 existing (total capacity of 18 MW) and development of 7 new (total capacity of 13 MW) small hydropower plants. This project should lead to a decrease in CO2 emissions of 60,000 tons per year.

—      24 November 2011 – General Director of EPS Mr. Dragomir Markoviæ and the Permanent Representative of the Japanese Agency for International Cooperation (JAIC) signed a Loan Agreement, worth RSD 26 billion (app. EUR 260 million). The loan will be used for the construction of a desulphurization system at the Thermo Power Plant “Nikola Tesla”.  The total value of the project amounts to EUR 300 million. The remaining funds necessary for realization of the project will be provided by the EPS. The project should start by the end of 2012 and should take 3 years to complete.  

—      16 November 2011 - A Consortium of bidders from Greece, Slovakia and the Russian Federation submitted a bid in the tender for a strategic investment partner in the project for the modernization and/or increase of capacity of the Combined Heat and Power Plant “Novi Sad“ and ended up being the only bidder in this tender. A decision on the proposed partnership is expected by mid-to end February 2012, after a review of the completeness of the bid. Implementation of this project – a new combined gas-steam cycle facility of 450 MW capacity of electric energy and 350 MWt capacity of thermal energy should result in economically and ecologically sustainable energy supply in the wider area of Novi Sad.

—      21 October 2011 – the General Director of EPS Mr. Dragomir Markoviæ and representatives of a consortium of Chinese companies China Environmental Energy Holdings (CEE), and Shenzhen Energy Group (SEC), signed the Protocol on the Realization of Development Projects in the Electro-energy Sector in Serbia. The first projects which should be realized within this cooperation are the construction of the third block in the Thermo Power Plant “Nikola Tesla B”, and the opening of  the coal seam Radljevo. The value of the investment in these 2 projects exceeds EUR 2 billion.
This protocol defines activities to be taken in relation to the realization of these projects, including the defining of project tasks and designs, the preparation of necessary studies, the incorporation of a joint company, the provision of financing, etc.

News

—      4 January 2012 - Minister of Infrastructure and Energy Milutin Mrkonjic announced that the revitalization of the block B2 in the power plant "Kostolac" should start by at the end of March this year. The project value of USD 344 million will be primarily financed (85%) from the loan of the Chinese Eksim Bank concluded in the end of 2010 with “Kostolac”.

—      21 November 2011 – In the presence of President of Serbia Mr. Boris Tadiæ, the chairman of the b board of Russian company “Gazprom” inaugurated the underground gas storage “Banatski Dvor”, one of the largest underground gas storage facilities in South-eastern Europe. Its working gas volume makes up 450 million cubic meters, maximum deliverability – 5 million cubic meters per day, with the potential for further expansion.

—      5 October 2011 – The police arrested former General Director of the mining basin “Kolubara” Dragan Tomiæ and 16 other persons because of irregularities in relation to the lease of machinery for mining in Kolubara. According to the official information from the police, the arrested persons made EUR 12 - 14 million as a result of these irregularities. However, certain media report that the amount of illegal profit in fact significantly exceeds the official estimations and could stand at an unbelievable EUR 80 million. 

Montenegro - Feed-in Tariff finally adopted

With significant delay, the Government of Montenegro finally adopted the Decree on the Tariff System for the Establishment of Preferential Prices of Electricity from Renewable Sources of Energy and Efficient Co-generations (Feed-in Tariff) on 29 September 2011. Before the issuance of the Feed-in Tariff, preferential prices for electricity from renewable energy sources (RSE) were available only to wind power plants and hydro power plants in line with regulations issued on the basis of the old 2003 Energy Law, which were in some instances at odds with the new 2010 Energy Law.

The Feed-in Tariff prescribes closer terms and conditions for the utilization of preferential prices and the amount of preferential prices available for specific types of facilities.

 

Terms for the Utilization of Preferential Prices

Primarily, in order to be entitled to preferential prices RSE generators and efficient co-generations (CHP) have to be granted the status of privileged producers in line with the 2010 Energy Law and appropriate regulations[2]. In addition, there is certain vague criteria which may provide room for discretion in deciding whether the feed-in tariff may be granted:

-         CHPs may be entitled to preferential prices if the capacity of the CHP is compliant with the program of development and use of CHPs.

