NEWSLETTER. no. 13 Year X, 2017

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1 OPERATOR SSTEM, TRANSMSON DHE TREGU SH.A. TRANSMSSON, SYSTEM AND MARKET OPERATOR J.S.C. OPERATOR SSTEMA, PRENOSA TRZSTA A.D NEWSLETTER no. 13 Year X, 2017

2 CONTENT The Second Edition of the High-Level Energy Forum "Energy Strategy and Market Liberalization" has been held KOSTT hosted regional meetings of South-East Europe' Transmission System Operators Project for mproving Electricity Transmission nfrastructure, Phase V and V, Toward Completion KOSTT conducted a study visit to the Slovenia's Operator of Electric Power Transmission Network ELES KOSTT participates in the Regional Conference of ENTSO-E "The last piece of the puzzle ntegrating South East Europe in the nternal Energy Market" KOSTT Part of the Delegation in the First Meeting of Special Group on Normalization within SAA, held in Brussels mplementation of Balancing Mechanism in KOSTT The Parliamentary Committee for Economic Development Discusses The Challenges Faced by KOSTT in the Path of ntegration in nternational Mechanisms KOSTT's management received in a meeting high-representatives of the U.S Agency for nternational Development (USAD) Kosovo and Albania ntroduced to Practices of Austria and Germany in Organization of Common Electricity Market KOSTT's Management Holds Preparatory Meetings for mplementation of Projects Co-funded with EBRD KOSTT's Delegation Conducts a Work Visit to TSO Albania KOSTT Appreciates Municipalities that Contributed in the mplementation of Projects for Development of Kosovo's Transmission System KOSTT J.S.C Commenced Application of E-Procurement KOSTT conducted a study visit to the Croatian Transmission System Operator HOPS Decisions of the Energy Regulatory Office Newsletter No. 13, Year X, 2017 Newsletter is published by KOSTT J.S.C - PR and Communications Office sa Boletini St. No. 39, Prishtina, Republic of Kosovo Ph: +381 (0) ; info@kostt.com Web: For additional information on KOSTT Newsletter, please contact: Public Relations and Communications Office at zana.rama@kostt.com or info@kostt.com

3 The Second Edition of the High-Level Energy Forum "Energy Strategy and Market Liberalization" has been held At the High-Level Energy Forum organized for the second consecutive year by the Ministry of Economic Development and USAD, was discussed about the Energy Strategy of the Republic of Kosovo and the liberalization of the energy market in Kosovo. n the Forum held on 18 April 2017 in Prishtina, participated the highest government leaders, including Prime Minister of Kosovo, Mr. sa Mustafa, Minister of Economic Development, Mr. Blerand Stavileci, as well as Ambassador of the United States of America Mr. Greg Delawie, Director of the World Bank Office, Mr. Marco M a n t o v a n e l l i, E u r o p e a n U n i o n O f fi c e Representative in Kosovo, Mr. Luigi Brusa, representatives of the Energy Community Secretariat and FC/NordPool, as well as other stakeholders of the local and international energy sector. n the presentation held by the KOSTT Chief Executive Officer Mr. Mustafë Hasani, the audience was informed about the current situation of the Kosovo Transmission System, the impact of ongoing investments in the development of the transmission network and in the increase of security and reliability of the electrical power supply in terms of transmission, the necessary preparations for the market liberalization process, as well as the obligations arising for KOSTT from the new Energy Strategy , which has already been approved by the Government of Kosovo and is expected to be adopted soon in the Assembly. One of the important issues addressed by Mr. Hasani was the challenge that KOSTT is facing as a result of non implementation of the KOSTT-ENTSO-E Connection Agreement by which KOSTT becomes an independent controll block/area within the Continental Europe Synchronous Area. On this occasion, Mr. Hasani expressed the concern for the blocking of implementation of the Connection Agreement by Serbia and also called for support from local and international authorities to resolve the issue of KOSTT's independence since this obstacle is causing to KOSTT an obstacle in development of the electricity market and fulfilment of obligations towards the regional processes and obligations from the Energy Community Treaty for South-Eastern Europe. Within the Forum, KOSTT's manager for longterm planning Mr. Gazmend Kabashi, also a member of the Working Group for drafting the Energy Strategy , presented the technical NEWSLETTER no. 13 Year X,

