Energy Market Actors
Electricity Market
Although Croatian energy law allows for independent producers to operate, with the exception of a wind park, HEP (read below) is still the country's only electricity company. (The complete opening of the elctricity market took place in 2008).
[ENERDATA]
Structure of Power Sector
HEP Group
Hrvatska Elektroprivreda (HEP Group) is a national electricity company which has been engaged in electricity production, transmission and distribution for more than one century, and with heat supply and gas distribution for the past few decades
HEP Group is organized in the form of a holding company with a number of daughter companies. (HEP Production, HEP Transmission, HEP Distribution, HEP Supply, HEP Gas, HEP District Heating, Sisak District Heating.)
HEP Grup has 4,000 MW of installed capacity for electricity production and 974 MW of heat production capacity. Within HEP Proizvodnja d.o.o. there are 25 hydro power plants and eight thermal power plants fired by oil, natural gas or coal. Some of them produce both electricity and heat in a combined-cycle, forming the backbone of the district heating system in the cities of Zagreb and Osijek.
Apart from HEP Proizvodnja, electricity in Croatia is produced by TE Plomin d.o.o., a company co-owned by HEP-a d.d. and RWE Power which operates a 210 MW thermal power plant, and industrial power plants and private owners of small renewable energy sources. HEP d.d. is a co-owner of Krško Nuclear Power Plant in Slovenia.
The Law on privatization of HEP (dating back to 2002) lays down the main restructuring and privatisation rules and methods for the company.
The law will not be replaced by a new one, the head of the Energy Department of the Ministry of Economy stated in 2010. However certain activity in HEP is expected in restructuring, both financial and organizational, so the company will be harmonized with the so-called third package of electricity and gas market liberalization. This means that HEP, just like other European companies, will have to adjust to EU’s demands for creating an open market by March 2011 or Croatia’s EU accession.
With the relevant legislation passed in 2002, the Croatian Independent System and Market Operator (CroISMO) was established as operator of the electric power system other than HEP itself.
[HEP]
Status of Deregulation
The Croatian energy sector is characterised by majority state ownership, except for natural gas distribution and retail sale of petroleum products, which, together with the distribution of LPGT, are partially in private hands.
The Hrvatska Elektroprivreda Privatisation Act was passed in 2002. Under the Act, at least 51% of HEP shares will remain in government ownership up until the Republic of Croatia joins the European Union.
Under the Electricity Market Act, eligible customers can freely choose their electricity supplier. In July 2007 the market was opened for all non-domestic consumers (approximately 60% of the consumption). At the end of 2008, all high-voltage consumers, as well as certain average and low-tension consumers, were supplied at market prices.
Oil and Gas Market
Oil and Gas
The INA Group is the state-owned holding company that controls Croatia's oil and gas exploration, production, transportation, trading, refining, and retailing. INA, in turn, owns 38% of JAFTAJANAF , the oil pipeline systems. INA's Crosco subsidiary provides oil drilling (including directional drilling), well testing, stimulation, workover, cementing, and logging services, and also supplies drilling mud and nitrogen INA operates two refineries and two lubricant product plants, 401 retail service stations in Croatia, 51 in Bosnia, and 5 in Slovenia. In addition, INA supplies gasoline and oil to over 200 service stations owned by others. In connection with this retail petroleum products business, INA owns and operates storage depots, railroad facilities, and oil tankers.
In the context of consolidation of oil industry in the world and liberalisation of energy market in the European Union, the Croatian Government decided to privatise INA. In March 2002, a special Act on Privatisation on INA (Law on privatization of INA) entered into force, according to which 25% plus 1 share are to be sold to a strategic partner. The public announcement for the expression of interest for purchase of the share was published in May 2002 and it aroused considerable interest by the European and Russian oil companies. The three shortlisted candidates – OMV (Austria), MOL (Hungary), ROSNJEFT (Russia) – submitted their binding offers. The tenders were opened on 20 July 2003, and MOL (Hungary) offered a price of $ 505 milion. Their tender also met other conditions set by the Croatian Government, so that the signing of the transaction contracts took place on 17 July 2003. The Republic of Croatia kept 25% plus one INA’s share until accession of the Republic of Croatia in EU. The remaining 21% will be distributed as compensation to former owners, and the rest will be sold or exchanged in accordance with market conditions, the decision of the Government and with the approval by the Croatian Parliament. [INA]
Jadranski Naftovod (adriatic pipeline) or JANAF is the operator of the oil pipeline system designed and constructed in the period from 1974 and 1979 as a modern, efficient and economical system of crude oil transport intended for local and foreign offtakers in Eastern and Central Europe. Jadranski Naftovoe is a Joint Stock Company with mixed ownership and a prevailing state capital.
