Focus on Energy, 2010 - Karanovic & Nikolic

Private ShareholdersEVN MACEDONIAAs part of the “EVN Austria” group, EVN Macedonia operates the distribution and electrical supply systemin the state. In 2005, “EVN Austria” bought 90% of the ESM distribution company for approximately EUR220 million and today it jointly owns it with the MEPSO (10%). With more than 3,000 employees and asupply of over 5,000 GWh of electricity, EVN Macedonia reached a turnover of approximately EUR 300Million in 2008 5 and stands as one of the biggest and most successful companies in Macedonia. Aside fromthe distribution and supply, EVN Macedonia owns and operates 11 smaller hydro plants with an installedpower of over 40 MW. In the past two years, the Government and EVN Macedonia disagreed over billingpolicy. The state-owned producer ELEM claims that EVN Macedonia has debts of over EUR 100 Million.The relations between the Austrian-owned distributor and the Government have improved in 2009, butthe dispute is still unresolved. In addition to this, the price of the supplied electricity is strictly regulated bythe ERC, dictating a low supply price regardless of the real costs incurred by the distributors. So-called “costreflective pricing” will most likely feature in the amendments to the Macedonian energy law scheduled forthis year.OKTA A.D.50FOCUS ON ENERGYThe only oil refinery in Macedonia is operated by the JSC ”Okta a.d.”, a company owned by the Greekgroup Hellenic Petroleum with an 81% majority shareholding (“OKTA”). Built during the early 1980’s usingSoviet technology, the facility is operating with higher costs and relatively low efficiency. This is havinga big impact on the environment. The scope of the company includes the refining of crude oil as well as theimport and trade of petroleum products. The refinery has an annual refining capacity of 2.5 million metrictons. The main products produced are liquid petroleum gas, leaded and unleaded gasoline, aircraft fuels,diesel fuel, heating oil and heavy fuel oil. The products of the company cover the largest part of the internalmarket and significant quantities are exported to Kosovo. The company also operates a network of 36outlets 6 . In 2008, OKTA was the biggest company in Macedonia with an annual turnover of over EUR 650Million. Currently, the company is being modernized, mainly as a result of the energy regulators increasingthe pressure on them to mitigate their impact on the environment and also due to an increased demandamongst consumers for a higher quality fuel product.MAKPETROL A.D.“Makpetrol a.d.” is the biggest company in Macedonia regarding the distribution and supply of oil products.It has been operating since 1947. The company, through its network of over 110 petrol stations and 12 oilproduct storage facilities, has established a significant infrastructure for the distribution and trade of oilproducts. Having over 1,900 employees and a 60% market share, “Makpetrol a.d.” was amongst the twolargest companies in Macedonia in 2008, with revenues of nearly EUR 400 Million. In 1996, the Governmentand “Makpetrol a.d.” jointly established the public company ”GA MA”, the current natural gas market operatorin Macedonia. Also, “Makpetrol a.d.” is the major importer and supplier of natural gas in the country.REGULATORY FRAMEWORKThe Umbrella LawThe energy sector in Macedonia is regulated by the so-called “umbrella” law, covering different areas ofenergy such as electricity, renewables, oil, gas, as well as the regulation of the markets, transport and thetransmission of energy. This is the Law on Energy, enacted in May 2006 and published in the Official Gazetteof Macedonia no. 63/2006 (the “Energy Law”). It has been amended twice, once in 2007 and more recentlywith the amendments of 2008.5 Euro business center, Skopje – publication “200 biggest companies in Macedonia”6 “Hellenic Petroleum” Data, http://www.hellenic-petroleum.gr/online/index.aspx