Southeastern Europe Seeks Energy Cooperation with EU

Albania and its neighbors say they want to have a common energy market by 2008 and are just waiting for EU approval.

"For these is countries, it is a bit like a mini-EU," said Ferran Taradellas Espuny, spokesman for the directorate-general for energy and transportation, who said an agreement is expected to be ratified by the end of June and participating countries would like to begin converting a month later.

"Still, participants don't want to open their markets abruptly but gradually. And together, they expect a liberal and privatized market will improve their energy sectors in the long run."

Improving energy efficiency

But southeastern European countries don't want to only put their trust in concepts such as liberalization and privatization. As a result, the pact prescribes exactly in detail what must be done, said Paul Rübig, a member of the European Parliament who works on energy issues.

"In the treaty, it states essentially that the energy efficiency is to be improved," he said. "That essentially means that buildings must insulate light fixtures and improve other infrastructure. And more renewable energy needs to be used."

A new general secretariat will monitor whether the participating countries are following the rules of the accord. It is going to cost about 20 billion euros in order to fulfil the terms of the agreement. The World Bank has already pledged a billion. And most of the rest will be found, said Rübig.

"The budget of the European Union will amount to about 900 billion euros by 2013," he said. "And energy is an important part of it."

Starting pains

Liberalizing energy markets has already been decided on and yet still many southeastern European countries are still reluctant.

In December 2005, the government of Macedonia promised to liberalize their energy market. At the same time, they didn't want to give up control over their energy sector, which is a state monopoly. Other countries in the region have similar outlooks.

Albania is in the most difficult situation because its energy sector has been isolated since communist times. In order to connect with international networks, even with Greece and Montenegro, a new 400 kilowatt connection between Elbasan and Podgorica would have to be built.

Countries such as Serbia and Croatia have had a connection with international networks since the beginning of the 1990s .

Both sides will profit

Many expected that energy prices in the region will increase after these countries enter into the agreement. But Rübig says that such liberalization doesn't automatically mean higher prices.

"According to the concept that is currently on the table, there will be a new energy mix. That means that there will also be competition. And we have in the EU established that overall, where liberalization functions well, prices go down."

Energy in the region is essentially produced by hydropower, coal, and natural gas. There is no nuclear power.

"The best and most efficient form of providing energy is hydropower and storage power stations," said Rübig. "There is a chance here for investors to create sources of efficient energy production."

He adds that is a prudent choice to decide to cooperate with these countries and for both them and the EU, it is a win-win situation.