The Former Yugoslav Republic of Macedonia has made significant progress in establishing a competitive and investor-friendly environment for the operation of its energy sector, but these efforts need to be sustained in order to create an efficient and secure national energy market. This was one of the main conclusions of an in-depth review of the country's investment climate and market structure, completed in 2006 by the Energy Charter.
As a signatory to the Energy Community Treaty and a country seeking membership in the European Union, a major priority for the Macedonian authorities has been to introduce legislation in line with requirements of the EU acquis. Many of the most important provisions are already in place, including the establishment of an independent regulator, to allow for integration into a regional market. However, further attention is needed to the implementation of this legislation, the quality of governance in the energy sector and corporate management.
Macedonia has opened its market to all forms of investment, including participation through the privatisation process, but the energy sector is one area where privatisation has proceeded with considerable difficulty. While the transformation of the electricity and oil sectors is gradually progressing, Macedonia's gas market requires substantial investment in the transportation and distribution infrastructure.
The Review encourages further efforts to reduce economy-wide business constraints that undermine investor confidence, especially creditor, property and contractual standards.
The in-depth review of the FYR Macedonia was drafted by the Secretariat in close cooperation with the Macedonian authorities. It was discussed at the spring meeting of the Charter's Investment Group, where representatives of Turkey and Bulgaria acted as examiners of the draft report. Conclusions and recommendations arising from the review will be considered by the Energy Charter Conference at its meeting in November.