Regional cooperation in energy sector – an economic necessity

At the begging of the second decade of the 21^st century the world is struggling to find and utilize all energy resources available. Joining energy resources and facilities for economic, environmental and other practical reasons became a common goal to many nations around the globe.

The same principles apply to countries of South East Europe (SEE) that through regional cooperation try to achieve their individual as well as common goals: secure energy supplies, production sustainability, environmentally safe and affordable energy, etc. 

The Energy Community established by the Treaty Establishing the Energy Community signed in October 2005 by the European Union (EU) and Contacting parties ( Albania, Bosnia and Herzegovina, Bulgaria, Croatia, The Former Yugoslav Republic of Macedonia, Montenegro, Romania Serbia, UNMIK/Kosovo and Moldova as of this year) is a major regional framework that operates in this filed.

The core mission of the Energy Community is to extend the EU internal energy market to SEE on the basis of legally binding framework. In economic terms, the Energy Community is to provide a stable environment for investments based on the rule of law and to draw its Contracting Parties closer to the EU.

“The Energy Community with its all-encompassing nature adequately covers major needs and priorities in the energy sector. It is one of the most important success stories of regional cooperation and a model for replication to some other areas”, says Miroslav Kukobat, Head of the Infrastructure and Energy Unit of the Regional Cooperation Council (RCC) Secretariat.

By signing the Treaty, the Contracting parties have committed themselves to implementing the relevant acquis communautaire, to develop adequate regulatory framework and to liberalise their energy markets thus expressing willingness to open to prospects of regional cooperation.

According to Slavtcho Neykov, Director of the Energy Community Secretariat, regionalism i.e. regional energy approach prevailed. “Energy nationalism is something that has been left behind”, says Neykov. 

He stresses positive changes in the SEE countries towards competition oriented market due to “better understanding among all Contracting parties that investments in small energy markets such as the SEE one can only be successful if the regional perception is taken onboard”.  

“Substantial benefits of keeping regional approach will be even multiplied through integration of different infrastructure sectors and enhanced cooperation between key sectoral initiatives primarily in the areas of energy, transport and environment”, adds Kukobat.

The Energy Community Secretariat has witnessed enormous changes in the process of adjusting national legislations to meet EU requirements and realizing a need to develop institutions that will be in charge of implementing these changes.

However, Neykov highlights that “the major achievement of the Energy Community is recognition of energy policy and clear understanding that targeting the issue of energy policy should not contradict the market developments in the energy sector.” 

The Former Yugoslav Republic of Macedonia has held the Energy Community Presidency-in-Office since January 2010 for the period of one year, with a special emphasis put on:  

• Development of regional market as concrete means of promoting the security of supply;  
• Support to development of the Coordinated Auction Office (CAO) and promotion of  the Gas Ring concept, the review of the investment process in the region along the Energy Community Ministerial Council’s decisions in this field;
• Oil dimension of the Energy Community, focusing on preparations for potential inclusion of the Oil Stocks related acquis in the implementation process.

According to Fatmir Besimi, Minister of Economy of The Former Yugoslav Republic of Macedonia, there are also other ways to improve regional cooperation in the energy field.

“In energy, good regional cooperation means, above all, construction of more interconnections in different fields (electricity, natural gas, oil), which will create conditions for easier exchange of energy as well as possibilities for diversification of energy supply.”

Besides evident lack of administrative capacity in terms of number of experts involved in the process, Neykov highlights poor energy efficiency as another common problem for the region.

“Energy efficiency in SEE is several times lower than the average in the EU. In practical terms, this means that production and particularly consumption of energy is very inefficient which negatively affects security of energy supplies.” 

Minister Besimi stresses that his Government has put special emphasis on the promotion of renewable energy sources and energy efficiency, which are also subject of intensive work within the Energy Community.

“Nowadays, in line with EU developments, we are analysing the possibilities for implementation of new EU Directives on renewable energy, which are the first elements of the EU acquis that make a concrete reference to the Energy Community”, adds Neykov.

Both Neykov and Besimi agree that regional cooperation in energy and infrastructure is pre-condition for overall economic, social and environmentally sustainable development, stability and prosperity for each country and for the region as whole.

“Respecting the specifics of each country of the region, a common challenge that all of us should focus on is active response to the impulse of joint cooperation on specific projects, with the aim of accelerated integration of the region in the European family”, says Besimi.

“The RCC sees its own role as complementary to bringing an integrated ‘holistic’ regional perspective into various sectoral initiatives and filling specific gaps in close coordination with the existing structures”, concludes RCC’s Kukobat.

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