Perspective - AmCham Serbia

ISSN 1452-6085

ABUSED NATURE

Searching for Energy Efficiency

Contributions: Bojan Kovačić Serbian Energy Efficiency Agency Ian Brown EBRD Serbia H.E. Laurent Louis Stokvis MA Ambassador of the Netherlands in Serbia Bojana Bregović Wolf Theiss and more...

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Editor’s Corner

Contents 8 Energy Efficiency Perspective Bojan Kovačić Deputy Director, Serbian Energy Efficiency Agency

According to Bill Gates, the world needs ‘energy miracles’ to meet the imperative demand for clean and renewable energy. I cannot claim that this edition of Perspective, with its theme of energy market and policy, delivers any miracles. But it offers a wide-ranging and incisive survey of the strengths and weaknesses of efforts to meet Serbia’s present and future demand for increasingly cleaner energy.

Zoran Stanojević, Director, MK Group d.o.o, points out that despite the general agreement of the promise of wind power as an important factor in Serbia’s renewable energy capacity, legislative and administrative logjams are inhibiting investment in this energy-rich field.

Offering the view from abroad, His Exellency Laurent Louis Stokvis, Ambassador of the Netherlands in Serbia, explores the legal, commercial and administrative reasons why Serbia is lagging far behind the Netherlands in wind power development.

On the same general theme, Bojana Bregovic of Wolf Theiss, points out that though in principle and on paper, many aspects of the Serbian energy market are “open” and conform to EU regulations, much more liberalization is needed to create a truly free market.

Bojan Kovačić, Deputy Director, Serbian Energy Efficiency Agency, adds that despite some progress, a vast range of energy efficiency measures and techniques remain to be implemented to get anywhere near the potential savings and their effect on the Serbian economy and standard of living.

On a positive note, Zlatko Dragosavljević, state Secretary for Mining, Ministry of Environment, Mining and Spatial Planning, says that blessed with abundant mineral resources, Serbia is creating the legal framework, technology and management techniques to maximize the economic impact and sustainability of these resources.

Dragoljub Damljanović, General Manager, Schneider Electric in Serbia, presents compelling evidence that installing systems that monitor and maximize energy efficiency will help Serbian hospitals meet present and future demands while cutting energy costs.

Finally, Ljubo Maćić, President of the Council, Energy Agency of the Republic of Serbia, emphasizes that as Serbia moves toward meeting European energy price liberalization standards in the coming years, success will depend on clearing a lot of hurdles in order to be both rational and fair.

These and a host of other articles and interviews will give our readers a clear view of the state of play of energy policy and potential in Serbia today and the trend in the future.

Branislav Čale AmCham Communications Manager

12 Energy Market Perspective Ljubo Maćić President of the Council, Energy Agency of the Republic of Serbia American Chamber of Commerce in Serbia Smiljanićeva 24/I 11000 Belgrade, Serbia Tel: +381 11 30 88 132; 34 46 437 Fax: +381 11 30 88 922 www.amcham.rs info@amcham.rs

15 Mineral Oil Perspective Zlatko Dragosavljević State Secretary for Mining, Ministry of Environment, Mining and Spatial Planning

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18 Electricity Market Perspective Bojana Bregović Internationally recognized legal consultant and a Partner at Wolf Theiss 20 Windmill Business Perspective Zoran Stanojević Director, MK Group d.o.o.

22 Health Care Perspective Dragoljub Damljanović General Manager, Schneider Electric in Serbia

Editor-in-Chief Branislav Čale cale@amcham.rs Editorial Board Amalija Pavić Acting Executive Director pavic@amcham.rs Advertising, Member Benefit & Network Branislav Valent Marketing & CSR Coordinator valent@amcham.rs Production, coordination and editorial contribution Emina Azizi/Future Media amchamperspective@futuremedia.rs

24 Energy Efficiency Loans Perspective Igor Anić Member of the Executive Board, ProCredit Bank 26 Clean Fuel Perspective Zoltan Michael Takács CEO, MOL Group 28 Solar Power Perspective 30 Wind Energy Perspective H.E. Laurent Louis Stokvis MA Ambassador of the Netherlands in Serbia

34 Renewables Potential Perspective Jovanka Arsić Karišić President of the Executive Board, CEDEF 36 New Energy Act Perspective Mark Crandall Chairman, Continental Wind Partners

English proofreader Charles Alverson

38 Serbian Energy Perspective Slobodan Petrović Secretary of the Energy and Energy Mining Association, Serbian Chamber of Commerce

Cover Page Ovation BBDO Printing Rotografika, Subotica

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32 Energy Projects Perspective Ian Brown Acting Head, EBRD Serbia

Graphic Layout and Prepress Branko |u\ić/BlackBox branko.zuzic@blackbox.rs

Director of Photography Miroslav Petrović/BlackBox mikica5@blackbox.rs

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46 HR Best Practice Dušanka Babić Human Resources & Training Manager, DHL International Beograd d.o.o 54 Advocacy Update, AmCham News and more...

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AmCham Patron Members

4 Perspective June, 2012

5 Perspective June, 2012

From the President

The Audacity of Taking Control

Energy efficiency: It’s what you need and deserve.

“A nation that can’t control its energy sources can’t control its future.”

Miloš Đurković AmCham President

These words from then-Senator Barack Obama’s 2006 book “The Audacity of Hope” rings true in the Serbia of 2012. We live in a region of great promise.

Serbia’s favorable geographic location puts the country in the position of an important player on the regional energy market.

But despite this promise, there is an imperative need to further liberalize every aspect of energy, and also to maximize our exploitation of rich sources of renewable energy and increase the efficiency with which we use energy.

Serbia has taken a big step towards implementing new energy regulations, but there is much more to be done with respect to the energy sector as a whole, with special focus on fostering market liberalization.

Serbia’s new Energy Law has been harmonized with the EU’s second internal energy market package - but, to achieve full electricity market liberalization Serbia must complete its legislative reform thoroughly and effectively.

Though in principle many aspects of the Serbian energy market are “open” and conform to EU regulations, much more liberalization must take place to create a truly free market.

This envisions complete integration and liberalization of the EU electricity (and gas) markets. With its favorable geographic location and untapped sources of renewable energy, Serbia will become even more attractive to investors.

On the second area of concern, Serbia has great potential of renewable energy sources, but better use of renewables requires efficient energy policies and solutions that meet the needs of the public and the economy, while minimizing damage to the environment.

One of the biggest challenges in the transition to the “green” technologies is achieving cost efficiency. In addition to technological challenges, undeveloped markets and a lack of experience, better use of renewables is also complicated by legal and administrative red tape. In order to improve energy efficiency, there needs to be a mindset change. Education and communication are crucial.

We have a great deal of work ahead of us, both as an organization and a nation. This may seem daunting but we must look ahead with confidence and renewed energy. Let me conclude with a quote from Eric Hoffer, the American writer and social critic: “The greatest weariness comes from work not done.”

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Bojan KovaÄ?ić

Energy Efficiency Perspective

> Despite some progress, a vast range of energy efficiency measures and techniques remain to be implemented to get anywhere near the potential savings and their effect on the Serbian economy and standard of living. <

8 Perspective June, 2012

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olitical, economic and environmental reasons, as well as the growing need for intensified use of existing energy resources due to accelerated industrial growth, demand development of new sources of energy and improved energy efficiency in Serbia.

This is one of the priorities of the National Strategy of Sustainable Development and one of the preconditions to become an EU Member State. Energy efficiency has also been cited as one of the priorities in the Serbian Strategy of Energy Development by 2015. Significant progress has been made in this field in the past few years, many projects have been realized, but there is still a lot systemic work to be done.

The Importance of Incentives Energy efficiency indicators show that Serbia has the potential to raise the level of rational use of energy in all consumption sectors, especially residential (civil engineering, agriculture, public utility services, households etc.). This is best demonstrated by the fact that applying energy efficiency measures only in the industrial sector could annually save US$70 million which could be invested in other development projects. Bearing this in mind, what we need now is coordinated action of public authorities - above all, the ministries in charge of energy, environment, spatial planning, agriculture, forestry and water management, science, economy and regional development and finance. Local government units - municipalities, cities and towns - play an important role, too. We can improve efficiency in generation, transmission and distribution of electric power as well as thermal energy.

The state can initiate creation of a favorable environment for energy efficiency improvement through new forms of financing, public and private partnership projects, introduction of the savings funds model (the ESCO model) and by incorporating energy efficiency criteria in the Public Procurement Act. Incentives play an important part in the establishment of an energy efficiency service market. There are different types of incentives, including subsidies, tax and customs facilities, voluntary agreements and favorable loans. But as well, appropriate penalties have to be in place when energy efficiency obligations are not met. Also, incentives have to be supported by the Energy Efficiency Fund.

Financial support will of course help (co)finance a number of energy reviews of Serbian enterprises, especially small and medium firms, which will, in turn, provide their owners/CEOs with more precise indicators of how, how much and over what period of time they can save both energy and money.

Although our public may occasionally hear differently, the total consumption of primary energy per capita in Serbia is not so high due to our underdeveloped industry. We can say that there is a correlation between total economic (primarily industrial) development and total energy consumption in every country. Compared to the EU, Serbia consumes up to three times less primary energy per capita and two times less electricity per capita than some new Member States (e.g. Slovenia). However, the problem of energy efficiency remains. Energy efficiency is measured by energy intensity, or specific consumption of energy, per newly generated value unit. Therefore, it is important that the Serbian energy intensity indicator is reduced to make the economy more competitive, the standard of living higher, the environment cleaner.

The Responsibility Belongs to Everyone Serbia could get closer to developed countries in the field of energy efficiency in the next ten years or so if appropriate measures were applied and if the government provided greater support. However, it should be said that rational use of energy (especially when it comes to consumption) is not just the responsibility of the government but also of every individual. Broader social action is necessary as well as raising awareness of these issues among all target social groups. A positive example in this respect was the year 2011, which was declared the Energy Efficiency Year in Serbia.

We should also welcome a recently initiated education action of the Public Enterprise Elektrovojvodina, supported by the Consumer Association of Vojvodina, which targeted all citizens. PE Elektrovojvodina has also signed a Memorandum of Cooperation with the Serbian Energy Efficiency Agency.

9 Perspective June, 2012

Energy Efficiency Perspective

Great Energy Savings Depend on Great Initiatives

Deputy Director, Serbian Energy Efficiency Agency

Bojan KovaÄ?iÄ&#x2021;

Energy Efficiency Perspective

Deputy Director, Serbian Energy Efficiency Agency

The situation is not better in other Central or Eastern European countries, but there it has been constantly improving since the year 2000, especially after some countries joined the European Union in 2004. This is because they were then able to use investment funds provided they implemented new regulations.

This is what Serbia and other countries in the Region, having the same problems and dealing with them in a similar way (in the systemic sense), will have to do. And they will be coordinated by the Energy Community Secretariat for South-East Europe.

The Serbian Statistics Office does not show GDP in the constant US dollar of 2000, which is why it is not possible to calculate primary energy intensity or final energy intensity according to the methodology of the International Energy Agency or to make comparisons with indicators in other countries. If indicators are calculated based on the gross domestic product in constant 2002 prices, it is obvious that both these indicators dropped in the period 2003 through 2008 by some 15 percent primarily due to an increase in proceeds from privatization and GDP rather than an increase in economic activity and energy efficiency. It is estimated that energy intensity in Serbia is 2 to 3 times higher than in the EU-15 countries, mostly because of declining industrial activity in the 1990s, slow industrial recovery, low prices of electricity and disproportionate prices of energy and fuels. None of these stimulated the rational use of energy.

10 Perspective June, 2012

One Directive Does Not Make a Regulatory Framework The key general act applying to all EU Member States, on which they have all based their regulations, is the Energy Efficiency Directive 2006/32/EC on energy end-use efficiency and energy services, the revision of which is in the pipeline as a new Directive has been proposed. The general objective of this Directive is for Member States to reach 9 percent indicative energy savings through energy services and other energy efficiency improvement measures after nine years of application of the Directive.

The Directive does not create a regulatory framework; nor does it deal with ways in which energy savings are to be achieved in the individual sectors of energy generation and consumption such as industry, households or public lighting. Each Member State was expected to draw up its own laws and regulations to regulate all relevant areas of energy efficiency improvement.

Why is energy efficiency so important for our companies?

Primarily because it is possible to reduce the cost of the final product if the cost of energy is reduced. Energy costs can add from 20 to 25 percent to the cost of the final product. If these are reduced by 10 percent, total cost is reduced by two percent and profit increases by as much. The concept of energy management is a model that should be used both in the economy and

by the local governments. The Serbian Energy Efficiency Agency calls for application of this model in other consumption sectors, e.g. civil engineering, as this is a sector with the highest consumption of final energy.

Institutional Capacity Building A law regulating rational use of energy should be adopted to create a legal framework for systemic increase of energy ef-

> Although our public may occasionally hear differently, the total consumption of primary energy per capita in Serbia is not so high due to our underdeveloped industry. We can say that there is a correlation between total economic (primarily industrial) development and total energy consumption in every country.

Compared to the EU, Serbia consumes up to three times less primary energy per capita and two times less electricity per capita than the some Member States (e.g. Slovenia). < ficiency in all sectors of energy consumption (and generation).

The law should contain effective new solutions that the Agency calls for, e.g. mandatory determination of existing annual energy consumption by industrial companies and their obligations in case they exceed the stipulated maximum level of consumption.

Establishment of an energy efficiency fund in Serbia is also of crucial importance, as it would finance and help carry out various energy efficiency projects and programs, including educational ones. The recently adopted government Regulation on Financing Energy Efficiency Projects creates prerequisites for more investment in this field, although primarily at the local government level.

Another important condition for the improvement of energy efficiency in Serbia is introduction of energy management in all consumption sectors. When it comes to local governments, one of the reasons why they should be among the first to implement energy efficiency measures is that their success will motivate the households, companies and industry to improve their own energy efficiency.

One of the key preconditions for improving energy efficiency in Serbia is capacity building in expert government institutions, primarily in the Energy Efficiency Agency, both in terms of the number of employees and the available budget. Many relevant reports compiled by international organizations (the European Union, UNECE, the World Bank, etc.) indicate this. Here is one, perhaps the most drastic, example: the Netherlands, with only twice the population of Serbia, has a government agency (recently renamed the NL Agency) with over 1,400 employees in charge of environment protection, energy efficiency and health

care. In other words, it has 100 times as many employees as our comparable agencies. When the budgets are compared, the result is similar.

Biomass Has the Greatest Potential All the countries that have long-term development programs have introduced the development of renewable energy sources (RES) as their first priority in the fields of environment protection and energy, and have made constant efforts to increase the share of RES in their energy balances. The Serbian Energy Efficiency Agency calls for increased use of RES, which should boost the demand for all types of power generation plants and equipment necessary for the use of RES. We want systematic, expert and wise use of renewables as they do it in the countries where this field is well developed. Based on research carried out so far, Serbia could annually substitute around 3.8 million tons of oil equivalent with renewables, which is some 25 percent of the current consumption of primary energy, not counting the hydroelectric power plants.

Of all the renewable energy sources in Serbia, biomass has the greatest potential at the moment (around 60 percent), but its efficient use depends on many factors, such as organized collection of raw materials and the cost of transport. In early 2010, Serbia introduced incentive redemption prices for electric power generation from renewables, and we can expect an increase in the use of renewables in years to come. In 2011, the first solar PV power plants were connected to the distribution grid (the project was implemented by the Energy Efficiency Agency), as well as a few smaller hydroelectric power plants and biomass plants. We should not forget co-generation - combined generation of power and heat - which should become an important segment in the Serbian energy mix in the next few years, and for which incentive redemption prices are also in place.

Adoption of the new Energy Act in August 2011 follows a number of actions that Serbia has taken in order to establish a legal and institutional framework with a view to adjusting to and harmonizing with the acquis communautaire in the field of energy. According to this law, plants generating electricity from renewable energy sources may be entitled to a temporary privileged producer status and to incentive measures including compulsory purchase of electricity from the privileged producer at a stipulated purchase prices. In addition, they can enter into a provisional power purchase agreement. The law imposes an obligation on the public power supplier to buy electricity from privileged producers and, consequently, it imposes an obligation on end users to pay a special incentive fee along with their heating bill.

What Serbia needs are incentives for using thermal energy from renewable sources. These incentives do not necessarily have to be in the so-called feed-in tariff system. They can be given other facilities and reliefs. It should be pointed out that the incentives for renewables are constantly being modified both in Europe and globally. In other words, the incentive policy is connected with the overall economic strategy of a country and its current choices regarding priorities in the energy sector.

Thus, some incentives increase, some are reduced or even abolished, and after a while the process is reversed.

11 Perspective June, 2012

Energy Efficiency Perspective

> The state can initiate creation of a favorable environment for energy efficiency improvement through new forms of financing, public and private partnership projects, introduction of the savings funds model (the ESCO model) and by incorporating the energy efficiency criteria in the Public Procurement Act. Incentives play an important part in the establishment of an energy efficiency service market. There are different types of incentives, including subsidies, tax and customs facilities, voluntary agreements and favorable loans.<

Energy Market Perspective

Ljubo Maćić President of the Council, Energy Agency of the Republic of Serbia this, the Ministry of Labour is preparing measures, and it is very important to have them in operation by the end of this year. Certainly, due to budgetary restrictions, the problem of providing the funds for this purpose will arise. However, at least in the first step, it is possible to direct a part of state income from the budget originating from the profit earned by the public energy enterprises through price increases.

What do you expect from this regulatory change? To what extent will it change the market and what kind of problems do you expect during the “breaking-in” period?

Pricing policy reform will probably be the most difficult and most sensitive energy issue in the near future. The tempo of prices reaching the market level, i.e. the level which provides for a reasonable profit and system sustainability, with costs rationalisation should be more obvious by the end of the year (Romania has recently agreed with the IMF a gradual pricing policy reform up to 2015).

Opening the market will imply dilemmas which should be addressed in a timely manner. For instance, although there are 50 licenced electricity traders in Serbia, the actual supply, as an alternative to the EPS, is not considerable enough for the market to regulate the supply and demand efficiently. Practically speaking, there are no other producers in Serbia except for EPS, although there is congestion on cross-border lines. The Regional market is in the initial phase, and it was concluded long ago by the European Commission (EC) that it is irrational to develop an internal market in small countries.