Over the past 27 years, the JANAF system was used to transport around 146 million tons of crude oil, out of which 34.9% for local refineries owned by Ina Oil Industry Plc., and 65.1% for the needs of foreign companies, revealing the pronouncely international character of JANAF Plc. Along with the crude oil transportation as its core business, and the storage of crude oil and oil products, JANAF Plc., as a concession holder in the Port of Omišalj, is also engaged in the reloading of liquid cargo.
The Janaf System consists the following:
- Crude oil handling Omišalj Terminal on the Island of Krk, with storage tank farm of 760,000 m³ and the accompanying pumping and meternig stations and the Port of Omišalj.
- A pipeline 759 km long, 610 km of which runs through Croatian territory
- Crude oil handling terminals in Sisak, Virje and Slavonski Brod, with storage tank farms (100,000m³ in Sisak and 40,000m³ in Virje), and the accompanying pumping and metering stations.
- Submarine oil pipeline Omišalj-Urinj, linking the Omišalj Terminal with Ina's Oil Refinery in Rijeka.
- A crude-oil handling terminal in Omisalj on the island of KRK and the Omisalj port,
- A 759 km pipeline, of which 610 km pass through the Croatian territory.
Shareholders:
- Croatian Institute of Pension Insurance 50,541 %
- Republic of Croatia: 21,726 %
- INA Oil Industry Plc. Zagreb: 16,000 %
- State Agency for Deposite Insurance and Bank Rehabilitation (DAB): 5,840 %
- Other Shareholders: 5,893 %
[Ministry of Economy, Republic of Croatia]
Gas
There are 39 natural gas distribution companies in the Republic of Croatia and two distribution companies for town gas and LPG/air mixture. Natural gas transportation is the primary activity of the business corporation PLINACRO fully owned by the Republic of Croatia. In 2001, PLINACRO Ltd was established and registered as a member of INA group, 100 % owned by INA Plc, while from March 11 2003 the company became a state-owned company.
Status of Deregulation
The energy sector reform commenced officially when in July 2001 the energy laws were passed. Thus the natural gas transport has become energy activity according to Energy Law and has been performed as a public service. By establishing PLINACRO Ltd in January 2001, in the process of separation of gas transmission division from INA Plc, the new entity for liberalization of natural gas energy market has been formed. Liberalization of natural gas market in line with EU Directive implies the possibility of choice among natural gas suppliers and free access to gas pipeline system. Transport system is available to suppliers and eligible customers in accordance with in advance stipulated and publicly announced provision. For natural gas production in 2004 only INA Industrija nafta has had energy licence. For natural gas transportation, PLINACRO has held the energy licence.
The Gas market liberalisation in the Republic of Croatia brought about certain changes in the structure of natural gas price for end consumers.
The basic gas price elements include natural gas supply price and natural gas price transportation price, which follow appropriate tariff systems: Natural Gas Suppy Tariff System for Tariff Customers and Natural Gas Transportation Tariff System for Gas Suppliers and Eligible Customers, as well as the distribution margin defined by the Croatian Energy Regulatory Council. [Ministry of Economy/ PLINACRO]
Coal Market
Total consumption of coal in the Republic of Croatia is covered by the import. Brown coal and lignite are imported mainly from Bosnia and Herzegovina and only a small portion from the Czech Republic; coke is mainly imported from the neighbouring countries while hard coal is purchased on the international market from the major hard coal exporters. [Ministry of Economy]