-         RSE generators might be entitled to preferential prices if they contribute to the fulfilment of the national RSE utilization target in line with programs for the use and development of RSE.

It remains to be seen how these additional conditions will be interpreted and implemented in practice.

 

Preferential Prices

The Feed-in Tariff establishes preferential prices in nominal amounts, as follows:

-         For small hydropower plants the amount of the preferential price depends on the quantities of electricity and ranges from 0.05 EUR/kWh for more than 15 GWh, to 0.1 EUR/kWh for less than 3GWh;

-         For other types of RSE the amounts depend on the type of facility, and range from 0.09 EUR/kWh for plants on biogas from waste, to 0.15 EUR/kWh for solar power plants (installed in buildings) and biogas plants;

-        For CHPs the amounts depend on the installed capacity of the facility, and range from 0.08 EU/kWh for capacities of between 5 and 10 MW to 0.1 EUR/kWh for capacities of up to 1 MW.

Under certain terms, the reconstructed facilities might be also entitled to preferential prices.

The rights and obligations of generators and the Market Operator should be stipulated by the power purchase agreement (PPA). The Market Operator pays the preferential prices to the generator once a month in line with the PPA. The Generator is then required to transfer guaranties of origin for electricity sold under the PPA to the Market Operators.

Decree on the Tariff System for the Establishment of Preferential Prices of Electricity from Renewable Sources of Energy and Efficient Co-generations is published in the “Official Gazette of Montenegro” no. 2/11 from 4 November 2011 and came into force on 12 November 2011. By coming into force of the decree, the 2010 Rulebook on the Methodology for the Calculation of Prices of Electricity from Wind Power Plants and the 2007 Manual for the Calculation of Prices of Electricity from Hydro Power Plants ceased to be effective.

 

News

—      1 January 2012 – Montenegro are currently presiding over the Ministerial Council of the Energy Community from 1 January – 30 June 2012.

 

—      30 September 2011 – The tender for the construction of Hydro Power Plants on the Moraca River failed. Neither of the two qualified bidders – Italian “Enel” nor the Consortium of “A2A” and Montenegrin Electric Power Company have submitted a bid for the construction of Moraca Hydro Power Plant.

Bosnia and Herzegovina

 

New Levies – Fees for Transmission of Electricity and Services of ISO Fee now Payable by the  Generators of Electricity

The State Electricity Regulatory Commission (SERC) amended the Methodology for the Establishment of Tariffs for the Transmission, Services of Independent System Operator and Ancillary Services (Transmission Methodology) on 6 September 2011 and these changes came into force on 13 September 2011.

The amendments to the Transmission Methodology now provide that the fee for the transmission of electricity and the fee for services of the Independent System Operator (ISO) will be payable by the generators of electricity. Until these amendments were made, the fees for these services were payable only by consumers and exporters.

Changes introduced by the amendments to Transmission Methodology will be effective after the issuance of a new Decision on Fees for Transmission / Services of the ISO, which will establish the amount of the fees (in a nominal amount) in accordance with the amended methodology.

The revised text of the Transmission Methodology has been published in the Official Gazette 93/11 since 22 November 2011.


—Republic of Srpska

 

Rulebook on the Promotion of the Production of Electric Energy from Renewable Resources and in Efficient Co-generation has been enacted.

The Regulatory Commission for the Energy of the Republic of Srpska (RCERS) enacted the long awaited Rulebook on the Promotion of the Production of Electric Energy from Renewable Resources and in Efficient Co-generation (RSE Rulebook) on 25 October 2011.

 

The RSE Rulebook establishes detailed terms, criteria and procedures for the utilization of incentives aimed at the promotion of both the production and consumption of energy from renewable energy sources (RSE) and co-generation (CHP). The incentives for RSE and CHP generators in the Republic of Srpska are prescribed by the Government’s Decree on the Production and Consumption of Energy from Renewable Energy Sources (RSE Decree)[3] and include the following:

-         Mandatory take-off of  “green” electricity under guaranteed prices on the basis of the Power Purchase Agreement (PPA) concluded with RSE Operator (an independent body established by the RSE Decree in charge for implementation of the incentives)

-         Premiums for electricity sold in the market (if the eligible generator decides not to sell its electricity to the RSE Operator) or to consumption of electricity for its own consumption

-         Priority in access to the grid, and

-        Privileges in relation to connection to the grid.

