extending eu gas guidelines to central and eastern europe - cera insight
title : extending eu gas guidelines to central and eastern europe
url : http : / / www 20 . cera . com / eprofile ? u = 35 & m = 2184
overview : a comprehensive reform of gas legislation in central and eastern
europe is bringing the region in line with the european union  , s gas
directive . this is true both for the countries expected to enter the union by
2004  ) 05  * czech republic , estonia , hungary , poland , and slovenia - - and for
candidates whose entry is not scheduled before the end of the
decade - - bulgaria , latvia , lithuania , romania , and slovakia . in cera  , s view
current developments regarding the establishment of a legal framework for the
internal gas market in eastern and central europe look promising from an
investor  , s point of view .
the candidate countries presented a review of progress made in the
implementation of the eu gas directive during a two - day workshop held by the
european commission and the world bank in paris in november .
many of these countries have been reforming their energy industries
throughout the 1990 s as part of their transition to a market economy . the
results have been mixed , particularly in the utility industries . the 1998 gas
directive ( adopted in august 2000 ) now offers a compelling incentive for eu
candidate countries to transform their gas industries , while providing a road
map to guide them .
the critical points relevant to harmonization between the european union and
candidate countries include the following :
* legal framework and regulation . the legal framework is the cornerstone of
enlargement and the yardstick of harmonization in europe . as a result , in all
candidate countries in 1999  ) 2000 energy laws were either updated or newly
established along the principles spelled out in the gas directive . regulatory
bodies have been created by law and are operating in every country , although
issues of staffing , financial autonomy , and independence from political
influence are not uniformly resolved .
* third - party access ( tpa ) and long - term take - or - pay contracts . all candidate
countries agree that tpa is a key to market competition . therefore , all have
adopted it or intend to do so in their new legislation . although the
commission favors regulated tpa , the specific approaches to tpa enforcement
in the candidate countries remain unclear in some cases . in particular , the
implementation of tpa will have to address the issue of long - term take - or - pay
contracts with russia that were signed by all major domestic gas companies
and somewhat preempt competition . russian gas is for the most part sold to
single , traditional state - owned operators that dominate their internal
markets . a balance will need to be struck between these incumbent dominant
players and the competitive environment . this is made more complicated by
their ownership of large volumes of russian gas supplied in kind in exchange
for transit rights to west european customers . article 25 of the directive
provides for !
a derogation to companies experiencing difficulties stemming from take - or - pay
obligations . this derogation would apply to the companies of candidate
countries with historical and commercial links with the russian gas industry .
furthermore , article 26 allows derogations to those member states with only
one major gas supplier , to those with an  +  + emerging gas market
status ,  ,  , or to those without a direct gas connection to the grid of another
member state . most of the candidate countries would in principle be able to
call on one or more of these grounds for derogation when they join the
european union .
* price cross - subsidies . residential gas tariffs are artificially low and are
financed partially through higher rates applied to industrial consumers . in
various countries , tariff increases and the phasing out of subsidies have
been scheduled , but such decisions remain politically sensitive to enforce .
this has recently been emphasized by high gas prices owing to the linkage of
imported gas to oil prices . all candidate countries have set legal frameworks
that include the phasing out of cross - subsidies as part of sector reform , but
the actual implementation will remain politically difficult . as table 1
indicates , price rebalancing is already under way in most countries expected
to enter the european union by mid - decade , but the legal framework itself
cannot guarantee the pace of reform . the same goes for candidate countries
that have only recently introduced eu - complying energy laws and whose entry
to the european union is likely to happen in a longer time frame .
* unbundling . most countries understand that the unbundling of transmission
companies from their supply businesses is the second critical element of
liberalization . to date , unbundling the accounts of these two businesses is
all that has been adopted by the member states or in the candidate countries .
in the future , the commission is likely to press all eu countries for legal
separation (  & structural unbundling  8 ) of the businesses , and candidate
countries will have to pursue their reform of the gas sector accordingly .
table 1 gives an overview of the state of play in candidate countries . as the
table shows , the countries belonging to the second group have only very
recently undertaken the reform of the gas sector in accordance with the
directive , whereas change had been introduced earlier in the countries
scheduled for the first wave .