4 aspects of generation scenarios within the strategy. Part of the forum "Energy Strategy and Market Liberalization" were also two focus groups, one for current and future developments of renewable energy sources in Kosovo and one on market liberalization, where the Director of Market Operation at KOSTT Mr. Skender Gjonbalaj held a presentation regarding the operation of the energy market and the implementation of the balancing mechanism in the Transmission System of Kosovo. n the framework of this Forum, KOSTT's deputy CEO, Mr. Kadri Kadriu held a meeting with relevant stakeholders from Kosovo and Albania, where it was discussed about the progress in the establishment of the Albanian Power Exchange (APEX), and co-ordination of activities for including Kosovo in the Albanian Power Exchange. NEWSLETTER no. 13 Year X, 2017 KOSTT hosted regional meetings of South-East Europe' Transmission System Operators Under the auspices of KOSTT J.S.C, the 22nd meeting of the Board of Directors of the Coordinated Auction Office in South East Europe (SEE CAO) and the 21st meeting of the Regional Group for South East Europe of European TSO (RG SEE), were held in Prishtina. The Chief Executive Officer of KOSTT, Mr. Mustafë Hasani, on his introductory speech, welcomed all representatives of TSOs to Prishtina, and expressed his honour and delight that KOSTT is hosting these two very important regional meetings. On this occasion, Mr. Hasani informed all those present on KOSTT's achievements and challenges faced by Kosovo with regard to regional integration, and opening of energy market. KOSTT is one of the founders of the Coordinated Auction Office in South East Europe (SEE CAO), seated in Podgorica. The establishment of this Office represents a step forward in establishing a joint regional market and integration into the single European market in one hand, and brings Kosovo closer to fulfilling obligations assumed under the Treaty on the Establishment of the Energy Community for SEE and the EU integration process, on the other hand. Whereas, RG SEE is a regional group under the umbrella of the European Network of Transmission System Operators for Electricity Market Committee, which handles market issues in SEE. 2

5 Project for mproving Electricity Transmission nfrastructure, Phase V and V, Toward Completion mplementation of investment in a total value of around 33 million for improving the electricity transmission infrastructure in Kosovo, Phase V and V, is close to being completed. A significant part of the project package under Phase V and V have been completed pursuant to the foreseen contractual deadline, namely earlier than foreseen in the contract, as the result of maximum engagement by working teams, management teams and implementing teams of projects. During December 2016, the following have been put into work: - double line of high voltage 110kV connecting the Substations Peja 1 to Peja 3 with an overall length of 26 km, out of which 24 km of overhead lines and 2 km of underground cable lines. This is the first highvoltage underground line 110kV in Kosovo. - Replacement of protective conductors in interconnection transmission lines with optic cables OPGW with a total length of 54 km. the system of modern technology facilities GS (Gas nsulated Switchgear) in SS Peja 1 - the second transformer with power 300MVA has been installed and energized in Substation 400/100 kv Peja 3 the second transformer with power 300MVA has been installed and energized in Substation 400/110 kv Ferizaj 2. mplementation of concerned projects is being enabled via the long-term commercial loan that KOSTT J.S.C has obtained from the German Development Bank (KfW) with conditions of a softloan in the amount of 23.5 million, and additional funding in the form of a grant from the European Commission in the amount of 7.3 million through the PA program, and 2.1 million from KOSTT's budget. mplementation of projects within Phase V and V has a significant impact in increasing the stability and security of electricity supply in terms of transmission, and creates the possibility of economic development and tourism potential in the region of Peja, stog, and Ferizaj. The Project "mprovement of Transmission Network, Sector Program V and V" is composed of 4 (four) LOT's: NEWSLETTER no. 13 Year X,

