Remaining restrictions on foreign investment in CEEC power markets

Date: 21/11/1996

Bulgaria: The energy sector is primarily state-owned, but the government plans to reduce subsidies, increase efficiency and integrate with international energy markets over 15 years. There is a total ban on foreign ownership of land.

Romania: The state owns Romgas and Petrom (production and exploration of gas and oil) and plans to maintain control over 51&percent; of oil and gas transportation and distribution services, but distribute the rest to Romanian citizens free of charge. Renel has a monopoly on electricity generation, transmission and distribution. There are restrictions on foreign land ownership. Sixty per cent of registered capital of state companies will be distributed to citizens upon privatisation, with anyone free to buy the rest, although only citizens will be able to pay by instalments.

Poland: Almost all state-owned energy enterprises have been 'commercialised', but are still owned by the state treasury. There are no legal monopolies, but the Polish Power Grid company has a de facto monopoly. There are restrictions on foreign ownership of real estate - would-be buyers require a permit from the ministry of internal affairs.

Slovakia: Monopolies remain in oil and electricity generation (natural), electricity transmission and gas distribution (legal). There are theoretical restrictions on foreign ownership of land and acquisition of securities, but it is easy to find a way round them.

Hungary: Energy privatisation began in 1995 and today 11 distribution companies and 2 power generation companies are mostly owned by foreigners. More than 40&percent; of national gas and oil company has been sold; nuclear power and electricity grid holding company will follow. There are no legally protected monopolies. Non-residents may not pursue business activity as 'natural persons' and foreigners may only buy registered shares, while domestic bids for state assets of equal value to foreign bids are given preference.

Czech Republic: The energy sector is mostly privatised, although Transgas (gas transport) and Diamo (uranium extraction) remain state-owned monopolies. Non-residents may only acquire real estate in special cases. Permission for some design activities is mainly given to Czech citizens.

Slovenia: Substantial privatisation has already been accomplished. There are no legal monopolies, but natural monopolies exist in electricity transmission and gas transport. Foreigners cannot acquire real estate except by inheritance, and the government must approve foreign-majority sales valued at more than10 million ecu. Directors and a majority of executive management of commercial companies must be Slovenian citizens.

Lithuania: A voucher-based privatisation system favours Lithuanian nationals. 'Special purpose companies' will remain state-owned until at least 2000, including energy infrastructure. There are natural monopolies in electricity, gas, oil transportation and refining, but no legal monopolies. Foreigners may not own 'strategic energy companies' and may not establish or purchase energy entities if this could injure Lithuania's interests. There are restrictions on foreign land ownership and leasing, and concessions are required to invest in resource exploitation.

Estonia: The energy sector is generally open to foreign investment, although natural monopolies remain in some oil and gas concerns. The state can reserve a proportion of sell-offs for nationals in the first sale. There are some foreign land ownership restrictions.

Latvia: There has been a free market in oil, oil products and coal since 1993. There are no obstacles to establishing new enterprises. Privatisation of the State Stock Gas company is in progress, with the State Stock Power and Oil terminal firms earmarked for foreign investment. There are natural monopolies in electricity and gas transmission. There are restrictions on land purchase for foreign companies whose governments have not signed international agreements, and for firms with more than 50&percent; foreign fixed capital.