* * end * *
follow above url for full report .
come shoot the rapids with us at ceraweek 2001 , " shooting the rapids :
strategies and risks for the energy future " in houston , february 12 - 16 ,
2001 ! for more information and to register , please visit
http : / / www 20 . cera . com / ceraweek /
e - mail category : insight
cera knowledge area ( s ) : european gas ,
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from cambridge energy research associates , inc . ( cera ) which is
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questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates
extending eu gas guidelines to central and eastern europe - cera
insight
title : extending eu gas guidelines to central and eastern europe
url : http : / / www 20 . cera . com / eprofile ? u = 35 & m = 2184
overview : a comprehensive reform of gas legislation in central and eastern
europe is bringing the region in line with the european union  , s gas
directive . this is true both for the countries expected to enter the union by
2004  ) 05  * czech republic , estonia , hungary , poland , and slovenia - - and for
candidates whose entry is not scheduled before the end of the
decade - - bulgaria , latvia , lithuania , romania , and slovakia . in cera  , s view
current developments regarding the establishment of a legal framework for the
internal gas market in eastern and central europe look promising from an
investor  , s point of view .
the candidate countries presented a review of progress made in the
implementation of the eu gas directive during a two - day workshop held by the
european commission and the world bank in paris in november .
many of these countries have been reforming their energy industries
throughout the 1990 s as part of their transition to a market economy . the
results have been mixed , particularly in the utility industries . the 1998 gas
directive ( adopted in august 2000 ) now offers a compelling incentive for eu
candidate countries to transform their gas industries , while providing a road
map to guide them .
the critical points relevant to harmonization between the european union and
candidate countries include the following :
* legal framework and regulation . the legal framework is the cornerstone of
enlargement and the yardstick of harmonization in europe . as a result , in all
candidate countries in 1999  ) 2000 energy laws were either updated or newly
established along the principles spelled out in the gas directive . regulatory
bodies have been created by law and are operating in every country , although
issues of staffing , financial autonomy , and independence from political
influence are not uniformly resolved .
* third - party access ( tpa ) and long - term take - or - pay contracts . all candidate
countries agree that tpa is a key to market competition . therefore , all have
adopted it or intend to do so in their new legislation . although the
commission favors regulated tpa , the specific approaches to tpa enforcement
in the candidate countries remain unclear in some cases . in particular , the
implementation of tpa will have to address the issue of long - term take - or - pay
contracts with russia that were signed by all major domestic gas companies
and somewhat preempt competition . russian gas is for the most part sold to
single , traditional state - owned operators that dominate their internal
markets . a balance will need to be struck between these incumbent dominant
players and the competitive environment . this is made more complicated by
their ownership of large volumes of russian gas supplied in kind in exchange
for transit rights to west european customers . article 25 of the directive
provides for !
a derogation to companies experiencing difficulties stemming from take - or - pay
obligations . this derogation would apply to the companies of candidate
countries with historical and commercial links with the russian gas industry .
furthermore , article 26 allows derogations to those member states with only
one major gas supplier , to those with an  +  + emerging gas market
status ,  ,  , or to those without a direct gas connection to the grid of another
member state . most of the candidate countries would in principle be able to
call on one or more of these grounds for derogation when they join the
european union .
* price cross - subsidies . residential gas tariffs are artificially low and are
financed partially through higher rates applied to industrial consumers . in
various countries , tariff increases and the phasing out of subsidies have
been scheduled , but such decisions remain politically sensitive to enforce .
this has recently been emphasized by high gas prices owing to the linkage of
imported gas to oil prices . all candidate countries have set legal frameworks
that include the phasing out of cross - subsidies as part of sector reform , but
the actual implementation will remain politically difficult . as table 1
indicates , price rebalancing is already under way in most countries expected
to enter the european union by mid - decade , but the legal framework itself
cannot guarantee the pace of reform . the same goes for candidate countries
that have only recently introduced eu - complying energy laws and whose entry
to the european union is likely to happen in a longer time frame .
* unbundling . most countries understand that the unbundling of transmission
companies from their supply businesses is the second critical element of
liberalization . to date , unbundling the accounts of these two businesses is
all that has been adopted by the member states or in the candidate countries .
in the future , the commission is likely to press all eu countries for legal
separation (  & structural unbundling  8 ) of the businesses , and candidate
countries will have to pursue their reform of the gas sector accordingly .
table 1 gives an overview of the state of play in candidate countries . as the
table shows , the countries belonging to the second group have only very
recently undertaken the reform of the gas sector in accordance with the
directive , whereas change had been introduced earlier in the countries
scheduled for the first wave .
* * end * *
follow above url for full report .
come shoot the rapids with us at ceraweek 2001 , " shooting the rapids :
strategies and risks for the energy future " in houston , february 12 - 16 ,
2001 ! for more information and to register , please visit
http : / / www 20 . cera . com / ceraweek /
e - mail category : insight
cera knowledge area ( s ) : european gas ,
to make changes to your cera . com account go to :
forgot your username and password ? go to :
http : / / www 20 . cera . com / client / forgot
this electronic message and attachments , if any , contain information
from cambridge energy research associates , inc . ( cera ) which is
confidential and may be privileged . unauthorized disclosure , copying ,
distribution or use of the contents of this message or any attachments ,
in whole or in part , is strictly prohibited .
terms of use : http : / / www 20 . cera . com / tos
questions / comments : webmaster @ cera . com
copyright 2000 . cambridge energy research associates