ENERGY IN FOCUS Serbia, Montenegro, Bosnia and Herzegovina and Macedonia Portorož, Slovenia - 23 June 2010

PRESENTATION SEE Regional Energy Community Treaty Energy Systems: Serbia (Kosovo) Montenegro Bosnia and Herzegovina Macedonia

ENERGY COMMUNITY TREATY Introduction Regional energy co-operation in order to establish long term stability Athens Forum Established in 2002 between European Commission and the number of countries of SEE Energy Community Treaty Entered into force on 1 July 2006. Major activity – implementation of acquis communautaire on energy, environment, competition and renewable energy sources Road maps “Report on the Implementation of the Acquis under the Treaty Establishing the Energy Community”

SERBIA Introduction Energy Sector Overview Serbia, biggest country in the Western Balkans, submitted application for EUR membership. Energy Sector Overview Consists of oil and gas industry, electrical power system, coal mines, etc. Infrastructure mainly state-owned. Participants in the Energy Sector The principal pillars are: the Government, the Ministry of Mining and Energy and the Energy Agency. “Gazprom” single largest investor. Regulatory Framework It is expected that the full liberalization of the energy prices will occur until 2015.

SERBIA Current Market Opportunities Construction of thermo plant TPP “Kolubara B” (2x350MW) and TENT B3 (700MW); Gas combined heat and power plant in Novi Sad; Small hydro plants on Danube, Sava, Morava and Drina; “South Stream” gas pipeline; Gas depot “Banatski dvor”; Wind Power Plants; Serbian section of the Pan European oil pipeline.

MONTENEGRO Introduction Energy Sector Overview Further increase of activity in the energy sector in the coming years. Energy Sector Overview Need for modernization and investment in the sector. Unused hydro energy potential. Participants in the Energy Sector The most important bodies are Ministry of Economy and the Regulatory Energy Agency. Major investor Italian company A2A. Regulatory Framework New Energy Law entered into force in May 2010.

MONTENEGRO Current Market Opportunities Concession on rivers Morača and Piva for construction of hydro energy plant; Construction of small hydro energy plants; Development of the Wind Power Plants on Krnovo (50MW) and Možur (50MW) locations; Concession of for the mining of coal in the Maoče basin; Plans to construct an interconnection cable connecting Italy and Montenegro.

BOSNIA AND HERZEGOVINA Introduction True hydro and wind energy potentials. Estimated hydro potential of 23,395 GWh/per year. Energy Sector Overview Oil and gas sector not developed as the electric energy sector. Participants in the Energy Sector Main authorities: Regulatory Commission for Energy of Republic of Srpska; Regulatory Commission for Electricity in Federation; and the State Electricity Regulatory Commission. One of the major investors is RWE. Regulatory Framework Competencies at the state level and on the entities’ levels.

BOSNIA AND HERZEGOVINA Current Market Opportunities Development of the number of thermo power plants (“Stanari”, “Gacko”, “Ugljevik”, etc.; Construction of number of hydro power plants in Republic of Srpska and in the Upper Drina Region; “Gornji Horizonti Project” in Herzegovina – hydro power plants and network of water supply tunnels for utilization of hydro capacities; Wind power plants – “Mesihovina”, “Borova glava”, “Velika Vlajna” and “Poklecani” locations – first operations in 2013 at “Mesihovina” with a power of 44MW.

MACEDONIA Introduction Energy Sector Overview Macedonia one of the most important players in the regional energy sector. Energy Sector Overview The renewable energy potential expands the possibilities for investments into the sector. Participants in the Energy Sector The major participants are the Ministry of Economy and the Energy Regulatory Commission. Main private investor is the Austrian EVN. Regulatory Framework The energy sector is regulated by so-called “umbrella” law covering different areas of the energy sectors. New law expecting in 2010.

MACEDONIA Current Market Opportunities There are 4 major projects in the hydro power sector (two major “Čebren” and “Galište” – 1,050GWh); “Vardar Valley Project” encompases construction of 12 hydro power plants; Tender to construction of 36 small hydro power plants (5MW each – DBOT model); 20-year period incentives for buyout of electricity from renewable energy sources.

THANK YOU Miloš Vučković Karanović & Nikolić Energy and Infrastructure Practice Group Belgrade, Serbia milos.vuckovic@karanovic-nikolic.com +381 11 3955404