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Directors of GASTRANS d.o.o. have on 8 March 2019, pursuant to the Decision on exemption of the new interconnector for natural gas dated 5 March 2019 and the Decision of Energy Agency of the Republic of Serbia no. 159-2019, nominated the Compliance Officer.

On 8 March 2019, pursuant to the Decision on exemption of the new interconnector for natural gas dated 5 March 2019 and the Decision of Energy Agency of the Republic of Serbia no. 159-2019, Directors of GASTRANS LLC nominated the Compliance Officer.

Subject decision can be found on the following link.

11 February 2019

Acting pursuant to the Article 10.2, paragraph 3 of the Decision on Rules for Allocation of Capacity and Mechanisms for Management of Transport Capacities of GASTRANS LLC. Novi Sad No. 40/2018-D-03/42 issued by the Energy Agency of the Republic of Serbia as of 3 September 2018, GASTRANS LLC. hereby notifies AERS and potential bidders about the results of the consultations, by publishing the questions and answers as follows:

  1. Please provide us with the Gas Transportation Agreement in Serbian language.

Pursuant to the Article 8.1 of the Binding Phase Procedure Rulebook, the Binding Phase documents for the purpose of the Stage of consultation are to be provided only in English language, whereby at the moment of announcing the official invitation, in line with the Article 10.3 of the Allocation Rules, both English and Serbian version of the documents will be provided to the Bidders.

  1. What are the legal consequences if Gastrans if does not start the transmission through the pipeline until 01.01.2020? Does User have a right to terminate the Gas Transportation Agreement if Transporter fails to start Gas Transmission Services by the 01.01.2020?

Please refer to the Article 23.2.1.2 of the Draft of the Gas Transportation Agreement.

  1. Which specific documents – guarantees should be provided by the Bidder to Gastrans, together with the Binding Bid? What does it mean that the Bidder is obliged to provide sufficient evidence of its capability to provide security for meeting the pecuniary obligations from the Gas Transportation Agreement? Which specific documents did you had in mind?

Please refer to the Articles 11.2 – 11.5 of the Binding Phase Procedure Rulebook

  1. What is the exact deadline for Gastrans to commence the transmission through the pipeline?

Currently envisaged date is 1 January 2020

  1. Would it be possible to book additional transportation capacity after the official announcement of the Invitation for Submission Binding Bids and signing Gas Transportation Agreement?

In the Binding Phase the long-term transmission service will be offered. Short-term products and other products mentioned in the Article 4.1.5 of the Binding Phase Procedure Rulebook shall be offered at relevant moment after the commercial operations date.

  1. Please provide us with the detailed calculation of the total capacity booking cost on yearly basis, by applying the Transmission fee for the transportation capacity of i.e. 1.000.0000 m3/day, as an example, preferably in excel format.

At the moment of official announcement of the Invitation, the price for the first year will be published. However, the Bidders are obligated to make any and all calculations necessary for them to place the Binding Bid.

  1. What is the difference between Single-Sided and Double-Sided Nomination?

Single-Sided Nominations apply to interconnection points, where the transmission system operators agree to enable only one user on relevant side of that interconnection point (being Active User) to submit Nomination, which will be applied to both sides. Double-Sided Nominations are Nominations provided separately by both users – to each TSO on the relevant sides of the interconnection point.

  1. What is the difference between Active and Passive User?

Active User is the user who makes Single-Sided Nominations and which are valid for both Active and Passive User.

  1. Is Company Guarantee issued by the company – Bidder (not its Parent Company) acceptable as the Credit Support in accordance with the Gas Transportation Agreement?

If the Bidder (or its 100% shareholder) satisfies the Rating Exemption Criteria, it is not required to provide Credit Support. If it does not satisfy Rating Exemption Criteria but its member/shareholder (not holding 100% of shares, but lower percentage) satisfies such criteria, the shareholder may provide corporate guarantee. In all other cases, other Credit Support must be provided.

  1. Are Bills of Exchange issued by the company – Bidder acceptable as the Credit Support in accordance with the Gas Transportation Agreement?