Even though these incentives were introduced back in March 2011, the RSE and CHP generators could not effectively use them before the issuance of the RSE Rulebook, since the RSE Decree does not prescribe terms and procedures for their utilization.

In addition to the terms for utilization of incentives introduced by the RSE Decree, the RSE Rulebook also deals with the following:

-         Methodology for the calculation of guaranteed prices and premiums,

-         Methodology for the establishment of the amount of funds necessary for the implementation of incentives and a fee for the promotion and promotion of “green” electricity, and

-         Responsibilities regarding the administration of the system of incentives.

Terms and Procedures for the Utilization of Mandatory Take-off /Premiums for New Facilities

Mandatory take-off under guaranteed prices/premiums are primarily intended for new power plants, i.e. power plants which have commenced operations after 1 January 2012. The amount of the guaranteed prices/premiums is established by the separate decision issued by the RCERS, on the basis of the methodology established by the RCERS Rulebook.

Plants may be entitled to mandatory take-off/premiums only after construction, i.e. after they have been provided with the use permit and connected to the transmission or distribution grid.

General conditions under which incentives may be granted are related to the installed capacity of the production facilities, impact on environment (generation in environmentally friendly and efficient way) and the limitations in terms of the total quantities of “green” electricity eligible for incentives. 

The RSE Rulebook sets limitations in relation to the installed capacities of facilities with regard to eligibility for mandatory take-off/premiums:

-         Facilities eligible for mandatory take-off of electricity are new plants using RSE and CHPs which have an installed capacity of up to 10 MW. This limitation is not intended for solar power plants, which are entitled to this incentive regardless of their installed capacity. Plants based on biogas are eligible for mandatory take-off provided that their installed capacity is 1 MW or more.

 

-        Facilities eligible for premiums for electricity sold in the market are the same as those for the mandatory take-off, albeit that the limitation of 10 MW does not apply to wind power plants. Wind power plants are entitled to the premiums regardless of their installed capacity. In addition the premium is available to CHPs with installed capacity of up to 30 MW.

Furthermore, these plants would have to be supplied with the certificate issued by the RCERS, confirming that such facilities fulfil the conditions concerning the source of the energy, the environment and energy efficiency (Certificate).

Finally, these incentives are available only if the quantities of energy produced in eligible facilities fall within the limitations on the total quantities eligible for incentives prescribed by the RSE Decree. However, if only a part of planned production is within the respective limitations, a generator might be entitled to mandatory take-off of/premiums electricity only for the relevant portion of its total production.    

The procedure for awarding the right to mandatory take-off/premiums is initiated by the generator through the submission of a request to the RCERS. The request is submitted in the form prescribed by the RSE Rulebook together with documentation evidencing that the generator fulfils the requirements prescribed by the RSE Rulebook.

The right to mandatory take-off/premiums lasts for 15 years starting from the commencement of the utilization of these incentives, on the basis of the agreement concluded between the generator and the RSE Operator – a PPA,  or an agreement on the payment of premiums. These agreements will be based on a standardized template.

 

Mandatory Take-off during the Commissioning Period

The RSE Rulebook provides that new generators from RSE and CHPs connected to the distribution grid might be entitled to the mandatory take-off during the commissioning period, on the basis of the agreement concluded with the Distribution System Operator (DSO). During the commissioning period the DSO will purchase electricity under prices equal to prices of electricity payable for the covering of the distribution losses. The mandatory take-off during the commissioning period may last up to 6 months.

Detailed terms and procedures for mandatory take-off during the commissioning period should be prescribed in separate regulation of the DSO. The DSO is required to issue such a regulation by the end of April 2012.

