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Serbia, What can the new gas distributor bring

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The announced reform in Srbijagas, as well as the separation of the gas sector for the sake of the liberalization of that market in Serbia, is a desirable process that strengthens competition, but at the moment it would not guarantee lower prices for consumers, because Srbijagas receives gas from Moscow very favorably, and the competition would hardly could offer a lower price, according to local experts

At the closing of the 30th Kopaonik Business Forum, the Prime Minister of Serbia, Ana Brnabić, stated that the reform of the public sector cannot be stopped and that, in addition to Elektroprivreda Srbije, Srbijagas is the first company that will face this process.

According to her, an action plan was adopted for the separation of the gas sector, which is awaiting complete liberalization and the “opening of Horgoš”.

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In practice, this means that the monopoly that Srbijagas has when it comes to supplying consumers with “blue energy” in Serbia will be terminated, and that company will face competition after the separation of activities within the gas sector.

The General Secretary of the Serbian Gas Association, Vojislav Vuletić, explains to Danas that the separation of activities within Srbijagas means that transportation should be separated from distribution.

– This means that a special company should be formed that will deal with the transportation of gas through our country, based on the principle that the supply of gas through the gas pipeline network under its authority will be carried out not only by Srbijagas, but that other companies that want to be involved in this business will also be involved to sell it to distributors in Serbia. 

This is a good thing and represents the liberalization of the gas market in Serbia. The only thing that should not be done within that process is the privatization of any part of Srbijagas after the transformation, because that would represent great damage to the interests of the state. 

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Simply, it is a company that operates profitably in all its segments, so it would be wrong to give it up – claims Vuletić.

Apart from announcing that an action plan was adopted for the separation of activities in the gas sector, the Government of Serbia did not provide details on how and in what way this transformation will be carried out, with the indication that the “opening of Horgoš”, i.e. the liberalization of the gas market on the territory of our country, will take place gradually.

Vuletić points out that the best way to do this is to organize Srbijagas as a holding company, so that one of its branches deals with gas transportation and charges for this service to those who are ready to use it.

The liberalization of the gas market, at least at the moment, would not lead to a reduction in the price of “blue energy” for consumers, because the price of gas that the state company “Srbijagas” receives from the Russian company Gazprom is among the lowest in Europe. 

This means that the retail price, with the appearance of competition, could not go lower than the current level.

Such a thing could hypothetically happen in the event that someone imports Russian gas into Serbia from Hungary or Belarus, countries that have a lower price than ours, but it should be taken into account that the buyer of that gas would also have to pay the costs of transportation from those countries to of Serbia, which would increase its price and make it not competitive with the one offered to customers by Srbijagas.

Vuletić believes that the reforms in Srbijagas should not imply the dismissal of employees because there are no redundant workers in that company, since the gas pipeline network is expanding.

– The number of consumers who connect to the gas pipeline network is constantly increasing, and a workforce is needed to deal with that and other jobs in the gasification segment, so it cannot be said that there are too many in Srbijagas – Vuletić says.

Energy expert Velimir Gavrilović also believes that the company that will deal with gas transportation through Serbia should not be privately owned.

– If that were the case, it is clear that it could not be expected that the private owner would not favor his interests and offer the same transport conditions to all capacity tenants in order for competition to flourish. 

That is why this role should be performed by the state through the formation of a company that would deal with it and would be organized on the same principle as Elektromreža Srbije. 

The introduction of an operator that will deal with gas transportation is a good move because now we have a situation where Srbijagas is organized as a vertically organized company, which enables a monopoly that must be broken according to the postulates of the free market. 

The formation of a special company dealing with gas transportation will provide the same chance for all participants – concludes Gavrilović.

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