Currently bills of exchange are not envisaged by the draft of Gas Transportation Agreement.

  1. I would kindly ask you to provide me with the Serbian translation of the Gas Transportation Agreement, if possible.

Pursuant to the Article 8.1 of the Binding Phase Procedure Rulebook, the Binding Phase documents for the purpose of the Stage of consultation are to be provided only in English language, whereby at the moment of announcing official invitation, in line with the Article 10.3 of the Allocation Rules, both English and Serbian version of the documents will be provided to the Bidders.

  1. Since the Tariff Methodology does not specify the tariffs themselves, the only information on approximate future tariffs was provided to us during Gastrans LLC non-binding market interest survey (Additional information of the Project). In this regard, it should be noted that the tariff range which was provided to us during Gastrans non-binding market interest survey as the Additional information on the Project appears to be unreasonably high as compared to other infrastructure projects planned or being realized in Europe, taking into account announced technical parameters of the Project and possible optimization. Proposed tariff range significantly decreases economic attractiveness of the transmission services. In order to stimulate interest to the Project, we deem it necessary for Gastrans LLC to take all reasonable actions in order to decrease the level of the tariffs.

Please be informed that the tariff will be made available to the Bidders (that entered into Confidentiality Agreement and paid the Fee) at the moment of announcement of Invitation, as stated in the Rulebook on Binding Phase Procedure. The tariff will be determined in accordance with the principles required by the item 12 of the Preliminary Exemption Act and Tariff Methodology the compliance of which will the relevant decision of the regulator will be approved by the regulator.

  1. Taking into account that all the Project investments for the construction of the infrastructure are to be compensated by tariff paid by shippers who made long-term bookings, we consider it reasonable that in case Gastrans LLC at any time receives extra revenues from the Project, such extra revenues, under control of AERS, should serve as the basis for compensation of tariff for long-term bookings and should be distributed among all successful Bidders proportionally to the volumes of capacities booked.

Thank you for your comment. Gastrans shall review the subject proposal together with the proposals/mark-ups of other Bidders that provided proposals/mark-ups and if deemed appropriate, it may reflect the proposal in the final Gas Transportation Agreement the compliance of which with the relevant decision of the regulator should be confirmed by the regulator.

  1. Taking into account Article 25.2.2 of the Gas Transportation Agreement (hereinafter – the GTA) it is unclear which Exit Point(s) should be booked for the purposes of further transit through the territory of the Republic of Serbia to Bosnia and Herzegovina using Srbijagas network.

Thank you for your comment. Gastrans shall review the subject proposal together with the proposals/mark-ups of other Bidders that provided proposals/mark-ups and if it deems it appropriate, it may reflect the proposal in the final Gas Transportation Agreement the compliance of which with the relevant decisions of the regulator should be confirmed by the regulator.

  1. It appears that the Article 20.3 of the GTA can be construed as a limitation of liability in all cases when the Transporter does not make available Contract Capacity at the Contracted Entry Point and the Contracted Exit Point and does not provide Gas Transmission Services. Since a reference in the Article 20.3 of the GTA is related to “the reasons set out in the Article 16.3” of the GTA and, at the same time, the Article 16.3 of the GTA does not provide any specific reason for a reduction of Contracted Capacity or the Gas Transmission Services (there are only two exemptions when the Transmission Fee should be paid by the User without any reduction), the Article 20.3 of the GTA implies that in any case of reduction of Contracted Capacity or the Gas Transmission Services by the Transporter the only remedy of the User would be the reduction of the Transmission Fee, however the Article 20.2 of the GTA envisages that the User should have recourse against the Transporter for any losses under gas supply agreement with third parties in the form of discounts granted or damages or penalties incurred by the User. If there is no contradiction between the Articles 20.2 and 20.3 of the GTA, please provide clarification. If there is no contradiction, please amend the Article 20.3 of the GTA accodingly by deleting the part of the provision starting from “provided that”.

Thank you for your comment. Gastrans shall review the subject proposal together with the proposals/mark-ups of other Bidders that provided proposals/mark-ups and if it deems it appropriate, it may address the proposal in the final GTA the compliance of which with the relevant decisions of the regulator should be confirmed by the regulator.