 

Preliminary Right to Mandatory Take-off and Premiums for New Facilities

The RSE Rulebook introduces the possibility for the generators from RSE and CHPs to be granted with the preliminary right to mandatory take-off/premiums before the finalization of the construction of a power plant on the basis of a resolution issued by the RCERS. The preliminary right may be granted after the investor obtains the construction permit and can last for a maximum of 3 years (with the possibility of an extension for the additional 1 year in certain cases). In order to be granted with this preliminary right, the investor will have to provide the RCERS with a bank guarantee covering 2% of the value of the power plant. The investor will lose this guarantee if it does not obtain the Certificate within the deadline established for the  preliminary right.

The preliminary right to mandatory take-off/premiums gives to the investor the right to conclude the preliminary agreement on incentives with the RSE Operator. The preliminary agreement will be based on the standardized template.

By the introduction of the possibility for awarding a preliminary right to mandatory take-off/premiums, the Republic of Srpska has finally addressed one of the main concerns of the financiers and investors in the RSE sector.

 

Mandatory Take-off for Existing Facilities

The RSE Rulebook also provides for the granting of a right to mandatory take-off under preferential prices for existing facilities, i.e. the facilities which became operational before 1 January 2012. The amount of prices of electricity generated by the existing facilities is established by a separate decision issued by the RCERS in line with the RSE Rulebook.

Unlike the new facilities, the existing facilities are eligible for mandatory take-off of electricity provided that their installed capacity is up to 5 MW (for plants on biogas the limitation is 1 MW). In order to use this incentive, the existing facilities would also have to be supplied with a certificate.

The duration of the mandatory take-off for the existing facilities is equal to 15 years decreased for the period that the respective plant has been operational (prior to the submission of the request for the awarding of the mandatory take-off).

 

Methodology for the Calculation of Guaranteed Prices/Premiums

The amount of the guaranteed price for new facilities is calculated as a sum of the reference price for mandatory take-off and the amount assigned to the production facility depending on its type and installed capacity. Until the full liberalization of the electricity market (1 January 2015) the amount of the reference price is equal to the average of price on the brink of the power plant necessary for supply of tariff buyers. After the liberalization of market, the amount of the reference price will be equal to the average price of electricity in the tender procedure. 

The amount of the guaranteed price for existing facilities is equal to the reference price for mandatory take-off. It is the same for all types of facilities.

The amount of premiums for electricity sold in the market is equal to the difference between the amount of the guaranteed price for the mandatory take-off for new facilities and the reference price for premiums. The reference price for premiums is established on the basis of the market price of electricity on the competitive market available to generators from the Republic of Srpska.

 

Priorities in Access to the Grid

Generators utilizing the right to mandatory take-off (both new and existing facilities) have priority in access to the grid in line with the declared daily schedule of operations. Furthermore, these generators bear only 25% of their balancing costs, while the remaining amount of balancing cost is covered through the fee for promotion of “green” electricity.

Generators which are using premiums for electricity sold in the market do not have priority in access to the grid.

 

Privileges in relation to Connection to the Grid

Privileges in relation to connection to the grid vary depending on whether the facilities will be connected to the transmission or the distribution system. For facilities which should be connected to the transmission system the fee will be reduced by 50%. On the other hand, the DSO will prepare connection conditions free of charge for facilities which should be connected to the distribution grid.

Privileges in relation to connection to the grid are available to new plants using RSE with the installed capacity of up to 10 MW and CHPs with the installed capacity of up to 30 MW. This limitation is not intended for solar and wind power plants, which are entitled to this incentive regardless of their installed capacity. The plants on biogas are eligible for privileges in relation connection to the grid provided that their installed capacity is up to 1 MW. In addition, the installed capacity of individual facility has to be within total limitations set by the RSE Decree, which is confirmed by the “certificate for capacity” issued by the RSE Operator.

The privileges are awarded in the procedure for connection to the gird by the system operator on whose system the new plant will be connected - DSO or Transmission System Operator (TSO).

 

Responsibilities regarding Administrating of System of Incentives

The RSE Operator is a body primarily in charge for administrating and implementation of the system of incentives for “green” electricity.