Putting a Price Tag on Energy > As Serbia moves toward meeting European energy price liberalization standards in the coming years, success will depend on clearing a lot of hurdles in order to be both rational and fair. < The Energy Agency will become autonomous in tariff setting by the end of 2012. Will this autonomy make electricity a more of a social category in Serbia, which has been the most common criticism of the experts in this field?

It seems that the provisions of the new Energy Law with regard to price regulation are not clear to everyone, hence I would like to summarize them again.

12 Perspective June, 2012

As of the end of 2012, the Agency will be responsible for the approval of electricity and natural gas prices for public supply and for the tariffs for the use of the transmission/transport and distribution grid, i.e. monopoly operations.

The following prices will not be regulated, i.e. they will be market-based: 1. wholesale energy prices (public supply included) and 2. retail prices specifically as of January 2013 for customers connected to the transport grid, while for other electricity, i.e. gas customers, as of January 2014 and 2015 respectively, except for small customers and households.

As of 2015, small customers and households will be also entitled to go on the market, but they will be in a position to stay with the public supply regime as well. Such a model and tempo for price liberalization is partly a result of EU requirements implying prompter repeal of regulated prices. However, in order to implement price liberalization and adjust total prices, the most important and the first step which should be taken implies more efficient protection of vulnerable customers. With reference to

Are you happy with the provisions of the new Energy Act, the aim of which is to liberalize the market? When can we expect its full implementation and first effects?

I think that the concept of the new Law balances both the interests of customers and investors and that it is harmonised with European practices. However, to see its effects, the Government, i.e. the competent Ministry, the Agency and the energy companies have to adopt a great number of by-laws and make structural and organizational changes within the deadlines stipulated by the Law. Most of the deadlines expire at the end of the third quarter of 2012, and it is obvious there will be certain delays, but this can still be managed. In 2013, the first, most obvious changes should be seen. In two years time, the energy sector of Serbia should be more similar to the conditions present in the market of, for instance, the Czech Republic, with improved prospects.

Which legal solutions are you not satisfied with? What needs further amendment?

Serbia, as well as other Contracting Parties of the Energy Community, is obliged to implement the so called Third EU Energy Package by 2015, which should imply a common EU energy market by 2014. The countries that are part of the Energy Community should join the market in 2015. This is the most important reason behind the need to start working on a new Law. Of course, there are some imprecise terms, ambiguities and omissions in the present Law that should be removed, but these do not jeopardize the essence of the core provisions.

Energy Market Perspective

Ljubo Maćić President of the Council, Energy Agency of the Republic of Serbia

How does Serbia’s energy future look?

There are a lot of ifs. If the by-laws are adopted by the end of the year as well as measures for the protection of vulnerable energy customers as is planned; if the tempo for energy prices reaching the real level is established; if the national action plan for renewable energy sources is adopted; if the final decisions on the realization of at least one big project in both the power and gas sectors are adopted and if the preparation of the policy for CO2 emission reduction reaches the initial phase, the energy sector of Serbia will be on the right track.

There are two resources which will be crucial for the future of the Serbian energy sector for some years to come: knowledge and capital. Many people think that today, even in the EU countries, big energy problems are addressed by paying more attention to tactical objectives (election results) than to strategic vision. Our prospects are good; our elections have already been held.

How much needs to be invested in the Serbian energy sector? Where is there the most room for investment and who are the potential investors?

It is difficult now to define the level of investment needed.

The companies managing energy grids will submit to the Agency their ten-year development plans. These will include crossborder overhead lines and gas pipelines which will improve the security of supply, reduce congestion and facilitate trade as well as the modernisation and development of the national grid. They are aimed at the reduction of losses and upgrade of supply quality, with expansion of gas market and smart-grid development.

However, much bigger investments are needed to provide for technological and ecological revitalization and modernization of existing production capacities and for the construction of new ones. As of 2017, the power plants with a total capacity of 800 MW will not comply with the ecological requirements and they should be replaced. Expectations show that production should be increased by almost 15 percent by 2020 in order to meet growing electricity demand. Should we adopt the EC proposal

14 Perspective June, 2012

for increase of the renewable energy share from 21.2 percent to 27 percent by 2020, with half of it through electricity (similar to the EU), investment amounting to €3-4 billion would be needed.

Above all, new investors could count on new power plants (using conventional and renewable energy sources) and a new gas grid.

Is the legislation stimulating enough for foreign investors? What aspects of it do they usually criticize?

The new Energy Law, as well as other laws which have been recently adopted, removed some of the reasons for investors’ discontent. The greatest progress was seen in terms of conditions for investment in renewable energy sources. However, the investors’ objections to the time spent for procedures necessary for approval issuance, to additional requirements and costs, especially on the local level, are still valid. The one-stop-shop for approval is a proposal on a good track, but the administration to cover it should make that procedure routine before the proposal is implemented. Otherwise, the intention will be discredited.

Mineral Oil Perspective

Zlatko Dragosavljević Ministry of Environment, Mining and Spatial Planning

Serbia’s Bright Mineral Resources Future > Blessed with abundant mineral resources, Serbia is creating the legal framework, technology and management techniques to maximize economic impact and sustainability of these resources.<

S

trategic planning of mineral resources management and development of the mining sector of the Republic of Serbia is a systematic way to manage the sector’s future on the basis of a broad consensus and a common vision of all stakeholders for a better, more prosperous and, above all, sustainable common future.

The national energy security and growth potential of mineral resources relies on the strategic management of the

> Lithium is the Serbian mineral resource that can absolutely place Serbia among the European leaders after the opening of a new mine. Also, the production of lithium in Serbia accounts for more than 10 percent of world production and as much as 90 percent of European production.< 15 Perspective June, 2012

Zlatko Dragosavljević

Mineral Oil Perspective

The potential reserves of oil shale in Serbia are approximately 4,9 billion tons located in a total of 11 basins and 23 deposits. The largest scope of exploration was carried out in the Aleksinac Basin with the greatest potential in Serbia, resources of approximately 2.1 billion tons with an average coal content of 10 percent. Processing would yield 150-200 million tons of crude oil, depending on the type of exploitation and processing technology applied.

sector based on sustainable development of mining in the context of the country’s integral development from an economic, environmental and sociological aspect. Such objectives promote the strategy into one of the most complex and most important mechanisms of modern space management and its long-term and rational development perspectives. The pillars of sustainable mining form the basis of three equally important strategic objectives: development of strategic documents, adopting a new, modern legal framework (laws and bylaws) and development and strengthening of the institutional framework.

The Ministry of Environment, Mining and Spatial Planning has developed a “Mineral Resources Management Strategy of the Republic of Serbia by 2030” proposal that was sent to the national Government for adoption at the beginning of 2012 and then to the Parliament. The National Assembly of Serbia passed the Law on Mining and Geological Explorations on 24th November 2011, the year of celebrating 600th anniversary of the first Law on Mines by Despot Stefan Lazarević. The drafting of by-laws is in progress.

Energy needs increase annually The global annual production of mineral resources is currently some 60 billion tons, 50 percent more than in 1980.

According to forecasts, in the period from 2010 and 2050, the production of mineral resources will be higher than the total produced to date. The expected average growth of annual consumption of metallic and non-metallic mineral resources is 3-5 percent or over, while an annual increase in the global consumption of lead is 3.9 percent, zinc approx.5.2 percent, copper 6.5-9 percent and nickel 13 percent.

According to a forecast, global energy needs increase annually by 1.5 percent and, according to other sources, the production of petroleum should be increased by 22 percent, gas by 42 percent and coal by 53 percent. The increase in global consumption of coal between 2010 and 2030 will be about 2.5 percent. Many countries have defined mineral resources that are critical for development of their economy by 2030, including the Mining Sector Development Strategy.

According to the vision of mining development by 2030, the mining sector in Serbia is the regional leader, one of the cornerstones of the national economy and

16 Perspective June, 2012

committed to sustainable utilization of mineral resources. Production of mineral resources in Serbia amounts to 80 million tons, and production of 120 million tons is anticipated by 2020. At the global level, average production of solid mineral resources is 4-8 percent of GDP, while energy production accounts for 8-12 percent of GDP. According to official data, the mining sector in Serbia accounts for 2 percent of GDP.

The highest grow rate in the mining sector The Mineral Resources Management Strategy of the Republic of Serbia defines the dynamic development plan by 2030 and applies to all the segments of the mining industry. The first strategic objective is to increase the share of the mining industry in Serbia’s GDP to 5 percent by 2020. Practically speaking, this objective has been already achieved since the accomplished revenue from the mining industry was 1.5 billion euros in 2011.

By 2020, with an annual increase in the physical volume of production of 5 percent, the gross revenue of the mining industry would amount to nearly 3 billion euros annually. This planned increase in

investment climate and simplification of investment procedures for geological explorations and the overall mining sector.

The new Law on Mining and Geological Explorations enables simple procedures for obtaining exploration and exploitation licenses and excluding subjective factors and corruption. Additionally, Serbia has good road and energy infrastructure, which significantly increases the competitiveness of investment in this sector.

Coal production is the basis of the electro-energetic system in Serbia. Two thirds of energy in Serbia comes from coal, and last year production reached its historical maximum. As part of RTB Bor, the process of re-investing has begun to develop industrial production and processing of copper, reaching maximum production for the previous ten years. The same trend was recorded in the production of Pb-Zn for the last 2.5 years.

Mining can reach a 20 percent share of GDP The relationship between mining and other industries, especially the energy sector, indicates that mining is the foundation of the electro energetic system. Together

> The investment environment in the mining sector in Serbia is favorable, as demonstrated by the increased interest of foreign investors in investing in exploration and exploitation.< production is based on expected investment of 4.6 billion euros in defined development projects.

Over the last two consecutive years, the mining sector in Serbia has achieved the highest growth rate compared to other industries; in 2010, the growth rate was 5.6 percent, and in 2011 it was 10.6 percent.

The investment environment in the mining sector in Serbia is favorable, as demonstrated by an increased interest of foreign investors in exploration and exploitation. Serbia has an advantage over other countries in the region, especially in the new legal framework that complies with all the standards of the mining sector. Integrated with the Environmental Department and Spatial Planning Department,, the mining sector is well positioned institutionally, thus creating a favorable

with the energy and other related industries, mining can reach the level of 20 percent share of GDP in years to come.

The revenue to be achieved with related industries should be around 10 billion euros by 2020. The number of employees in the mining industry would in this period increase from 30,000 to 40,000.

The Republic of Serbia is among the countries with diverse and relatively abundant mineral resources. In 2011, the number of approved geological explorations reached 127, 58.3 percent were for gold, lithium and boron, copper and polymetallic ores. The total value of geological explorations was 37 million euros in Serbia proper and 50 million euros in Vojvodina.

The value of investments in geological explorations of mineral resources since 2003 (when investment in geological ex-

ploration amounted to 1,7 million euros) has grown steadily with the exception of temporary decline in 2009/2010, due to the global economic crisis. In recent years, it has stabilized at approximately 50 million euros annually, owing to investment in projects such as the exploration of lithium in Jadar (“Rio Sava Exploration”), gold in sediments at Potaj Cuka in the western part of the Timok magmatic complex (‘Avala Resources Ltd”), and oil and gas, south of the Sava and Danube (“НИС-Нафтагас”).

Lithium is the Serbian mineral resource that can absolutely place Serbia among the European leaders after the opening of a new mine. Also, the production of lithium in Serbia accounts for more than 10 percent of world production and as much as 90 percent of European production. In addition to lithium, nickel also presents a big opportunity for Serbia, with resources of approximately 150 million tons and possible investments of over one billion US dollars.

Potential of oil shale Oil shale offers enormous potential for balanced technological development.

There is a great deal of interest in exploration and exploitation of oil shale in the Aleksinac deposit. The choice of a strategic partner will be contingent on production and processing technology that can ensure environmental sustainability and cost-effectiveness as well as best possible return for Serbia. Our aim in production and processing of oil shale is to apply the world’s most advanced technologies that fully meet both the national and EU environmental standards. With respect to exploitation technology, there are two possible exploitation models: ex-situ and in-situ.

Mineral resources can be observed in two planes, space and time. This also applies to oil shale. Over time, new technologies will develop as well as new possibilities for exploitation. The choice of optimal exploitation and processing technology is a vital challenge both at present and in the future.

The processes that have been initiated in the mining and geology sector in recent years, as well as the interest of a large number of domestic and foreign companies in investing in geological explorations and mining are the best proof of achieving long-term goals and the vision of Serbia to become the leader in the mining sector of Southeast Europe.

17 Perspective June, 2012

Mineral Oil Perspective

Potential Reserves

State Secretary for Mining, Ministry of Environment, Mining and Spatial Planning

Serbian Energy Must Be Further Liberalized > Though in principle and on paper, many aspects of the Serbian energy market are “open” and conform to EU regulations, more market liberalization must take place to create a truly free market. <

S

erbia’s favorable geographic location, which connects it to the markets of Central and Western Europe, the Balkans and Greece, puts the country in the position of an important player on the regional energy market. More than 50 electricity trading companies are already licensed in Serbia. These traders are utilizing Serbia’s excellent location in order to trade energy across various European markets. But electricity traders rarely sell on the Serbian market, since the opportunity arises only when EPS (Elektroprivreda Srbije), the current de facto state monopoly, encounters a seasonal or other unplanned imbalance and issues tenders for the purchase of electricity in the international market.

The Serbian electricity market must become truly open Serbia, an EU candidate, is on the road to implementing EU acquis communautaire reforms - in particular those required to foster the development of competitiveness in its energy sector. In 2005 Serbia adopted the Energy Strategy of the Republic of Serbia, which sets out energy sector objectives to be met by the year 2015. Serbia took a big step towards implementing the EU acquis by enacting the 2011 Energy Law, which is largely in line with EU Directive 2003/54/EC on the common rules for the internal market in electricity and Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources (RES).

But there is much more work to be done

18 Perspective June, 2012

Bojana Bregović Internationally recognized legal consultant and a Partner at Wolf Theiss with respect to the electricity market and the energy sector as a whole. In this context, a higher level of energy efficiency must be achieved and the Serbian electricity market must become truly open.

The operation of the transmission system and electricity market in Serbia is still run by EMS (Elektromreža Srbije), a public enterprise, while generation, distribution and supply are carried out by the vertically-integrated EPS, also a public enterprise.

Although the new Energy Law foresees the unbundling of distribution and supply, what we currently have in Serbia is somewhat of a paradox. Under law, the electricity market is “open” for all nonhousehold consumers. But, as a matter of fact, no eligible consumers have switched to a supplier other than EPS. The reason: EPS offers regulated, below-market pric-

of electricity from renewable energy sources (RES). EPS purchases renewable generation at an incentivized “feed-intariff”, which is guaranteed during the term of the PPA. With the exception of wind and solar energy producers, only power plants with a capacity of less than 10 MW can benefit from the feedin-tariff incentive scheme.

In this context, a green energy producer can qualify for the status of a Privileged Producer of Energy (PPE) whereby certain additional rights and benefits will be conferred. The status of a PPE is granted by the Ministry for Mining and Energy upon submission of an application accompanied by the required evidentiary documents. The following types of applicants may qualify as PPEs: (I) producers of electricity produced from RES or waste;

Why New Energy Law Has Been Slow The new Energy Law foresees the unbundling of distribution and supply of gas and electricity in Serbia.

The Energy Agency of the Republic of Serbia (AERS), which promulgates energy market and allocation rules and is in charge of planning for the future development of energy supply networks, is also in charge of overseeing the unbundling process. However, the work with which AERS is tasked requires significant financial and human resources - and this is likely to be one of the main reasons why implementation of the measures foreseen under the new Energy Law has been slow. ing and, therefore, still has a de facto monopoly on the supply of electricity in Serbia. But this situation is expected to end as of the beginning of 2013, when the regulated tariffs for industrial consumers connected directly to the transmission grid are scheduled to end. Then, as of the beginning of 2014, regulated pricing of electricity will only apply to households and industrial consumers connected to the grid for up to 1kV (if their annual revenues do not exceed €10 million and they have no more than 50 employees).

EMS must ensure access to the grid for RES As for green energy, it is currently promoted in Serbia by the 12-year power-purchase agreements (PPAs) that EPS offers to qualified producers

(II) producers of energy generated from small power plants (up to 10 MW); and (III) co-generation producers that fulfill certain energy-efficiency criteria. To attain the status of a PPE, renewable energy must constitute a certain percentage of the total primary energy used by the electricity producer, and the percentages vary depending on the source of energy used. Even a combined fossil fuel and RES power plant can attain PPE status if the share of renewable energy used meets certain thresholds.

With respect to PPEs, EMS must ensure access to the grid; but so far there are no rules that give priority access to PPEs. EMS is required to grant equal access on a non-discriminatory basis, subject to its technical capabilities. However, the transmission system is often congested so that PPEs may face delays. Capac-

ity upgrade projects are underway, some being funded by the EU, especially in the southern regions of Serbia.

Serbia applies essentially the same rules as the EU Given the need for significant expenditures to fully develop RES, the general prohibition on anti-competitive “state aid” at first appears to be a stumbling block for further development - and this cuts across many EU jurisdictions. In this context, the Central European Free Trade Agreement of 2010 (CEFTA) also prohibits such state aid if it affects trade between CEFTA member states. Moreover, Serbia’s Law on the Control of State Aid applies essentially the same rules as those found in EU state aid law. However, notwithstanding the general prohibition on state aid as an anti-competitive practice, state support for the production of electricity from RES will be deemed compatible with the goals of the EU common market so long as the conditions set out in the Commission’s Community Guidelines on State Aid for Environmental Protection are met.

Finally, though the Stabilization and Association Agreement (SAA) between Serbia and the EU also contains a prohibition on anti-competitive state aid, there is an exemption whereby any state aid granted by Serbia will be assessed under the same criteria as state aid granted in the EU’s poorer regions. This will apply for a period of 5 years after the effective date of the SAA. In conclusion, Serbia’s new Energy Law has been harmonized with the EU’s second internal energy market package - but, to achieve full electricity market liberalization Serbia must complete its legislative reform thoroughly and effectively, adopt a number of by-laws in order to fully implement all of the relevant EU directives and regulations, and start preparing for alignment with the EU’s third internal energy market package. This envisions complete integration and liberalization of the EU electricity (and gas) markets. With its favorable geographic location and untapped sources of renewable energy, Serbia is a highly attractive location both for RES producers and traders. It will become even more attractive once the electricity markets have been truly liberalized, not only on paper, but also as a matter of fact.

19 Perspective June, 2012

Electricity Market Perspective

Electricity Market Perspective

Zoran Stanojević

Windmill Business Perspective

Director, MK Group d.o.o.

