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 d.o.o. Novi Sad No. 40/2018-D-03/42 rendered by the Energy Agency of the Republic of Serbia as of 3 September 2018, GASTRANS d.o.o. hereby notifies AERS and potential bidders on 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 is 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 language will be provided to the Bidders.

  1. What is the legal consequence for 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 GTA

  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 ability to provide security for meeting the pecuniary obligations from the Gas Transportation Agreement? What specific document 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 applying the Transmission fee for the transportation capacity of i.e. 1.000.0000 m3/day, as an example, preferably in excel form.

At the moment of official announcement of the Invitation, the price for the first year will be published. However, the Bidders are responsible 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 Nominations?

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

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

Active User is the user which 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 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 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 is 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 language 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 d.o.o. Pipeline Market Test (Additional information on the Project). In this regard, it should be noted that the tariff range which was provided to us during Gastrans Pipeline Market Test 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 transmission services. In order to stimulate interest to the Project, we deem it necessary for Gastrans d.o.o. 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 d.o.o. at any time receives extra revenues from the Project then 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 the 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-up of other Bidders that provided proposals/mark-up and if it deems it appropriate, it may reflect the proposal in the final GTA the compliance of which with the relevant decisions 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-up of other Bidders that provided proposals/mark-up and if it deems it appropriate, it may reflect 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 appears that the Article 20.3 of the GTA can be construed as a limitation of liability in all cases where 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 made 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 for 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 provides that the User should have recourse against the Transporter for any losses under gas supply agreements 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 a contradiction, please amend the Article 20.3 of the GTA correspondingly by deleting the part of the provision starting from “, provided thaf’.

Thank you for your comment. Gastrans shall review the subject proposal together with the proposals/mark-up of other Bidders that provided proposals/mark-up and if it deems it appropriate, it may reflect 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 that 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. Because of the missing capacity price, we are afraid market players will not have enough time for detailed analysis of strategies and will not be able to acquire proper approvals for the binding bid. For long term capacity booking approvals and decisions are usually required at top management level. Because 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. Since this is one of the most important parts for being interested in providing a binding bid, 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. What is the basis on which GASTRANS d.o.o. (GASTRANS) will 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 a review initiated and executed by GASTRANS for reviewing the actual tariff?

Please refer to the Article 22 of the Tariff Methodology

  1. What exactly constitutes valid economic reasoning why an adjustment of the actual tariff might be necessary?

Economic reasoning might be different depending on the 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 at 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 from the side of GASTRANS. It is contrary to industry practice that one side shall provide various guarantees for its proper performance while the other side does not provide appropriate guarantees for its necessary obligations. Because the lack of delay guarantees 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 marl-up the GTA, including the request for delay guarantees. Gastrans has received the comments/mark-up from the Bidders and shall prepare the final versions of the Binding Phase Documents taking them into account to the extent possible.

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

In the GTA published by Bulgartransgaz the deadine for unilateral termination is 1 April, so we believe that 8 April is quite enough time for unilateral termination in 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 countries in case of delay (e.g. a bidder or a counterparty of a bidder has contracted capacities for the section in Bulgaria or for the exit in Hungary, but because of a delay there is no gas transfer possible)?

Please refer to the Article 20 of the Draft GTA

  1. How will GASTRANS compensate for damages of the parties affected in the connected countries in case of a possible reduced long-term capacity (e.g. a bidder or a counterparty of a bidder has contracted capacities for the section in Bulgaria or for the exit in Hungary, but because of a reduction there is lost capacity in the connected 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 guarantees (e.g. Bank Guarantee) provided by GASTRANS. General industry practice would require proper guarantees for fulfillment of obligations from both sides.

The Bidders had the opportunity to comment and mark-up respective documents including the request for other type of guarantees. Gastrans has received the comments/mark-up from the Bidders and shall prepare the final versions of the Binding Phase Documents taking them into account to the extent possible.

  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 which 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 satisfying the criteria set out for bank guarantees.

 

Please be informed that the text bank guarantee will be made available 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 Stage Submission 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 deposited funds in an escrow account.

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

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

  1. We find the validity of the required bank guarantee or releasement of the escrow funds very short and contradictory to the aim of the guarantee (it seems like 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 revert to Article 19.2. of the GTA and Appendix 1 of the GTA.

  1. The allocated submission window is very short, given the fact that an irrevocable, unconditional, payable on first demand and without protest bank guarantee in a yet unknown amount (because of the undisclosed capacity fee) is required (if funds are not deposited on an escrow account).

The allocated submission window complies with the item 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 on the occasion of official announcement of the invitation to each Bidder  – the commencement of Stage Submission of Binding Bids, in accordance with the Rulebook on Biding Phase Procedure.

