The EU Energy Community has criticised Kosovo for failing to amend its legislation to ensure the effective transposition and implementation of the Third Package provisions in the electricity sector. Kosovo missed the January 1, 2015 deadline for transposing the Third Package, but is expected to amend its legislation by the end of the year.

The implementation of the Third Package, which was incorporated into the Energy Community acquis communautaire in October 2011, will allow Kosovo to liberalise the electricity market and open the way for the development of the country’s gas sector. Signatories to the Energy Community treaty, which are mainly EU aspirant states from Southeast Europe, had been given until January 2015 to transpose the Third Package, a set of EU legislation aimed at making the EU’s energy market fully effective and creating a single EU gas and electricity market.

As of now, the Third Package has not been transposed in Kosovo, liberalisation of the electricity market is still pending and the country is lagging far behind the implementation of its target for renewable energy, said the statement released by the Energy Community on October 8.

The pace of market reform slowed down to some extent as Kosovo focused all the attention on one investment, the new thermal power plant Kosovo e Re, it said.

The Energy Community noted that institutional weaknesses still needs to be addressed.

On the other hand, agreements concluded between the transmission system operators of Kosovo and Serbia and the start of the connection process with ENTSO-E raise hope for Kosovo’s full and equal integration in the regional market.

The Energy Community said that the Energy Regulatory Office of Kosovo must impose measures aimed at deregulation of prices in the wholesale and retail electricity markets and limit public service obligation to what is necessary to address market failure without delay.

Pristina was also advised that the current cross-subsidisation between different categories of customers must be phased out.

“The necessary preconditions for retail market opening need to be put in place, including development of switching rules, appointing a supplier of last resort and defining load profiles for customers without interval meters. Distribution tariffs must be publicly available in order to allow for non-discriminatory third party access,” the Energy Community statement said.

Kosovo’s electricity transmission system operator KOSTT must also start to procure balancing services and address network losses through transparent and market-based procedures.

The Energy Community said that a gas market does not yet exist in Kosovo, but regional gas studies envisage the possibility for the country to become interconnected with the emerging market in Albania or with neighbouring Macedonia, which corresponds to Kosovo’s strategic plans.

Only after establishing a legal framework compliant with the acquis, will Kosovo be able to develop its natural gas infrastructure, including participation in regional gas initiatives.

Abandoning the customs duties levied on imports of petroleum products is a precondition for terminating the infringement action against Kosovo (Case ECS-12/14), which was launched by the Energy Community’s Secretariat in July 2014, it advised.

The parties to the Energy Community Treaty are the European Union, on the one hand, and on the other the contracting parties: Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro, Serbia, Kosovo and Ukraine. The countries should implement the relevant EU energy acquis communautaire, to develop an adequate regulatory framework and to liberalise their energy markets in line with the acquis under the Treaty.