Croatia has been reforming its energy sector on market principles and competition in energy businesses. The energy sector reform is especially demanding in the area of electrical energy. The Republic of Croatia (which in 2004 obtained the status of a candidate for accession to the European Union and is now is in the screening process), and HEP (which strives to be a full and equal participant in the European electricity market) have been working at an accelerated pace to meet the requirements of the European Commission. Directive 2003/54/EC which governs the relationships in the EU electricity market came into force in July 2004, and the Croatian Parliament at its session of December 3, 2004 passed the Act Amending the Energy Act, the Electricity Market Act and the Energy Activities Regulation Act (Official Gazette 177/2004).

Under the Electricity Market Act, eligible customers can freely choose their electricity supplier. Since December 2004, eligible customers are all customers with an annual consumption of over 20 GWh and all customers connected directly to the transmission network. The Electricity Market Act sets the pace for further opening of the electricity market. The following time-limits are set:

• by July 1, 2006 for customers with a consumption above 9 GWh
• by July 1, 2007 for customers in the commercial category,
• by July 1, 2008 for all customers

This will have the consequence that new suppliers and traders will enter the market.

The Energy Community Treaty, signed on the 25th of October 2005 in Athens and ratified by Croatian Parliament in May 2006, is a process that aims to extend the EU internal energy market to the South East Europe region (SEE region). The Treaty was signed by the European Union and nine partners of South East Europe - Croatia, Bosnia and Herzegovina, Serbia, Montenegro, the Former Yugoslav Republic of Macedonia, Albania, Romania, Bulgaria and UNMIK on behalf of Kosovo. It is a basic document, which integrates Croatia in energy system of European Union, even before the official accession. Main goals are to create a stable and regulatory market framework capable of attracting investment; to create a single regulatory space for trade; to enhance security of supply; to improve the environmental situation and to develop electricity and gas market competition on a broader geographical scale.

With this Treaty, Croatia will enhance its security of energy supply. National companies will have the possibility to enter into energy markets of EU and South East Europe and at the same time foreign companies will have the opportunity to extend their operations in the SEE region. Competition in generation and supply, provides new business opportunities (like expansion other energy and non-energy businesses) and strategic business alliances with partners at home and abroad.

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Experpt from "An Analysis of the Croatian/SouthEast European Situation Regarding the free Energy Market Implementation" regarding EU strategy and legislature (section 3 "Energy Charter, Energy Strategies, Energy Directives, Energy Laws") Format: PDF (51 pages, 1933 kB) Click here to download