Gas

State of compliance

The Energy Law transposes the requirements of Directive 2009/73/EC and Regulation (EC) 715/2009. Even though the Law requires the adoption of all relevant secondary acts by June 2019, acts on defining priority investments, vulnerable customers and a gas crisis have yet to be developed. Secondary acts on supply and market rules, transmission and distribution tariffs and transmission system operator certification rules have been adopted. In addition, certain existing acts still have to be aligned with the new Law, such as licensing rules and network codes.

  • Unbundling

    Unbundling

    The situation with respect to unbundling continues to be stagnant and the deadline to transfer the shares of the transmission system operator to the Ministry responsible for energy of 5 June 2019 set by the Energy Law has been missed. The Government still has to decide on and implement an acquis-compliant solution for an ownership unbundled gas transmission system operator.

    The only licensed gas transmission system operator in North Macedonia, GAMA, is part of a vertically integrated company which does not comply with the unbundling requirements of Directive 2009/73/EC. The State (controlling the entire production of electricity in the country) and Makpetrol, the biggest gas importer and supplier, are the only shareholders of GAMA. The company Macedonia Energy Resources (MER), although it is continuously developing the country’s transmission system as tasked by the State, does not hold a license for transmission system operation.

    The Energy Law foresees ownership unbundling as the only possible transmission system operator model. This solution could solve the long-standing dispute between the State and Makpetrol over the ownership of GAMA assets, which continues to block gas market development in the past.

    The regulator approved the certification rules for the transmission system operation under the Third Energy Package in August 2018, as one of the first secondary acts required by the new Energy Law.

    Three distribution companies are licensed for supply and distribution system operation, which is compliant with the acquis as they serve less than 100.000 customers.

  • Third Party Access

    Third Party Access

    The Energy Law transposes the general principles of third party access, as well as the missing provisions in regards to refusal of access and exemption for new infrastructure.

    ERC approves both the methodology and the tariffs for access to the transmission and distribution systems. In December 2018, it adopted the Rulebook on Methodologies for Transmission, Distribution and Market Operation of Natural Gas, the distribution tariff methodology and an entry/exit transmission tariff methodology as required by Regulation (EC) 715/2009.

    Capacity allocation rules are covered by the Transmission Network Code developed by GAMA (‘the Network Code’). The Network Code provides the possibility for allocation of both firm and interruptible capacity, however, there is no obligation for the transmission system operator to offer both types. According to the Network Code, the TSO may sell annual and monthly capacity1. In case the demand for firm capacity should exceed the available capacity, the TSO is obliged to offer interruptible capacity. A time-interval for such an offer is not prescribed. A provision allowing network users to re-sell or sublet their unused contracted capacity on the secondary market is not included in the Network Code.

    The Transmission Network Code transposes the requirements for third party access to services, capacity allocation and transparency, but they still have to be aligned with the new Energy Law and with the missing requirements of Regulation (EC) 715/2009 and Regulation (EU) 703/2015. The regulator’s Market Rules, adopted in June 2019, clarified previously overlapping issues with respect to the transmission code. In any case, the Energy Law envisages the preparation of rules for capacity allocation and balancing that are supposed to lead to full Third Energy Package implementation, but such rules have not been adopted yet. Provisions on cross-border capacity allocation, as defined by the Energy Law, must also be taken into account, together with the requirement of interoperability, as foreseen by Regulation (EU) 703/2015. The deadline for these additional rules, as well as for adjusted transmission and distribution codes, already passed.

    The information is currently being published as required by the methodology for calculation of transmission charges, gas market rules and the transmission network code and as well relates to the tariff methodology, applicable tariffs, the capacity allocation mechanism and congestion management procedures. However, the transmission system operator does not publish additional information as required by Annex I of Regulation (EC) 715/2009, and there are no such requirements in place while the update of the Transmission Code is pending.

