EU's Eastern Neighbours Far From Liberalised: ECMR
The Energy Community regulatory board (ECRB) has published its Market Monitoring Report on gas and electricity retail and wholesale markets in eastern Europe plus Georgia for 2014 – the first such comprehensive report covering the region.
It shows that most states in the region, including Ukraine, have some way to go before their markets can reasonably be described as liberalised but that many are overcoming major disadvantages.
The ECRB also said Bosnia-Herzegovina was close to implementing the EU's Third Energy Package.
In Ukraine, sales to final gas users were 38.9bn m3 in 2014, down 16.6% year-on-year, the report said. Georgia consumed 1.7bn m3, up 12.8%; Serbia 1.5bn m3, down 8.6%, while Bosnia and Macedonia each consumed less than 0.2bn m3 and Albania, Kosovo and Montenegro consumed none.
Households consumed just above 70% of total gas sales in Ukraine and Georgia, but only 10% in Serbia and a negligible amount in Macedonia, with no figure for Bosnia.
There were 350 active gas suppliers in Ukraine – of which 301 operating nationwide – compared with 37 in Georgia, 36 in Serbia and four each in Macedonia and Serbia. But for the first four countries, the report estimates that the incumbent supplier’s share of the household gas market is 100%.
All non-household customers were eligible to switch their suppliers in 2014 only in Georgia, Serbia and Ukraine. However, in Ukraine only 0.007% of meter-points switched (equalling 4.6% by volume). The top 3 suppliers in Ukraine had a 43.8% share of the retail market, compared with 77% in Georgia, 71% in Serbia and 36.2% in Macedonia for the top trio there.
Inclusive of VAT and taxes, among the markets surveyed, Georgia, which relies heavily on imports, had the lowest 2014 industrial gas price at €32.50/MWh-gas and Ukraine the next lowest at €33.60, with Serbia €42.10, Macedonia €49.80 and Bosnia €62.10. The EU-28 average was €44.30/MWh gas.
Average 2014 wholesale gas prices were €12.51/MWh in Ukraine, €31.09 in Moldova, €33.98 in Serbia and €48.60 in Macedonia, the report said, while the average import price to Georgia was €18/MWh. The report said that gas exchanges do not exist in the analysed markets. Shippers active in 2014 at border interconnections were one each in Bosnia and Moldova, two in Macedonia, three in Serbia, five in Georgia and 17 in Ukraine. In Georgia, half of gas demand is met by long-term contracts.
The report said:“Underdeveloped competitive market conditions – caused by lack of interconnection infrastructure and diversification of sources on one side but also by not fully developed legislative and functional preconditions on the other side” – led to higher border prices in these markets, compared with wholesale gas prices in neighbouring EU countries.
ECRB also published a report on the transparency of gas transmission system operators in Bosnia, Macedonia, Moldova, Serbia and Ukraine. The status report assesses compliance against the transparency requirements of the Third Energy Package as at March 2016.
On April 22, the ECRB said that Bosnia had taken steps to comply with the Third Energy Package; a law is expected to go before its parliament in mid-May 2016, following one more round of consultations deemed necessary to finalise the draft gas market law, the EC said.
Mark Smedley