Monday, August 6, 2012

Unbundling provisions bring uncertainty in Slovak legislation


During negotiations on EU Third Energy Package Slovakia opposed the proposal to completely break up assets to produce and transmit power/gas (ownership unbundling, OU) of vertically-integrated energy companies or partially  ceding control to an independent system operator (ISO) which were tabled by the European Commission in September 2007. Slovak Republic sided with Germany and France and supported their third way proposal - independent transmission operator (ITO).

As a result three equal unbundling models were included in the final compromise text of the EU directives 2009/72/EC and 2009/73/EC.

Only the United Kingdom and Lithuania decided to apply full ownership unbundling. The latter mainly as a way how to extract the infrastructure from Gazprom ownership, which actually led the Russian giant to file an arbitration suit against Lithuania at UNCITRAL. 

More or less the situation in Slovak electricity sector resembles OU provisions, since SEPS acts as the only transmission system operator (TSO) with 100 % state participation. However, the situation in gas sector is different – Eustream as a gas TSO is a 100 % subsidiary of SPP. 

Former governments of Robert Fico (2006 - 2010) and Iveta Radicova (2010 – 2012) supported ITO model as the most suitable for Slovakia. 

However, after years of agreement SPP was caught off guard by paragraph 50 of new Act on Energy which stipulates OU as the default model and the other two options follow as secondary. 

„I have never heard arguments in favor of ownership unbundling,“ said the Chairman of the Board of Directors of SPP Hans-Gilbert Meyer in recent interview for energia.sk. „The sudden change towards OU is surprising and from our point of view hard to understand.“

According to proposal of the Act the government could decide until October 1 whether it would use OU or not. The final wording which was approved on August 31 prolonged this reconsideration period until December 1. 
Already at the beginning of July, after the first reading in Parliament, SPP informed media it initiated preparation work for potential sale of Eustream. SPP also warned that is was impossible to sell such a big and important company in such a short period of time in transparent way.

Meyer pointed out that the sale would not only weaken the current position of SPP as a player in Central and Eastern Europe but also the position of Slovakia as an important transit corridor for gas in Europe. He also explained that without Eustream it would be difficult for SPP to fulfill some obligations arising from its position as supplier of last resort.

An open question that remains is that  Eustream might be sold to full state ownership - similarly to SEPS position. This process might take place simultaneously with the sale of 49 % of Slovak Gas Holding shares (owned by E.ON Ruhrgas & GDF Suez) which is currently being negotiated. 

Full version of the interview with H.-G. Meyer in English will be published shortly. 

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