6 LOT 1: Substations - being implemented by the Austrian company SEMENS (Austria) LOT 2: Transformers being implemented by the Croatian company Konçar Power Transformers LOT 3: Transmission Lines being implemented by the Croatian company Dalekovod (Zagreb) LOT 4: Rehabilitation of 19 substations being implemented by the company SEMENS (Austria) Finalization of total projects under phase V and V is expected to be completed by mid NEWSLETTER no. 13 Year X, 2017 KOSTT conducted a study visit to the Slovenia's Operator of Electric Power Transmission Network ELES With the aim to exchange experiences in electricity market operation, KOSTT conducted a study visit to the counterpart company of Slovenia ELES, from 22 to 24 March During this visit organized by the USAD project (Repower Kosova), a meeting took place between KOSTT delegation led by Chief Executive Officer, Mr. Mustafë Hasani, and representatives of ELES led by Chief Executive Officer, Mr. Aleksandar Mervar. As Kosovo will open the electricity market on 1 April 2017 and the implementation of balancing mechanism will begin in the coming months, this visit served for the exchange of experiences on implementing the balancing mechanism, as well as processes in the operation of transmission system and operation of electricity market. The delegation discussed with Slovenian counterparts also about the challenges faced for implementation of Connection Agreement with ENTSO-E, on which occasion it was requested the support of KOSTT in this regard. n conclusion, Mr. Hasani, on behalf of KOSTT, thanked for the warm support and readiness for support, as well as made a special thank for Mr. Faruk Serdarevic from AECOM REPOWER, for an excellent organization of this study visit. 4

7 KOSTT participates in the Regional Conference of ENTSO-E "The last piece of the puzzle ntegrating South East Europe in the nternal Energy Market". KOSTT management participated in the South East Europe Regional Conference of the European Network of Transmission System Operators (ENTSO-E), "The last piece of the puzzle ntegrating South East Europe in the nternal Energy Market" held in Thessaloniki (Greece). n the margins of the conference, was also held a high-level meeting of directors of Transmission System Operators (TSO) of SEE, whereby they discussed the objectives and challenges on functionalizing the electricity market in South East Europe. At this meeting, KOSTT presented the progress made this far and the challenges faced as a result of non-implementation of Connection Agreement between KOSTT and ENTSO- E, based on which KOSTT should start operation as independent control block/area. During the conference, the Deputy CEO of KOSTT, Mr. Kadri Kadriu, presented before the audience the role and the impact of the 400 kv interconnection line between Kosovo and Albania on increasing security of regional system's operation, the possibilities of creating a common energy market between Kosovo and Albania and its further integration in the region. On this occasion, Mr.Kadriu also spoke on the consequences of non-implementation of the Connection Agreement between KOSTT and ENTSO-E and the impact on nonfunctionalization of 400 kv interconnection line between Kosovo and Albania, a concerne which was also emphasized by the Albanian Minister for Energy and ndustry, Mr. Damian Gjiknuri, during his speech. KOSTT management headed by Chief Executive Mustafë Hasani, also conducted a series of consultative meetings with counterparts from the region and officials of ENTSO-E, among them with Mr. Peder Andreasen - President, NEWSLETTER no. 13 Year X,