The most important responsibility of the RSE Operator is to purchase of electricity produced from RSE and CHP under the fixed guaranteed prices and payment of premiums for electricity sold in the market. Other competences of the RSE Operator include:

-         Keeping records on total capacity/quantities of electricity using incentives, and the issuance of a “certificate for energy” and “certificates for capacity”,

-         The conclusion of agreements with suppliers for purchase of electricity which was sold to the RSE Operator in the system of mandatory take-off,

-         Collecting of fees for the promotion of RSE and CHP from suppliers and qualified buyers.

Decision on Amount of Guaranteed Prices and Premiums for Electricity produced from RSE or in CHPs issued

The RCERS issued the Decision on Amount of Guaranteed Prices and Premiums for electricity produced from RSE or in CHPs on 25 October 2011, establishing the amount of guaranteed prices under which electricity is purchased in the system of mandatory take-off of electricity and the amount of premiums for electricity sold in the market.

The amount of guaranteed prices/premiums for new facilities generating electricity from RSE depends on the type and installed capacity of the generation facility using the appropriate incentive. Exceptionally, the amount of prices for mandatory take-off of electricity from existing facilities is the same for all eligible facilities, regardless of their type and installed capacity.

The amount of guaranteed prices for new facilities generating electricity from RSE ranges from 0.1186 BAM/kWh (app. 0.06 EUR/kWh) for hydro power plants between 5 MW and 10 MW, to 0.5357 BAM/kWh (app. 0.27 EUR/kWh) for solar power plants under 50 kW.

The amount of guaranteed prices for take-off of electricity from the existing facilities using RSE is equal to the reference price for mandatory take-off and amounts to 0.0541 BAM/kWh (app. 0.027 EUR/kWh) for all existing facilities eligible for mandatory take-off.

The amount of premiums for the electricity sold in the market by the generators using RSE ranges from 0.0343 BAM/kWh (app. 0.017 EUR/kWh) for hydro power plants between 5 MW and 10 MW, to 0.4514 BAM/kWh (app. 0.25 EUR/kWh) for solar power plants under 50 kW.

The amount of guaranteed prices for CHPs ranges from 0.0541 BAM/kWh (app. 0.027 EUR/kWh) for old CHPs on lignite to 0.1505 BAM/kWh (app. EUR 0.08) for new CHPs on gas.

The amount of premiums for the electricity sold in the market by CHPS ranges from 0.0039 BAM/kWh (app. 0.002 EUR/kWh) for CHPs on lignite to 0.0662 BAM/kWh (app. 0.033 EUR/kWh) for CHPs on gas.

 

Decision on Amount of Fee for Promotion of Electricity from RSE and CHPs issued

The RCERS issued the Decision on the Amount of Fees for the Promotion of Electricity from RSE and CHPs on 25 October 2011.

The guaranteed prices granted to eligible generators and other incentives for electricity from RSE and CHPs will be financed from the fee for the promotion of electricity from RSE and CHP (RSE Fee). The RSE Fee will be paid by all final consumers in the Republic of Srpska.

The RSE Fee for the year 2012 is by this decision and amounts to 0.0018 BAM/kWh (app. 0.0009 EUR/kWh). The amount for the following years will be established by the RCERS by 15 December of the current year for the following year.

The RSE Rulebook, the Decision on the Amount of Guaranteed Prices and Premiums for Electricity Produced from RSE or in CHPs and the Decision on Amount of Fee for Promotion of Electricity from RSE and CHPs are published in the “Official Gazette of the Republic of Srpska”, no. 128/11 from 22 December 2011, and they came into force on 30 December 2011. They became applicable on 1 January 2012.

 

Rulebook on Qualified Buyers Enacted

The RCERS adopted the Rulebook on Qualified Buyers on 22 December 2011. The Rulebook on Qualified Buyers prescribes the time frame for the full liberalization of the energy market, the supply of qualified buyers, the responsibilities of spare supplier, the procedure for a change of supplier of qualified buyers and the methodology for the establishment of prices for qualified buyers supplied in the system of public service. The Rulebook on Qualified Buyers replaced the 2006 Rulebook on the Status of Qualified Buyers (2006 Rulebook).

