7-Year Transport Tax Exemption For Romanian Sector Of Nabucco

The National Energy Regulatory Authority (ANRE) has amended the decision made last year regarding the exemption of the Romanian sector of Nabucco from the provisions of the law on third party access to the natural gas transport system and the pricing methodology. The new decision has been published in the Official Journal and came into effect in the beginning of February, shortly after the conclusion of the Nabucco Summit in Budapest.

The pricing methodology applicable to the natural gas master pipeline Nabucco will be reviewed after 20 years from the moment when the first sector becomes operational. The tax exemption applies to up to one half of the technically available annual capacity, but not more than 15 billion cubic meters per year. If the prices applicable to the use of Nabucco on Romanian soil vary by more than 10% from similar transport systems existing in the European Union, the Nabucco Project Company will have to modify the applicable pricing methodology or elaborate a new one.

The new decision also includes the project company"s obligation to organize at least a public tender for the transport capacity in the even that they decide to implement the project and to present ANRE with the final list of companies that have reserved capacity. The new ANRE decision becomes invalid if the Romanian sector is not commissioned within seven years from the date when the exemption comes into effect, or on 31 December 2016 at the latest.

• Challenges for the project

The ANRE decision also explains the reasons why Transgaz, as partner within the project company, has requested the changes deemed necessary for the implementation of Nabucco. Thus, the commissioning of Nabucco is postponed by one year, because it depends on the start of mining operations on the Shah Deniz II natural gas deposit in Azerbaijan. Transgaz explained it was unlikely that alternative gas supplies should exist before 2013, when Nabucco was scheduled for commissioning. In early 2008, the promoters of the Shah Deniz II deposit announced that mining operations would be delayed by at least one year, that is, to end-2013. The finalization of the intergovernmental agreement also plays a major role, because it secures a stable legal foundation in Turkey, which is not yet part of the European Union. The agreement is necessary for setting up the correspondent Nabucco company in Turkey, for defining the fiscal status of the master pipeline and for ensuring that the Turkish sector receives similar exemptions to those in the EU gas directive.

• Banks want more collateral

According to ANRE, the international financial crisis has had repercussions on several major EU banks and therefore on the long-term financing of Nabucco. The banks are now asking for more collateral and greater legal stability. Other delay factors include the administrative procedures for the environmental license, the deficit on the steel market and the military conflict in Georgia, which highlights the political instability of the area. Within their substantiation document to ANRE, Transgaz pointed out that the Russian-Georgian conflict could delay the works as banks would tighten lending terms. Moreover, the users of Nabucco could be scared off by the same political instability.