8 NEWSLETTER no. 13 Year X, 2017 Ms. Bente Hagem - Chair of ENTSO-E Board, and Janez Kopac - Director of the Energy Community Secretariat for SEE, whereby they discussed topics of interest for KOSTT. Furthermore, in the course of KOSTT'S continuous engagement for integration in the european mechanisms, on 17th of March 2017, KOSTT's delegation had an informal meeting with ENTSO-E officials, Jenz Birkebaek, Chairman of the Regional Group Continental Europe and Alexander Mondovic advisor in the ENTSO-E Secretariat. During the meeting they discussed about the possibilities of KOSTT commencing to operate as an independent control block and unblocking the Connection Agreement between KOSTT-ENTSO-E. KOSTT's management reiterated the request of commencing operation as an independent controll block which would enable development of energy market and fulfilment of KOSTT's obligations toward regional processes and obligations deriving from the Treaty establishing the Energy Community of South East Europe. KOSTT Part of the Delegation in the First Meeting of Special Group on Normalization within SAA, held in Brussels O n 21 March 2017, delegation of the Republic of Kosovo, chaired by the Minister for Dialogue, Ms. Edita Tahiri, held in Brussels the first meeting of the Special Group on Normalization within the Stabilization and Association Agreement between European Union and Republic of Kosovo. During the meeting it was discussed about the progress and challenges in implementing 6 Agreements concluded within the Brussels dialogue between Kosovo and Serbia, including Energy Agreement expected to be implemented. n the first meeting of the Special Group on Normalization, which is an obligation deriving from the Stabilization and Association Agreement between Kosovo and EU, Mr. Mustafë Hasani, Chief Executive Officer of KOSTT, was part of the delegation.

9 mplementation of Balancing Mechanism in KOSTT Modern liberal policies in Europe, supported by regulations and directives, have made necessary the establishment of a regional energy market, flexible toward integration in internal European market, as well as its functioning based on a single regulatory and legal framework. Six contracting parties of the South-East Europe Energy Community: Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia, committed to implement the so called "soft energy measures", both at national and regional level. With regard to fulfilling the commitments of six Western Balkan countries, also known as WB6 initiative for establishment of spot market, regional balancing and allocation of interconnection capacities, KOSTT cannot fulfil all of the requirements because the implementation of the agreement 1 signed with ENTSO-E has not been made possible, and KOSTT cannot act as a trade zone. However, regardless of all "political" obstacles, KOSTT is conducting all necessary preparations in order to be completely ready for integration in regional mechanisms. The design of energy market in Kosovo represents a bilateral market, accompanied with a balancing mechanism, wherein KOSTT receives electricity purchase and sale offers in order to manage differences in electricity flows not covered by bilateral contracts. This balancing mechanism shall function on the openmarket principles and shall ensure real-time system balancing. The adopted Law on Electricity 2 defines TSOs obligations to procure balancing services by using transparent, non-discriminatory, market-based procedures. The Market Operator also prepared the 3 "Methodology for Calculating mbalance and Compensation Prices". The balancing mechanism has been implemented / operated by the System Operator (SO), whereas the rules and commercial functioning, including calculation of imbalances, of this mechanism is under the responsibility of the Market Operator (MO). All market participants, with registered schedules at MO, are part of the balancing mechanisms and therefore responsible for imbalances caused by them. Deviation from their nominated position makes them responsible for paying the imbalance price, which should be in proportion with balancing costs. On the other hand, Trade Parties, will be able to submit their offers for increase/decrease to the MO, based on which they accept to change their physical nomination, if so required by the SO. Upon the commencement of balancing mechanism implementation, parties' monthly payment shall be done based on nominated and approved values by KOSTT. As of 1st of October 2016, KOSTT has initiated the dry-run testing phase of the balancing mechanism, without any financial imlications. Pursuant to ERO recommendation, this "dry run" phase will continue until 31 May Vjosa Rezniqi Manager of Market Operator Sector NEWSLETTER no. 13 Year X, For this reason, MED, ERO and KOSTT on 27 April 2016 did not sign MoU WB6 whose aim is full integration of the electricity market and security of supply in WB6 as a first step towards regional electricity trading across the SEE region. 2 LAW No. 05/L The document waw approved by ERO on (V_853_2016) 7