Exploitation of hydro potentials over many years and great capacities built on our rivers make Serbia a prominent source of renewable energy. If we make a breakthrough, and we will, in the field of wind power plants as well, it will be important both for reducing the use of fossil fuels as well as for gaining more energy.

Installation of 450 MW is a realistic number.

If the market and statutory regulations allow it, we believe that the total installed power of wind power plants will be over 450 MW. This is also confirmed by the number of issued energy permits and by investors’ interest.

Does investment in this sector pay off? What is its potential?

Serbia Can Unharness the Power of the Wind > Despite the promise of wind power as an important factor in Serbia’s renewable energy capacity, legislative and administrative logjams are inhibiting investment in this energy-rich field. < Experts say that there is no money in the 2012 Budget to invest in environmentally cleaner but expensive energy.

The only way to invest in this sector is through private investment. How much should be invested in wind energy?

According to our knowledge, it is a question whether any of the investors in 2012 will succeed in building wind generators. Even the most successful companies that invest in wind generators are still at the level of developing project documentation and obtaining necessary permits and approvals. The conclusion is imposed that the state, as guarantor of purchase and prices of electricity from renewable energy sources, will provide only a small contribution for this form of energy in 2012. We hope that time will prove us wrong, but this

20 Perspective June, 2012

is the only realistic view of the current status. Bearing in mind that the state has chosen to stimulate renewable energy source projects through Feed-In Tariffs, we can look at this as some sort of indirect investment by the state in renewable energy, without special investment or risk. When we say this, we think that the state is excused from investment through such elements as training, time, project documentation and settling property law relations. As for the second part of your question, it is necessary to invest in wind generators at first at least to the extent of the limit of the Feed-In Tariff for wind generators, i.e. 450 MW, and then speed up further investment. The upper limit of further investment should be determined both by the capacities of the electrical energy network, whose development should be strongly supported, and the wind energy potential.

Measurements performed by investors over many years, as well as studies of the wind energy potential, rather clearly show which parts of Serbia are suitable for investment in wind energy.

The “Košava” wind region is by far the best choice for wind energy potentials. If society as a whole was in favor of investing in wind power plants, the potential which could be used would largely depend on the electrical energy network as well. This is not an issue only for Serbia. Such issues exist even in richer European countries. It is a question of how ready is our energy system for wind power plants.

Has Serbia done enough to pave the financial way to windmills? Does the legislation stimulate investment?

What are your main criticisms?

As far as laws and regulations are concerned, they partly recognize windmills and act as a stimulant. An issue is the administration and its performance, which cannot be evaluated as stimulating. The problems faced by our company vary: from the lack of a regulatory framework, lack of experience and will

to mutually conflicting laws and by-laws, which slow down the whole process. It is necessary to decrease the formalities and emphasize the principle of effectiveness in order to achieve concrete results in a much speedier manner. Bearing in mind these issues in Serbia in the field of investment in renewable energy sources, more than a billion euros of investments have to wait.

What is the waiting period for a windmill building permit?

From this distance it is difficult to give a concrete answer as to how much time it is necessary to build windmills in Serbia, bearing in mind that nobody has succeeded in building them although their construction is relatively easy and quick. Our company was founded in 2008, and we have managed to obtain projects and permits. We have invested a lot of energy, effort and knowledge to shrink the time to obtain necessary papers and approvals. However, it is a fact that it is very difficult to get building permits for wind power plants; thus, their construction has not started till recently. It is a very long and economically exhausting road for every investor.

Which Serbian regions are the most promising for wind power?

It is definitely the region where the “Košava” wind blows.

This is the region on the left and right sides of The Danube, from Belgrade toward the Iron Gate. The Košava distinguishes a whole region in Serbia. It is necessary to carefully select specific locations in this region and confirm wind speed by measurement.

The Energy Ministry has recently announced that the Renewables Action Plan is underway and that it should be finished by the end of the year. What do you think this should contain?

The Action Plan should be very concrete and set realistic objectives that are, therefore, achievable. We hope that the experts who have been working on the adoption of this “Action Plan” have realized by now all the issues, in the legislative field as well as the administration, that inhibit the building of windmills; and that the result of the adoption of such a document will be speedy action and clear support to the investors in this field.

Bearing in mind that investment in renewable energy sources is a relatively new type of investment in Serbia, and in light of all the issues we have discussed, we believe that, in parallel with the increase of investment in this area, education at all levels of state institutions is necessary. It is important to raise the awareness of people when the value of investments in this field is in question, since exploitation of renewable energy sources is of multiple significance for Serbia, both for environmental protection as well as for the overall progress of society.

> The problems faced by our company vary: from the lack of a regulatory framework, lack of experience and will to various mutually conflicting laws and by-laws that slow down the whole process. It is necessary to decrease the formalities and emphasize the principle of effectiveness in order to achieve concrete results in a much speedier manner. <

21 Perspective June, 2012

Windmill Business Perspective

In Serbia’s total energy balance, production from renewable sources accounts for 21.2 percent at the moment. Experts estimate that additional 450 megawatts of wind energy would increase the share of renewables by one percent. Is this realistic and, if so, in what time frame?

Health Care Perspective

Dragoljub Damljanović General Manager, Schneider Electric in Serbia

Boosting Hospital Energy Efficiency Pays > Installing systems that monitor and maximize energy efficiency will help hospitals meet present and future demands while cutting energy costs. <

EcoStruxture for healthcare facilities

Good Local Examples Locally, we also have good examples. The clinical center in Belgrade has made modernization of gas cogeneration for heating.

The clinical center in Novi Sad has established complete building automation in their new building where they can measure power usage and also control HVAC, lightning and power supply from one place.

22 Perspective June, 2012

ver the last decade, hospitals have faced increasing financial challenges. Both private and public healthcare system administrators are challenged with budgetary constraints. By year 2050, the world population over 60 years of age will nearly triple from 700 million to 2 billion, leading to an increase in the number of potential hospital patients.

How will healthcare systems meet this increasing financial pressure? Hospitals must find a way to do more with less. Energy efficiency projects can unlock trapped capital and improve a hospital’s profit margin or be used to fund technological advancements, purchase medical equipment or improve the patients’ hospitalization experience.

Energy use in the healthcare market has increased by 36 percent since 1995 due to changes in technology as well as in the number of patients.

How energy efficiency ensures financial health for hospitals Despite this increase, energy efficiency initiatives have historically been overlooked as an option to reduce costs. Why? Because energy costs typically represent only 2 percent to 5 percent of a hospital’s total operating budget. Hospital management is focused on traditional cost-cutting measures, usually related to staff or renegotiating pricing with suppliers. This may improve the bottom line for 1 to 2 years, but it is difficult to sustain such savings over the longer term.

In contrast to other cost-cutting approaches, energy efficiency can be achieved through professional services and equipment rather than process changes that affect the function of hospital staff or the level of patient care. The most important benefit of an energy management solution is that energy efficiency is directly measurable. In order to monitor and improve energy efficiency, CFOs and facility managers need insight into real-time energy usage in their hospital.

An automated building management system can gather, centralize and analyze energy usage and history throughout the hospital and display that information in what is often called an “energy dashboard” where building information and energy usage can be quickly viewed and filtered by hospital section, utility, time, day or any number of

Comprehensive – Aggressive investment projects including building upgrades, HVAC improvements, lighting retrofit, building envelope improvements and application of innovative energy saving measures.

Within the comprehensive option, publiclyfunded entities can make energy efficiency improvements over a longer pay-back period. Since publicly funded hospitals may not have money in their budget to pay for large projects, a third party finances the improvements based upon forecasted and guaranteed energy savings. Third-party financing may be available for projects that cost between $1 million and $10 million.

Solution: An intelligent hospital infrastructure The traditional hospital infrastructure approach leads to siloed systems, redundant cabling and inefficient communications. These result in wasted resources: energy, productivity, time and money.

Intelligent infrastructure solution leads

to reduced costs, better hospital performance and improved safety and security.

So what does an intelligent hospital infrastructure look like? In the illustration you can see numerous services, systems and applications within the healthcare facility that can be connected to the intelligent infrastructure. There is seamless integration and full interoperability over an open protocol network. Having a common network ensures flexibility and scalability, allowing for changes, as well as the integration of emerging and future technology. It also provides a single point of monitoring, control, and maintenance.

Hospital end users, such as facility managers, nurses, and security staff, can see and manage the information that is most important to them. Facility and security personnel can also access information and receive alerts remotely so they can manage hospital systems from any location – thus saving time and money, increasing productivity and resolving issues more quickly and efficiently.

Health Care Perspective

O

variables. As a result, this real-time information enables hospitals to quickly alter usage and achieve results with low risk to patient care and staff productivity.

A 30 percent savings in energy costs has the potential to improve profitability by up to 1 percent. So where does that 30 percent savings come from? Depending on the hospital’s needs, this can be reached by implementing one of three levels of energy efficiency solutions.

Entry level – A small investment with a payback in less than two years reduces energy use up to 10 percent.

Projects typically include building optimization, utility rate reviews and variable speed drives. Typical project costs range from $20,000 to $50,000.

Advanced – A medium investment with a payback in 2–5 years reduces energy use up to 20 percent This approach includes advanced building recommissioning, HVAC optimization and lighting retrofits. Typical project costs range from $100,000 to $1 million.

Healthcare Energy Trends (Europe)

Healthcare Energy Trends (US)

23 Perspective June, 2012

Igor Anić

Energy Efficiency Loans Perspective

Member of the Executive Board, ProCredit Bank the financing provided during 2011, our borrowers have achieved annualised savings of nearly 15 million kWh and 7,300 tonnes of CO2 equivalent.

Additionally, enterprises which opt to invest ProCredit Bank’s tailored loans in energy efficient projects in adequate amounts and maturity can apply for grants of 15 percent of the total value of the investment provided by the EU, which significantly increases return on investment.

The bank reaffirmed its commitment to finance energy efficiency during the programme of loans subsidized by the Ministry of Environmental Protection in May 2012, disbursing more than 300 loans amounting to nearly €1 million within two weeks.

ProCredit Accelerates Green Banking Program

Green finance products Apart from these activities related to our core banking business and clients, ProCredit Bank is putting in place an approach to better understand and improve the sustainability of its own energy use and environmental impact. For example, the bank has invested in a state-of-the-art “Green

> Ranging from monitoring the environmental impact of its loans to reducing its own carbon footprint, ProCredit Bank has initiated a number of broadbased activities designed to play an important part in protecting the environment. <

A

ll of the banks belonging to the ProCredit group set high standards regarding the impact of their operations on the environment. In 2011, ProCredit Bank Serbia established an Environmental Committee chaired by a Management Board member. The main functions of this committee are to approve environmental Policy and key activities derived from it, as well as to oversee bank-wide green activities. In line with Group standards, the bank has also designated an Environmental Coordinator to be responsible for monitoring our environmental performance and coordinating efforts to improve it.

Pillars of environmental management One of the pillars of environmental management at ProCredit Bank is con-

24 Perspective June, 2012

tinuous assessment of our loan portfolio according to environmental criteria. This implies an in-depth analysis of all economic activities that potentially involve environmental risks and the rejection of loan applications from enterprises engaged in activities which are deemed environmentally hazardous or appear on the bank’s exclusion list. By incorporating environmental issues into our loan approval process, ProCredit Bank Serbia is also able to raise its clients’ overall level of environmental awareness.

During 2010 and 2011, the bank broadened its program of green finance products consisting of energy efficiency loans and leasing products for private individuals as well as for businesses with additional credit lines from KfW and the EU. In addition to favourable interest rates, this initiative has also involved broadening

the base of suppliers of environmentally friendly equipment and services and encouraging them to offer products bearing the EU’s standard energy efficiency labels.

Our clients recognized the overall benefits provided by these loans. As a result, since the start of this programme, the bank has disbursed more than 500 loans to businesses to finance investments in energy efficient fixed assets. At the end of 2011 outstanding business energy efficiency loans including leasing totalled more than €13 million, while the home-improvement loan portfolio amounted to over €260 thousand.

Decreasing CO2 emissions The terms and conditions of ProCredit Bank’s leasing and loans for energy efficiency improvement state that vehicles, machines and equipment purchased with the loans provide minimum 20 percent savings in energy consumption or, alternatively, 20 percent decrease in carbon dioxide emissions. The terms and conditions also state that the bank should continuously monitor the overall impact and effects of the improvements. With

Branch” in Nis to highlight what can be done to reduce resource use. Also, environmental issues are an essential component of the training provided to ProCredit Bank staff at the local, regional and international level. As a further contribution towards global CO2 reduction, the bank decided to add Toyota Prius hybrid cars its fleet. The

Credit Bank is also involved in a number of local environmental projects, such as promoting the recycling of electronic waste and raising public awareness of the significance of responsible e-waste management. During 2011 the bank also took part in numerous public debates, conferences and forums dedicated to the

Benefits of Improving Energy Efficiency By improving energy efficiency, enterprises can reduce energy costs, modernise their production and operations with new equipment and at the same time contribute to the environment with reduced carbon dioxide emissions. Being a development-oriented full-service bank, ProCredit recognized the potential of financing energy improvements as early as 2007, when the first KfW credit line was activated for energy efficiency improvements in households and businesses. bank aims to use all of those measures, as well as its green finance products and approach to increase public awareness and understanding of the subject.

With the same goal in mind, Pro-

financing of energy improvements, taking the opportunity to spread the message that these efforts can have an important beneficial impact on our mutual asset, the environment we live and work in.

Zoltan Michael Takács

Clean Fuel Perspective

CEO, MOL Group

Cleaner Automobile Fuel Helps the Environment > Liberalization of the auto fuel market has resulted in the import of higher quality European fuels and introduced price competition. < Why is cleaner fuel important? How can it be achieved? How far are we from this goal?

The importance of cleaner fuel is great because it can help reduce vehicle emissions and contribute to reducing carbon dioxide as well as to longer engine life.

The objective of the introduction of new “cleaner fuels” is to contribute to a healthier life and the environment by limiting emission of pollutants resulting from the use of petrol and diesel in motor vehicles. International experience has shown

that pollutants from motor vehicles can be reduced by changing the composition of the fuel. Intermol is offering Euro 5 fuel - a cleaner and more environmentally friendly fuel - in Serbia. This gasoline contains the most advanced synthetic additives. It is especially designed to meet the requirements of the latest engines.

To what extent do MOL gasolines protect the environment?

To the highest extent possible and even beyond. They adhere not only to the

EU environmental regulations but - in a lot of cases - they also comply with even stricter requirements.

What does MOL fuel offer for our cars?

In addition to the environmental benefits, you can benefit your car if you use MOL gasoline: • t he entire fuel supply system will be kept clean - the fuel tank, the injectors and the engine valves • as a consequence, the engine retains its original condition and ability for acceleration • regular use will allow old deposed particles to be removed from the surface of the fuel tank and the engine valves

What do you think of fuel-market liberalization in Serbia? Will the public lose because of it?

Liberalization of the market in Serbia introduced free fuel price formation by companies and provided the possibility to import European quality fuels. MOL Group welcomed this move and, among the first, introduced premium gasoline of Euro 5 quality. We believe that market liberalization brings with it a challenging environment that is good for both market players and customers.

MOL Group has confidence that a liberalized market with implemented European principles is the path Serbia should take in order to fully integrate with European standards. Of course, there is still room for further improvements, but hopefully these will be provided for the benefit of the Serbian people. The best example of market liberalization is LPG, where this process was implemented some years ago. It is obvious from the market tendencies that filling stations are doing their best to attract customers not only with quality but with lower prices.

How do you evaluate the quality of fuel in Serbia? What are ways to improve that quality and to equalize it with counties in the EU? There is very good fuel on the market. However, misuses do occur. The quality of fuel could be improved by stricter controls. I think there are still challenges in this field, but in general oil companies respect the law. However, more rigid controls are important, from importing, transportation and storage all the way to the filling station pump. This would be better for the oil companies and their customers.

How do you evaluate the level of environmental awareness of MOL Group and to what extent is the company socially responsible?

Sustainable development is a major element in MOL Group’s business strategy. This is reflected in our European quality fuels. The company also takes seriously its role as a socially responsible company.

Since its entry into the Serbian market, Intermol, as a member of MOL Group, has supported many CSR activities - whether through sports events, a talent program

or providing help in times of natural catastrophes.

Recently in the area of environmental protection, MOL Group supported a pioneering “Eco friendly project”. This activity was implemented in cooperation with the Ministry of Environment, mining and Spatial Planning. Intermol has also been a sponsor for many years now of the international ecological camp in Ludas, organized by Riparia, where bird monitoring is done on a very high level and festival “Ekobonton” with its environmental awareness element.

AmCham Serbia e-service

Business Advocacy Update also available on www.amcham.rs

27 Perspective December, 2008

26 Perspective June, 2012

Smiljanićeva 24/I, 11000 Beograd Tel: (+381 11) 30 88 132, 34 46 437 Fax: (+381 11) 30 88 922

info@amcham.rs 27 Perspective July, 2008 www.amcham.rs

Solar Power Perspective

Solar Energy’s Potential as an Alternative Source

Energy White Paper In May, 2011, the Serbian Government presented the Energy White Paper. This was an important strategic document by means of which the Serbian Electric Power Industry (EPS) sought to get closer to achieving the objectives of the European Union regarding energy production from renewable sources, reduction of emission of harmful gasses and increase in energy efficiency by 2020. happening for over five billion years, the estimated age of the Sun. Based on the available stocks of hydrogen, it is likely to continue for equally as long.

Our region, as well as the entire European continent, is not particularly ideal for exploitation of solar energy. However, thanks to exhaustive energy and environmental policies, most research projects and generation of this type of energy take place in Europe. The main exploitation problems are low density of energy flow, great oscillations in radiation intensity and high investment costs. For the time being, the most commonly used technologies are solar collectors and PV cells. There is another fast-growing inno-

> Although solar collectors and photovoltaic cells are still comparatively expensive technologies for most uses, this investment can be worthwhile for family households. <

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or millennia the sun has been used by mankind as a source of life-giving energy. The challenge is how to maximize the use of energy from the star closest to us and make it as economic as it is sustainable. Solar collectors and photovoltaic (PV) cells are the most popular options but they still cannot compare with the price of energy generated from conventional sources.

This, along with regional differences, is the principal reason why the energy of the sun is still not utilized to its full potential.

As with other alternative energy sources, incentives, i.e. subsidies, are of key importance for technical and technological development. However, considering the limited nature of resources such as fossil fuels and, as their by-product, huge emissions of harmful radiation, many countries have encouraged the use of all sources of alternative energy.

