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Serbia’s EPS and Srbijagas end of July, Greek Environment and Energy ICSID ruled that Croatia caused “substantial
damages” to MOL’s Croatian subsidiary INA
Minister Kostas Skrekas said on July 7 as
register loss of €1bn, electricity quoted by Bulgarian public broadcaster BNR. for failing to take over the energy company’s
gas trading business as well as for breaching
The interconnector will be officially put
and gas prices expected to into operation on July 8 by Skrekas and his contractual obligations concerning gas pricing
and royalties, and awarded $168mn. Including
Bulgarian counterpart Kiril Petkov.
increase regulators of the two countries licenced interest, the total amount came to $236mn,
At the beginning of July, the energy
according to Hungarian media.
Serbia’s Fiscal Council said on July 7 that the ICGB, the company managing the gas Last October, the Supreme Court of
total losses of power utility Elektroprivreda interconnector, clearing the last formal Croatia upheld convictions on charges of graft
Srbije (EPS) and gas company Srbijagas step needed for the gas link to be put into against Ivo Sanader, Croatia’s former prime
during the 2021-22 heating season amounted commercial operations, while technical tests minister, and Hernadi. The court rejected the
to about €1bn, and one of the ways for those were completed in June. appeals of the two in the combined case and
companies to recover is to increase electricity The start of work of the interconnector upheld the first-instance ruling sentencing
and gas prices. would allow Bulgaria to start receiving cheap Sanader to six years and Hernadi to two years
Due to the global energy crises and gas from Azerbaijan immediately. in prison.
the internal crises of state-owned energy The completion of the gas interconnector The Hungarian CEO was charged
companies, Serbia’s main problem became was delayed for 12 years by the former in absentia with bribing Sanader, while
how to finance and ensure regular supply of governments led by Boyko Borissov. It prime minister, a decade earlier to give
electricity and gas to the country. allows Bulgaria to receive 1bn cubic metres MOL management rights in INA. Hernadi
“One of the conditions for the recovery of (bcm) of cheap natural gas from Azerbaijan, was earlier acquitted of the charge by the
EPS would be an urgent measure to increase significantly more than the current 300mn Hungarian judiciary.
electricity prices for households by 15%-20%, cubic metres. The amount of gas transported MOL noted that it had filed a request
with a similar increase for companies,” the through the interconnector from Azerbaijan for arbitration against Croatia in 2013 for
Fiscal Council suggested in a study. to Bulgaria could be increased to 3bcm per breach of contract related to agreements
The council said that the price of gas for year, which would completely cover the concerning Croatian energy company INA
households should increase by 65-70%, which country’s annual consumption. signed in 2009. According to these provisions,
looks like a big increase, but it would not be After Gazprom stopped deliveries of the state had to divest the loss-making gas
a precedent since similar prices were valid natural gas to Bulgaria at the end of April, the business from INA after the acquisition. The
during 2013 and 2015. government negotiated additional deliveries government was supposed to take over the
The prices of heating prices should increase from Azerbaijan, but at a higher price than underground gas storage facility at Okoli, and
in the range of 10-40%, depending on the that agreed for the gas that will be supplied via to take over the entire gas trading part of INA,
share of expenditures for gas in the total costs the interconnector. which had not happened.
of heating utilities. The €220mn gas link was supposed to be This was the second arbitration case
“Approximately half, or about €500mn of ready by the end of 2020 but was delayed by the Croatian government has lost to MOL.
total losses incurred by EPS and Srbijagas the then government due to administrative Croatia turned to the Arbitral Tribunal of the
so far, has already been financed by the issues. United Nations Commission on International
state budget with subsidies to Srbijagas,” the The 180km gas link that has an annual Trade Law (UNCITRAL) in Geneva in 2014
council said. capacity of 3bcm is being built by a joint with the aim of cancelling a 2009 deal that
The remaining €500mn was paid by EPS, venture of Bulgaria’s state energy company allowed MOL to obtain a dominant position
mostly by taking liquidity loans. BEH and Greece’s gas utility DEPA and Italy’s in INA despite only having 49% of the shares.
“New big losses of EPS and Srbijagas could Edison (EDNn.MI). MOL won the arbitration case in December
be made next winter as well, if the there is no 2016. After the ruling, the country has
turnaround in business operations of energy attempted twice to appeal it without success.
companies,” the study said. MOL calls on Croatia to cancel At the end of 2022, the government of Prime
According to the Fiscal Council, EPS can Minister Andrej Plenkovic said it intends
no longer produce enough electricity for conviction of CEO after ICSID again to appeal that ruling.
domestic needs because it did not invest in its
coal mines so it has to import both coal and ruling
electricity, at record high prices. Czech govt considering adopting
On the other hand, Srbijagas is Hungarian oil and gas giant MOL has said
systematically dependent on imports. that Croatia’s Supreme Court should revise solidarity energy tax
“Although import prices are beyond the its verdict in the company’s appeal against
control of domestic economic policy, the sentence of its chairman-CEO Zsolt The Czech government is considering
Srbijagas’ big failure is that it has not yet built Hernadi for graft following the decision by adopting an energy sector tax that would
a gas storage facility with sufficient capacity,” the International Centre for the Settlement of be mainly aimed at energy companies, said
the council said.. Investment Disputes (ICSID) in the case over Prime Minister Petr Fiala, adding that it
the privatisation of the Croatian oil company would be an expression of solidarity at a time
INA. when Czechs are facing extremely high energy
Greece-Bulgaria gas link to the Croatian judiciary’s binding ruling on prices.
The chief legal counsel of MOL said that
“Some degree of solidarity is in place here.
start full operations at end- Hernadi and the sentence of two years in We should think about whether this will take
the form of a temporary sectoral tax or some
prison “flies in the face of” the decision by
July the International Centre for the Settlement of other form,” Fiala said, as quoted by the public
broadcaster Czech Television. “The energy
Investment Disputes (ICSID) and suggested
The Greece-Bulgaria natural gas steps should be taken to remedy the situation. companies are making huge profits, which are
interconnector will start full operations at the Pal Kara’s comments came after the not due to any innovation, and at the same

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