EU asks the Balkans to fight energy sector corruption

07/07/2014

A new report recommends reform of the justice system to tackle corruption in energy deals.

By Linda Karadaku for the Southeast European Times in Tirana -- 07/07/14

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Investigations into attempted bribery by Hungary’s oil and gas company Mol Group in Croatia led to the trial and imprisonment of former Croatia Prime Minister Ivo Sanader. [AFP]

The energy sector is one of the key sectors fostering economic development and stability, but Balkan countries must tackle corruption to save money and take of advantage of development opportunities, EU officials said.

Experts said eliminating corruption in the energy sector must be urgently addressed through reforms and improvements in the justice system.

The EU needs to assist the Balkan countries to correct the negative impact of corruption because the region urgently needs investments in the energy sector, especially since wages are below the EU average, said Janez Kopac, director of the Energy Community Secretariat.

"We would like to see EU directives on public procurement and stronger rules on the notification of state aid to become part of the legally-binding obligations under the Energy Community Treaty as soon as possible," Kopac told SETimes.

Kopac also said adopting EU directives will provide much-needed transparency and allow the secretariat to open dispute-settlement procedures if the rules are not followed.

An energy sector which operates transparently, one in which the players obey the rules, increases efficiency to the maximum, improves sustainability and benefits the national economy, said Dardan Malaj, a spokesperson for the Albania energy ministry.

Malaj said Albania's energy sector had been subject to corruption and illegal interventions, including providing licenses for hydro-power plants without contenders conducting any feasibility or other studies.

"The view of this unplanned development is the current situation, where nearly 70 percent of the plants have failed, and projects that have passed the deadline," Malaj said. But experts also said fighting corruption in regional countries, such as Kosovo, that seek to develop the energy sector, requires a reformed and efficient system, said Seb Bytyci, executive director of the Balkan Policy Institute in Pristina.

"Kosovo has the smallest number of judges and prosecutors per capita in Europe. The energy sector is continuously seen as the most corrupt in Kosovo, especially the Kosovo Power Company (KEK)," Bytyci told SETimes.

The Balkans Policy Research Group published a report last month on the effects of corruption in the energy sector.

"Weak institutions are a serious obstacle for the region's sustainable energy future," said Marko Prelec, executive director of the Balkans Policy Group.

The Energy Community plans to invest nearly 29 billion euros in the western Balkans by 2020. As a result, the energy sector will grow tremendously, but corruption levels could also grow proportionately, according to the report.

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Kosovo residents protest high electricity prices and corruption in the country’s KEK energy company. [AFP]

The report recommends the strengthening of the institutions and capacities of the prosecutors and courts handling energy cases.

"The capacities of the institutions dealing with oversight of the work of electricity traders (customs offices, anti-corruption and anti-monopoly commissions, etc) must be strengthened professionally and financially," the report said.

Experts also pointed out that corruption has affected the energy systems' sustainability.

In Croatia, former Prime Minister Ivo Sanader was tried and convicted for receiving a 10 million-euro bribe from the Hungary's oil and gas company Mol Group, initiating an investigation in Hungary of the Mol Group.

Some countries are already planning and taking specific measures to uproot corruption.

Albania Energy Minister Damian Gjiknuri promised to end the "black market for licenses" and authorities are working to review the legislation on concessions to create the conditions for fair, transparent competition for contracts.

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Malaj said Albania is in the process of creating a concessions register to help transparency and project follow up. Moreover, the government is working to impose justice system reforms to make the fight against corruption more effective.

However, the report also warned countries to develop comprehensive measures to avoid loopholes.

"Albania should strengthen the office of the public prosecutor and urgently advance plans to reform its judiciary in co-operation with the EU," it said.

What else can the Balkan countries do to tackle corruption in the energy sector? Share your opinion in the comments section.

This content was commissioned for SETimes.com.
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