The European Union has gone further than other regions by adopting the well-known binding regulation pursuant to which all EU Member States must increase the share of renewables in their energy production by as much as 20 per cent by the year 2020. Serbia is not far behind - by introducing the so called feed-

28 Perspective June, 2012

in tariff (FIT) the energy generated from renewable resources can be purchased at privileged prices. Yet, time will tell whether this will be enough to boost the development of this branch of the energy industry. Devices and equipment used to collect solar energy are not cheap, but in the long term they can be worthwhile in, for the time being, residential use, mostly heating household water.

Solar Collectors and PV Cells The sun does not provide us uniformly with heat. If it did, the temperature would be the same on the entire planet. The sun emits energy that is transported exclusively by radiation. Solar energy is created by nuclear reactions in the sun’s core, where the temperature reaches up to 15 million degrees Celsius. This is fusion, where hydrogen atoms join and form helium, releasing great energy in the process. Every second, around 600 million tons of hydrogen create helium and around four million tons of hydrogen is converted into energy. Nuclear fusion has been

vation that involves focusing solar energy used in great energy plants.

According to current data, Serbia receives many useful sunny hours during the year. The annual ratio of solar radiation received and possible total solar radiation is 50 per cent, which is much higher than the average in European countries where solar energy is utilized much more than in our country. This indicates that we have great potential for solar energy applications and that we should do our best to use photovoltaic conversion in electricity generation, especially for heating water.

In photovoltaic conversion, PV cells convert solar energy into electricity. A PV

cell is basically a silicon semi-conductive diode with a large surface. When exposed to light, a PV cell produces direct current of a relatively low voltage. To increase the voltage of the current, several cells are connected in series or in parallel modules. Production of solar modules has recorded an annual growth of as much as 40 per cent in recent years in the SEE countries, which shows its potential efficiency.

Solar Energy in Serbia According to data of the Serbian Ministry of Infrastructure and Energy, the annual average of global radiation on our terrain is 700 kWh/m2. The Ministry’s experts say that if one in five out of Serbia’s 2.5 million households installed a solar collector of 4 m2, the annual generation of thermal energy would be 1,750 GWh. This would reduce the consumption of electricity and in part the use of fossil fuels to heat sanitary water. And it would reduce the emission of carbon dioxide by 2.3 million tons per year. Southern Serbian towns, Niš, Kuršumlija and Vranje, have the greatest solar energy potential.

H.E. Laurent Louis Stokvis MA

Wind Energy Perspective

Ambassador of the Netherlands in Serbia

Taking the Long View on Wind Power Pays Off > The Dutch ambassador explains why Serbia - for all its potential - is lagging far behind the Netherlands in investment in wind power development.< new possibilities and jobs in the metal processing sector and ICT. Most important, these sectors employ highly skilled labor for development, operation and maintenance of the systems.

In the Netherlands, most windmills - some 1,879 of them or 95 percent - are located onshore. The investments in these is measured in billions. To quite some extent this cost is a function of the price of land, as land is scarce and managing space and the environment are of particular importance in the Netherlands.

Thus, the future for development and investment is in offshore wind parks. So far, there are four marine wind parks. Development of these offshore parks alone cost some €600 million.

The long view pays off

T

he Netherlands, throughout its history has been known for using renewable energy sources, wind power in particular. In some parts of the country one can see old and new windmills close to each other, a hallmark of technological progress in the Netherlands. Originally, our windmills typically powered pumps to keep the sea out of our homes, but were also used to grind wheat; these days windmills provide electricity to households. At present, there are some 1,975 windmills in the Netherlands with an aggregate capacity of slightly over 2.3 GW. In 2011, 4.4 percent of Dutch electricity needs were met by this source. To put this into perspective, the Netherlands is the world’s 27th largest consumer of electricity.

Efficient wind turbines Investment in wind energy pays off by generating electricity while reducing our carbon footprint and by its spin-off effects for other industries. As a result of research and development, wind turbines are getting more efficient by the year. This in turn offers

30 Perspective June, 2012

I’ll tell you what I think is necessary in order to attract investments in Serbian wind parks and in renewables in general.

First on the list is a clear and realistic strategy that is fully in line with legislation. This should ensure predictability, clarity and certainty as to the regulatory conditions of business. Let me explain: in the Serbian legal framework there are parts that are due to expire at the end of this year: decrees and bylaws that regulate implementation of the Energy Law. Assuming that the priorities of the incoming government regarding renewable energy remain the same, it is probable that the validity of these decrees and bylaws will be extended for a further year. Yet in order to attract investment – and to enable cost calculations and

> In the Netherlands, 95 percent of windmills are located onshore, some 1,879 of them. Investment in these is measured in billions. To quite some extent this cost is a function of the price of land, as land is scarce and managing space and the environment well are of particular importance in the Netherlands. <

Offshore Wind Parks The Dutch government wants to encourage further investment in offshore wind parks.

By 2020, the Netherlands would like to produce 6 GW from offshore wind parks. For this purpose, the government has allocated 65 potential areas for future development for which investors can compete. This is part of our long-term planning and it is supported by legislation. the financing of the investment – regulations should remain valid throughout the duration of the investment. In this sector, longterm views and long-term decisions should be made, otherwise companies will have much more difficulty financing projects.

Serbia has potential in wind energy If we look at the number of documents and permits, studies and measurements that are necessary to make an investment in wind energy, we discover that the situation in the Netherlands and Serbia is very much comparable. Though we do not know for sure, as there are no wind parks yet in Serbia, the industry believes that rounding off planning procedures may take less time in Serbia than in the Netherlands. Therefore, the question is why these investments are taking place in the Netherlands

> There is no doubt that Serbia has potential in wind energy and that there is a willingness to invest in this sector.

Realizing this potential and readiness to invest will result in economic activity, exports and employment. < and not yet in Serbia. The answer the industry gives points to the certainty that the Netherlands regulatory framework offers to investors. Knowing clearly what steps must be taken, in which order and what the costs are at each stage is worth the price of waiting somewhat. Another important question relates to the development of rules in order to ensure a level playing field on the market for electricity producers.

There is no doubt that Serbia has potential in wind energy and that there is a willingness to invest in this sector. Realizing this potential and readiness to invest will result in economic activity, exports and employment. Wind energy could have made a difference last winter when the potential for power production was tested to its limits. Diversification in energy sourcing, as well as increasing efficient use of energy is the way forward.

Hydropower, wind energy, biomass and solar installations are all part of the Europe-wide drive for a new, better and more sustainable energy mix that includes both traditional and renewable sources.

Ian Brown

Energy Projects Perspective

Acting Head, EBRD Serbia

> Over the last ten years, the EBRD has been a major provider of the finance needed to bring Serbia’s energy sector up to standard and to enable it to meet present and future need in terms of both capacity and preservation of the environment.<

E

BRD has been active in promoting investments in the energy sector across the bank’s 31 countries of operation, while the bank has been closely engaged in the energy sector since the bank first started operations in Serbia. In 2011 EBRD’s total investments in the energy sector amounted to €1.8 billion, of which €127 million was in Serbia.

EBRD started working in the Serbian power sector immediately after the fall of the Milošević regime, making two loans to EPS (the state owned electric power utility responsible for lignite mining, electricity generation, distribution and supply) in 2001 and 2003 for a total of €160 million focused on immediate reconstruction needs of the energy sector.

Four main elements More recently, EBRD has been closely involved with EPS in focusing on investments that support the overall development strategy of both EPS and the country. EPS’s strategy is centered around four main elements: the renewal of its mining and generation infrastructure; improvements to the environmental performance of its existing plants to achieve compliance with EU regulations; the upgrading of EPS’s distribution and supply business, focused on reducing losses and improving collections; and the development of renewable energy.

Three investment projects were agreed and funded between EBRD and EPS in the last two years. The first project, agreed in late 2010, was an €80 million co-financing from the EBRD and the European Investment Bank (EIB) for smart

32 Perspective June, 2012

metering and communications infrastructure that will help EPS move towards the development of a ‘smart grid’. This project has two main aims: first, it will help consumers manage their energy consumption better, improving energy efficiency and helping EPS to manage demand. Second, it will help to reduce distribution losses, which are considerably above the normal levels experienced by comparable Western European electricity utilities.

The second project being funded, together with the German Development Bank, KfW, is a major investment in a coal quality management system in the Kolubara mining basin. This €160 million project involves investment in mining equipment and technology to manage the quality of the lignite being supplied by Kolubara to the Nikola Tesla thermal power plants at Obrenovac. This will allow Kolubara to analyze the quality of lignite as it is excavated and blend higher and lower qualities to ensure that the lignite supplied to the power plants is of uniform quality. This will deliver major environmental improvements equivalent to around 250,000 tons of coal and 6,500 tons of fuel oil presently used for co-firing for the same electricity genera-

Promoting energy efficiency and renewable energy EBRD is also actively promoting energy efficiency and renewable energy, with two dedicated financing facilities for the Western Balkans, including Serbia. For smaller projects, where the loan size is between €500,000 and €2 million, funding is provided through credit lines made

> Challenges for the future are the need to replace older power plants and to meet the growing demand for electricity and gas, at the same time complying with strict EU environmental standards and moving towards a lower carbon economy. Many challenges and many opportunities lie ahead.< available to local banks. In addition to the credit facilities, the scheme provides at no cost technical assistance from consultants to help potential borrowers to prepare their applications and the technical consultants and legal advice needed.

For larger projects where the loan is between €2 million and €6 million, a similar scheme operates, but the loans are provided directly by EBRD itself. Both schemes also benefit from incentive payments, based on the carbon emissions the projects will avoid, which can amount to up to 10% of the amount of the loan. The take up of the loans under both the credit lines and the direct lending facility, including in Serbia, has been very encouraging, and both schemes have been recently extended with the provision of additional funds.

As part of the project, the EBRD will also finance the rehabilitation of 40 per

Construction of New Underground Gas Storage In the gas sector, EBRD agreed a significant €150 million sovereign guaranteed loan to Srbijagas (the stateowned company responsible for transmission, storage, distribution and trade of natural gas) in 2010 to finance upgrading of the country’s gas transmission network and the construction of a new underground gas storage facility.

Serbia is dependent on gas imports for 94 percent of its total gas consumption, and transit through Serbia represents the only gas supply route to Bosnia and Herzegovina. The existing gas storage in northeast Serbia is sufficient to supply only district heating companies and households and does not have the capacity to service industrial customers. The construction of a second underground gas storage in Serbia will help the country and the region to become more resilient against disruptions and seasonal consumption swings. The new gas storage facility will be located in one of the Itebej gas fields, in northern Serbia and will have a capacity of up to one billion cubic meters.

cent of Serbia’s gas network, which is between 20 and 40 years old and in some parts has reached its maximum service life. Close to 1,000 km of gas pipes will be inspected and repaired with EBRD funds.

Serbia’s energy sector has made great strides Looking to the future, the energy sector is likely to be a key driver and a vital opportunity for Serbia’s economy. In order to meet EU environmental standards for power plants, which will apply to Serbia from 2018, a number of older, inefficient plants must be closed. These will need to be replaced by new, much more efficient plants that will be fully compliant with the highest EU environmental standards. The funds needed for these investments will however be considerable.

The planned construction of an undersea cable from Montenegro to Italy, and an associated high voltage transmission line across Montenegro also will provide Serbia’s energy sector with an important opportunity. The energy market in the Balkans will be, from 2015, directly linked to the Italian market, providing a stimulus to the development of energy generation in general, and renewable energy in particular. We believe that Serbia will benefit from this through the development of a number of hydro power plants for which the primary market will be the sale of green energy to Italy.

To summarize: Serbia’s energy sector has made great strides in recent years.

The huge backlog of investments from the 1990’s has been largely overcome (with much help from donors and the international financial institutions, including EBRD), and the scale of this largely hidden achievement should be recognized. But challenges for the future include the need to replace older power plants and to meet the growing demand for electric power and gas, at the same time complying with the strict EU environmental standards and moving toward a lower carbon economy. Many challenges and many opportunities lie ahead.

33 Perspective June, 2012

Energy Projects Perspective

EBRD Loans Power Serbia’s Energy Future

tion, corresponding to a reduction of CO2 emissions by more than 200,000 tonnes per year.

The third and most recent project concerns the development of renewable energy. Increasing the production of renewable energy is one of Serbia’s strategic priorities, in line with objectives of the European Union. In order to help achieve this objective, EBRD provided a €45 million loan to EPS to be used to rehabilitate fifteen existing small hydro power plants (with a combined capacity of 18 MW) and to build seven new plants on existing dams. The project will allow the lifetime of the existing plants to be extended, increasing the overall generation of renewable energy.

Renewables Potential Perspective

Jovanka Arsić Karišić President of the Executive Board, CEDEF

IPR Corner Miloš Blagojević

Guiding the ‘Gold Rush’ to Renewable Energy

Incentives Boost Investor Interest A particularly important step was providing regulations in 2009 that introduced the conditions for obtaining the status of privileged producer of electricity from renewables and the incentives and Feed-in tariffs for energy production from renewable energy sources. Those incentives provide a guaranteed purchase price for electricity generated over a period of 12 years. The investor community has seized the moment and is extremely interested in these developments. There is a lot of interest in mini hydro plants, wind, solar and biomass, less so in geothermal.

Even waste-to-energy projects are being developed in many localities as impressive new sources of energy.

S

erbia has great potential of renewable energy sources, but this not sufficiently used or, in some cases, not used at all.

One of the biggest challenges in the transition to the “green” technologies is achieving cost efficiency. In addition to technological challenges, undeveloped markets and a lack of experience in Serbia, better use of renewables is also made difficult by legal and administrative obstacles and red tape.

Serbia is developing a sustainable energy market. The Central European Development Forum CEDEF is at the heart of this process by facilitating it and linking all the stakeholders, providing education and expertise, organizing public debate and advocating better and faster regulation and new technologies that create “green” jobs. The Energy Law of 2004 envisaged measures to create the conditions for stimulating the use of renewable energy sources. Also, the Energy Development Strategy of Serbia, in effect until 2015, one of main priorities of the Serbian energy sector, stipulates greater use of renewables. This is a priority strategy in the field of sustainable development for improving environmental protection and the rational use of natural resources.

Biomass potential The energy potential of renewables is significant and is estimated at over 4 million tons of oil equivalent per year, which corresponds to nearly half of the country’s annual demand for energy. Respectively, the greatest potential of the renewables in Serbia is in the field of biomass. The potential of biomass is estimated at around 2.7 million tons of oil equivalent or 63 percent of the total potential of renewables.

The rest of renewable sources’ potential is: 14 percent hydro energy, 4.5 percent geothermal sources, 4.5 percent wind power and 14 percent solar energy. In the next several years, the Serbian Government plans to invest more than €2 billions in renewables and more than 1 billion dinar for improving the energy efficiency of the municipalities. In order to improve energy efficiency (EE) there needs to be a mindset change.

Education and communication are crucial.

34 Perspective June, 2012

of introducing EE measures, monitoring usage, creating energy balances, introducing renewables, etc. To prepare them for this new task CEDEF has created a network of Energy Managers of Serbia (MEMS) and works with them to bring them up to speed for when the law is enacted. CEDEF also works by influencing policy, stimulating public discourse and debate, organizing research in relevant fields, holding numerous international events and high level conferences. The education of regulators, policy implementers and energy managers in public utilities and companies is also an important CEDEF role.

“Green” jobs openings

> The Central European Development Forum (CEDEF) is at the heart of a growing effort to establish and support a broad-based move to renewable energy sources and their efficient management. <

Managing Energy Information Also, managing information on energy spent on all levels, in municipalities, in industry and in SMEs in a standardized manner is a must. New regulation exists for EE in buildings, but we need more standards and more set goals. The law needs to install energy managers in towns and cities to perform important tasks

By working with the ministries, universities, cities, the media and industry, we believe that we can develop energy policies and solutions that best meet the needs of the public and the economy, while minimizing damage to the Serbian environment.

Both in Serbia and abroad, the renewables and energy efficiency currently have greater impact on the economy, society and the environment. The result is the intense interest of representatives of the Government, embassies, municipalities, companies, financial institution and the general public in CEDEF activities. More than 200 participants per CEDEF event reveals increasing interest in the field of renewables and energy efficiency, its significance to new investments and new “green” jobs openings. With great pleasure I would like to inform readers that, on March 5th of this year, World Energy Efficiency Day, the Energy Efficiency Agency of Serbia gave a special award to CEDEF for a significant contribution to the mission of improving awareness of the importance of energy efficiency in Serbia. According to many international experts, this is the moment to invest in the Serbian market given that Serbia is currently in the era of a Gold Rush in the field of renewable energy sources and energy efficiency.

Business Development Manager Microsoft Serbia

Software Piracy Reduction a Sign of Better Times for IPR 2011’s reported 2 percent reduction in software piracy in Serbia is the first positive step in a campaign that could see better IPR protection mechanisms and contribute both to the economy and Serbian society.

I

n May of this year, IDC published the results of its Global Software Piracy study for 2011 which includes 120 countries and is most likely the premier Intellectual Property Rights-related study in the world. The results showed a 2 percent software piracy reduction in Serbia in 2011, moving from the already infamous 74 percent to 72 percent.

This 2 percent reduction was the best result for the year, and only 10 countries worldwide managed to achieve such piracy reduction. It is worth mentioning the fact that a 2 percent piracy reduction brought €3.5m revenues for the state budget from VAT on increased sale of legal software.

For comparison purposes, that is equal to the amount collected annually from Income tax.

The piracy rate is still very high, but the IDC software piracy study results reveal an improving trends for IPR in Serbia,. AmCham is one of the major contributors to this improvement. Our ongoing efforts to promote the IPR agenda to regulators has resulted in a very solid legislative framework for IPR protection. Our continuous efforts toward ensuring better enforcement resulted in creation of a special unit for software legality control within the Tax Administration and improved cooperation among the Public Prosecution, the Ministry of Interior and the Customs Administration.

Indeed, there is still room for improvement, especially in raising overall IPR know-how among holders of judicial positions, since their increased efficiency is the final piece of the puzzle that could ensure effective IPR protection.

Needless to say, the other enforcement agencies also need to improve their control mechanisms, be innovative and rise to the challenge that lies ahead, to ensure enforcement of IPR controls and thus allow development of the knowledge economy and attract new foreign investment.

