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THE WOLF THEISS GUIDE TO: Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe 2018 Edition THE WOLF THEISS GUIDE TO: Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe This second edition of The Wolf Theiss Guide To: Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe is intended as a practical guide to the general principles and features of the basic legislation and procedures in the countries included in the publication. While every effort has been made to ensure that the country guides were accurate when finalised, they should be used only as a general reference guide and should not be relied upon as definitive for planning or making definitive legal decisions. In these rapidly changing legal markets, the laws and regulations are frequently revised, either by amended legislation or by administrative interpretation. Status of information: Current as of 1 January 2018 Conception, design, and editing: WOLF THEISS Rechtsanwälte GmbH & Co KG, Attorneys-at-Law Schubertring 6, 1010 Vienna, Austria www.wolftheiss.com © 2018 WOLF THEISS Rechtsanwälte GmbH & Co KG. All Rights Reserved. Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe CONTENT TABLE OF CONTENTS FOREWORD 03 EXECUTIVE SUMMARY 07 AN INTERNAL ENERGY MARKET FOR THE EUROPEAN UNION AND BEYOND 13 COUNTRY CHAPTERS 16 ALBANIA 16 AUSTRIA 34 BOSNIA & HERZEGOVINA 46 BULGARIA 66 CROATIA 90 CZECH REPUBLIC 104 HUNGARY 118 POLAND 138 ROMANIA 158 SERBIA 182 SLOVAK REPUBLIC 204 SLOVENIA 218 UKRAINE 232 OUR OFFICES 249 1 Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe FOREWORD FOREWORD Wolf Theiss is pleased to publish the 2nd edition of The Wolf Theiss Guide To: Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe. In the past decade, this part of Europe has seen increasing interest in participation in the wholesale energy markets. Our energy team has handled numerous licensing procedures throughout the region both in the electricity and the natural gas market. The most challenging aspect is often helping our clients manoeuvre through the labyrinth of regulations, hence our decision to publish this Wolf Theiss Guide To: Licensing of Electricity and Gas Wholesale Activities in Central, Eastern & Southeastern Europe. It is intended as a practical guide to the principal regulatory features of the licensing of wholesale activities in 13 jurisdictions covered by Wolf Theiss. In the first part of the guide, we present an executive summary of the regulatory licensing framework applicable in each of the 13 jurisdictions covered. The second chapter of the guide contains an outline of the current status of the internal energy market in the European Union and highlights the regulatory “patchwork” regarding access to the physical wholesale energy markets in our region. The regulatory framework applicable in each jurisdiction is described in more detail in the country chapters. To facilitate the reference to the relevant sections, all the country chapters follow a uniform structure and start with a detailed table of contents including the relevant page numbers. When they are used, defined terms apply to the specific country chapter only. The information contained in this Wolf Theiss guide was correct as of 1 January 2018. While every effort has been made to ensure that the information was accurate when finalised, the guide should be used only as a general reference guide and should not be relied upon as definitive for planning concrete transactions. In these rapidly changing legal markets, the laws and regulations are frequently revised, either by legislative amendments or by administrative interpretations. Our thanks go to all of the teams at Wolf Theiss who have enabled us to produce this guide. Zoltán Faludi March 2018 Partner, Co-Head of Projects (Infrastructure and Energy) Practice Group Wolf Theiss 3 Licensing of Electricity and Gas Wholesale Activities WOLF THEISS & REGION Warsaw POLAND Kyiv Prague CZECH UKRAINE REPUBLIC SLOVAK REPUBLIC Bratislava Vienna AUSTRIA Budapest HUNGARY Ljubljana ROMANIA SLOVENIA Zagreb CROATIA Bucharest BOSNIA & Belgrade HERZEGOVINA SERBIA Sarajevo BULGARIA Sofia Tirana ALBANIA EUROPE WOLF THEISS REGION EUROPE 5 Licensing of Electricity and Gas Wholesale Activities EXECUTIVE SUMMARY EXECUTIVE SUMMARY 1. LICENSING OF ELECTRICITY WHOLESALE ACTIVITIES ARE WHOLESALE ACTIVITIES SUBJECT TO DO YOU NEED AN LICENSING MAY A FOREIGN ENTITY DIRECTLY ADDITIONAL LICENCE (NOTIFICA- APPLY FOR AND HOLD A WHOLESALE TO SUPPLY INDUSTRIAL TION)? LICENCE? END-CUSTOMERS? ALBANIA Yes. No. Foreign entities are required to establish No. a Local Corporation in order to apply for a Wholesale Licence. AUSTRIA No. N/A. A foreign entity may directly engage in N/A. electricity Wholesale Activities in Austria provided that it has a domestic process agent. BOSNIA & Yes. No. Foreign entities are required to establish No. HERZE- a Local Corporation in order to apply for the GOVINA Wholesale Licences. BULGARIA Yes. A foreign entity incorporated in an EU Member No. State