Energy Ministers of nine Southeast European Governments have committed themselves to creating a regional electricity market and to its integration into the internal electricity market of the European Union.  By signing a Memorandum of Understanding in Athens today, Albania, Bosnia-Herzegovina, Bulgaria, Greece, FYR Macedonia, Romania, Turkey and Yugoslavia have laid the groundwork for the electricity sector to catch up with the standards of the European Union by 2005.  Croatia has indicated it will sign in the near future.  Through UNMIK, Kosovo associated itself to the process as well.  Moldova indicated its determination, through a unilateral statement of intent, to abide by the provisions of the memorandum.  The Initiative is led jointly by the Stability Pact and the EU Commission. 

The South East Europe Electricity Regulatory Forum (SEEERF) is a blueprint for the establishment of a competitive regional energy market in Southeast Europe.  The signatories committed themselves to opening their national markets until 2005, following the principles of the EU Electricity Directive (96/92).  In order to achieve this, countries in SEE will:

­         Establish National Regulatory Authorities, wholly independent of the interests of the electricity industry by 2003

­         Create National Transmission System Operators no later than by June 2003

­         Unbundling by 2003: Transmission system operators will have to be fully independent in terms of legal form, organisation and decision making from any activity not related to electricity transmission.

Welcoming this important step on the way to creating an integrated power market in SEE, Special Coordinators Erhard Busek outlined the potential benefits, which will result in increased reliability in electricity supply, opening opportunities for private investment in the sector, lower operating costs and lower consumer prices, and reduced needs for additional investments, especially in the expensive generating hardware.  Busek also outlined the challenges ahead, as the liberalisation of electricity markets also requires a mental change in Southeast Europe.  « As elsewhere in Europe, national boundaries will become much less relevant in terms of electricity supply.  The smart choice is to help each other out across the region, the expensive choice of going it alone will not work, as it cannot be financed and is therefore not sound economics.  By trading electricity, gaps can be bridged while exporters and traders of electricity can earn money at the same time.  These are the typical win-win situations created by regional cooperation ».

The SEEERF initiative will not only be led by the EU Commission, represented in Athens by Commissioner Loyala de Palacio, but will equally benefit from international donor support within the Stability Pact framework.  So far, German BMZ/KfW, USAID/SECI, CIDA (Canada) and French EdF have been particularly active in the region and Austria, Hungary, Italy, Moldova and Slovenia signed the document as observers.  The co-ordination of the various actors in the energy sector will be done by the European Commission, working closely with the Special Coordinator of the Stability Pact and the Joint Office (European Commission/World Bank) in Brussels.

Annexes:

Memorandum of Understanding

Outline and Strategy Paper for Regional Electricity Market