With that in mind, I am certain that this reduction of software piracy is the first measurable sign of improvement in IPR protection in Serbia. If we all work towards this common goal - I mean both the Government and businesses - we will create an IPR-friendly environment that is one of the key requirements for creating a modern and prosperous society.

35 Perspective June, 2012

Mark Crandall

New Energy Act Perspective

Chairman, Continental Wind Partners

The Next Move Is up to the Government C

ontinental Wind Partners (CWP) is a US company that believes that the world is changing and that we should be part of that change. Our business is the development of large-scale renewable energy projects, principally wind farms, that benefit consumers, communities and the earth.

We strive to combine international experience with local knowledge, and thus have offices in all of the five countries where we operate: Serbia, Poland, Romania, Bulgaria and Australia. Our primary focus is wind energy, with 2,500 megawatts of capacity under development. CWP’s Fantanele project in Romania, acquired by the Czech utility CEZ, is Europe’s major onshore wind farm and one of the largest transactions to date in the European wind sector.

a wind farm also provides an indirect but very tangible benefit to the local economy through the construction or rehabilitation of infrastructure required by the wind farm but used by local inhabitants. For example, our project in Serbia will require us to construct fifty kilometers of new roads and to rehabilitate much more. Work on roads, foundations and electrical installations will

employ more than 400 people during the three-year construction period.

Despite this fact, there are currently no wind farms in Serbia being built, and, indeed, even if we had our construction permit in hand today we would not be building ours. The Serbian government has still not put in place a framework for private investment in renewable power that

Wind: Serbia’s greatest investment potential Serbia has a very good wind potential that should attract substantial foreign and domestic investment in the coming years. On average, 25 percent of the total investment in a wind farm is locally sourced and directly stimulates the local economy. Moreover, the construction of

36 Perspective June, 2012

Wind farms will fight pollution

Continental Wind Partners has been present in Serbia since 2009, and has thus far invested about €5 million developing a 300 MW “Chibuk” wind farm in the municipality of Kovin. Our plan is to invest about €450 million in wind farm construction in Serbia in the next 4 years. When that is completed, we hope to be able to produce electricity for over 30,000 Serbian households.

Serbia needs wind power. The construction of wind farms producing 450 megawatts of capacity, which is the government’s current cap on wind farms, would considerably strengthen Serbia’s energy sector, contribute to Serbia’s energy security, and significantly reduce energy imports that have been projected to increase by 7 percent this year.

Economically, this will lead to an increased level of Greenfield investments in this country, increase employment dramatically during the construction period, support local construction and transportation companies and increase State revenues from taxes. The Serbian Wind Energy Association (SEWEA) brings together a

is adequate for investment to go forward.

Passage of the new Energy Law last summer was an important step, and we hoped that it would lead to wind farms providing power beginning next year. However the government has failed to enact the enabling (secondary) by-laws required to make the Energy Law functional, so we are still stuck and unable to begin our investment. The Government had a fourmonth deadline after passage of the Energy Law to adopt the necessary secondary legislation, but that deadline passed six months ago. We will soon be marking one year since the adoption of the Energy Law, a year wasted because the government has not completed those processes that it promised and that are required by the Law. Investors like CWP are continuing to proceed with the permit phase at a slower pace than would be ideal. But nobody has plans to start actual construction because the projects are both uneconomic and too risky to finance in the absence of the required secondary legislation. The two biggest ‘missing pieces’ that were meant to be enacted by the government were a new feed-in tariff guaranteeing the price at which firms can sell power produced from wind farms, escalating according to euro-zone inflation during the life of the tariff, and contractual terms and structure (a “Power Purchase Agreement” or “PPA”) regulating how the sale of the power will be made to EPS (Electric Power Company of Serbia) and how payment to the windpower producer will be guaranteed.

The government has to lead

> The current situation arises from the fact that Serbia has a very good wind potential which should attract substantial foreign and domestic investment in the coming years.<

The decision as to what is ‘adequate’ with respect to these issues is driven largely by the international banking community. The wind business requires extremely high capital investment with low, infrastructure-like returns. As such, a wind farm investment is normally structured with about 70 percent long-term debt

from banks and about 30 percent equity from an investor like CWP. Banks are cautious, and their returns are low, so they must always mitigate whatever project risks they can. Unless there is a fair tariff, protected against inflation, and a strong contractual framework including all requisite guarantees, according to which

> The banks and the investors would both like to see the new Government efficiently address current issues and negotiate a Power Purchase Agreement that would allow wind-power investments to proceed.<

electricity from a wind farm can be sold to EPS, banks cannot justify the risk and enter into the loans required. The banks and the investors would both like to see the new Government efficiently address these issues and negotiate a Power Purchase Agreement which will allow these investments to proceed. There is room for compromise, but the government has to lead the effort to make this happen. One should remember the old saying: “A successful business negotiation is one that ends with both parties unhappy.”

What is clear in Serbia, and this is a good thing in the correct measure, is that the Government is not just opening the doors and inviting anybody who wants to invest in Serbia to do so, on terms overly generous to foreign investors. On the contrary, the Government has been very careful, trying to make sure that foreign investors receive sufficient incentive to participate, but not beyond the point of fairness. But they have probably been overcautious so far and not speedy enough, as we still don’t have a framework that works. It is high time to complete the legislation, get the paperwork behind us and focus on construction.

group of investors interested in investing over €1 billion in wind farm development in the next 3 to 5 years. This makes it one of the biggest investment potentials for Serbia. Politically, this will move the country closer to the EU by contributing to its renewable energy targets. As a signatory of the Energy Community Treaty, Serbia is obliged to adopt an implementation plan for the promotion of renewable energy sources for electric energy production. Although still negotiating its targets for 2020, Serbia will, in any case, have to increase its total consumption of energy produced from renewable sources by 5-6 percent by 2020. Environmentally, wind farms will reduce pollution from older coal-fired generation which currently represents close to 70 percent of Serbia’s energy production. The result will be a cleaner, healthier Serbia. Wind farms are a first small step toward a greater diversity in energy supply, lower pollution for the electricity produced and a cleaner future. Serbia needs a sustainable, renewable-energy future for its children.

Wind and other new renewable electricity technologies are central to achieving this.

37 Perspective June, 2012

New Energy Act Perspective

> The promising future of wind power in Serbia – and increased investment – is being held up by the failure of the government to complete necessary secondary legislation to make the new Energy Law effective. <

Ambitious Investment Plan

Slobodan PetroviÄ&#x2021;

Serbian Energy Perspective

Secretary of the Energy and Energy Mining Association, Serbian Chamber of Commerce investment strategy, Serbia could be left without the necessary quantities of electricity in a few years. But, an improved economic position of Elektroprivreda Srbije (EPS) would give incentive to the development of industry in the country because EPS is the main pillar of Serbiaâ&#x20AC;&#x2122;s re-industrialization.

Recommendations to the new government - what are the priorities of the energy sector?

The Managing Board and the Assembly of the Serbian Chamber of Commerce (PKS) have recently adopted a program of economic policy measures based on our national economic problems and proposed concrete solutions. The PKS Managing Board and the Assembly have unanimously adopted this document, stating that the economists must fight for their positions in discussions with the representatives of government bodies to kick start as soon as possible all the recommendations of the PKS program concerning the new 2012-2016 economic policy. This document will be sent to the future Prime Minister, line ministries, all

Needed: a Rational Energy Development Plan > Although there has been increased interest in renewable sources of energy in the last couple of years, Serbian energy policy is still beleaguered by red tape, divided responsibility and the inability to solve such problems as underpriced electricity. The new Energy Agency should receive full support and be allowed to do its job unhindered by bureaucracy and special interests.< What are the priorities of Serbiaâ&#x20AC;&#x2122;s future energy policy?

Serbian energy policy has gotten much closer to the market economy to adjust to the agreement with the Energy Community of South East Europe (ECSEE) and, simultaneously, to the operating principles of the European Union. This

38 Perspective June, 2012

policy was determined under the new Energy Act adopted in July, 2011. Work on a new energy development strategy for the period 2015-2025 with projections through 2050 will start soon. In general, Serbian energy policy includes the electric power system, the natural gas and oil industries, renewables, energy mining and energy efficiency.

Decisions concerning the policy and strategy for the privatized oil industry are made by Russian Gasprom, while Serbia gets involved proportionately to its share of the industry. As for natural gas, Serbia almost entirely depends on imports. The market price of natural gas follows oil prices on the London Stock Exchange in the world market. This situation will improve when we finish building the gas storage facility in Banatski Dvor as then we will be able to control the seasonal and daily oscillation of peak loads.

One of the key priorities of Serbian energy policy should be to build power plants of around 1500 MW installed power, the exploitation of which should start in the second half of this decade. If there is not both investment and a good

AmCham Serbia e-service!

e-CARD

How to become competitive in the energy sector where there is no investment? How to attract investors?

Investors are not particularly interested in investing in the energy sector because it involves expensive and technically complex construction. Besides, investors cannot fully own the result of their investment, but can only be minority shareholders alongside EPS. This is what practice has shown in the past few years. The greatest interest is in production and trade in energy and fuels because they bring the most profit. Every investor is looking after their own interests while disregarding the general welfare. This sector requires government control.

The biggest investors in the electric power industry are the public and EPS because EPS funds its investment projects with the money it gets from selling electricity.

The economic power of EPS should be strengthened, i.e. the price of electricity has to go up considerably in the next couple years, as it is the lowest in the region at the moment. relevant institutions of executive power, representatives of legislative power and all members of Serbian Assembly.

As regards the energy sector, one of the aims of the new government should be to increase the price of electricity twice

Serbian Energy Perspective by the end of this year. We should now have the price that we had nearly a year ago, when a kWh cost some 5.6 cents, as opposed to the current price of 4.5 cents today.

Investment in new production capacities, building hydro and thermal power plants and mines, investment in the distribution sector, environment protection and development of renewable energy sources would help revive the Serbian economy, provide a safe, quality supply for domestic consumers, increase the efficiency and competitiveness of EPS and strengthen our export potential.

The future government should support the financial and investment capacity of EPS because its investment is the driving force of the Serbian economy, especially in the electrical engineering sector.

Slobodan Petrović Serbian Chamber of Commerce

ing work analysis, propose electricity prices and decide on the prices of fuels, too.

So far, the Agency has proposed prices but these were ultimately the government’s decision. With the new law and transfer of competencies, a more rational and sounder energy policy is guaranteed.

Neither marked improvement nor reaching the market price can be expected before 2015, but this should be done gradually, following an established plan and program. If electricity went up by only two percent relative to the current price, it would still by lower than that in neighboring countries by some 30 percent. But with such a price Serbia could invest, meet current needs and cover the costs of investment development as well as its obligations concerning debts for revitalization from previous years.

How can we resolve the electricity price policy considering that it has been considered a socially-protected category for years?

As of October, the price of electricity will become the responsibility of the Energy Agency (a regulatory body), which will, in cooperation with EPS, and follow-

40 Perspective June, 2012

It is interesting how no one even thinks about asking why the price of gasoline is as it is, but everybody wonders about the price of electricity. The price of electricity in Serbia has been the lowest in the region since 1990, considerably limiting realization of any investment projects in the public enterprise EPS. We have been talking about social maps for four or five years, but no one wants to tackle the problem and solve it. Social maps would introduce social categories so that the burden of social peace is not borne by the economy but by the state.It is high time that we fully recognized the Energy Agency and that we believed that it could determine both the policy and the deadline by which the market price of electricity should be reached. Only then will we be able to demand efficient and rational operation from EPS. How can we increase the share of renewables?

Renewable energy sources have been included in energy strategies and

Nataša Vujović

policies worldwide for three decades.

We have been better educated about renewables in the past ten years, but started implementing real measures only in the beginning of 2010, when the Regulation on Feed-In Tariff entered force.

This Regulation introduced guaranteed purchase prices for the electricity generated from renewable sources and a guaranteed buy-out period of 12 years.

Since the Regulation was adopted the interest in renewables has suddenly increased.

In my opinion, Serbia has done a lot in the field of renewables in the past two years. We have built nearly twenty small hydroelectric plants, the most promising form of power generation from renewable sources, and we have

> Serbian energy policy is determined under the new Energy Act adopted in July 2011.

Work on a new energy development strategy for the period 2015-2025 with projections through 2050 will start soon. In general, Serbian energy policy includes electric power system, natural gas and oil industries, renewables, energy mining and energy efficiency. <

Serbian companies should be sources of work, guarantees and the quality of big projects, and the government should help ensure that they can compete with foreign companies by granting them various tax facilities. Serbian companies should be supported in the next big investment cycle. Legislation should be amended so that foreign and domestic companies can compete in tenders under the same conditions.

The unequal position of Serbian companies when applying for funding, whether it is for loans with foreign banks or for donations and favorable credit lines with EBRD, is aggravated by the absence of bank guarantees and the Development Bank as a pillar of the Serbian economy.

Views from Serbia Investment and Export Promotion Agency (SIEPA)

already been exploiting a few co-generation cycles, i.e. combined heat and electricity generation. We have symbolically installed some solar panels, and there are numerous ideas, projects and a lot of interest in the building of electric power plants that would use other renewable sources (hydroelectric).

However, we are still lacking wind farms. They are expensive, long-term investments, researching micro locations where they would be built is time-consuming. There is a problem of ownership of those locations and, finally, the construction itself. Collection of technical documents and licenses has started for several locations in Vojvodina and for one location in eastern Serbia.

Cumbersome and painstaking administrative procedures further hinder the construction of plants using renewables, and there is a lot to be done on their simplification.

Building a plant exceeding 1 MW of power requires 42 documents. Each document requires getting additional documents, so that it takes 1.5 to 3 years to get only these documents.

Marketing Advisor, SIEPA

Despite the Crisis, Drivers Push Green Buildings Trend T

Green building development, driven by regulations, the search for profits and corporate social responsibility concerns remains a growing trend despite set back due to the effects of the economic crisis.

he economic crisis hit the world hard, and we are all still coping with the continuing effects that are reflected on all aspects of business, including green growth. But there remain important drivers for the green building movement even in these hard times.

These include government legislation derived from regional or national environmental goals, business’ saving policies and an increased return on investment (ROI) for the building owners. All these elements to a growing extent have contributed to sustainable building development.

Legislation imposed by governments is an important, top-down measure that can spin the wheel of green growth and development. In 2003 the EU established the Energy Performance of Buildings Directive (EPBD) to increase awareness of energy use in buildings and boost investment in energy-efficient buildings. But it was not until 2009 that companies had to certify new or large existing buildings that were to be renovated. At that point companies were really pushing hard to meet deadlines and comply with the given standards and government requirements. Thus, a law is not enough; having strict compliance deadlines is crucial.

The pressure to save and make money is everlasting, thus finding ways to cut costs and improve productivity can be critical. Employee productivity, reduction in health and safety costs and savings from energy, maintenance, and operational costs supplies the basic equation. Studies have shown that occupying a green building decreases overall costs due to higher energy efficiency, increase em-

ployee productivity lower employee turnaround and can send a positive message to shareholders. If this also agrees with a Corporate Social Responsibility (CSR) strategy that supports the green movement, everybody is happy.

The current green trend is driven by big companies. Although in 2009 they reported a significant decrease in green initiatives investment, in 2010 they unfroze these funds and have been spending again since that time. In addition, they started hiring skilled employees specialized in environment and sustainability and report increased spending in green innovation product development. History has shown that for any kind of movement to succeed, its leaders have to be big, enthusiastic and powerful. Research suggests that the green building movement has leaders who will not change direction despite the economic crisis.

The benefits of energy- efficient buildings are prompting building owners to adopt these standard when building new or refurbishing old buildings in order to seek a higher return. This investment is considered sound because these buildings are expected to provide higher returns as a result of environmental awareness, business strategies and the green movement. Research indicates that on average rental rates of green buildings have been 3 percent higher per square foot than their identical non green counterparts. Also selling prices of green building have been 16 percent higher. Furthermore, the retained value of green buildings is substantially higher than that of their non-sustainable counterparts.

Strong Drivers for a Green Economy CSR concerns and cost-benefit analysis for big companies are strong drivers for the green economy. Big companies set trends, present better insight into the results and will provide better understanding and evidence of sustainable building usage. They also drive the green business PR and widely advertise the results, further engaging the business community. Thus, with the good results that sustainability provides for business and construction, small and Medium enterprises should take the green building path and start supporting this economy. Higher returns are attractive to everyone.

At the moment, a higher initial investment is the biggest obstacle. However, in the long run better business results will continue to drive the green trend.

The green buildings business will continue to grow, although there will be setbacks due to the current economic crisis.

Energy saving in households

Small Steps towards Big Energy Savings

> Can we make our homes energy smart? An energy smart home does not only mean having a home powered by solar energy or an electric car, for instance.Your home can become environmentally friendly, that is you can both save money and protect the environment, by saving energy. <

F

or a start, it would help if everyone became aware of their ability to control how much electricity they use, and of their capacity to make an impact on environmental protection by making simple changes to their daily routines and household organization.

Can we make our homes energy smart?

An energy smart home does not only mean having a home powered by solar energy or an electric car, for instance.

Your home can become environmentally friendly, that is you can both save money and protect the environment, by saving energy. How? It’s very simple.

Locate Air Outlets Make a list of obvious places where air comes in, because this is where the heat escapes when the heating is on. If you prevent this, you can reduce your energy consumption by 5 through 30 percent (for an average family of three with a monthly consumption of 350 kWh through 400kWh a year and costs of up to 6,000 dinars).

42 Perspective June, 2012

Check your doors and door frames, floor edges, corners, windows and openings.

Put weather stripping on windows and doors. If you can afford it, the best thing to do is to replace old windows with new ones. If you can’t do this, insulate them well. If you can see a strip of light under the lower door frame at night, heat will be escaping through the same gap.

Check if air is coming through sockets, electric switches, window frames, door frames, around air-conditioners, through roof windows and around the fireplace. If you have difficulties finding the cracks or outlets where the air is coming through, use a simple trick with an incense stick.

Light the stick and start walking around the room. The smoke will stay upright until it finds a fissure or an outlet. Then it will start flickering and you’ll know that that’s the gap you need to fill to save energy.

Insulation Attics are huge heat-eaters. If you don’t use the attic as a living space, insulate it well from the rest of your home.

For example, the attic access panel can be insulated with foam board (on the upper side), and weather stripping – a rubber sealing or self-stick foam can be used on the attic openings.

> Energy efficient light bulbs use one fifth of the energy of standard ones. They last eight times as long, so in the long run they are not more expensive than standard light bulbs although they seem so at first glance.