  1. It is unclear from the Binding Phase Documents whether the GTA will allow the usage of the booked capacity for direct injection into/withdrawal from UGS Banatski Dvor to the Project. In order to clarify that the Project capacities can be used in direct connection with the storage facility the relevant Entry/Exit points should be introduced in the Binding Phase Documents in order to allow to inject or withdraw natural gas directly to/or from UGS Banatski Dvor. We deem it necessary to point out that the additional direct connection of the Gastrans gas transmission system to UGS Banatski Dvor would significantly enhance security of supply to the countries in the Balkan region and shall be welcomed by all market participants.

Please be informed that the current technical design does not envisage connection with UGS Banatski Dvor.

  1. Due to the missing capacity price, we are afraid that market participants will not have enough time for detailed analysis of strategies and will not be able to acquire proper approvals for the binding bid. Approvals and decisions for long term capacity booking are usually made at the top management level. Since the time constraints prevent the possibility of proper decision making, it seems possible that it will decrease the competition.

Gastrans believes that the project enhances the competition. The process, including the deadlines, is regulated by the decision of Energy Agency of the Republic of Serbia.

  1. The current proposal does not expressly guarantee that the capacity price will be published on 18 February the latest and within the tender package for binding phase. Since this is one of the most important parts for issuing decision on binding bid submission, please make sure to publish the capacity price on 18 February and within the tender package.

Yes, the price will be published at the moment of announcement of the Invitation.

  1. ON which basis will GASTRANS LLC (GASTRANS) conclude that the review of tariffs is necessary at a given time?

Please refer to the Items 12 and 14 of the Preliminary Exemption Act and to the Tariff Methodology.

  1. What exactly constitutes a public and transparent manner of actual tariff review, which will be initiated and executed by GASTRANS?

Please refer to the Article 22 of the Tariff Methodology.

  1. What exactly constitutes valid economic reasoning based on which was concluded that an adjustment of the actual tariff might be necessary?

Economic reasoning might be different depending on the specific reasons for adjustment. Therefore, it cannot be defined in general manner

  1. While not unprecedented, on what basis or methodology will the tariff for the virtual reverse flow be set in the amount of 90% of the relevant transposed Exit and Entry Tariff?

Please refer to the Item 12 of the Preliminary Exemption Act

  1. We found no adequate delay guarantee by GASTRANS. Contrary to industry practice that one side shall provide various guarantees for fulfillment of its necessary obligations while the other side does not provide appropriate guarantees for fulfillment of its necessary obligations. Since the lack of delay guarantees once again prevents the possibility of proper decision making, it seems possible that it will decrease the competition.

The Bidders had the opportunity to comment and suggest the text of specific amendments to the GTA, including the request for delay guarantee. Gastrans has received the comments/mark-ups from the Bidders and shall prepare the final version of the Binding Phase Documents taking them into account to the possible extent.

  1. Please provide an extended deadline for the User to unilaterally terminate (Gas Transportation Agreement, Article 24.1.1) the contract, linking it to the exact dates mentioned in the tender materials. In case of any delay (including the delay in the adoption of the Final Exemption Act as well) the available time for the unilateral termination of the Users shall not suffer and the delay shall not make this unilateral termination right impossible.

In the GTA published by Bulgartransgaz the deadline for unilateral termination is 1 April, so we believe that 8 April leaves quite enough time for unilateral termination of Gastrans GTA.

  1. What happens with the allocated capacities if the New Interconnector is not ready by its milestone dates (reduced capacity by 1 January 2020 and 1 October 2021 and full capacity by 1 October 2022)?

Please refer to the Article 23.2.1.2 of the Draft GTA.

  1. How will GASTRANS compensate for damages of the parties affected in case of delay?

Please refer to the Article 20 of the Draft GTA.

  1. How will GASTRANS compensate for damages of the parties affected in the connected/neighboring countries in case of delay (e.g. a bidder or a counterparty of a bidder has contracted capacities for the section in Bulgaria or the exit in Hungary, however, due to a delay there is no gas transfer possibility)?