  1. No available network code disables proper planning, as industry practice presumes a network code when calculating business opportunities. The lack of network code and the fact that it is not possible to comment it can seriously damage the competition, as it is a major unknown risk for the bidders.

In other cases of exemption (e.g. TAP), the Network Code was not prepared this early in the process, but at later stage and in any case before the COD. Large part of the provisions to be regulated by the future NC are in the draft GTA and in case of discrepancies the long-term GTA shall prevail, which secures the position for the Bidders. Please also see our below answer regarding the consultations before adoption of the NC.

  1. When will the “Gastrans Network Code” meaning the network code as established, and from time to time amended in accordance with the procedure provided therein, by GASTRANS for the operation of the New Interconnector be available? At what intervals GASTRANS is planning on amending the “Gastrans Network Code”?

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 d.o.o. shall conduct the consultations with the users on the draft Network Code and shall adopt the Network Code following consultations in time for the start of operations. Amendments shall be made as 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 for the methodology:
  2. Length of the bid
  3. Starting Gas Year of the bid
  4. Quantity of the bid
  5. Length of allocated or submitted binding bid to an adjacent transmission system operator
  6. Quantity of allocated or submitted binding bid to an adjacent transmission system operator

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

  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 facts that up to 88% of the capacity will be allocated to the EPA partners (with no requirement of security of seriousness from them) and the un-connectedness of the tenders by countries throughout the whole pipeline, the current procedure will not enable market players to offer competitive bids for the whole and so the Serbian part of the interconnector and it will only provide (after the calculation of the tariff is finished and it is published) a sufficient rate of return, if any, providing sub-optimal realization of the project, and creating a monopolistic situation for the EPA partners. We find the maximum 88% allocation of capacity to EPA partners in general very high and significantly over 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 indicating if the 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 affiliate of the Bidder be mentioned in this sense?

The information primarily serves Gastrans d.o.o. to require the Bidders 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 is made by its parent/subsidiary/related company.

  1. The Gas Transportation Agreement (Article 23.1.5) states that the Transporter may terminate the Agreement if a User insolvency event impends or occurs (Article 23.2.1.1 defines the opposite direction). Please clarify and add more detail to this article, as it seems very vague.

Gastrans has received the comments/mark-up 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 what form) will the exit “Horgoš” be connected to the Hungarian TSO “FGSZ” and how is it going to continue in Hungary? Where can official information available from the Hungarian TSO be found?

This is subject to interconnection agreement to be entered into 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 lifetime (and thus the economic calculation) is calculating with 40 years of operation. With what rate of usage and price are the incomes from the second 20 years of operation (after the current tender scope) calculated for the commercially sustainable development of the New Interconnector?

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

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

The question is not clear. Gastrans d.o.o. is not operator of HU > SRB interconnector and it does not intend to operate such interconnector but to construct its own connection point to the Hungarian system.

  1. Complaint window of three (3) working days from the receipt of the notification on non-acceptance of the Binding Bid is unrealistically short, as facts for reasoning need to be collected for the case.

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

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

Wording “material amendment” is derived from the Allocation Rules. If the Final Exemption Act provides for different allocation rules, Gastrans shall consult with AERS on the manner of application of this wording. “

  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 what would be usual according to the god industry practice.

30.04.2018

Aggregated results of the Market Test collected pursuant to the rules of procedure (bids received by 15.04) are published by Gastrans

16 April 2018

Non-binding phase on the market test finalized

Gastrans informs all interested parties that the deadline for submitting the non-binding bids upon the Public Invitation to submit non-binding bids for reservation of capacities has elapsed on 15 April 2018 and thanks to all parties that have submitted non-binding bids. The aggregated final results will be published not later than 30 April 2018, and the participants that have submitted the bids will be duly informed in all other 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 društvo sa ograničenom odgovornošću 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 invitaion is published also o website of 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 Test on the Interest in the 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 TEST ON THE INTEREST IN THE USE OF FUTURE INFRASTRUCTURE FACILITY

The Council of the Energy Agency of the Republic of Serbia (AERS) has adopted on the session held on February 9, 2018, a Decision on Method and Deadlines for Market Test on the Interest in the Use of Future Infrastructure Facility of the Company “GASTRANS” LLC, Novi Sad.

The Decision of the Council of AERS can de downloaded on 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 TO THE ENERGY AGENCY OF THE REPUBLIC OF SERBIA THE REQUEST FOR EXEMPTION PURSUANT TO ARTICLE 288 OF THE ENERGY LAW

GASTRANS LLC, Novi Sad has submitted on February 2, 2018 to the Energy Agency of the Republic of Serbia (AERS) the request for exepmtion pursuant to article 288 of the Energy law of the Republic of Serbia which request 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 Serbian legislation the rules on exemption stipulated by so-called “Third Package” of the European Union regulations on common rules for internal energy market into national legislation.