AT A TIME when Cyprus has declared local energy an emerging market, the European Parliament is pushing for a liberalisation of the bloc’s energy market.
The EP Plenary Session yesterday approved two parts of the third energy package, discussed at the Industry Committee, regarding the internal energy market and conditions for access to it.
But what with Cyprus being 100 per cent dependant on imported oil, along with political delays in preparing the infrastructure for facilitating natural gas, this Directive could only be felt on the island by 2014 the earliest – the date given for the importation of natural gas to Cyprus. And even this is doubtful, following the previous government’s decision to declare the Cyprus energy market as emerging.
The key point to this European directive – and also one of the most controversial proposals – is “ownership unbundling” in the gas and electricity market, which simplified means separating owners of oil and gas resources from distributors. The move hopes to increase competition and widen consumer choice.
The third package aims to further liberalise the EU electricity and gas markets by tackling ownership structure of production and distribution assets as well as the role of national energy regulators and the Agency. for the Co-operation of Energy Regulators. It also aims towards access to cross-border electricity network and gas pipelines, and restrictions on the purchase of assets from third country operators.
Consumers’ rights play a significant role in the package.
According to Atanas Paparizov of the Socialist Group, international oil prices are expected to increase by 80 per cent until the year 2020 and with the EU being 70 per cent dependent on importing oil from third countries, such as the Far East or Africa, this package seeks to alleviate the effect this will have on the general public.
Rapporteur Romano Maria La Russa of the Union for Europe of the Nations Group, the specific directive took months of extensive discussions and input from all MEPs. “I am proud that we all managed to achieve this Directive,” he told reporters at a press conference yesterday.
“The main obstacle we found from the start was the unbundling of ownership, which will split ownership of gas resources from distribution,” he explained, adding that there was opposition not just from oil companies and operators, but also from a number of member states – among whom were Greece, France and Germany.
“There was inevitably a tough clash because this Directive will have an impact on major monopolies in Europe, but also individual states,” said La Russa.
The general idea, he explained, was to ensure that gas producers do not own distribution networks.
“It is hard for new businesses to enter the energy market, which leads to a lack of competition. this has a direct effect on consumers.”
An adjustment period of five years has been given to see how the unbundling method will work, after which the situation will be reassessed and decisions made whether it is an effective measure.
La Russa concluded, “I think [ownership bundling] will be difficult to put into practice, but it is worth examining.”
The Directive also provides better transparency for consumers on their gas and electricity bills, which is why the Agency for the Co-operation of Energy Regulators will be introduced. The idea initially was for this Agency to have an advisory role, but with the new Directive, it will be given more power and also the authority to impose penalties.