Please refer to the Article 20 of the Draft GTA.

  1. How will GASTRANS compensate for damages of the parties affected in the connected/neighboring countries in case of a possible reduction of long-term capacities (e.g. a bidder or a counterparty of a bidder has contracted capacities for the section in Bulgaria or the exit in Hungary, however, due to a reduction there is a loss capacity in the connected/neighboring countries)?

The question is not clear. Generally speaking, the Article 20 of the Draft GTA regulates the liability.

  1. In addition to the lack of delay guarantees, we could not find any other type of guarantee (e.g. Bank Guarantee) provided by GASTRANS. General industry practice would require proper guarantee for fulfillment of obligations from both sides.

The Bidders had the opportunity to comment and suggest specific amendments of the Gas Transportation Agreement, including the request for delay guarantee. Gastrans has received the comments/mark-ups from the Bidders and shall prepare the final version of the Binding Phase Documents taking them into account to the possible extent.

  1. Please provide a list of banks or financial institutions that are licensed by the National Bank of Serbia and are acceptable to GASTRANS for providing a bank guarantee.

Please find the website of the banks that are licensed by the National Bank of Serbia

http://www.nbs.rs/internet/english/50/50_2.html

  1. Please provide an example of Bank Guarantee which satisfies the criteria set out for bank guarantees.

 

Please be informed the text of the bank guarantee will be submitted to the Bidders (that entered into Confidentiality Agreement and paid the Fee) to their respective e-mails before the official announcement of the invitation to each Bidder  – the commencement of the Submission Phase of Binding Bids, in accordance with the Rulebook on Biding Phase Procedure.

  1. Please provide a list of banks that are acceptable as escrow agents to GASTRANS for providing the deposited funds on an escrow account.

Please find the website of NBS with the list of banks which are licensed by the National Bank of Serbia

http://www.nbs.rs/internet/english/50/50_2.html

  1. We find that validity of the required bank guarantee or releasement of the escrow funds is very short and contradictory to the aim of the guarantee (it seems as if the guarantee for the payment of the capacity fee should be continuously available until the commencement of the transportation).

In respect to the validity of the required bank guarantee or releasement of the escrow funds please  refer to the Article 19.2 of the Gas Transportation Agreement and Appendix 1 of the Gas Transportation Agreement .

  1. Deadline for submission of bids is very short, given the fact that an irrevocable, unconditional, payable on first demand and without protest bank guarantee in a yet unknown amount (due to the undisclosed capacity fees) is required (if funds are not deposited on an escrow account).

Deadline for submission of bids complies with the Article 4.5.5 of Allocation Rules. Tariff will be made available to the Bidder (who have entered into the Confidentiality Agreement and paid the Fee) in the tender documents an the occasion of the official announcement of the invitation to each Bidder  – the commencement of the Submission Phase of Binding Bids, in accordance with the Rulebook on Biding Phase Procedure.

  1. A lack of work regulations disables proper planning, as industry practice presumes the existence of work regulations when evaluating business opportunities. A lack of work regulations and the fact that it is not possible to comment them can seriously damage the competition, as it is a main unknown risk for the bidders.

In other cases of exemption (e.g. TAP), work regulations were not prepared this early in the process, but at a later stage and by all means before the COD. Large part of the provisions to be regulated by the future work regulations are already in the draft of the Gas Transportation Agreement and in case of discrepancies, the long-term Gas Transportation Agreement shall prevail, which secures the position for the Bidders. Regarding the consultations issue before adoption of work regulations, please refer to our answer below.

  1. When will the “Gastrans work regulations” which represent work regulations that will be established by GASTRANS, and from time to time amended, in accordance with the procedure provided therein, for the operation of the New Interconnector be available? At which intervals is GASTRANS planning on amending the “Gastrans work regulation”?

Pursuant to the Energy Law, the transmission system operator adopts the Network Code. An entity becomes the transmission system operator by acquiring the license. Gastrans LLC shall conduct consultations with the users, regarding the work regulations draft and shall timely adopt the work regulations, following consultations in time for the commencement of operations. Amendments shall be made when deemed necessary.