may directly apply for and hold a Whole- sale Licence, if it meets the mandatory require- ments for the performance of Wholesale Activities. Foreign entities incorporated in other countries cannot directly obtain a Whole- sale Licence, they need to establish a Local Corporation for this purpose. CROATIA Yes. No. A Local Corporation or a natural person Yes. registered as an individual trader may apply for a Wholesale Licence. However, if a foreign entity is set up in the EU or the European Energy Community (including Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Monte- negro, and Serbia), it may apply for and hold a Wholesale Licence directly, provided that it has a branch office registered in Croatia and meets the financial, technical and staffing requirements set out by the Ordinance on permits for performance of energy related activities. CZECH Yes. No. Foreign companies are required to have No. REPUBLIC a local presence either through the establish- ment of a new Local Corporation/acquisition of an existing Local Corporation or a Branch Office to be established in the Czech Republic. 7 ARE WHOLESALE ACTIVITIES SUBJECT TO DO YOU NEED AN LICENSING MAY A FOREIGN ENTITY DIRECTLY ADDITIONAL LICENCE (NOTIFICA- APPLY FOR AND HOLD A WHOLESALE TO SUPPLY INDUSTRIAL TION)? LICENCE? END-CUSTOMERS? HUNGARY Yes. Foreign entities incorporated in an EU/EEA Yes. An Additional Licence can Member State may directly apply for and hold be directly obtained by a foreign a Wholesale Licence, provided that they law- entity incorporated in an EU/EEA fully and effectively pursue electricity Member State provided that it trading in their country of incorporation. lawfully and effectively pur- Foreign entities incorporated in countries sues electricity trading in its other than EU/EEA Member States cannot country of incorporation. directly apply for a Wholesale Licence in Foreign entities incorporated in Hungary. They may only obtain an Additional countries other than EU/EEA Licence, provided that they establish a Local Member States are required to Corporation. establish a Local Corporation or a Local Branch Office in order to apply for an Additional Licence. POLAND Yes. Foreign entities having their corporate seat No. (or domicile, in case of individuals) within the territory of an EU Member State, the Swiss Confederation or a Member State of both the European Free Trade Association (EFTA) and the EEA may directly apply for and hold a Wholesale Licence. Foreign entities registered in other countries are required to have, in addition to the information from URE, at least a Local Branch Office, or preferably a Local Corporation. ROMANIA Yes. A foreign company may apply for the recogni- No. tion of its Wholesale Licence issued in another EU Member State provided it declares on its own liability that it will observe the technical and commercial norms in Romania applicable to the respective activity. A foreign company which is not established within the territory of an EU Member State may only apply for a Wholesale Licence pro- vided it sets up a Local Corporation or a Local Branch Office for the entire duration of such licence validity period. SERBIA Yes. Yes, foreign legal entities can directly apply for Yes, however a foreign legal a Wholesale Licence. entity cannot directly apply for and hold an Additional Licence; it is necessary to establish a Local Corporation in Serbia. 8 Licensing of Electricity and Gas Wholesale Activities EXECUTIVE SUMMARY ARE WHOLESALE ACTIVITIES SUBJECT TO DO YOU NEED AN LICENSING MAY A FOREIGN ENTITY DIRECTLY ADDITIONAL LICENCE (NOTIFICA- APPLY FOR AND HOLD A WHOLESALE TO SUPPLY INDUSTRIAL TION)? LICENCE? END-CUSTOMERS? SLOVAK Yes. Foreign entities incorporated and lawfully No. REPUBLIC supplying electricity in a Member State of the EU/EEA are entitled to directly apply for and hold a licence in the Slovak Republic. Foreign entities incorporated in other countries cannot directly apply for and hold a Wholesale Licence. They need to set up a Local Branch Office or a Local Corporation in order to obtain a Wholesale Licence. SLOVENIA No. N/A. Generally, no. Licence is only required for closed distribution systems. UKRAINE Yes. No. Foreign entities are required to establish No. a Local Corporation in order to obtain a Wholesale Licence. 9 2. LICENSING OF NATURAL GAS WHOLESALE ACTIVITIES ARE WHOLESALE ACTIVITIES SUBJECT TO DO YOU NEED AN LICENSING MAY A FOREIGN ENTITY DIRECTLY ADDITIONAL LICENCE (NOTIFICA- APPLY FOR AND HOLD A WHOLESALE TO SUPPLY INDUSTRIAL TION)? LICENCE? END-CUSTOMERS? ALBANIA Yes. No. Foreign entities are required to establish Yes. a Local Corporation in order to apply for a Wholesale Licence. AUSTRIA Wholesale The trade licence may only be obtained by a No. Activities are Local Corporation or a Local Branch Office. subject to prior The extent to which trading activities affecting notification to Austrian territory may be exercised cross- the competent border by EEA and non-EEA companies is not energy regu- fully clarified by case law.