Electricity sector reform in South-East European countries in transition

Abstract

This article concentrates on interactions between various factors and agents like the state and its sector policies and strategies, supra-national legislation, EU accession, institutional environment and companies pursuing electricity market reform in the South-East Europe (SEE) region. It is rather obvious that the SEE countries have not succeeded in reforming their electricity sectors in a way that would enable development of stable and self-sustainable free markets for electricity, either within national borders or on the regional level. The most important research question of this article is: why did this happen? After an examination of the barriers to trade in electricity that are still present throughout SEE one can conclude that all of them can be directly traced to a single cause – rigid pricing policies that have been in place for decades and have not been removed. However, it would be too simple to say that this problem could easily be solved if only governments had the political will to do it. Since all of them carry a heavy burden of socio-economic problems that have arisen during the last two decades of post-communist transition, they would need to create a clear political strategy to gradually release their grip on electricity prices. The main conclusion is that the only possible way to finish the reform of the electricity sector in these countries successfully is to allow all market participants to do business under normal economic conditions, which seems still to be rather difficult for the governments of SEE countries.