HRVATSKA ELEKTROPRIVREDA dd

HEP
Investment Barriers in SEE
Goran Slipac, M.Sc.
Corporate Development Division
www.hep.hr
April, 2007
I.
Political aspects
II.
Social aspects
III. Economic aspects
IV. Culturological aspects
V.
Energy aspects
VI. Environmental aspects
Athens Forum, Athens, 23rd April 2007
2
I. Political aspects
¾
Major political changes
¾
Post-Conflict Era
¾
Necessary political stability
¾
¾
¾
¾
Political stability requires regulated mutual relations
between new states
Regulated mutual relations between new states
requires their internal stability
Political constitution of new states determines
new economic relationships
The key to SEE economic cooperation – stable
political situation
Athens Forum, Athens, 23rd April 2007
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II. Social aspects
¾
¾
Unstable social situation
Social aspects of energy and electricity prices
– prices don’t reflect costs
¾
Price cap – solution to social issues?
¾
Cross-subsidation: industry – households
¾
Social politics is run via national companies
¾
The key to economic cooperation – stable
social situation and no cross-subsidation
Athens Forum, Athens, 23rd April 2007
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III. Economic aspects
¾
Transitional economies - low GDP/cap
¾
Trading orientation – SEE shoping area
¾
Production orientation – SEE production area
¾
Price cap – no incentives for investments
¾
High risk of default in payment
¾
¾
New investments for the benefit of domicile
states - what is vaule added for partners?
The key to economic cooperation – pozitive
economic indicators - GDP/cap high enough
Athens Forum, Athens, 23rd April 2007
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IV. Culturological aspects
¾
¾
¾
¾
SEE – meeting point for various cultures, traditions,
concepts….
“the Big” don’t trust “the Small”
¾
Sovereign guarantees
¾
Additional bank guarantees
¾
Additional guarantees for
long-term loans
¾
51 – 49 %
“the Small” don’t trust “the Big”
¾
Takeover
¾
Privatization
¾
49 – 51 %
This is not market
This is not investment in
new generation capacity
The key to joint-venture projects – trust & partnerships
Athens Forum, Athens, 23rd April 2007
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V. Energy aspects
¾
SEE – high share of energy fuel import
¾
Energy prices don’t reflect costs
¾
¾
Significant investments into electric power
system required
One country SoS influences the other –
influences the entire region
¾
Renewable energy sources – insufficient
¾
Energy efficiency - limited
¾
The key to economic cooperation – stable
energy situation
Athens Forum, Athens, 23rd April 2007
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VI. Environmental aspects
¾
Increasing problems in selecting locations
¾
Increasing environmental costs
¾
Increasing limitations
¾
¾
“the Greens” less educated and more
politicized
Misinformation in public media
Athens Forum, Athens, 23rd April 2007
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VI. IEM
¾
¾
¾
Clear regulatory and legal framework – Clear
implementation
Countries in the region require know-how in
market organization and concepts of new
economic relationships
Who is on the market:
¾
¾
¾
¾
¾
TSO
Energy Regulator
Energy Authority
no
no
no
DSO
GenCos
no – very sensitive role
yes
Athens Forum, Athens, 23rd April 2007
Athens Forum
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HEP
30000
GWh
Key Investment Projects
CCGT Osijek TPP Plomin
500 MW
250 MW
CCGT Sisak
250 MW
25000
CCGT ZG L 100 MW
HPP Lešće 42 MW
Shortage
9,5 TWh
20000
15000
Existing TPP
10000
NPP Krško
5000
Existing HPP
0
2006
2007
2008
2009
Athens Forum, Athens, 23rd April 2007
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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HEP
Key Investment Projects
CCGT Zagreb
100 MWe/ 70 MWt
CCGT
HPP Lešće
42 MWe
TPP Plomin
500 MW
CCGT Sisak
250 MWe / 50 MWt
CCGT
DV 2x400 kV
Ernestinovo-Pecs
CCGT Osijek
250 MWe / 80 MWt
CCGT
Terminal LNG
CCGT ?
Cable
400 kV Croatia-Italy
Athens Forum, Athens, 23rd April 2007
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Conclusions……
¡ Lack of generation capacity - Heavy import –
High(er) wholesale prices
¡ Low retail prices – Utilities accumulate losses
- Financial instability
¡ Governments accommodate social problems
through electricity pricing
Athens Forum, Athens, 23rd April 2007
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…and recommendation
¡ Key objective: Investments, but in generation
¡ How: Parallel increase of status of economies and
electricity pricing
¡ Result: More financially stable utilities capable to start
investment cycles
¡ Additionally: Let foreign capital to bring in know-how,
but on management and operation efficiency
¡ Otherwise: State monopoly is changed to private
company one
¡ Trust: is what we needs
¡ Competitiveness: not only cross border, but internally as
well
Athens Forum, Athens, 23rd April 2007
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Thank you for your attention
Athens Forum, Athens, 23rd April 2007
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