Eight countries in South East Europe - Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Romania, Serbia and Montenegro, and Turkey —are working to create a market to share energy in an efficient and mutually beneficial manner. They are part of the European Commission and Stability Pact-sponsored and World Bank supported Energy Community of Southeast Europe. The Energy Community was created following the December 2003 Athens Memorandum of Understanding. The United States Interim Administration in Kosovo, pursuant to the United Nations Security Council Resolution 1244, is an adhering party in the Community. EU member states Austria, Greece, Hungary, Italy and Slovenia have also agreed to participate. Signatories to the Athens memorandum agreed to introduce European Union standards in their national energy sectors, including the establishment of independent electricity regulatory agencies, and unbundling of power utilities. | | |  Presentation on the World Bank Framework for Energy Trade in South East Europe (MS Power Point, 73 KB)
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Potential economic benefits for the countries involved include lower power prices and a more reliable power supply. "Increased power trade will reduce costs and tariffs, and will make basics like light and heat cheaper," says David Kennedy, Senior Energy Economist and the main author of the Bank's framework paper on energy and trade in South East Europe, published in March 2004. The Bank approved in January 2005 a US$1 billion Adaptable Program Loan (APL) facility to support the development of the Energy Community. Two IBRD loans, to Romania and Turkey, have been approved from the APL facility, and two IDA credits, for Albania and Serbia, were approved in 2005. In 2006, IDA credits were approved for Bosnia and Herzegovina, FYR Macedonia, and Montenegro. Additional loan to Turkey aimed at strengthening, expanding, and upgrading electricity transmission network was also approved in 2006. Bank clients participating in the Energy Community can apply for financing of electricity transmission and selected generation and distribution projects, but to qualify, they first must be on track with reforms. The Energy Community may also lead to greater general regional integration and cooperation, which will in turn contribute to stability and prosperity. “The Energy Community is a great opportunity for the countries of South East Europe to work together in order to provide a stable and continuous energy supply and to improve the security of energy supply. The creation of an area without internal frontiers for energy will contribute to economic development and social progress in the region,” says Mr. Kari Nyman, Lead Specialist and leader of the APL team. The prospect of putting a regional energy market into place in a relatively short time is challenging, but it is an attainable goal, says David Kennedy. "To move forward we need to see the right institutional frameworks in place, such as regulations, industry structures, and market rules. There is a lot to do before a functional market is in place. He says future plans for South East Europe include a regional gas market, and the Bank may in time develop a similar APL for gas. For more information on this program visit Energy in South East Europe
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