Foreign Companies May Deal With Energy In Serbia

OBTAINING A LICENSE TO PERFORM ENERGY ACTIVITY IN SERBIA BY A FOREIGN LEGAL ENTITY

The electricity market in Serbia has been liberalized for several years. Despite that, Electric Power industry of Serbia (“EPS”) actually covers most of it, and independent electricity producers in Serbia are needed to create stronger market competition for the benefit of consumers.

The Law on Energy (“Official Gazette of the RS”, No. 145/2014, 95/2018 – other law and 40/2021) (“Law”) stipulates that energy activity may be performed by a public company, company, or other legal entity or entrepreneur who has a license to perform energy activities.

WHO IS AUTHORIZED TO ISSUE A LICENSE?

The competent body for issuing a license according to the Law is the Energy Agency of the Republic of Serbia (“Agency”). The Agency issues licenses for performing energy activities and issues an act on revoking the license for all energy activities except for activities in the field of thermal energy.

The license is issued at the request of a domestic legal entity, i.e. an entrepreneur, as well as at the request of a foreign legal entity only for performing the energy activity of wholesale electricity supply, i.e. wholesale supply of natural gas.

The content of the request is determined by the Rulebook on the license for performing energy activities and certification (Official Gazette of RS No. 87/15, 44/18 – other law, 83/21) (“Rulebook”).

Namely, the request contains: data on the applicant and on energy activity, statements of the applicant for issuing a license, evidence submitted by a foreign legal entity for issuing a license for performing energy activity of wholesale natural gas supply.

WHAT DOES THE LICENSE CONTAIN?

The license shall contain the name of the energy entity, energy activity, list of energy facilities used to perform the activity, technical characteristics of these facilities, data on the location or area where the energy activity will be performed, period for which the license is issued and obligations regarding uninterrupted performance, transparency and reporting.

CONDITIONS FOR ISSUING A LICENSE TO A FOREIGN LEGAL ENTITY

The Law precisely determines the specific conditions that a foreign legal entity must meet in order to obtain a license, which are:

• that the applicant meets the financial requirements for performing energy activities;

• that the applicant has not been imposed a measure prohibiting the performance of activities or if the legal consequences of the imposed measure have ceased;

• that no bankruptcy or liquidation procedure has been initiated against the applicant.

In addition, a foreign legal entity must meet the conditions prescribed by the Ordinance, which are:

• that the foreign legal entity is a participant in the electricity market or natural gas or electricity exchange in the EU or in the signatory countries of the Treaty establishing the Energy Community between the European Community and the Republic of Albania, Bulgaria, BiH, Croatia, Northern Macedonia, Montenegro, Romania, Serbia and the UN Interim Mission in Kosovo in accordance with UNSC Resolution 1244;

• that the director and members of the management body have not been convicted of criminal offenses related to the performance of economic activity.

For the fulfillment of the conditions determined by the Law and the Rulebook, appropriate evidence must be submitted, which are specified in Article 13 of the Rulebook.

DEADLINE FOR ISSUANCE AND VALIDITY OF THE LICENSE

The Agency issues a license within 30 days from the day of submitting the request, while the license is issued for a period of 10 years, and for the production of electricity and combined production of electricity and heat for 30 years. The mentioned validity period can be extended at the request of the energy entity.

It is important to point out that the license is non-transferable, and when issuing a license, a fee is paid in accordance with the act on the amount of costs for issuing a license issued by the Agency.