  1. Although it is mentioned several times in the tender package, allocation of capacities is not accurate. Please indicate the detailed allocation methodology for the allocation of capacity for a point and gas year, i.e. the exact steps for the final allocation. An example of the methodology:

 

  1. Time period for which the bid is submitted
  2. Starting Gas Year of the bid
  3. The amount of capacity required by the bid

 

Length of the allocated capacity or submitted binding bid to an adjacent transmission system operator

Quantity of allocated capacity or submitted binding bid to an adjacent transmission system operator

We have not received remarks from the other Bidders on allocation methodology, but we will take into account your comment in the same manner as all other comments/amendments.

  1. The tendering process seems to aim at proving the existence of the interest in capacities of the New Interconnector and enabling the commercially sustainable development of the New Interconnector. Given the fact that up to 88% of the capacity will be allocated to the EPA partners (with no requirement to submit guarantee for seriousness of the offer from them) and the uncoordinated tender procedure in all countries where the pipeline will go through, the current procedure will not enable market participants to offer competitive bids for the whole part, but only for the Serbian part of the interconnector and it will only provide (after the calculation of the tariff is finished and it and published) a sufficient rate of return, if any, not providing sub-optimal realization of the project, and creating a monopolistic situation for the EPA partners who are entitled to priority allocation. We find the maximum 88% allocation of capacity to EPA partners in general is very high and significantly over the market standard.

The percentages are set by the Preliminary Exemption Act, considering that such allocation enhances the competition as 12% represents close to 50% of the Serbian market.

  1. How does the fact that Bidder has been allocated or submitted a binding bid to an adjacent transmission system operator (BULGARTRANSGAZ and/or FGSZ) influence the capacity allocation? Should any affiliates of the Bidder be mentioned in this regard?

This information primarily serves Gastrans LLC to require from the Bidders an additional information if the quantities requested under the Binding Phase differ from the quantities requested/allocated in AFO systems. The Bidder may in the table, next to the quantities, specify that the request was made by its parent/subsidiary/related company.

  1. The Gas Transportation Agreement (Article 23.1.5) states that the Transporter may terminate the Agreement in case of User’s insolvency impends or occurs (Article 23.2.1.1 defines the opposite situation). Please clarify and add more details to this article, as it seems very vague.

Gastrans has received the comments/mark-ups from the Bidders and shall prepare the final versions of the Binding Phase Documents taking them into account to the extent possible.

  1. How (in which form) will the exit “Horgoš” exit be connected to the Hungarian TSO “FGSZ” and how is it going to continue in Hungary? Where can official information issued by the Hungarian TSO be found?

This is subject of interconnection agreement that should be entered into force with FGSZ. For the official information available from the Hungarian TSO, please refer to FGSZ.

  1. The period of the binding bids for the capacities is limited to a maximum of 20 years, whereas the economic lifespan (and thus the economic calculation) is calculated for 40 years of pipeline operation. With what rate of usage and price are the incomes from for the second 20 years of operation (after the current tender scope given at the auction) calculated in order to accomplish commercially sustainable development of the New Interconnector?

Binding Bids are limited to the period of exemption. After the expiration of the exemption period, allocation and usage of the pipeline will be conducted in line with at that time applicable rules and legislation valid at that period.

  1. How will the exit points in Serbia (with 108.16 Gwh/day/year technical capacity) substitute currently available and widely used Hungarian-Serbian interconnector (with 136.98 GWh/day/year technical capacity)? Are the economic effects (loss of income) from the decreased usage of the Hungarian-Serbian interconnector calculated into the sustainability model?

The question is not clear. Gastrans LLC does not manage Hungarian-Serbian interconnector and it does not intend to manage such interconnector, but rather construct its own connection point with the Hungarian system.

  1. Complaint deadline of three (3) working days from the receipt of the notification on non-acceptance of the Binding Bid is unrealistically short, since clarification needs to be stated for each instance.

This deadline is set in the Allocation Rules rendered by Energy Agency.

