WHY A NEW TREATY?

1. TREATY ESTABLISHING THE ENERGY COMMUNITY- A WAY FORWARDSlavtcho NeykovENERGY COMMUNITY SECRETARIATVienna/AUSTRIA

2. WHY A NEW TREATY? • ENERGY - QUICK CHANGES IN THE RECENT YEARS – world wide, in the European Union, in South and Eastern Europe • THE ENERGY POLICY IN EUROPE - generally - approach towards common principles (security of supply, competition, environment); BUT big EU vs. SEE differences; - currently in SEE – mostly bilateral relations; - the basis aimed – the relations with the EU as a backbone; - a necessity for a common framework.

3. WHY THE TREATY IS A NEW ONE - 1 • Signed recently; entry into force – 01.07. 2006. The Treaty is new as it is based on a new approach. • It does not establish principles; it establishes a concrete framework, which is part of the Acquis Communautaire; minimum soft law obligations • The framework is familiar - to the investors; - to the donors; - to the EU member states; - to the Parties to the Treaty i.e. It is a framework much easier to implement.

4. WHY THE TREATY IS A NEW ONE - 2 • Clear and easy to explain objectives; • Envisages contemporary mechanisms and the relevant institutions for the achievement of the objectives, which unite: - the political will (The Ministerial Council); - the experts’ experience (the Permanent High Level Group); - the focus of the market reforms (the Regulatory Board); - transparency and direct involvement of the business (The Fora) – investments needed; - the EU experience and - the support of the Donors’ Community.

5. THE MAIN OBJECTIVES • Create a single and stable regulatory space and stable market framework • Enhance the security of supply of the single regulatory space • Develop network energy market competition on a broader geographic scale • Via application of the EU Acquis Communautaire on energy: • Electricity Directive • Natural Gas Directive • Acguis on Environment • Acquis on Renewables • Acquis on Competition

6. ACQUIS COMMUNAUTAIRE - ENERGY • The European Community Electricity Directive 2003/54/EC • The European Community Natural Gas Directive 2003/55/EC • The European Community Regulationon conditions for access to the network for cross-border exchanges in electricity 1228/2003/EC. (FOR ALL – IMPLEMENTATION ONE YEAR AFTER THE TREATY ENTERS INTO FORCE) • The eligible customers - Each Contracting Party must ensure: • From 1 January 2008, all non-household customers • From 1 January 2015, all customers.

7. ACQUIS COMMUNAUTAIRE - ENVIRONMENT Each Contracting Party shall; • endeavour to accede to Kyoto Protocol • implement Council Directive 85/337/EEC (including amendments) on the assessment of the effects of certain public and private projects on theenvironment, on the entry into force of Treaty • implement Council Directive 1999/32/EC (including amendments) on reduction in the sulphur content of certain liquid fuels by 31 December 2011 • implement Directive 2001/80/ECon the limitation of emissions of certain pollutants into the air from large combustion plants by 31 December 2017 • implement Article 4(2) of Directive 79/409/EEC on the conservation of wild birds on the entry into force of this treaty

8. ACQUIS COMMUNAUTAIRE - RENEWABLES • Each Contracting Party shall provide to the European Commission within one year of the date of entry into force of Treaty to: • implement Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market • implement Directive 2003/30/EC on the promotion of the use of bio fuels or other renewable fuels for transport

9. ACQUIS COMMUNAUTAIRE - COMPETITION • the Treaty establishing the European Community is the leading document; • The following shall be incompatible with the proper functioning of the Treaty: • all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition • abuse by one or more undertakings of a dominant position in the market • any public aid which distorts or threatens to distort competition by favouring certain undertakings or certain energy resources

10. PARTIES • The Republic of Albania, • The Republic of Bulgaria, • Bosnia and Herzegovina, • The Republic of Croatia, • The Former Yugoslav Republic of Macedonia, • The Republic of Montenegro, • Romania, • The Republic of Serbia • The United Nations Interim Administration Mission in Kosovo • The European Community

11. PARTICIPANTS AND OBSERVERS • Upon a request to the Ministerial Council, any Member State of the European Community may be represented in the Ministerial Council, the Permanent High Level Group and the Regulatory Board as a Participant • Upon a reasoned request of a neighbouring third country, the Ministerial Council may, by unanimity, accept that country as an Observer. • Observers may attend the meetings of the Ministerial Council, the Permanent High Level Group, the Regulatory Board and the Fora, without participating in the discussions (unlike participants)

12. DURATION • This Treaty is concluded for a period of 10 years from the date of entry into force • The Ministerial Council, acting by unanimity, may decide to extend its duration

13. WHAT IS TO COME • The Roadmaps - 2006 • The Implementation Process – 2007 onwards • The Projects – ongoing • THE SOCIAL FACTOR – PARTICULAR ATTENTION OF THE ENERGY COMMUNITY

14. AND TO CONCLUDE • No doubt about the success of the initiative – the Treaty is an appropriate expression of: - political will; - economic reasoning; - clear, familiar and effective legal framework.

15. AND MORE, AND MORE …… WWW.ENERGY-COMMUNITY.ORG THANK YOU FOR YOUR ATTENTION!