Research has shown that if all three million of Serbia’s households used at least one 75W light bulb less, the country would save up to 25,000 euros a month on electricity imports. <

Home Lighting

If the attic is used as a living space, pay special attention to partition walls with heated rooms, elements which lean on the roof construction and the ceiling, where the space above is exposed to outside temperatures. Also, insulate external walls, especially those between rooms which are not used as living spaces (garages, loggias) and floors above unheated rooms (corridors, garages). Reinforce the insulation where walls meet, and pay attention to other openings and cracks through which cold air can enter.

A well-insulated attic or cellar must be aired frequently to let accumulated moisture evaporate and to prevent the appearance of mildew and mold.

The energy used for lighting accounts for about 10 percent of your electricity bill. Check the wattage of the light bulbs in your home because energy consumption is determined by the wattage and how long they’re on. Compared to energy saving light bulbs, standard ones devour electricity. This is why standard light bulbs should be installed only where the light is not needed for long periods of time (e.g. the cellar or the bathroom). Fluorescent

and LED light bulbs and new technologies will slash your electricity bill in half.

Generally speaking, the light should never be left on for long, regardless of whether you’re using energy efficient light bulbs or not. If you tend to forget to turn off the lights in the garage or on the balcony, you should install an automatic switch which turns the lights off automatically after a few minutes. You should do this for the light at the entrance door, where you can use an automatic light sensor that will switch on the light only when it detects someone in the vicinity. Outside lighting can also be powered by solar energy.

Walls and furniture painted in pale colors reflect the light better than those painted in dark colors. This means that a 100W light bulb above a black table will not provide better lighting than a 60W bulb above a white table. Also, a palecolored interior can be perfectly lit by a weaker light bulb. When there’s no one in the room, turn off the light.

Energy efficient light bulbs use one fifth of the energy of standard ones. They last eight times as long, so in the long run they are not more expensive than standard light bulbs although they seem so at first glance. Research has shown that if all three million of Serbia’s households used at least one 75W light bulb less, the country would save up to 25,000 euros a month on electricity imports.

Cooking If you cook without a lid securely placed on the pot, you’ll use twice as

Energy saving in households

system, your monthly heating bill will be 14,500 dinars if your heating appliance is on mostly during peak hours, if it is turned up to full power or if it can’t reheat but has to start heating all over again. Don’t let heat escape the room! When it’s cold, keep your doors and windows shut as much as possible (first check if they let any air through and use weather stripping).

Most electric space heaters have several power settings. Don’t always use the highest setting. Don’t leave space heaters on if you’re going out for a while. Not only will you be wasting electricity but you’ll also increase the risk of fire. Before you go to bed, turn the thermostat on your storage heater down. It is healthier and cheaper.

The same applies when you’re planning to leave the room for several hours. By turning the thermostat down by just one degree, your electricity bill can drop by 10 percent, or 300 dinars a month. Modern home thermostats can be programmed with the desired temperatures for different times of day.

Electric Space Heater / Storage Heater When used rationally in the winter, a storage heater consumes 60 percent of the total electricity in a household not connected to the district heating system.

If your storage heater, space heater or a similar 3 kW appliance is on for 15 hours a day, it will use 1,400 kWh of electricity each month. According to the current tariff

43 Perspective June, 2012

Energy saving in households

Pressure Cooker A pressure cooker not only saves time, but also uses 70 percent less energy. In addition, vegetables cooked in pressure cookers retain more vitamins and other nutrients.

Water Tank A traditional bathroom water tank uses around 15 percent of a household’s total electricity. To make the most of it the best thing to do is set up the temperature to around 60°C. Avoid taking baths as they use up to 100 liters of water, while a shower needs only 50 liters.

Switch off the tank when you plan to be away from home for longer than a day. A tankless kitchen water heater and a dish washer use only up to 6 percent of your annual electricity.

When purchasing a water tank, pay attention to the household’s needs. A water tank that’s too big heats up more water than a family needs in a day, while a small water tank will have to reheat the water during the day, when electricity is most expensive. To heat only one liter of water from 10°C to 80°C will cost you about the same as having a 100W light bulb on for an hour. On average, each person uses between 300 and 800 liters of water a week.

Ideally, the distance between the water tank and the tap should be as short as possible. The further away the tap is, the longer you need to wait for hot water to start running from it, and the more excess water will be in the plumbing when you turn the tap off.

If you can afford to, add insulation to the water tank. It will pay off in a year’s time. New water tanks use up to 30 percent less electricity than those over ten years old. In practice this means that an

44 Perspective June, 2012

average family of three will save around 8,000 dinars a year just on the water tank, i.e. purchasing a new water tank will pay off after only one year.

Fridge Do not open the fridge door every other second, it should be open as little as possible. If you cover the food in the fridge, you’ll reduce the quantity of moisture on the inner walls of the fridge and help its efficiency. Wipe the droplets off bottles and Tupperware containers before you put them in the fridge. Do not place the fridge near a stove, space heater, radiator or other source of heat. It will need much more time to achieve its working temperature.

A fridge without a freezer compartment is the best choice, neither too big nor too small. If you want a fridge-freezer, choose one with an auto-defrost feature.

The temperature of the room where the fridge is kept is very important. If it’s just a degree lower, you’ll use 4 percent less energy! Ideally, the fridge should be in a cold room near the kitchen.

Don’t forget, the distance between the back of the fridge and the wall should be at least 5 centimeters to let the cold air circulate around the fridge’s condenser coil. The ideal temperature in the fridge is 5°C.

Freezer How much energy a freezer uses depends on its power, the model and insulation. If you put it in the right place, set the right temperature and use it properly, you can save energy. The best place for a freezer is in a room that is not heated, e.g. a cellar. If this is not possible, make sure that it’s not exposed to the sun’s rays. In a room where the temperature is 15°C, a freezer uses one third less energy than in a room at 25°C. The ideal temperature in the freezer is -18°C. The higher the temperature in the room, the more energy it consumes. The heat that a freezer takes out from foodstuffs is extracted through a condenser, which is why you must make sure that the air can flow around the freezer. Clean the dust off the condenser and the grill a few times a year. You should also be aware that an empty fridge uses more energy than a full one. If you don’t have enough food to fill up the freezer, use Styrofoam.

Arrange your foodstuffs in an orderly

fashion so you can find what you need more easily and don’t keep the freezer open for too long.

Washing Machine When buying a washing machine, you should give priority to a model that saves both energy and water. You can also save energy and water by choosing the right program and temperature.

Read carefully and follow the instructions for the appropriate quantity and type of laundry. Always load the machine fully and use environmentally friendly detergents, following their instructions. If the laundry is not too dirty, you can wash it at a lower temperature. A good detergent can use 10 to 20 percent less energy. In other words, a machine that uses up to 1.2 kW saves from 50 to 70 dinars per cycle, or 400 dinars a month. Many washing machines have a ‘low-energy button’, an energy saving program. Use the when the machine is half full. Always choose an appliance marked with the letter “A”, or a letter close to it in the alphabet. Using this classification you

Air Conditioning Air conditioners are big energy consumers. Centralized air conditioners use up around 10 kWh per day, while the so-called split system, the most common type in Serbia, uses from 1 kWh through 3 kWh. If we assume that an average air-conditioner consumes 5 kWh a day, split equally between off-peak and peak hours, it will use up 300 kWh a month. In this case, 1,000 dinars of the electricity bill will be just for using the air conditioner.

When it comes to heating with an air-conditioner, the situation is slightly different. In fact, this type of appliance uses 1.2 kW of electricity on average, generating 3.5 kW of heat. A space heater, for example, uses the same amount of electricity to generate only 1 kW of heat! can make a better choice when buying a washing machine.

Audio / Video Units There is no need for the TV to be on if you’re not watching it. The same counts for the computer, iron and audio-unit. They use electricity even in stand-by mode, as many of their components are voltage controlled.

Installations Most money trickles away through faulty installation. Although fixing this can be pricey, it is far more cost-effective than letting money constantly seep through the cracks.

Energy Star When buying home appliances, make sure that they have an Energy Star service

mark. This must be visible on the appliance itself, on its box, and on the accompanying papers. Make sure that you ask the vendor to show you the mark. If there isn’t one, you’re looking at an energy inefficient appliance.

Despite popular belief, appliances carrying the Energy Star label are no more expensive than those without them. Whenever you can, choose energy efficient appliances.

45 Perspective June, 2012

Energy saving in households

much energy, so try to minimize your cooking in open pots. Transparent lids are ideal because you can monitor what you’re cooking without lifting the lid. It’s best to use cookware with flat bottoms that fit the size of the stove burner or hot plate. Cooking in pots and pans with deformed bottoms or on deformed hot plates doubles the consumption of electricity. Most vegetables are best cooked in a pot with a lid on, as they cook faster and lose fewer nutrients.

Dušanka Babić

HR Best Practice

Human Resources & Training Manager, DHL International Beograd d.o.o

> The success of DHL International Beograd – DHL Express’s Human Resource program is reflected by the fact that its employees chose the firm as the best employer to work for in its category as a medium-sized enterprise. And the firm’s success is testimony to its achievement. <

A

ccording to the survey „The best employer for 2012 – employee’s choice” recently conducted by Infostud, DHL International Beograd d.o.o. – DHL Express was awarded „The best employer” in the category of medium enterprises. In addition, DHL won three special prizes: The best organization to work for, The best development possibilities and The best interpersonal relations. These were all the reasons to find out more about good HR practices implemented in this international company.

How many people does your company employ in Serbia and what professional profiles do you have here? Can the Serbian labor market meet the demand for qualified staff?

In Serbia, DHL International Beograd d.o.o. employs 160 permanent employees and around 20 part timers. Being in the transportation and logistics industry, most of the positions in the company are couriers, ground distribution and warehouse clerks and customs agents. For most of these jobs we employ people with high school, and only about 20% of job roles are filled up with people with University degree. For our industry, Serbian labor market can not offer experts and professionals for most of our job roles and this is the reason why we have so many promotions within, meaning that we are growing our talents through vast job experience employees gain here combined with various developmental experiences. It is not rare that ex couriers are now leading some processes and departments.

46 Perspective June, 2012

What were the main reasons for DHL to win these prizes? What makes you different from the rest of the companies?

The main reason why we won these prizes, in my opinion is that our employee’s perception of what we are doing, as leaders in the company, is very positive. When we talk about the truth, I always like to say that the truth is the perception of the individual and as such it is a long way to build on employee’s perception. I would say that positive perception, pleasant emotions and self motivation from within has enormous effect on progress we make every day. So, I would say that our team leaders, supervisors and managers are just supporting the progress in our organization and by so doing, the natural results are productivity, commitment and camaraderie.

Which global HR practices does DHL employ in Serbia that led to the company’s recognition as the best employer?

There are a series of HR practices that we implement all over the world related to employee engagement, active leadership, motivation, performance management, target agreements, incentive schemes, compensation and benefits, training and development and of course, that it helps a lot in achieving good results. The most of corporate world already have these practices these days. However, this is just a frame for each one, out of 220 countries where we are present, but how we locally build on our global strategy “to become

Employer of Choice” and how we live our values through open and genuine relationships while supporting the progress on daily basis is something very personal and has an impact to employee engagement. It proves to be the difference between good and great!

How does the company recognize the right person for a job? What are the qualities that such candidate must have? How does DHL reach a satisfactory level of efficiency and productivity of employed staff? How do you measure it?

It is very easy: the candidate should be competent – able to do the job, committed – willing to do the job and finally to contribute – they should find meaning from the work they do. If you miss one of these three you have to be aware of it and work on it with each and every employee. Sometimes

Do you have a staff incentive program in your Company? How does it work and to what extent does it contribute to productivity?

Incentive schemes are definitely something that has a positive impact to productivity and personal budget as well.

Incentives are motivational to certain extent but the best motivation is based on success you experience on daily bases, feeling of pride for belonging to successful team, being the part of the team that is leading the industry you are in, which all together nurtures your soul with good feelings, positive perceptions and willingness to contribute.

ous improvement and should evaluate its performance constantly and perform mini quality audits and learn not only from problems and setbacks they experience but from successes. Those successes are good to celebrate but more you can get from them to analyze them and find out what enabled such a success and if possible create a repetitive pattern of factors that are leading to success.

What creates successful team?

How important is it that staff education and training is worthwhile for companies? And why? How much does this contribute to the productivity in your company?

There are a lot of theories about “How to create a successful Team”, however I am sure that the team who handles successfully all situations must communicate openly, knowledge of team members is thorough and skills well developed, individuals are caring for each other. The team should be committed to continu-

Education is base for every progress and I would like to share with you our experience with one very unique programme DHL recently launched in all 220 countries in the world. It is impressive to know that the same programme was and still is being implemented for 100.000 employees with the same content. This specific education

has a clear objective and that is to transform 100.000 employees into 100.000 Certified International Specialists. This means that all our employees are not only experts in what they do every day but have a wider knowledge and picture of what our industry is, how DHL helped the world trade in the past, from the time when we pioneered the industry till the present moment, what is the unique spirit of DHL who invented the business we are in and still is leading the industry. We all go through all segments of our business, from brand and product knowledge, to customs clearance procedures, real time visibility shipment, simply we all gain knowledge that will enable us to use every interaction with our customers to provide impeccable service by giving them piece of mind when they deal with us making them loyal and real DHL ambassadors by saying to the other people how great we are. This programme had a very positive impact on our employees, they really feel proud of being a part of such a successful DHL story.

Has the crisis affected the function of Human Resources, and if, how? How to maintain the number of employees in times of crisis?

In those times of crises I remembered one says: “If you want to cut ribbons cut the costs!”

Unfortunately, we all have to cut the costs and we all try to do with the cost that is related to nice things that you can easily live without. However, it is always hard to make decision about reducing the number of employees and luckily we were not forced to take serious measures so far.We strongly believe that we have to create as much as we can positive contribution to our business results and that our own results will save us from such unpopular measures.

47 Perspective June, 2012

HR Practices Perspective

DHL Builds Individuals into Successful Teams

you have to work more to build a competence, sometimes we have to help employee finding the meaning by explaining how their individual targets correspond to our country or even area objectives. Sometimes you have to support the progress by awakening willingness to work if throughout the time it goes down. Every single employee has his/her own targets that are followed up regularly. For each position you have different measures but all targets must be measurable and clear. It is interesting practice that within some departments you can find their internal competition which is completely unofficial but very motivational, because all of them are committed to excel.

Intellectual Property Rights (IPR) Committee

TAX COMMITTEE

Dear AmCham members,

Dear AmCham members,

Please allow me to briefly inform you on our AmCham (IPR) Committee’s plans for 2012/2013 and update you on few important milestones we have reached during our engagement so far.

First of all, it is my pleasure to inform you that work of the IPR Committee is already paying dividends with the latest results of the BSA Global Software Piracy Study which showed that Serbia has in fact reduced its piracy rate by 2 percent and is one of only 10 countries in the world to achieve such a result in 2011. Despite this success, a great amount of work is still ahead of us, and the IPR Committee is keen on taking this challenge and improving this important result even further.

Speaking of milestones, we are glad to inform you that in this year we will host the 10th Annual AmCham IPR Conference, which has become a leading and the most prestigious event of its kind not only in Serbia but in the region. We are hoping to bring the 10th conference to a whole different level and are dedicated and committed to delivering a highly visible and effective event.

I believe that our greatest challenge in the following year will be appropriately addressing the relevance of IPR cases in the judicial system and increasing level of know-how among the judicial community. Last year’s IPR Conference brought some interesting ideas including one which opts for specialization of courts for IPR cases as most feasible at this point. It is up to this Committee to engage actively with relevant stakeholders and effectively address this issue.

In addition, we are keen to prepare an IPR policy brief for the new Government in which we shall outline our primary concerns and propose a number of improvement in areas where the focus of the new Government should be.

In closing, our plans for the year ahead are very ambitious, and I can ensure you that the entire Committee is dedicated to leading the change in this very important area. Also we are looking for all of you to be IPR ambassadors and spread our message further.

Truly yours,

Sincerely, Igor Lončarević Tax Committee Chairperson Tax Committee Agenda 2012/2013

Miloš Blagojević IPR Committee Chairperson IPR Committee Agenda 2012/2013

IPR Steering Committee 2012/2013

About IPR Committee

» Organization of the 10th IPR Conference » Media Brunch with journalists on IPR issues and presentation of the IDC Piracy Study » Enforcement monitoring (Market inspection, Tax and Custom Administration, RATEL) » Participation in a seminar for the judiciary which will be organized by the Intellectual Property Office » Reality check of Copyright Law implementation » Social media engagement

Miloš Blagojević, Chairperson Business Development Lead, Microsoft

As a joint initiative of AmCham member companies, the IPR Committee was established in 2004 with the goal of improving the status of intellectual property rights in Serbia. Over the following years, the Committee has established close cooperation with key Government and public institutions and accomplished significant results in various aspects of IPR.

48 Perspective June, 2012

I have the pleasure of presenting to you the Tax Committee’s 2012/2013 Agenda, which I may say is quite ambitious.

One of our first steps was organization of Roundtable with Ministry of Finance (MoF) and Tax Administration (TA) at the beginning of June 2012. The main aim of the meeting was to point out issues that AmCham members and other taxpayers are facing in dealing with the Tax Administration (discrepancies in interpretation of the tax laws published in MoF opinions, inconsistent application of opinions of the MoF by the Tax Authorities and unreasonable administrative procedures in certain cases).

Based on the results of the Roundtable, our Committee will prepare a Policy brief for the new Government in which Value Added Tax (VAT) Law, Corporate Income Tax (CIT) Law, Personal Income Tax (PIT) Law and local charges issues will be covered. The Policy brief will serve as a basis for further tax dialogue with the Government and the Tax Authorities, but would also envisage our both short and long term goals for improvement in this area.

AmCham is also preparing a position paper on potential conclusion of the Double Taxation Treaty between the US and Serbia.

This document will be channeled through the US Embassy to US Government officials and would represent an initiative for conclusion of the treaty.

For more info on our past Committee activities, please visit the AmCham website.

