The prospects of actual gas infrastructure development, based around a clear regional development vision to bring gas deep into currently ungasified markets and ungasified parts of other markets, should serve as a major incentive to implementation of the requirements of the EC Treaty to which the governments of the SEE markets are signatories.
Roles of Public and Private Sector Players in Realizing the Gasification Vision Gas transmission infrastructure is essential, and can play a vital catalyzing role in increasing gasification in the SEE markets. Development of regional transmission infrastructure fits well within the aims and objectives of the Stability Pact. In the energy sector, the EC Treaty is an important part of the Stability Pact. But without physical transmission infrastructure to allow gas to be delivered to the markets of Southeast Europe, even the full implementation of the requirements of the EC Treaty will not bring any tangible benefits to the people in markets currently unserved by gas. Therefore, there is a major potential role for public financing of transmission to kick-start the increased gasification of Southeast Europe. Institutions that would be expected to take an interest in financing gas transmission in the region include the World Bank, KfW Entwicklungsbank, the European Bank for Reconstruction and Development, the European Investment Bank, and the European Union. Furthermore, these international institutions and donors are in the best positions to manage the country risk with the involvement of such organizations as the Multilateral Investment Guarantee Agency. Power plants clearly will be required to provide the large, up-front, high load factor demands that are necessary to make investments in transmission economical and bankable. The updated GIS shows economic potential for several thousand megawatts of gas-fired combined-cycle plants in the region, under some likely scenarios in the next few years. Many private sector generation companies are highly experienced in the development of such plants, and there are well-established business models for independent power plants. This is an area suitable for private financing, possibly with some financial involvement of such institutions as the European Bank for Reconstruction and Development (which can lend or take an equity position in such investments) and the International Finance Corporation (the private sector arm of the World Bank). Gas distribution infrastructure can be developed only when the transmission infrastructure is in place. Distribution-connected customers are far more numerous than are transmission-connected customers (such as power stations); and individually, they are much smaller. Their load tends to build
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The Future of the Natural Gas Market in Southeast Europe