10 NEWSLETTER no. 13 Year X, 2017 The Parliamentary Committee for Economic Development Discusses The Challenges Faced by KOSTT in the Path of ntegration in nternational Mechanisms The Parliamentar y Committee for Economic Development, nfrastructure, Trade and ndustry, at the meeting held on 7 March 2017, discussed the challenges faced by KOSTT in regional and European integration processes. n this meeting, the Minister for Dialogue, Edita Tahiri, provided members of the Parliament of Kosovo with more details regarding Serbia's failure to implement the Energy Agreement, and obstacles posed to KOSTT by Serbia in implementing the Connection Agreement with ENTSO-E, which allows KOSTT to operate as an independent control block/area. Members of the Committee for Economic Development expressed their concerns regarding Serbia's failure to implement the Energ y Ag reement, and sug gested undertaking concrete measures to ensure the implementation of the agreement. The Chief Executive Officer of KOSTT, Mr. Mustafë Hasani, was also present at the meeting, and informed members of the Assembly of Kosovo regarding the obstructions posed by the Serbian transmission operator (EMS) and the financial damage caused to KOSTT due to such 7 interferences. Wbereas, in a visit that this parliamentarian comminttee made in KOSTT, few months ago The Chairperson of the Committee for Economic Development, Mr. Muhamet Mustafa, expressed his gratitude for the work being done by KOSTT, which has resulted with tangible results in both reducing losses in the transmission network, currently the lowest in the region, as well as in investments, whereby around EUR 200 million have been invested in 10 years as of the establishment of KOSTT. On this occasion, Mr. Mustafa, emphasised KOSTT's important role in the Kosovo Power System, and among others stated "We support the work that you have done, and encourage you to continue deepening the results". This visit of the Committee for Economic Development, nfrastructure, Trade, and ndustry of the Assembly of Kosovo to KOSTT was conducted in the light of adopting the new laws on electricity, according to which the Assembly of Kosovo will exercise the shareholders rights on KOSTT. 8

11 KOSTT's management received in a meeting highrepresentatives of the U.S Agency for nternational Development (USAD) KOSTT's management, led by the Chief Executive Officer, Mr. Mustafë Hasani, received in a meeting the highdelegation of the U.S Agency for nternational Development (USAD), led by the Chief of Energy and nfrastructure for Europe and Eurasia, Mr. Steve Burns, Mr. William Trigg, Deputy Director of Economic Growth Office, and Mr. Arben Nagavci, Project Management specialist. Mr. Hasani informed the U.S delegation regarding the progress made in the integration of Kosovo- Albania energ y market, and KOSTT's participation in the Albanian Power Exchange, considering them as important factors that have an impact on the development of both countries and ensure mutual benefits in terms of electricity security of supply. USAD's delegation was also informed about challenges being faced by KOSTT in the integration processes, both in regional and European mechanisms. On this occasion, Mr. Burns appraised the commitment and work done by KOSTT, and considered KOSTT a success story in Kosovo. Additionally, Mr. Burns noted that USAD plans to further support KOSTT in terms of reforms, and integration of Kosovo's electricity market. Furthermore, in September 2016, also a delegation from the US State Department visited KOSTT. US delegation headed by the first asistent deputy of the Secretary of State for Energy, Ms.Mary Burce Warlick, where informed with the challenges that KOSTT is facing in starting to operate as an independet control area, for KOSTT participation in the regjional mechanisms for TSO's and KOSTT dedication towards liberalisation of the electricity market in line with WB6/Berlin Process initiative. On this occasion, Ms.Warlick expressed support for KOSTT in overcoming these challenges, which would enable KOSTT to operate as an independent regulatory block/zone and to operate, on legal and commercial grounds, the Kosovo Transmission System in sinchron with the European Electricity Transmission System and further development of electricity market in Kosovo. NEWSLETTER no. 13 Year X,