    1 i.e. long- and short-term capacity

  • Wholesale market

    Wholesale market

    Gas prices – wholesale and retail – are fully deregulated in North Macedonia since 2015. Nineteen licences have been issued for trade, but the market is still illiquid with very few active traders. The main reason is the lack of interconnection capacity – the sole interconnector is fully booked by Gazprom on the Bulgarian side. Two traders, Makpetrol, under a long-term contract with Gazprom, and Kogel Stil d.o.o, import gas for the wholesale market. In addition to this, several big consumers import gas individually for their own needs, which accounts for three-fourths of total gas imports. All contracts are concluded on a bilateral basis for monthly or yearly deliveries. There is neither a functional nor a defined virtual trading point in the transmission system.

    The new Energy Law lays down the balancing rules, including on balancing groups, balancing responsibility and imbalance charges in line with Regulation (EC) 715/2009. However, additional functional details have to be prescribed by the balancing rules and the updated Transmission Code. The adoption of both documents is still pending.

    Several important elements of Regulation (EC) 715/2009, such as the provision on informing the balancing status to network users and the calculation of imbalance charges, are transposed in the existing Network Code. However, the imbalance charges are not being published, which is not in line with the Third Energy Package.

  • Retail market

    Retail market

    Besides the Energy Law, the Regulation for the Criteria and Conditions for Proclamation of State of Crisis in the Supply of Natural Gas transposed Directive 2004/67/EC, which is still mandatory for the Contracting Parties.

    Based on the Energy Law and the Natural Gas Market Rules, all customers became formally eligible and end-user gas prices became deregulated as of 1 January 2015. At the retail level, there are six active retail suppliers. Gas is mainly consumed by industrial customers, whilst households have at present an almost negligible share of total consumption. The Government continues in its endeavor to try to find partners to develop the gas distribution system by open tenders and within the model of public private partnership.

    The new Natural Gas Supply Rules, adopted on 1 March 2019, transpose the main measures for customer protection from the gas acquis, including the procedure for switching suppliers. Promgas, the daughter company of Makpetrol, performs the function of the supplier of last resort, in line with the old legislation. The new Energy Law stipulates a tender procedure for the selection of a supplier of last resort by March 2019. The procedure remains to be launched.

    There is a governmental programme in place for subsidizing the consumption of energy where monthly funds partially cover the cost of energy (electricity, heating energy, natural gas and other) for social aid recipients. The new Energy Law puts the focus on vulnerable energy customers. According to the Law, concreate measures and programmes had to be developed by the Ministries responsible for energy and social affairs, which has not been done yet.

    Customer protection has been defined by the Energy Law, but also by the security of supply secondary acts. The Regulation for the Criteria and Conditions for Proclamation of State of Crisis in the Supply of Natural Gas transposed Directive 2004/67/EC and focuses on retail customers. The Regulation has been improved from year to year. Supply standards, as defined by Regulation (EC) 994/2010 and established by a Ministry Decree, provide an additional tool for customer protection.

  • Interconnectivity

    Interconnectivity

    The transmission network has a limited spread of 98 km, with the sole supply entrance at the Bulgarian border. It has an annual capacity of 800 mln m3, which is still much more than is needed to satisfy current demand. However, the development of the country’s internal transmission network is progressing quickly. In the last three years, Macedonia Energy Resources (MER) has constructed 178 km of transmission pipelines and plans to construct an additional 150 km by 2020.

    The transmission system operator, GAMA  operates the main transmission and branch pipelines, including the only interconnection point. GAMA has a technical agreement with Bulgartransgaz, which has yet to be aligned with Regulation (EU) 703/2015. In addition, MER signed a Memorandum of Understanding with DESFA, the Greek transmission system operator, for the interconnection of the two systems (PMI GAS – 04B).

    It is obvious that the unsolved internal situation with regards to the transmission system operator – one entity with a license, another without a license but responsible for network development – has to be resolved quickly in order not to hinder future internal and external interconnectivity efficiency.

    The Regulation for the Criteria and Conditions for Proclamation of State of Crisis in the Supply of Natural Gas established measures and a national communication plan in emergency situations. Communication and cooperation with neighbouring transmission system operators is subject to the voluntary implementation of Regulation (EU) 2017/1938 at borders with non-EU countries, i.e. Contracting Parties to the Energy Community.