Rules for Supply until and after the Full Liberalization

The time frame for full liberalization remained the same as under the 2006 Rulebook - starting from 1 January 2015 all households will acquire this status. All other consumers except households have the status of a qualified buyer since 1 January 2008.

The 2006 Rulebook provided for possibility that the qualified buyers are supplied under same terms as tariff buyers until 1 January 2012. The Rulebook on Qualified Producer extended this deadline to 1 July 2012. Qualified buyers who do not choose their supplier until 1 July 2012 will be entitled to supply in the system of public service by the public (spare) supplier until 1 January 2015, under prices established by the Rulebook on Qualified Buyers.  Exceptionally, small consumers (until 1 January 2015 small consumers are all industry and commercial consumers connected to distribution grid voltage of less than 1kV) will be entitled to supply under same terms as tariff buyers until 1 January 2015. 

Starting from 1 January 2015, all consumers except households and small consumers (starting from 1 January 2015 small consumers are industry and commercial consumers connected to a distribution grid voltage of less than 1kV with less than 50 employees and an income of less than EUR 10 million) will be required to purchase electricity under market terms. Households and small consumers will be entitled to purchase electricity from public (spare) supplier in the system if universal service – purchase of electricity of standard quality under economically reasonable prices.

 

Public (Spare) Supplier

Until full liberalization, i.e. until 1 January 2015 public (spare) suppliers will be suppliers of tariff buyers. Each of them will supply buyers on the territory established under the license for the supply of tariff buyers. In the period prior to the complete opening of the market, public (spare) suppliers will supply electricity to qualified buyers who have not yet chosen or who have lost their supplier.

Public (spare) suppliers are required to establish prices for the supply of qualified buyers in the system of public service in the period 1 July 2012 – 1 January 2015 and submit them the RCERS until 29 February 2012 for approval.

 

Rights and Obligations of Qualified Buyers and their Suppliers

A qualified buyer is entitled to freely choose its suppliers and to agree on the quantities and prices of electricity supplied by such a supplier. A qualified buyer may change its supplier free of charge in line with rules prescribed by the Rulebook on Qualified Buyers. In order to be able to purchase electricity form supplier of its own choice, the qualified buyer is entitled to connection and access to the grid.

A crucial obligation of suppliers of qualified buyers, including the public (spare) suppliers is to take all of the necessary measures to ensure a safe and quality supply. Other responsibilities include the providing of various notifications and information to other participants in the sector.

In the case of a change in the prices of supply, a supplier is required to inform the buyer about anticipated changes, to leave 10 days for buyers to decide about these changes and to continue to supply the buyer under same terms in the month following the change of prices. On the other hand, buyers will be required to inform the suppliers whether or not they want to be supplied under new prices within 10 days following the notification. Otherwise, it will be deemed that they have accepted supply under new prices.

 

Change of Supplier

Changing of supplier is free of charge. Generally, the procedure for changing of supplier introduced by the Rulebook on Qualified Buyers include the submission of requests/notifications to current and the new supplier by the qualified buyer, the preparation and conclusion of the supply agreement with the new supplier, termination of the old supply agreement, and the notification of the change of supplier to the appropriate grid operator. The buyer is required to settle its obligations towards the current supplier before the change of supplier.

The Rulebook on Qualified Buyer is published in the Official Gazette of the Republic of Srpska no. 131/11 from 27 December 2011 and came into force on 4 January 2012. By coming into force of this rulebook the old 2006 Rulebook on Acquiring of Status of Qualified Buyer ceased to be effective.

 

—Federation of Bosnia and Herzegovina

 

Amendments to the Rulebook on Acquiring of Status of Qualified Producers

On 14 December, 2011, the Regulatory Commission for Electricity of Federation of Bosnia and Herzegovina (FERC) issued the amendments to the Rulebook on the Acquisition of the Status of the Qualified Buyer.

At the moment, all consumers of electricity except households have the status of qualified buyers.

The only essential change introduced by these amendments is extension of period during which qualified buyers will have right to be supplied under same terms as tariff buyers: from 1 January 2012 to 31 May 2012.