12 Kosovo and Albania ntroduced to Practices of Austria and Germany in Organization of Common Electricity Market NEWSLETTER no. 13 Year X, 2017 Under the support provided by USAD (RePower) project for establishment of a common Kosovo-Albania electricity market, the representatives of relevant ministries, energy regulatory authorities and Transmission, System and Market Operators of Kosovo (KOSTT) and Albania (OST), conducted an official visit to TSO (Austrian Power Grid) in Vienna, Austria, and in TSCNET (TSO Security Cooperation Centre) in München, Germany. The purpose of this visit was to get familiarized with Austria's and Germany's practices and experiences in unification of the electricity market and its functioning as a single trade area, and the possibility of applying this model for establishing a single operational, commercial and balancing electricity area for Kosovo and Albania. Delegations were also informed about the practices of security control coordination centre for managing cross-border capacity and redispatching the electricity in cases of congestions.n this visit, the KOSTT's delegation was headed by the Chief Executive Officer (CEO) Mr. Mustafë Hasani, and consisted of Mr. Kadri Kadriu - Deputy CEO, Mr. Skender Gjonbalaj - Director of Market Operation, Mr. Sabri Musiqi- Director of System Operation and other relevant officials. During 2016, Kosovo and Albania intensified their efforts towards complete integration of the electricity market, and their cooperation towards the establishment and operation of an Albanian Power Exchange (APE) in accordance with E u r o p e a n U n i o n d i r e c t i v e s a n d recommendations of the Energy Community Secretariat for Southeast Europe (ECS). n the course of this visit, the delegation also visited the SEE Energy Secretariat in Vienna, whereby they discussed mutual cooperation and matters of interest for development and functioning of the electricity market. 10

13 KOSTT's Management Holds Preparatory Meetings for mplementation of Projects Co-funded with EBRD n the light of KOSTT's management preparatory engagements for commencing implementation of projects that have a total amount of 36.5 million, co-funded with the European Bank for Reconstruction and Development (EBRD), were held several meetings with Mayors of the municipalities which will benefit from this capital investment. n separate meetings with the Mayors of Prishtina, Fushë Kosova, Drenas, Rahovec and Theranda, KOSTT's management informed them about the plans for development and rehabilitation of transmission network, thereby supporting the increase of security and quality of electricity supply in the respective municipalities, as one of the key preconditions for economic development. On the other hand, all Mayors expressed their gratitude to KOSTT for implementing the planned investments, and expressed their commitment to provide support in the preparatory process and during the implementation process of projects. Within these projects which are foreseen to commence implementation by the middle of this year, are the following: Municipality of Prishtina Construction of a new Substation 110/10 (20) kv - Prishtina 6 with the system of modern technology facilities GS, installation of two power transformers of 40 MVA and construction of a double line underground cable of high voltage 110 kv, 3.8 km long from SS Prishtina 6 to SS 220/110 kv - Prishtina 4. underground cable about 1.5 km long and overhead power line of 110 kv about 1.9 long. Construction of SS Fushe Kosova with the GS system, and two power transformers, will commence once the budget is allocated, according to works described in the basic contract. Municipality of Drenas - Construction of a new Substation SS 210/10 (20) kv - Drenasi 2 with the system of modern technology facilities GS, installation of two power transformers of 40 MVA and construction of a double high voltage line 220 kv, about 3 km long. NEWSLETTER no. 13 Year X, 2017 Municipality of Fushë Kosova - Construction of a new Substation 110/10 (20) kv - Fushë Kosovë with the system of modern technology facilities GS, installation of two power transformers of 40 MVA and construction of a double line 11

14 NEWSLETTER Buletini no. 13 nr. 13 Year Viti X, 2017 X, 2017 Municipality of Theranda and Rahovec Rehabilitation of SS 110/10(20) kv Theranda, with the system of modern technology facilities HS, and construction of a new high voltage line 110 kv, SS Rahovec SS Theranda about 19 km long. Municipality of Mitrovica - Construction of a new Substation 110/10 (20) kv Mitrovica 2, with the system of modern technology facilities GS, installation of two power transformers of 40 MVA and construction of two double highvoltage lines 110 kv, one being 2 km long, and the other 1.5 km long. During the coming months, KOSTT in cooperation with the Ministry of Finance, Ministry of Environment and Spatial Planning and with the support of the respective municipalities will perform other preparations for commencing project implementation. There will be public debates on environmental impact assessment for the above-mentioned projects, completion of necessary procedures to obtain construction permits for facilities, which have to be obtained based on the law, as well as estimates and realization of the necessary expropriations and easements. 12