  1. What exactly constitutes significant amendments of the capacity, allocated in accordance with the results of the capacity allocation or conditions for usage of capacity allocated in accordance with the results of capacity allocation based on which the Bidder who entered into a long-term gas transportation agreement with GASTRANS is entitled to terminate that agreement?

The expression “significant amendments” is derived from the Allocation Rules. If the Final Exemption Act determines different allocation rules, Gastrans shall consult with the AERS regarding the manner of application of this expression.

  1. Please provide the ratio for fuel gas consumption.

The ratio will be available once when the parameters for the compression station are known. Gastrans does not expect that the ratio will be higher than usual, according to the good industry practice.

30.04.2018

Aggregated results of the market interest survey, collected pursuant to the rules of procedure (bids received by 15.04) were published by Gastrans

16 April 2018

Non-binding phase of the market test is completed

Gastrans informs all interested parties that on 15 April 2018 the deadline for submitting the non-binding bids upon the Public Invitation to submit non-binding bids for reservation of capacities has expired and thanks to all parties that have submitted non-binding bids. The aggregated final results will be published no later than 30 April 2018, and the participants that have submitted the bids will be duly informed about all further steps.

6 March 2018

On 5 March 2018 the Public Invitation to submit non-binding bids for reservation of capacities for the future pipeline of the company GASTRANS limited liability company Novi Sad was published also in the following media:

  1. In Serbian printed media – Official Gazette of the Republic of Serbia no. 16/2018 dated 5 March 2018
  1. In expert international media – World Pipelines, March edition:
  1. Electronic version of the March edition is available at:

http://publications.worldpipelines.com/flip/world-pipelines/2018/March/p3h1aa.html#38

  1. Public invitation is published also on the website World Pipelines:

https://www.worldpipelines.com/business-news/05032018/gastrans-invites-non-binding-bids-for-reservation-of-capacities-for-natural-gas-pipeline/

  1. Information on publishing the public invitation in edition of World Pipelines is published on their twitter account:

https://twitter.com/WorldPipelines/status/970698186368143360

  1. As well as Facebook page of World Pipelines:

https://www.facebook.com/WorldPipelines/

March 5, 2018

GASTRANS has announced the Public Invitation to submit non-binding bids for reservation of capacities, in line with the Decision on Method and Deadlines for market interest survey for use of Future Infrastructure Facility of the Company “GASTRANS” LLC, Novi Sad adopted by AERS.

The text of the Public invitation is available on the following link: www.gastrans.rs/market_test.

February 9, 2018

THE COUNCIL OF THE ENERGY AGENCY OF THE REPUBLIC OF SERBIA HAS ADOPTED THE DECISION ON METHOD AND DEADLINES FOR MARKET INTEREST SURVEY FOR USE OF FUTURE INFRASTRUCTURE FACILITY

The Council of the Energy Agency of the Republic of Serbia (AERS) on the session held on February 9, 2018, adopted a Decision on Method and Deadlines for market interest survey for use of Future Infrastructure Facility of the Company “GASTRANS” LLC, Novi Sad.

The Decision of the Council of AERS can be downloaded the website of AERS, on the following link: http://www.aers.rs/FILES/Odluke/2018-02-09_Odluka%20GASTRANS-ENG.pdf.

February 2, 2018

GASTRANS HAS SUBMITTED A REQUEST FOR EXEMPTION TO THE ENERGY AGENCY OF THE REPUBLIC OF SERBIA PURSUANT TO THE ARTICLE 288 OF THE ENERGY LAW

GASTRANS LLC, Novi Sad on February 2, 2018 has submitted to the Energy Agency of the Republic of Serbia (AERS) the request for exemption pursuant to the article 288 of the Energy law of the Republic of Serbia, which relates to the entire natural gas infrastructure facility – new gas pipeline which will go through the Republic of Serbia and connect Bulgarian and Hungarian national transmission system.

The Article 288 of the Energy Law transposes into legislation of the Republic of Serbia rules on exemption stipulated by so-called “Third Package” regulations of the European Union on common rules for internal energy market.