The amendments to the Rulebook on Acquisition of Status of a Qualified Buyer are published in the “Official Gazette of the Federation of Bosnia and Herzegovina”, no. 87/11 from 23 December, 2011, and came into force on 31 December, 2011.

 

New Deals

—      8 December 2011 – The Government of the Republika Srpska granted a 30-year concession to “Bijeljina gas” for the design, construction, operation and maintenance of a distributive gas system with a connection to the gas pipeline in Gornji Šepak. The purpose of this concession is to ensure the safe supply of consumers in Bijeljina with natural gas. The estimated value of this investment is BAM 45 million (app. EUR 22.5 million).

 

—      1 December 2011 - The Government of the Republika Srpska established public interest for granting of the concessions for the construction of the SHPP “Podgaj“ and SHPP ”Ušæe” on the Rakitnica River, Rogatica Municipality. SHPP ”Podgaj“ should have the installed capacity of 0.46 MW and annual generation of 2,201 GWh. The SHPP ”Ušæe” should have the installed capacity of 0.47 MW and should generate 2,285 GWh of electricity annually. The concessionaire will be chosen in the public tender procedure. The date of publication of invitation for participation in tender is not known yet. 

 

—      14 November 2011 – The Ministry of Industry, Energy and Mining of the Republika Srpska signed two concession agreements for the detailed geological research of coal at the deposits “Deliæi i Peljave-Tobut” (municipalities of Ugljevik and Lopare) and “Baljak” (municipality of Ugljevik) with the “Comsar Energy Republika Srpska” company. Each of the concessions is granted for the period of 2 years and 6 months. This project envisages the investments in the total amount of BAM 12,700,000 (app. EUR 6,350,000) and is the prerequisite for the continuation of the project of construction of thermal power block Ugljevik 3 of the installed capacity up to 400 MW. If investors decide to develop thermal block Ugljevik 3, the total investment should amount to EUR 400 million.

 

—      3 November 2011 – The Government of the Federation of Bosnia and Herzegovina and Shell Exploration Company B.V. from Netherlands signed the Memorandum of Understanding for geological research of oil and gas in the Federation of Bosnia and Herzegovina.  The first research dwells in the Federation of Bosnia and Herzegovina are expected in 2013, provided that Shell Exploration Company B.V. determines the existence (and the quantity) of oil and gas reserves.

 

—      23 September 2011 – The Government of the Republika Srpska accepted to conclude loan agreement with the Credit Institute for Reconstruction “Frankfurt on Main” for financing of major part of HPP Cijevna III Project on the Bosnia River (Cijevna III Project). The amount of loan available under this agreement is EUR 50 million with a 15 years repayment period. The final beneficiary of the funds is “Elektro Doboj” (subsidiary of the state-owned Electric Power Company). Remaining funds for implementation of the Cijevna III Project in amount of EUR 610,000 will be provided by Elektro Doboj from its own resources. The Cijevna III Project will be implemented by Elektro Doboj, Mješoviti holding “Elektroprivreda Republike Srpske” Trebinje, the Ministry of Industry, Energy and Mining and the Ministry of Finance. The finalization of this project is planned for 30 December 2015. 

 

—      13 September 2011 – The Government of the Federation of Bosnia and Herzegovina granted a concession for the construction of HPP “Vranduk” (on the Bosnia River) to the state-owned “JP Elektroprivreda Bosne i Hercegovine d.d. Sarajevo”. The total installed capacity of the HPP should be 19.63 MW. The estimated value of this investment is some BAM 130 million (app. EUR 65 million). The Concession Agreement should have been concluded by 21 November 2011, but there is no information as to whether the concession agreement has been concluded yet.

 

News

—      2 December 2011 – The Government of the Republika Srpska established the working group for implementation of the project gas pipeline South Stream (“Juzni tok”) through the Republika Srpska. The goal of the working group is to analyze previous activities in the process of gasification of the Republika Srpska and Bosnia and Herzegovina.

 

Footnotes: [1] For information about the Energy Law please see our Energy Newsletter from August 2011 [2] For information about the RSE Decree please see our Energy Newsletter from August 2011 [3] For information about the RSE Decree please see our Energy Newsletter from May 2011.