15 KOSTT's Delegation Conducts a Work Visit to TSO Albania Adelegation of KOSTT's management, led by the Chief Executive Officer, Mr. Mustaf Hasani, following an invitation by the Transmission System Operator of Albania, conducted a one day work-visit to Albania. This visit was focused on KOSTT obtaining information regarding the extent of preparation done so far by the TSO on creating the Albanian Power Exchange (APEX), whereby KOSTT is planned to be part of it, and also to discuss future coordination steps. On this occasion, Mr. Hasani reiterated KOSTT's interest to be part of the Albanian Power 13 Exchange, and expressed his gratitude to the Chief Executive Officer of the OST, Mr. Engjëll Zeqo for the continuous support. Finally, both counterparts agreed to intensify meetings and cooperation in terms of accomplishing the joint projects/goals, which are in the function of integrating energy markets and ensuring power supply to the consumers of both countries. KOSTT's delegation and the OST also consulted regarding the integration process into regional and European mechanisms of Transmission System Operators. KOSTT Appreciates Municipalities that Contributed in the mplementation of Projects for Development of Kosovo's Transmission System KOSTT's delegation, headed by the Chief Executive Officer, Mr. Mustafë Hasani, had a meeting with the Mayor of the Municipality of Ferizaj, Mr. Muharrem Sfarqa. On this occasion, Mr. Hasani informed Mayor Sfarqa with regard to investments made until now by KOSTT in this Municipality, and plans for further development of transmission infrastructure in the coming years, thereby supporting economic development of this municipality. On the other hand, Mr. Sfarqa expressed his gratitude for KOSTT's continuous investments in increasing security and reliability of electricity supply, in terms of transmission, for the citizens of the Municipality of Ferizaj, and also expressed the commitment for accomplishing other KOSTT projects. On the 10th anniversary of the establishment of KOSTT, Mr. Sfarqa received a Plaque of Appreciation for the contribution of the municipality of Ferizaj upon allocating 4 hectares of municipal land, free of charge, for the purpose of constructing the Substation 400/110 kv Ferizaj 2. Substation 400/110 kv Ferizaj 2, is one of the most important substations of Kosovo's Electricity System, which connects to the interconnection line 400 kv Kosovo-Macedonia. SS Ferizaj 2 was constructed in 2011 based on a co-funding by KOSTT, Government of Kosovo and European Union funds. NEWSLETTER no. 13 Year X, 2017

16 KOSTT J.S.C Commenced Application of E-Procurement NEWSLETTER no. 13 Year X, 2017 Electronic procurement means purchase of services and products through the electronic platform. Based on the Decision No. 12/79 of the Government of the Republic of Kosovo, dated , and Decision No. 47/2016 of the Public Procurement Regulatory Commission, in early 2017, commenced the application of electronic procurement platform for all public authorities in Kosovo. Public procurement aims to ensure better value for public money, by adhering to the rules stipulated under the Law on Public Procurement in Kosovo, whereas the use of electronic system guarantees a transparent process and provides the condition for an open competition between participatory economic operators. n accordance with the abovementioned decisions, as of January this year, KOSTT as a public company has commenced applying e-procurement. This process includes all public procurement procedures of high and medium values in electronic form, based on which KOSTT J.S.C prepares and publishes all announcements and tender dossiers for procurement procedures in the electronic platform, as foreseen by the rules and the Law on Public Procurement. n order for economic operators to have the right of participation in electronic procurement, they are obligated, under the law, to register into the platform. According to the Decision of the Public Procurement Regulatory Commission (PPRC), economic operators can download relevant files only via the electronic platform, and have the right to submit their bids either electronically or in hard copy, but not in both versions, until electronic procurement becomes fully functional by the end of KOSTT has published 12 procurement procedures through the platform so far, whereby bids were successfully opened electronically in seven procurement procedures, whereas one procurement activity has been concluded with a notice for signing of contract. Merita Zharku Acting Director of Procurement Department 14

