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From Rehabilitation to Reform EC support to the energy sector European Agency for Reconstruction May 2006.

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Presentation on theme: "From Rehabilitation to Reform EC support to the energy sector European Agency for Reconstruction May 2006."— Presentation transcript:

1 From Rehabilitation to Reform EC support to the energy sector European Agency for Reconstruction May 2006

2 European Agency for Reconstruction2 Energy: EC funding of 879m

3 European Agency for Reconstruction3 Energy: three phases of support Crisis management Emergency imports Rehabilitation Power plants Coal mines Transmission and distribution Reform Creating a market based energy system Facilitating investment Developing a regional energy market for SEE

4 European Agency for Reconstruction4 Energy: starting situation for the Agency: a regional crisis 10 years of little or no investment, but heavy use Conflict damage Mines were unsafe and operators disregarded the long term consequences to keep supplies running Serbia kept cost of electricity artificially low (one fifth of economic costs) A vacuum of experience in Kosovo Output was in decline; power cuts were common

5 European Agency for Reconstruction5 Energy in Kosovo: rehabilitation Emergency electricity imports million Overhaul of Kosovo B power plant 174 million (including repairing of fire damage in 2002) Rehabilitation of coal mines74 million Rehabilitation of electricity transmission & distribution 19 million Refurbishment of district heating systems 8 million Management training to energy company KEK, Turnaround Management appointed EU funds have made a difference: Kosovo B Power Plant availability and capacity increased, life expectancy extended Managers and operators better trained Environmental impact improving Efforts underway to creating sound institutions and a sustainable future

6 European Agency for Reconstruction6 Kosovo B fire damage and repair

7 European Agency for Reconstruction7 Energy in Serbia: rehabilitation Electricity imports million Energy for Democracy: 45 million 37% of thermal power capacity overhauled 148 million Rehabilitation of transmission lines & distribution network - 25 million Coal mines – equipment and spares 24 miliion EU money makes a difference: Productivity improved at major power plants Life expectancy of major power plants extended Power cuts reduced to zero in 2004 In the coal mines, overburden removal up 70% from 2000 to 2003 Energy Law passed, prices increased close to cost recovery levels, collections improved

8 European Agency for Reconstruction8 Energy: Montenegro and FYR of Macedonia Montenegro Support for the Government in energy sector reform Support to develop energy efficiency policies and programme Assistance & training for the electricity utility EPCG Delivery of electricity distribution equipment to critical sub- stations (Podgorica, Berane, Niksic) FYR of Macedonia Repairs to the power distribution and transmission Support for the establishment of the independent Energy Regulatory Commission

9 European Agency for Reconstruction9 Energy: the regional context Energy Community in South East Europe: Treaty was signed in Athens on 25 October 2005 Treaty has major significance for the region: creates a single electricity and gas market covering whole of SEE and EU power plant investments could be cut by one - third if regional market fully operational will increase economic integration and stability

10 European Agency for Reconstruction10 Supporting reform and the regional market Agency working closely with DG TREN Strengthening regulation EAR providing assistance to independent energy regulators in Serbia, Montenegro, Kosovo, FYR of Macedonia Encouraging Unbundling EAR providing TA for establishment of separate transmission system operators in Serbia, Kosovo, and Montenegro Promoting reform EAR providing capacity building to Ministries in Serbia, Kosovo, Montenegro Revenue collection in Kosovo remains a serious problem: a project is underway to assist KEK Projects in Serbia and Kosovo to protect the environment Assistance to promoting energy efficiency in Serbia (Energy Efficiency Energy created) and in Kosovo and Montenegro

11 European Agency for Reconstruction11 Supporting reform, assisting investment Facilitate investment Close collaboration with the EBRD, the EIB, World Bank and KfW EAR funded preparatory work secures 67 million from EBRD/ KfW for Tamnava West lignite mine; and 57 million from EIB for transmission system in Serbia Mapping future needs with Least Cost Investment Plan in Serbia Support for investment in new power plant and new mine in Kosovo with studies and support for rehabilitation of urgently needed mining equipment Creating conditions for private sector investment

12 European Agency for Reconstruction12 EU and Energy: from rehabilitation to reform In summary, EU support for the energy sector in South Eastern Europe has: Stabilised the supply situation Helped to improve the financial viability of the utilities and the conditions for needed new investments Helped to mobilise substantial IFI investment funds from EBRD, EIB, and KfW Much work has been done, but more remains on reform, unbundling, regulation: all crucial for creating conditions for private investment in this capital intensive sector Supported the Regional Energy Market

13 European Agency for Reconstruction13 From rehabilitation to reform: a teamwork effort

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