I think for EU energy was always a very important issue and actually the treaty in the fifties was related to the coal and coal is also energy. It was actually the beginning of the EU and we clearly see Balkan countries with European perspective...
Interview by Svetlana Jovanovska
For SEETV users in Macedonia: please specify that the interview was conducted by Svetlana Jovanovska, correspondent of the daily Dnevnik Commissioner, two weeks ago the first treaty between the EU and South East European countries was signed in Athens. Could you tell us why the EC compares this treaty to the treaty established in the EU? A: I think for EU energy was always a very important issue and actually the treaty in the fifties was related to the coal and coal is also energy. It was actually the beginning of the EU and we clearly see Balkan countries with European perspective and from this point of view, the first treaties between the Balkan countries and the EU is actually expanding of the EU.
So it’s not there a comparison but we feel very much that signing of this treaty indicates clearly that Balkan countries will be part of the EU. This is what the president of the EC, Mr Barroso, said, that this is the first step towards the entry of these countries to the EU and the major factor to the stability in Europe as a whole. Could you explain exactly what this treaty represents? What it is? Why is it so important? First of all, there is a huge need for supply of energy in the Balkan countries. For a lot of reasons it had been neglected for years and people are suffering. So something should be done. In the same time investment possibilities in these countries are very limited and it could be expanded if there is a regional market related to the EU. Because then definitely for investments it is a much more secure place. And also for citizens to achieve the energy service at the best possible price. I sometimes wonder how the people can pay the prices for energy resources in the Balkans as they pay because they are sometimes much higher than in the EU.
At least in a lot of cases, like gas, I just wonder, five prices are sold. The answer is: there is no market. The actually vision is not only political, it’s an economical vision we have in mind. People should get supply of energy to solve their social issues and also for industrialization of the Balkan region for experts, for jobs, for the growth of the region. This is the objective of such a treaty. The elements that we put in place are very much alike the same as we are doing in the EU and we have established internal energy market. The main principles are acquis that allows for stability of the investments, that allows competition for the generators of energy, acquis that allow environment standards and also links between the countries. So these are the major elements of the treaty.
What are the major problems, what is the current situation in the energy field in the Balkans?
Are these countries connected to the reliable sources of energy?
I would it describe as critical and not sufficient. To make things work there is not enough generating capacity. As a result the customers are suffering. We know that there is a link between the current energy policy and mortality in winter. We clearly see that there is a link. Action should be taken now between there is need in every sector: generation, transmission, distribution, sale. All sectors need investment. For investments do we need previous reforms? Yes, but some things have been done. For pre-accession countries like Romania and Bulgaria there has been a substantial step of reforms. In the Balkan countries we would like to see that there is a clear separation between generation, distribution, transmission, sales. There will be a possibility for the market to get additional generation capacities and not discriminatory access to the networks. Plus, the biggest challenge is the environmental acquis. In this respect, there are transitional arrangements to place and countries can easily accede to it. I believe strongly that all the countries and governments of this region have a European vision. Will all these reforms bring an increase of the prices of energy? It would be problematic in the Balkans. This is why the people have always been against the treaty. Yes it will bring the prices up but nobody could answer this. Now the prices are extremely high. What we see in the world market is that energy resources are costing more and dependence on some suppliers in the Balkans are so obvious that the prices will get higher along with a lack of security of supply. I know some countries where the electricity is switched off for a while and some people have sometimes no access to energy resources. So the situation as it is now is definitely not acceptable. This is a starting point that should be changed. Second issue, will the prices get higher or not, the market will decide. Prices are influenced by a lot of factors. Not least by competition. If there is competition the prices are the lowest possible that could be. We should take into account that gas is an energy commodity that’s quite expensive. Some of these countries have their own resources and can use them and bring some equilibrium to the energy mix. There is a possibility to find an optimum price but it’s very important to have enough places for investment. Because if there is no investment, at some stage the countries could have a total black out. And then you’ll say, at whatever price I want to have energy. This is not an argument. It is important to argue about the price but in concrete conditions only competition brings the best possible price. Let’s not discuss hypothetical raise of prices but real steps that will be made and what will that mean for each country: will there be enough supply? What will be demanded? How to deal with this? This is a good question, can we reform people? I don’t believe. Change of behaviour, yes. For years people thought that energy doesn’t cost. I remember that water didn’t cost anything, then later I discovered that is costs! Energy is a commodity that costs. We should be reasonable when we use it but we should definitely not decrease our standard of living. There are things that could be managed in the same time. EU asked the Balkan countries to privatise their electricity companies. This is not true, EU never asked that. What EU says is that you should have real possibilities for somebody to come and generate electricity in the market and be able to come in the network, because network is more or less a national monopoly. The access should be guaranteed.
If I want to build a power station I should have guaranteed access to the network so that I could sell to the customers that want to buy. What type of ownership is used has never been said. All generation could be owned by ten state enterprises, or private. The network should be independent and there should be competition but we never said that the energy enterprises should be privatised. We said that monopoly situation should be avoided in the generating market because at the end of the day monopoly is putting higher prices and you are obliged to pay this price because you have no other choice.
This is what EU said: competition but the form of ownership is up to the country to decide. Macedonia: in the opinion of EC, it says that Macedonia does not meet the criteria in the energy sector. Where are the problems? First of all, energy is not a criteria for a start of negotiations. Energy is just one negotiation chapter. The environmental acquis, the security stocks should be done. A lot should be done in FYROM in the energy sector but this is not something that cannot be overcome. Tomorrow perhaps a lot will be implemented so it is obvious the EU energy acquis is not implemented at this stage but it will come and the treaty will definitely help. Albania: they have a lot of electricity shortages, how the treaty will help improve the situation? It is absurd, there is state monopoly situation, the market does not provide for investment and there is lack of generation capacity. It means that EU acquis on energy market should be implemented as soon as possible and definitely it will bring the answer. To build new power station based on natural gas or coal doesn’t take too much time. It means that if the situation is like that then something is wrong with the energy sector reform. There should be much more targeted approach to energy reform that will mobilize investments and investment will come immediately because energy is normally quite good thing. It’s necessary to pay for energy, this goes partially with the same issues that energy sector reform. Albania has potential to overcome it now there should be political will to establish a market where investments could really happen. Does it apply for Kosovo? It applies for each market that is not functioning. It means that there is no interest to invest. If it hasn’t worked so far only the market could change it. | 
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