17 KOSTT conducted a study visit to the Croatian Transmission System Operator HOPS n view of regional cooperation with operators of transmission systems, a delegation of KOSTT led by Chief Executive Officer, Mr. Mustafë H a s a n i, t o g e t h e r w i t h representatives of the supporting project of USAD (Repower Kosova), conducted a study visit to the Croatian Transmission System Operator (HOPS). n the meeting held with high representatives of the counterpart company HOPS led by the Director Mr. Miroslav Mesić, it was discussed about bilateral issues related to the transmission system operation and operation of the electricity market. Croatian counterparts were also informed about the difficulties faced by KOSTT for integration in international mechanisms, as well as it was requested the support for overcoming challenges related to the implementation of the Connection Agreement with ENSTO-E. Representatives of HOPS expressed the interest for the reasons of non-implementation of the agreement and at the same time expressed the readiness to support the Connection Agreement according to their technical and legal competencies in the European Network of Transmission System Operators (ENTSO-E). n conclusion, Mr. Hasani thanked Croatian counterparts and praised the readiness for supporting KOSTT for overcoming current challenges in integration in international mechanisms. NEWSLETTER no. 13 Year X,

18 Decisions of the Energy Regulatory Office NEWSLETTER no. 13 Year X, Energy Regulatory Office in the Board meeting held on 13 April 2017, upon the request by KOSTT, has decided to approve the amendments to the document- Transmission Connection Charging Methodology- of KOSTT J.S.C (V_912_2017) -Energy Regulatory Office, in the Board meeting held on 13 April 2017, upon the request by KOSTT, has decided to approve the Maximum Allowed Revenues (MAR) which will be covered by the System, Transmission and Market Operator (KOSTT) J.S.C through tariffs and charges for the relevant year ETR11 (V_907_2017) -Energy Regulatory Office, in the Board meeting held on 31 March 2017, upon the request by KOSTT, has decided to approve the document "Transmission Development Plan ". (V_904_2017) -Energy Regulatory Office, in the Board meeting held on 23 December 2016, upon the request by KOSTT, has decided to allow KOSTT to derogate the implementation of the provisions of the Grid Code, Market Rules, and License of the Transmission System Operator. (V_879_2016) -Energy Regulatory Office, in the Board meeting held on 23 December 2016, upon the request by KOSTT, has decided to approve the document "Long Ter m Energ y Balance ". (V_878_2016) - Energy Regulatory Office, in the Board meeting held on 23 December 2016, upon the request by KOSTT, has decided to approve the document "Annual Electricity Balance 2017". (V_877_2016) - Energy Regulatory Office, in the Board meeting held on 14 October 2016, upon the request by KOSTT, has decided to approve the document "Methodology for mbalance calculation and compensation program price". (V_853_2016) - The Energy Regulatory Office, in the Board meeting held on 14 October 2016, upon the request by KOSTT, has decided to approve the "Supplier Switching Rule" document. (V_852_2016) - Energy Regulatory Office, in the Board meeting held on 03 October 2016, upon the request by KOSTT, has decided to approve the amendment of the Auction Rules for Allocation of nterconnection Capacities of South-eastern Europe SEE, Version 1.4. (V_851_2016) - Energy Regulatory Office, in the Board meeting held on 03 October 2016, upon the request by KOSTT, has decided to approve the document "Derogations for Metering Code and Market Rules". (V_850_2016) Translation of the KOSTT Newsletter into English is intended solely as a convenience to the non-albanian-reading public. Translation accuracy is not guaranteed nor implied. f any questions arise related to the accuracy of the information contained in the translation, please refer to the Albanian version which is the official version of the document.any discrepancies or differences created in the translation are not binding and have no legal effect for compliance or enforcement purposes. 16