Vuk Pribić, Vice Chair Government Relations Manager, Japan Tobacco International Marketing and Sales Slobodan Kremenjak, Member Attorney at Law, Živković Samardžić Law Office

» Roundtable with representatives of the MoF and TA (on topics such as: dvarious interpretation of the tax laws between the MoF and the TA, delay in bylaws adoption, second-instance procedure, etc.) » Requirement of the TA to capitalize royalties’ expenses that do not satisfy requirement of IAS 38 (Intangible assets) negative corporate income tax (cit) consequences and incorrect interpretation of the TA decisions by the Court » Improvements of the CIT Law (e.g. marketing expenses limitations, rulebook for application of incentive for profits realized from production in free zones,

About Tax Committee

WHT on swap expenses, etc.) » Advocacy against proliferation of earmarked revenues » VAT Law amendments

Tax Steering Committee 2012/2013 Igor Lončarević, Chairperson Partner, KPMG Stefan Strovjanovski, Vice Chair Senior Manager, Ernst & Young Zoran Skopljak, Member Tax Senior Manager, Deloitte

BUSINESS ADVOCACY UPDATE

AmCham Business Advocacy Activities

The AmCham Tax Committee commenced its work in 2004 as the VAT Task Force with the specific aim of addressing problems associated with the implementation of VAT Law. The group achieved significant results in a short period and in 2006 was transformed into a formal Tax Committee. Since then it has continuously cooperated with the Government on improving tax legislation and solving specific problems in practice. The committee was consultant to the IMF delegation that deals with tax issues related to the key obstacles to the economy.

49 Perspective June, 2012

AmCham Business Advocacy Activities

May, 2012 AMCHAM HEALTH CARE COMMITTEE SUCCESSFUL IN CANCELLING HEALTH INSURANCE FUND (HIF) 40 percent DEBT WRITE-OFF Over past two months, AmCham has actively advocated against the Government’s conclusion implementing forced write-off of 40 percent HIF’s debt towards wholesalers and producers of medicines.

Namely, at its session on March 9, the Government adopted a conclusion in which it was incorrectly stated that the producers and wholesalers accepted the write-off of HIF’s debt in the amount of 40 percent, while the remaining outstanding amount of 60 percent has been reprogrammed for payment during 2012, 2013 and concluding with December 31, 2014.

Following the adoption of Government conclusion AmCham Health Care Committee, along with Serbian Chamber of Commerce and INOVIA (Association of Innovative Producers) took urgent actions in order to prevent consequences of such decision. As a result of collaborative efforts of all relevant stakeholders, the Government issued new conclusion which withdraw the previous one, resulting with HIF following on with paying outstanding debts in chronological order.

AMCHAM HR COMMITTEE ORGANIZED FOCUSED MEETING ON PERFORMANCE/TALENT MANAGEMENT On May 25, the AmCham HR Committee’s focused meeting on Performance/ Talent Management was hosted by Tatjana Jovanović, Director HR of Philip Morris in Serbia and Montenegro. The meeting provided an insight to the Philip Morris system of employee’ evaluation and talent management, and also was an opportunity for experience exchange between HR Managers on that topic.

The performance review of employees is assessed several times per year. A final, annual, performance review, besides providing information on an employee’s achievements, reflects the possibility that the individual might be treated as talent and, as such, nominated for a specific talent pool. Employees are assessed by their supervisors, but also by themselves, and the results of these evaluations provide opportunities for cross functioning between the different departments and further development. Five basic leadership attributes are evaluated: efficiency, clear and constructive communication, courage, emotional intelligence and entrepreneur spirit. This system provides an integrated and strategic view of the organization and its employees, early identification of top talent on different levels and specific follow-up on their accelerated development.

As a practical tool that can be used for further exploration of this topic, Ms. Jovanović suggested a book: “FYI: For Your Improvement” by Michael M. Lombardo & Robert W. Eichinger.

Topic: Presentation and communication skills Lecturer: Ivona Simić

Topic: Preparation for the selection process – what is important to companies when they interview and employ Lecturer: Milena Manojlović of ConsulTeam

Topic: Teamwork Lecturers: Sonja Jovanović & Olga Mosenkova of Ernst & Young

Topic: Career Development Lecturers: Sanja Tišma and Slobodanka Cvetković of Philip Morris

Topic: Networking Lecturer: Vladan Petrović, PricewaterhouseCoopers

Topic: Time Management and Setting Priorities Lecturer: Nataša Stojimirović of Hewlett Packard

FOURTH CYCLE OF “KADAR DA BUDEM KADAR” PROGRAM HELD from MAY 21 TO 24 From May 21-24, AmCham and the Center for Career Development and Student Counseling of the University of Belgrade organized, the fourth session of the “Kadar da budem kadar” (Qualified to be qualified) program for students and young graduates from various faculties of the Belgrade University.

The aim of the program, which consists of several ‘soft skills’ workshops, conducted by AmCham’s HR Committee representatives, is to give students and young graduates an insight into the required skills important to gaining employment as well into demands of the modern world of business. Participants had an opportunity to actively take part in workshops and lectures by the following AmCham HR Committee members:

50 Perspective June, 2012

Topic: Leadership Lecturer: Jelena Šribar of British American Tobacco

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AmCham Business Advocacy Activities

April, 2012 AMCHAM JOINS IN PANEL DISCUSSING DANGERS OF PARA-FISCAL CHARGES On April 19, AmCham’s Acting Executive Director, Amalija Pavić took part in a Panel Discussion on Para-fiscal Charges organized by the USAID Business Enabling Project. The study presented at the event identified 370 different fees and charges that Serbian companies must pay, which cost them €730 million.

The study was conducted by USAID BEP and NALED and included a survey on earmarked charges in which AmCham took part.

Milica Janković of Janković Popović Mitić Law Office

Milena Jakšić Papac of Karanović and Nikolić Law Office

Jovana Tomić of Živković Samardžić Law Office

obligations related to labor regulations and possible penalties for non-compliance. These include obligatory and voluntary acts and records that every employer should keep and the necessary content of an HR file for each employee.

AMCHAM JOINS CALL FOR REFORMS TO SERBIAN INSPECTION SYSTEM

Photo: Media Centar Belgrade

Besides Ms. Pavić, speakers at the event were Joe Lowther and Dušan Vasiljević of the USAID Business Enabling Project, Milan Simić of NALED, Nikola Altiparmakov of the Fiscal Council, Branko Radulović of the Balkan Centre for Regulatory Reform and Darko Vukobratović of Contango LTD. Ms. Pavić pointed out that one of major problems faced by domestic and foreign investors is a lack of transparency in the introduction and adoption of new charges and compensations that creates an insecure and unpredictable business environment. In the case of local them, she explained, it is hard in practice for an investor to compare taxes in various municipalities, since these may differ, and such comparisons are hardly achievable due to different methodologies used by the municipalities. Emphasizing that only a transparent and credible regulatory framework could attract investments, Ms. Pavić pointed out that advocacy towards preventing imposition of new para-fiscal charges in non-fiscal regulations and strict criteria for determining charges collected at the local level, will remain one of AmCham key advocacy priorities.

On April 4, AmCham, NALED, the Serbian Association of Managers, the Serbian Chamber of Commerce, the Serbian Employers’ Association and the Regulatory Reform Office presented a joint initiative for comprehensive inspection system reform at a press conference organized by the USAID Business Enabling Project (BEP).

AmCham’s Regulatory Affairs Coordinator, Milica Samardžić, pointed out that the efficiency of inspections is one of key conditions for the competitiveness of the country. She emphasized that along with its role of protecting public interests and consumer rights, inspections should be regarded as a service to businesses.

However, the impression that is gained in practice is almost quite the opposite, as inspections put additional burdens on businesses operating legally while the grey economy is tolerated. This directly affects competitiveness since instead of developing and improving its operation, targeted companies have to deal with long inspection control procedures, while their competitiveness is threatened by the grey market.

Currently, 32 inspections across 12 different ministries are active in Serbia. According to data of the Regulatory Reform Office, costs to business entities caused by inspections are more than €13 million each year. Better coordination of some of these inspections could reduce costs by some 30 percent.

According to a USAID BEP survey of 1000 businesses from various economic sectors across the country, companies complained most about their inability to lodge complaints against inspectors, the content of regulations governing inspection oversight, lack of coordination between the various inspections and lack of bylaws that would closely regulate the work of inspectors. It was also emphasized that inspections should use modern methods of risk assessment leading to frequent inspection controls for business entities that have shown increased incidence of regulation violations, instead of the entire private sector. The business associations confirmed their readiness to join with the Government of Serbia in resolving this issue and aiming for a better business environment.

AMCHAM ORGANIZES BRIEFING SESSION WITH LAWYERS ON LABOR INSPECTIONS Some 50 participants from the AmCham membership had an opportunity to hear Milica Janković of Janković Popović Mitić Law Office, Milena Jakšić Papac of Karanović and Nikolić Law Office and Jovana Tomić of Živković Samardžić Law Office, address the practical aspects of labor inspections control, including the competences of inspectors and second instance procedure, the necessary documents that should be prepared in case of inspection. They also provided responses to numerous questions from the audience.

The briefing session took place on Tuesday, April 10 at AmCham premises. Although the initiative to organize the event came from the Human Resources Committee, the attractiveness and usefulness of the topic drew a wider audience from the AmCham membership.

After hearing legal aspects of labor inspections control, participants had an opportunity to learn more on the most common problems that could occur in practice during this process through actual examples and cases. With the aim of facilitating preparation of relevant documents in case of inspections control, the speakers had prepared handouts for participants that provided comprehensive information on employers’

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Photo: Media Centar Belgrade

53 Perspective June, 2012

AmCham News AMCHAM CSR PARTNERSHIPS JUNE 14, 2012

STUDENTS’ VISIT TO SUCCESSFUL COMPANIES: EUROBANK EFG Belgrade, June 15, 2012 - American Chamber of Commerce in Serbia and the Centre for Career Development and Student Counseling of the University of Belgrade have organised a meeting of students and young graduates of the University of Belgrade to Eurobank EFG. The visit is part of the “Meet Business First Hand” program and is organised to provide students with an opportunity to gain new knowledge on the modern business world through direct contact

54 Perspective June, 2012

with top managers of most successful companies.

Presenting Eurobank EFG to the University of Belgrade students, member of the Board of Directors Ivan Vujačić has said that by acknowledging young talents, investments in the future of Serbia and development of its economic potential is made. ”Since its establishment in Serbia in 2003, Eurobank has been striving to be perceived as a systemic bank, which

makes planned investments in the community where it operates. As one of the leading foreign investors and the bank for which Serbia is a market of strategic relevance, through our comprehensive CSR program “We invest in European values“, we enthusiastically focus our special attention to young people, because we believe that investing in young people and their knowledge is the main element of development of every advanced society,“ said Ivan Vujačić.

Belgrade, June 14, 2012 - The American Chamber of Commerce in Serbia (AmCham) and the Economic Section of the US Embassy in Belgrade organized a dialogue with AmCham member representatives on the recycling situation in Serbia and decreasing the country’s collective waste footprint.

The meeting opened with a presentation by waste management operator Sekopak on the recycling situation in Serbia reviewing the provisions of the Implementation of the Packaging Waste Law and Transfer of (Packaging Waste Recovery) Obligations to Licensed Operator in particularly. Facts and figures related to Decree on The National Plan for Packaging Waste Reduction in the Period 2010 – 2014 were introduced.

The presentation of Delta Pak, non-profit organization specialized in packaging and waste management and a member of the Delta Holding, brought ideas with a focal point on waste management and CSR, energy efficiency, renewable energy sources, recycling and building public awareness.

The last presentation was given by a Philip Morris Operations representative, featuring the waste management program in its factory in Ni[, performance increasing and compliance with applicable legislation and impact on business operations. PMI representatives also presented some corporate environmental actions for employees

and the wider community related to waste management.

Wrapping up the session Mr. Douglas Apostol, Chief Economic Officer of the US Embassy in Belgrade summed up the exchange of ideas at the briefing: `Analyzing current situation and recommending models for improvement of the waste management systems within the companies, following the regulatory inputs and legislation, offering the most cost-effective solution for managing waste and developing a bigger and stronger collectors network by investing in adequate resources, Serbia can become a ``green`` place indeed’.

AmCham News

MEET THE BUSINESS FIRST HAND, JUNE 15, 2012

BRIEFING SESSION WITH U.S. EMBASSY ON WASTE MANAGEMENT

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AmCham News BUSINESS BRIEFING SESSION, JUNE 5, 2012

AMCHAM ORGANIZES LAWYER BRIEFING ON MOBBING AND EMPLOYMENT TERMINATION

AMCHAM ORGANIZES ROUNDTABLE WITH THE TAX ADMINISTRATION Belgrade, June 6, 2012 - On June 6, AmCham organized a Roundtable with representatives of the Tax Administration: Rada Kostić, Assistant Director in the Sector for Payment Collection, Dragan Agatunović, Coordinator in the Sector for Control and Lidija Popović, Advisor in the Center for Large Tax Payers.

The event was attended by around 40 AmCham members.

The discussion at the Roundtable centered around a list of specific topics on tax policy and tax law implementation, which were prepared by the AmCham Tax Committee. These included issues stemming from Corporate Income Tax Law (including capitalization of royalty charges, transfer prices, tax amortization), Personal Income Tax Law (including proper application of tax relief stipulated by Double Taxation Treaties, determination of the residency of individuals), Value Added Tax (VAT) Law (including turnover of services abroad and loss of status of VAT taxpayer, registration of non-resident companies that do not have a branch in Serbia for VAT) and Tax Procedure (including the non-binding character of Ministry of Opinions and appeal on to the Tax Administration decisions).

Representatives of Tax Administration agreed that some provisions of these laws were ambiguous, leading to varying interpretations by tax payers and the relevant authorities and creating

56 Perspective June, 2012

implementation problems in practice. Issuance of a number of opinions, most of which are not publicly available, was characterized as a negative trend that creates legal uncertainty. Participants agreed that such practices could be ended by amendments to these by-laws and clearer legal provisions which would mitigate the need to issuing opinions in the first place.

Conclusions from the Roundtable, with joint AmCham Tax Committee and Tax Administration recommendations, will be sent to the Ministry of Finance, the Tax Administration and the Large Tax Payers Unit.

Belgrade, June 5, 2012 - On June 5, around 50 representatives of AmCham member companies attended an AmCham briefing on Mobbing and Employment Termination with Vuk Drašković of Bojović Dašić Kojović Law Office, Nataša Lalatović of Moravčević, Vojnović, Zdravković in cooperation with Schoenherr and Bojana Vujanović of Naumović & Partneri.

Mr. Drašković presented key provisions of the Law on Workplace Violence Prevention and supplementing Rulebook, highlighting the rights and obligations of both employers and employees, procedures in case of mobbing, court protection and penalties. Besides applying to employers and employees, the Law covers persons engaged by employer based on other types of contracts, including volunteers and practitioners.

Ms. Lalatović presented a comparative overview of regional and EU practices in the area of mobbing, with regulatory solutions and case-law. Since Serbia still lacks adequate court practice on this topic, the main emphasis was on case law of the Slovenian and Austrian courts as well as the European Court of Justice Ms. Vujanović highlighted three main reasons for employment termination by employer – an employer may cancel a contract if there are justifiable reasons relating to the working capacity of the employee, his/her behavior and the need of the employer for the employee. She also pointed out that the main reasons for problems in practice are lack of synchronization of internal documents, including the employment rulebook with factual procedures and employment termination rules.

After the event, the audience and lecturers had an opportunity to mingle and enjoy a small wine & cheese party at AmCham’s premises.

AmCham News

BUSINESS ROUNDTABLE, JUNE 6, 2012

57 Perspective June, 2012

AmCham News

SOFTWARE PIRACY IN SERBIA REDUCED BY 2 percent IN 2011

58 Perspective June, 2012

Belgrade, May 16, 2012 - On May 16, AmCham organized media presentation of key results achieved in fight against software piracy. During 2011, software piracy in Serbia was reduced by 2 percent, according to results of the eighth annual study on software piracy. Presenting the study results, published by Business Software Alliance (BSA) and prepared by renowned international company IDC, Chairperson of the Intellectual Property Rights Committee of the AmCham Serbia Miloš Blagojević noted that Serbia is one of only 10 countries in the world that accomplished such a result.

“In regard to its immediate effects, it is important to note that this reduction in software piracy has mainly affected the IT industry. As a result of reduced piracy, the local software industry recorded an increase of 1.5 percent, while the turnover of this entire sector rose by €24 million. Furthermore, direct budget revenues reached €3.5 million, and 200 new jobs were created in the IT sector,” Blagojević said.

He said that the legal framework in intellectual property rights is effective and largely harmonised with EU legislation.

However, the implementation of laws in the area of intellectual property rights has not reached a suitable level, and therefore continues to result in high piracy rates. “Despite the fact that the rate of software piracy in Serbia is still high at 72 percent, last year’s decrease is a positive trend and confirms the benefits of introducing best practices in this area. This particularly refers to the establishment and activities of the Software Legality Control Unit within the Tax Administration, which established a mechanism of control and obviously contributed to the improvement in this area,“ Blagojević concluded.

In addition, Mr. Dejan Vidojević of Tax Administration presented results of Software Legality Control Unit, while Mr. Atila Madai of IDC provided information on the study methodology and comparisons with regional and global IT market.

The IDC study is the most relevant survey of software piracy with results from 112 countries worldwide, including Serbia. In the last 8 years since this survey was introduced, the results have been used as a measure of a country’s standing in the area of intellectual property rights in the software sector by the business community, state bodies and the European Union.

AMCHAM SPECIAL EVENT, APRIL 24, 2012

TWO-PARTY DEBATE ON ECONOMIC POLICY Belgrade, April 24, 2012 - On April 24, at an Economic Policy Debate organized by AmCham, the Democratic Party (DS) and the Serbian Progressive Party (SNS) presented their plans for improving fiscal policy, structural reforms and the business climate to an AmCham audience at the Hyatt Regency Belgrade.

Milan Ćulibrk, Deputy Editor-in-Chief of NIN magazine, moderated the discussion between DS and SNS economic teams.

DS’s team was led by Božidar Đelić and supported by Slobodan Kocić, and SNS’s team was led by Jorgovanka Tabaković and supported by Milenko Dželetović, Milan Knežević and Bojan Terzić.

The participants were given an opportunity to address particular economic and regulatory issues of vital importance to AmCham member companies and Serbian business in general, including achieving balanced state budget, earmarked revenues policy, real estate issues, labor law amendments and reform of the public procurement system.

Both parties identified several key economic priorities for the new Government. For DS it was jobs, support to SMEs, strengthening of industry and agriculture; SNS emphasized the manufacturing sector, exports, the fight against corruption and protection of competition. They agreed that reform of the tax administration is necessary as well as better tax collection on the revenue side of the budget. When asked whether their party will advo-

cate for a VAT (value added tax) increase, an SNS representative replied that such a measure will be used only as a last resort after reform of the revenue and expenditure side, as well as by VAT Law amendments. DS agreed that such a measure should be used as ultima ratio action, but accompanies with a lower tax burden on wages. On the other hand, the two parties disagreed regarding additional taxation of the financial sector: DS argued against in lieu of the Hungarian scenario, while SNS pointed out that it will consider increasing tax burden on financial sector in order to balance it with the real sector burden.

