Regional Energy Market

SEECP
South East European Ministers
Energy Coordination and Policies in SEE

Introduction

1. This paper, prepared by the Albanian Presidency of the SEECP, is intended to provide a basis for improving energy coordination and cooperation in SEE. It provides measures to implement the conclusions of the SEECP Energy Ministers’ meeting of 18-19th October in Tirana.

2. The SEE countries are dependent on energy imports amounting to 40 percent of total energy consumption. Per capita primary energy consumption is about half of that in more developed European countries. However, consumption per unit output is two to three times the OECD-average, which illustrates the inefficient supply and use of energy. Furthermore, prevailing high energy intensities constitute economic and environmental liabilities.

3. While there are differences between all SEE countries, there are certain common features: Energy sector institutions are generally still state-owned entities with limited institutional capacity. Energy policies, legislation and standards need to be further developed and be brought closer to Western norms and practices. Energy trade is hampered by poor infrastructure, the disruption of traditional transport interconnections and lack of standards and agreements for a regional energy market. While improvements can be observed in certain areas, progress has been hampered by public attitudes conditioned by the wasteful past, lacking energy sector reforms, relatively low tariffs and lack of investment resources.

   
   
   Considerations
   

4. The SEECP countries note the importance of the norms and practices of the EU in the energy sector and reaffirm the need for furthering the interconnection of the Participating Countries into the UCTE.

5. They recognize the importance of trading energy on the ground of regionally co-coordinated energy systems and services with respect to economic recovery and growth, environmental protection and regional stability;

6. They recognize that the envisaged regional electricity market (REM) depends on sharing cross-border responsibility in terms of regional approach to reforms of national regulations, energy industries and pricing policies. More generally they recognise the role of national energy policies, institutional reforms and energy planning among the participating Countries as preconditions for the optimal use of resources;

   
   
   Enhanced cooperation
   

7. There are already a number of initiatives and processes active with energy coordination in SEE (including SECI, REM and SEETEC). However, there are two major shortcomings; first, they are restricted to restructuring and organizing the electricity subsector in general while the energy sector as a whole, including primary energy sources (coal, oil, gas, renewables) as well as energy conservation, requires broader innovation while being interlinked with policy reforms in other sectors of the economy. Secondly, the countries in SEE have not really assumed ownership in these processes. Therefore the SEECP countries have decided to launch an energy initiative which should build on the work which has been done in other fora.

8. The SEECP countries have decided to enhance their cooperation in the field of energy with the goal of

   • Identifying common objectives and establish mechanisms for regional co-ordination;
   • Ensuring better regional co-ordination of energy development by producing jointly strategic standards seeking an optimised utilisation of local resources in a sustainable environment.
   • Ensuring better coordination of energy infrastructure development
   • Sharing experience and facilitate reforms of national policies, institutions and structures with a view to an increased harmonization of legal institutional frameworks. Coordinate the need for technical assistance to be provided by the International Community.
   • Exchanging information on steps undertaken to motivate private local and foreign investment in the energy sector;
   • Identifying issues inhibiting the development of the Regional Electricity Market (REM) and propose measures for their eradication. Optimize utilisation of existing resources.
   • Taking better profit of existing initiatives undertaken by the International Community, including the SECI, the REM and the SEETEC on electricity.
   
   
   The SEE Energy Cooperation process
   
9. To that end the SEECP countries establish hereby the South East Europe Energy Cooperation Process (ECP). This process will be based on annual meetings on the ministerial level and will rely on the South East Europe Energy Cooperation Committee (ECC).

10. The ECC will be composed of high officials of each SEECP country appointed by their governments. The Committee will open its meetings and working sessions, as necessary, to observers, to be commonly agreed by the members of the committee.

11. The main task of the ECC will be to prepare any measures deemed appropriate to reach the objectives stated in para 8.

12. The SEECP welcomes the offer of Germany, stated at the Regional Conference at Bucharest, October 25th/26th, 2001, to support the energy coordination in the framework of the Stability Pact.

13. The ECP counts on the Stability Pact, Working Table II, to help reaching all the goals mentioned above.
    
    Next actions
    
14. SEECP Ministers resonsible for energy will be asked to appoint, by 15 January 2002, high officials as permanent members of the ECC. The ECC should have its first meeting at the end of January 2002 to prepare a letter of Intent aiming at concluding a MoU on Energy Coordination in SEE by Summer 2002.

15. At the SEECP Summit Meeting in February 2002 in Tirana the Ministers responsible for energy will be asked to endorse this procedure and the letter of Intent as prepared by the ECC.

16. The ECP will undertake, under the auspices of the Stability Pact and supported by Germany, the preparation of a regional energy concept.

17. The SEECP calls upon the international community to provide technical and financial assistance to facilitate the process as described above.