- legal aspects - investment opportunities in natural gas infrastructure - legal aspects - ministry...
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Investment opportunities in natural gas infrastructure - - legallegal aspe aspeccttss - -
MINISTRY OF MINING AND ENERGY
RUPUBLIC OF SERBIA:
Branislava Lepotić Kovačević, Ph.d
Aleksandra Babić
Belgrade, March 8th 2005
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Content
investments in construction of gas pipelines and
underground storages
existing investment models
investment barriers
conclusions
Development of gas pipelines and underground storages
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Development of gas pipelines and underground storages - before The Energy Law is fully enforced -
administrative procedure for construction of energy
facilities is same as procedure for all facilities
responsibility of the Ministry for capital investments
Building permit and Occupancy permit issued by the
Ministry for capital investments
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Development of gas pipelines and underground storages - after The Energy Law is fully enforced -
Energy permit for constructions of energy facilities
responsibility of the Ministry of mining and energy
Energy permit is precondition for Building permit
issued in accordance with:
– Energy sector Development Strategy and
– Strategy Implementation Programme
Activities in natural gas sector
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Activities in natural gas sector- provided by the Energy Law -
gas pipeline transportation and operation of gas transportation pipelines
gas distribution and operation of gas distribution pipelines
underground gas storage and operation of underground gas storage
natural gas trade
activities of public interests (except natural gas trade), monitored by the Government and the Energy Agency
Existing Models
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Existing Models
State-owned enterprise (SOE)/daughter company
of SOE
Contract on assignment of right to conduct activity of
public interest (Assignment Contract)
Concession Contract
SOE/daughter company of SOE
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S O E - existing models -
founded by – the Government of the Republic
of Serbia
investment into SOE:
– investment into SOE is not allowed so far
– joint ventures with SOE are possible
– loan agreements and commercial arrangement are
possible
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Daughter company of SOE - existing models -
daughter company founded by – Petroleum Industry of
Serbia (SOE)
sources of investments
– Investments in daughter company of SOE
– Joint venture…
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SOE and daughter company of SOE - existing models -
Characteristics: legislation is in transition procedure (pending
adjustments)
Petroleum Industry of Serbia (SOE) is approaching
restructuring procedure
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Model of daughter company of SOE
additional founder daughter company
bank(credit
contract)
feasibilitystudy
Assignment Contract
contract on international
sale of equipment
additionalfoundingcapital
credit forfoundingcapital
Modality 1:credit for
assets
Modallity 2:credit for
assets
gas pipelineconnection
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Model of daughter company of SOE - after The Energy Law is fully enforced -
additional founderdaughtercompany
bank(credit
contract)
feasibilitystudy
AssignmentContract
contracton international
sale on equipment
additionalfounding
capital
creditfor founding
capitalModality 1:
creditfor assets
Modality 2:credit
for assets
Modality 1:energy permit
Modality 2:energy permit
energy licence- Energy Agency
responsibility
gas pipelineconnection
Assignment Contract
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Assignment Contract- existing models -
Preconditions: any form of company can be founded (except SOE)
founder of company - domestic and/or foreign person
company must be fully in compliance with the
legislation (technical conditions for equipment,
environmental protection,...)
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Assignment Contract- existing models -
Characteristics: procedure not used so far
avoids tendering procedure
new legislation pending
time period is not legally limited nor defined
there is no legal obligation to transfer energy facility
into state property
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Model – Assignment Contract
founder newcompany
bank(credit
contract)
feasibilitystudy
Assignment Contract
contractfor international
sale of equipment
foundingcapital
credit forfoundingcapital
Modality 1:credit
for assets
Modality 2:credit for
assets
gas pipelineconnection
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Model – Assignment Contract - after The Energy Law is fully enforced -
foundernew
company
bank(credit
contract)
feasibilitystudy
Assignment Contract
contractfor international
sale of equipment
foundingcapital
Credit forfoundingcapital
Modality 1:credit
for futureequipment
Modality 2:credit for
equipment
Modality 1:energy permit
Modality 2:energy permit
energy licence- Energy Agency
gas pipelineconnection
Concession Contract
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Concession Contract - existing models -
Preconditions: Grantee – domestic or foreign person Grantor – the Government of the Republic of Serbia
Procedure: Serbian Government and Parliament to review the
application
one member of Tendering Commission from Serbian Parliament
The Government of Serbia signs the contract
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Concession Contract - existing models -
Types of Concessions: construction, exploitation and maintenance of gas
pipeline reconstruction, modernization, maintenance and
exploitation of gas pipeline construction, exploitation and maintenance of
underground gas storage reconstruction, modernization, maintenance and
exploration of underground gas storage conduction of activities of public interest B.O.T. system...
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Concession Contract - existing models -
Characteristics: complex procedure precise procedure tendering procedure is being applied for selection of
grantee grantee have to establish concession company concession contract may be valid for the maximum
period of 30 years transfer of new energy facility into state property is
obligatory after concession expires
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Model - Concession Contract
grantee concessioncompany
bank(credit
contract)
tender bid
contractfor international
sale of equipment
foundingcapital
credit forfoundingcapital
Modality 1:credit
for assets
Modality 2:credit for
assets
gas pipelineconnection
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Model - Concession Contract- after The Energy Law is fully enforced -
granteeconcessioncompany
bank(credit
contract)
tender bid
contractfor international
sale of equipment
foundingcapital
credit forfoundingcapital
Modality 1:credit
for futureequipment
Modality 2:credit for
equipment
energy licence- Energy Agency
responsibility
gas pipelineconnection
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Notes
one additional procedure for development of energy facilities that are required to secure reliable energy supply is envisaged by the Energy Law
development option should be tendered by the Government of Serbia
Barriers for investments
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Barriers for investments
inconsistency between some applicable Laws
high level of administration discretion rights in
decision making process
lack of secondary legislation
certain steps to overcome these problems are envisaged
Conclusions
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Conclusions
Concession Contract - the most precise procedure
Assignment Contract - avoiding tendering procedure, shorter procedure, transfer of energy facility into state property is not envisaged risk of changes in legislation
Investment in daughter company of SOE - the shortest procedure, risk of changes in legislation
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Applicable Laws
Energy Law Law on foreign investments Company Law Law on State-owned enterprises and activities of
public interests Concession Law Law on pipeline transportation of liquid and gaseous
hydrocarbons
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Resume
investments in construction of gas pipelines and gas underground storage
existing models:– Investments in daughter company of SOE
– Assignment Contract
– Concession Contract
barriers for investments conclusions applicable Laws
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www.mem.sr.gov.yu
dr Branislava Lepotić Kovačević
Aleksandra Babić