Representatives of both DS and SNS pointed out that it is necessary to renew the arrangement with the IMF, as well as to fulfill two particular requirements the IMF imposed: the extension of the fixed-term labor agreements to up to 36 months as well as limiting severance payments by providing compensation only for years spent with the latest employer.

Earmarked revenues proliferation and system was recognized as an area for improvement and reform by both parties.

With respect to accelerating the procedures for obtaining construction permits, DS emphasized that this depends on the reform of the system, but that improvements can be expected by autumn, while SNS stressed that they had a project for speeding up the process and were ready to implement it.

AmCham News

IPR MEDIA PRESENTATION, MAY 16, 2012

59 Perspective June, 2012

AmCham Network

Embassy Techzones d.o.o. is part of the Embassy Property Developments Group, a leading Indian company with an impressive 27-year track record in real estate development. The company’s portfolio spans the commercial, residential, retail and hospitality segments of the real estate industry. Embassy has developed an aggregate of approximately 29.8 million sq ft (2.8 million sq mts) of completed space across real estate segments in India and abroad.

The company’s commercial real estate business focuses on the development of business parks for the IT/ITeS sector, SEZs and corporate office space. Embassy’s award-winning business parks play host to large multinational corporations and Fortune 500 companies.

The main advantages of this IT& Business Park complex will be savings in rental charges and operational costs, state-of-the-art infrastructure and synergies between park tenants that foster business development and innovation processes. Embassy Techzones is bringing to Serbia its innovative approach and creates a new concept for IT and ITeS real estate market development.

Embassy Techzones d.o.o., Marketing and Sales Department Omladinskih brigada 90b, 11070 Belgrade, Serbia Office: +381 11 353 35 63 office@embassytechzones.rs www.embassytechzones.rs

AmCham Serbia welcomes new members

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services and events for the information, telecommunications and consumer technology markets. IDC helps IT professionals, business executives and the investment community makes fact-based decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology, industry opportunities and trends in 110 countries worldwide.

Member Benefit Program - Special Active Offers

Contact: Ms. Milena Zečević Tel: (+381 11) 20 24 190 milena.zecevic@uniqa.rs www.uniqa.rs

IDC CEMA is the most trusted market intelligence and advisory firm in CEMA. We deliver practical advice and insight culled from a combination of rigorous primary research, in-depth analysis and client interaction. IDC retains a coordinated network of offices in 18 cities with regional research centers in Prague and Dubai.

IDC ADRIATICS analyze and forecast the IT market developments of Croatia, Slovenia, Serbia, Bosnia and Herzegovina, Macedonia, Montenegro, UNMIK Kosovo and Albania.

IDC Adriatics d.o.o.

Bulevar Arsenija Čarnojevica 52/II 11070 Belgrade Tel: (+381 11) 21 29 040 mosatovic@idc.com www.idc-adriatics.com; www.idc-cema.com; www.idc.com

Contact: Ms. Dragica Aranitović Tel: (+381 11) 301 1171 dragica.aranitovic@hyatt.com *All above prices are inclusive of VAT and are subject to availability.

This offer cannot be combined with existing Club Olympus membership.

The MedUNIQA voluntary health insurance program enables you to organize and cover the costs of inpatient and outpatient treatment in the best private and state owned health institutions in the country and abroad.

Contact us as soon as possible to find out all about the privileges of MedUNIQA voluntary health insurance.

As well as this, UNIQA takes care of you with its foreign travel health insurance programme, so that each of your trips abroad is completely safe.

We are offering exclusive special conditions for AmCham members, valid until September 1, 2012: • for individual voluntary health insurance policies, UNIQA will give 30% discount on foreign travel health insurance; • for corporate MedUNIQA policies, you will receive 10% discount on voluntary health insurance and 30% discount on foreign travel health insurance.

Club Olympus Fitness Centre & Spa is the perfect surrounding for you to unwind, be pampered and find a peaceful moment away from tension and stress, while indulging in an optimum state of physical wellbeing and comfort.

Weekly membership for just EUR 100 per person Monthly off-peak membership for just EUR 280 per person New corporate membership offer* 4 members / EUR 1,300 per person, per year 3 members / EUR 1,400 per person, per year Additional membership benefits: 20% discount on laundry services 15% discount on food and beverage 20% discount on spa treatments Indulge yourself with 85 minutes of anti-stress massage and body exfoliation with the special Summer Energy package for only EUR 65.

This offer is valid until September 30, 2012.

Danas Conference Center invites all AmCham Members to register with a 10% discount for 11 new conferences in 2012: The Metropol Palace is a 5-star luxury hotel with a 55-year history and tradition in Belgrade. Once its remodeling is completed in the fall of 2012, the hotel will offer even a wider range of modern and luxurious suites and apartments. These will include one royal and one presidential suite, each equipped with all modern amenities to fulfill our guests’ desires.

Apart from superior accommodation, the Metropole Palace offers a variety of restaurants, bars, meeting and party venues, ballrooms, a spa and fitness center and much more. The Metropol Palace is located in the very heart of Belgrade, overlooking Tašmajdan Park and offering a unique oasis of tranquility amid the fast-paced life of Belgrade. The elegance of the hotel’s preserved historical heritage combines effortlessly with the fresh stylishness provided by many modern details, providing a refined yet relaxed atmosphere.

The Metropol Palace is owned by Kokari limited, a hospitality company, owning and managing premium hotel properties.

Metropol Palace d.o.o.

Bulevar kralja Aleksandra 69, 11000 Belgrade Tel. (+381 11) 3231 212 www.metropolpalace.com

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TRS was founded in 1988 in Switzerland and is one of the leading remanufacturer’s of alternative print consumables. TRS produces high quality laser toner cartridges while protecting the environment by utilizing existing resources.

In 2006, TRS` production and development were relocated to Novi Sad, Serbia. Production, based on high Swiss quality standards, has continuously evolved and expanded. These high quality standards are regularly certified by independent testing institutes, and also by ISO 9001 and ASTM.

Contact: Tel: (+381 11) 71 11 767

TRS employs more than 500 people and continues to develop its leadership in the Central and Eastern Europe markets while also focusing on expanding into new territories.

In August 2011, TRS was acquired by Clover Holdings Inc., USA, the world’s leading provider of vertically integrated, closedloop environmental solutions, including the recycling and remanufacturing of imaging supplies.

TRS Swiss Production d.o.o.

Rade Končara 1 21131 Petrovaradin, Novi Sad Tel: (+381 21) 439 900 Info@trs.rs www.trs.rs

Contact: Mr. Miloš Zečević, Director of Marketing milos.zecevic@msm.edu.rs Cell: (+381 65) 30 35 081

Tax System Reform and the Pension System in Serbia ������������������������������Sep 05, 2012 Tax System Reform and Parafiscal Charges in Serbia ���������������������������������Sep 05, 2012 Public-Private Partnerships and the Real Estate Market in Serbia �������������� Sep 19, 2012 Investments and Development of the Serbian Energetics Sector �������������Oct 03, 2012 Investments and Development of the Serbian ICT Sector ��������������������������Oct 03, 2012 Labor Legislation and the State Budget of Serbia ���������������������������������������Oct 17, 2012 Agriculture and Retail Chains in Serbia ����������������������������������������������������������Oct 31, 2012 Education System and the Budget Deficit of Serbia ������������������������������������Nov 14, 2012 The Economics of Sport-Media and Income from TV Rights �����������������������Dec 05, 2012 The Economics of Sport-Corporate Sponsors and Commercial Revenues ���������Dec 05, 2012 The Economics of Sport-Infrastructure and Investment Incomes ��������������Dec 05, 2012

Mokra Gora School of Management is a unique blend of academic and contemporary skills focused on value creation and development of the Serbian and regional economy with programs for professional executive development.

In our portfolio we have standardized and tailored programs for all levels of management, ranging from three-day programs for functional development to our general management program SMPtm. As of 2012 we are launching our M-EMBA program for senior executives, the first locally developed EMBA program, with an international curriculum with local relevance. MEMBA carries 90 ESPB points.

AMCHAM – SPECIAL OFFER Mokra Gora School of Management is offering a 10% discount to all AmCham members for this prestigious M-EMBA program, the offer is valid until July 31, 2012.

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AmCham Membership Abbott Labaratories S.A............................................................ www.abbott.com Actavis.............................................................................................. www.actavis.rs Air France Belgrade....................................................................www.airfrance.rs Airport City d.o.o................................................... www.airportcitybelgrade.com Aleksić & Ratković Law Office with Associetes................aleksic-advokat.com Algotech d.o.o.............................................................................. www.algotech.rs Alliance One Tobacco d.o.o. Beograd.......................................www.aointl.com Altis Capital............................................................................. www.altiscapital.net Apatinska pivara...................................................................................www.apa.rs Asseco South Eastern Europe............................................www.asseco-see.com Avon Cosmetics SCG d.o.o........................................................... www.avon.com Balkans Real Estate (MPC Properties).......................... www.mpcproperties.rs Ball Packaging Europe.......................................................www.ball-europe.com Banca Intesa ad Beograd..................................................... www.bancaintesa.rs BBDO Ovation Advertising...................................................... www.ovation.co.rs BDO d.o.o..........................................................................................www.bdo.co.rs Bel Medic General Hospital..................................................www.belmedic.com Belgrade Philharmonic Orchestra................................................ www.bgf.co.rs Berlin Chemie AG Representative office Serbia.......... www.berlin-chemie.rs Best Seed Producer Ltd.................................................................. www.bsp.co.rs Bojović Dašić Kojović, Attorneys at Law............................. www.bdklegal.com Božić i sinovi d.o.o............................................................................ www.bozic.rs British American Tobacco South-Eeast Europe d.o.o................ www.bat.com Carlsberg Serbia Ltd............................................................www.calsbergsrbija.rs CB Richard Ellis ...............................................................................www.cbre.co.rs CEED Serbia........................................................................... www.ceed-serbia.org CES Mecon.............................................................................. www.cesmecon.com Cisco SR d.o.o. Beograd................................................................ www.cisco.com Citibank N.A. Representative Office Belgrade Coca Cola Company Coca Cola HBC Serbia a.d.............................................www.coca-colahellenic.rs Colliers International.................................................................www.colliers.com Communis.................................................................................. www.communis.rs ConsulTeam d.o.o. ............................................................ www.consulteam.co.rs Cooper Tire & Rubber Company Serbia d.o.o................. www.coopertire.com DAI PPES Project...............................................................www.scopes-serbia.org Danas Conference Center...............................................................www.danas.rs Dekel d.o.o. Beograd ................................................................. www.dekel.com Deloitte .................................................................................. www.deloittece.com Delta Holding.........................................................................www.deltaholding.rs Delta Sport ............................................................................ www.deltasport.com DHL International Belgrade ..........................................................www.dhl.co.rs Diners Club International Belgrade Ltd. .................................... www.diners.rs Direct Group ............................................................................. www.dirtrade.com Dufry d.o.o. Beograd....................................................................www.dufry.com Ebart Ltd Belgrade............................................................................. www.arhiv.rs EKI Transfers - Western Union.......................................................www.wu.co.rs Ekonomski institut a.d. Beograd............................................ www.ecinst.org.rs Eli Lilly (Suisse) S. A. Representative Office...............................www.lilly.com Embassy Techzones d.o.o........................................ www.embassytechzones.rs EOS Matrix................................................................................. www.eos-matrix.rs Ernst & Young...........................................................................www.ey.com/eyse Erste Bank a.d. Novi Sad.......................................................... www.erstebank.rs Eurobank EFG......................................................................... www.eurobankefg.rs Executive Group ..........................................................www.executivegroup.co.rs First Data d.o.o. ...........................................................................www.firstdata.rs FORD - Grand Motors d.o.o................................................................ www.ford.rs Fresenius Medical Care........................................................ www.fmc-srbija.com G4S Security Services...........................................................................www.g4s.rs GlaxoSmithKline Export Ltd............................................................www.gsk.com Grand Casino Beograd........................................www.grandcasinobeograd.com Harrison Solicitors.................................................... www.harrison-solicitors.com Harvard Club.................................................................... www.harvard-serbia.org Hemofarm Koncern A.D. ................................................... www.hemofarm.com Hewlett Packard ...............................................................................www.hp.co.rs Holcim......................................................................................www.holcim.com/rs Honeywell d.o.o. ................................................................ www.honeywell.com Hogg Robinson Group Serbia and Montenegro.......www.hrgworldwide.com Hyatt Regency Beograd................................www.belgrade.regency.hyatt.com Hypo Alpe - Adria Bank a.d. ...................................... www.hypo-alpe-adria.rs IBM............................................................................................... www.ibm.com/cs IDC Adriatics d.o.o............................................................. www.idc-adriatics.com Identico........................................................................................... www.identico.rs Infobiro d.o.o................................................................................. www.infobiro.tv Intel...................................................................................................www.intel.com Intermol ....................................................................................... www.intermol.rs Jankovi', Popovi', Miti' Law Office ................................................ www.jpm.rs Johnson & Johnson............................................................................ www.jnj.com Jovanović, Milovanović & Simić Law Office..............................www.jmslaw.rs JT International a.d. Senta .......................................................... www.jt-int.com Karanovi' & Nikoli' Law Office ..............................www.karanovic-nikolic.com Kinstellar.................................................................................. www.kinstellar.com Knjaz Milo[..................................................................................... www.knjaz.co.rs Komercijalna banka ..............................................................www.kombank.com Konsing....................................................................................... www.konsing.com

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Koving d.o.o.....................................................................................www.koving.rs KPMG d.o.o. ...................................................................................... www.kpmg.rs Kraft Foods d.o.o............................................................................www.kraft.com L’Oréal Balkan...............................................................................www.loreal.com Lalin Law Office ....................................................................... www.lalinlaw.com Leo Burnett d.o.o...................................................................... www.leoburnett.rs Link Consultants.................................................................... www.link-group.com Luka Beograd.......................................................................... www.port-bgd.co.rs LUNA & TBWA Ma[inoprojekt................................................................www.masinoprojekt.co.rs McCann Grupa...........................................................................www.mccann.co.rs Merck Sharp & Dohme Idea, Inc...............................................www.merck.com MetLife a.d.o...................................................................................www.metlife.rs Metro Cash & Carry d.o.o................................................................www.metro.rs Metropol Palace...........................................................www.metropolpalace.com Microsoft...........................................................................www.microsoft.com/scg Mikijelj Janković & Bogdanović Attorneys-At-Law....................... www.mjb.rs MK Group Ltd Belgrade..............................................................www.mkgroup.rs Moravčević, Vojinović, Zdravković in cooperation with Schoenherr......................................................................www.schoenherr.rs Naumovi' & Partneri............................................ www.naumovic-partners.com Nelt CO d.o.o....................................................................................www.nelt.com New Moment................................................................... www.newmoment.com New York Trade d.o.o................................................................ www.newyork.rs Omnicom......................................................................................www.omnicom.rs Oracle............................................................................................. www.oracle.com Orbital Engineering Serbia d.o.o. ....................................www.orbitalengr.com OSA - Računarski In\injering.............................................................. www.osa.rs OTP banka Srbija a.d. Novi Sad............................................... www.otpbanka.rs Pedersen & Partners......................................... www.pedersenandpartners.com PFB d.o.o..............................................................................www.psp-farman.com Pfizer...............................................................................................www.pfizer.com Philip Morris..................................................www.philipmorrisinternational.com PriceWaterhouseCoopers d.o.o.............................................. www.pwc.com/rs ProCredit Bank a.d. Belgrade........................................... www.procreditbank.rs Raiffeisen banka a.d..........................................................www.raiffeisenbank.rs Rudnap Group AD Beograd......................................................www.rudnap.com SAGA................................................................................................. www.saga.co.rs Salford Schneider Electric Srbija d.o.o.....................................www.schneider-electric.rs SEAF South Balkan Fund Rep. Office............................................www.seaf.co.rs Serbian Business Systems............................................................. www.sbs.co.rs SGS Beograd d.o.o............................................................................www.sgs.com Siemens d.o.o. ........................................................................www.siemens.co.rs Smart Kolektiv................................................................... www.smartkolektiv.org Societe Generale Srbija .................................................www.societegenerale.rs St. Jude Medical Balkan................................................................. www.sjm.com Stracon Security..................................... www.stracons.com; www.stracon.co.rs Strauss Adriatic d.o.o...............................................................www.doncafe.com SVA d.o.o................................................................................................ www.sva.rs TeleGroup d.o.o............................................................... www.telegroup-ltd.com Telenor..............................................................................................www.telenor.rs Tigar..................................................................................................www.tigar.com Titan Cementara Kosjerić.................................................................. www.titan.rs TMF Services d.o.o................................................................ www.tmf-group.com TRS Swiss Production d.o.o..................................................................www.trs.rs Unilever Beograd d.o.o...........................................................www.unilever.com Uniqa................................................................................................... www.uniqa.rs Urbis Design.........................................................................www.urbis-group.com Verano Motors................................................................................. www.verano.rs VIP mobile d.o.o........................................................................www.vipmobile.rs VREME Ltd Newspaper Company............................................ www.vreme.com West Pharmaceutical Services.......................................www.westpharma.com Wiener Städtische osiguranje a.d.o....................................... www.wiener.co.rs Wolf Theiss & Partners........................................................www.wolftheiss.com Wrigley........................................................................................www.wrigley.com XPRO d.o.o...................................................................................... www.xpro.co.rs Živković Samardžić Law Offices..................................................... www.zslaw.rs

AmCham Serbia Board of Governors

President: Mr. Miloš Đurković, Hewlett Packard Serbia

First Vice-President: Mr. Paul Riley, Philip Morris in Serbia Second Vice-President: Mr. Zoran Petrović, Raiffeisen banka a.d.

Secretary-Treasurer: Mr. Stephen Fish, Ernst & Young

Untitled Governors: Ms. Jelena Kralj, Pedersen & Partners

Mr. Ivan Vujačić, Eurobank EFG

Mr. David Banjai, Ball Packaging Europe Belgrade

Mr. Nikola Stefanović, SEAF South Balkan Fund

Ms. Milica Bisić, KPMG Acting Executive Director: Ms. Amalija Pavić

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