September 28 (SeeNews) - Serbia has failed to meet its obligations under the Energy Community Treaty, which require the country to unbundle its gas companies, and may face the suspension of certain rights following the Ministerial Council in October, the Energy Community has said.
"Both Srbijagas and Yugorosgaz are not yet unbundled within the meaning of Article 9 of Directive 2003/55/EC. Compliance programmes as required by the gas directive have not been adopted and applied by either of the two companies", the Vienna-based Energy Community said in its 2016 annual implementation report published on Tuesday.
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The Energy Law sets the deadline for unbundling of transmission system operators as of 1 June 2016, and stipulates that a certification procedure shall be performed until 31 December 2016.
Yugorosgaz Transport (controlled by a third country) applied for certification under Article 11 of Directive 2009/73/ EC but then revoked its application before Serbia's energy agency, AERS, adopted a preliminary decision, the Energy Community explained. Srbijagas, however, continues to hold licenses for and performs the function of transmission system operator and supplier of natural gas in Serbia, without being unbundled even in line with the EU's Second Energy Package.
"The highly concentrated share of Srbijagas in the wholesale and retail markets explains the company’s obstruction to unbundling and making space for new entrants," the Energy Community noted. It added that it is up to the Serbian authorities to fully apply their own laws and stick to international commitments, thus enabling the creation of an integrated gas market to the benefit of Serbian customers.
The community's Secretariat has submitted a request to the Ministerial Council for a decision on the issue under Article 92 of the Treaty to be adopted in October 2016. If Serbia is found at fault it could face suspension of voting rights and exclusion from meetings or mechanisms provided for in the Energy Community Treaty.
The Energy Community also noted that Serbia is yet to complete the unbundling of its power utility Elektroprivreda Srbije (EPS) which should have been transformed into a joint-stock company by 1 July 2016.
"Ownership unbundling requires further measures, including amendments of the laws on government, ministries and public enterprises. The new law governing the control over public enterprises, promulgated in February 2016, fails to ensure unbundling in a compliant manner", it said.
Overall, Serbia was, in previous years, a frontrunner in reforming its energy sector in the Energy Community, however now it is lagging behind due to the unbundling issue and the country's failure to rectify its long-term breaches of Energy Community law.
The only producer of gas in Serbia, Naftna Industrija Srbije, NIS AD, majority owned by Russia's Gazprom Neft, produced some 19% of gas supplies in 2015.
The remaining supplies come from the Russia under 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%), which is in turn 100% owned by Centrex Europe Energy & Gas AG, Vienna.
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