Natural gas liberalization along EU requirements is proceeding at different rates in the Visegrad countries. In 2002, an EU Directive on natural gas (2003/55/EC) was adopted under which industrial and commercial users were enabled to choose their suppliers by July 1, 2004. Under the Directive, all customers should be able to choose their suppliers by July 2007. The Directive required vertically integrated natural gas monopolies to unbundle transmission operations by July 2004 and distribution operations by July 2007, as well as to establish a market regulator and a power exchange. Along with divesting and unbundling state owned natural gas companies, governments are required to open their natural gas market to outside competition, thus allowing customers to choose their own supplier. In Slovakia, the natural gas market was opened to competition among gas suppliers in July 2004. This deregulation included industrial and commercial sales of gas, but excluded household consumers. This means that each customer (except from in the residential sector) has the right to choose its supplier, as opposed to being assigned a utility by the government. The opening of the natural gas market for all customers will follow in July 2007. Slovensky plynarensky priemysel (SPP) (EdF 24.5 percent, Ruhrgas 24.5 percent and Slovak National Property Fund 51 percent) is responsible for natural gas imports, transit, and distribution. The companys subsidiary, Nafta Gbely, operates Slovakias natural gas storage of 60 Bcf. SPP is currently unbundling its natural gas assets according to EU requirements. In June 2004, the Hungarian government approved a new Gas Act, establishing a regulatory framework for a liberalized natural gas market in Hungary. The Act called for partial liberalization of the countrys gas market, allowing all non-residential users to choose their supplier by July 2004, and for all consumers by July 2007. Along with opening the market liberalization, MOL, as required by the Gas Act and EU regulations, has unbundled its gas business activities (supply, storage, and transmission) into three, 100 percent MOL-owned, independent entities. The Gas Act created a new tariff regime, which came into effect in October 2003. Previously, the government required MOL to sell consumers natural gas at below-market rates while buying at world prices, resulting in huge losses for MOL. Under the new price regime, MOL has continued to subsidize residential consumers but on a smaller scale in order to make the transition to higher prices less abrupt. Hungarys natural gas sector is organized around six regional distributors: Fogaz (Budapest region); Tigaz (northeast region); Degaz (southeastern region); Ddgaz (south Danube region); Kogaz (west and Mid-Danube region); and Egaz (northeast region), with MOL still controlling most of the countrys upstream and downstream natural gas activities. The regional distributors have all been privatized, with RWE, E.ON Energie, Ruhrgas, Eni and EdF holding majority and minor stakes in them. According to the Czech Republics State Energy Policy, which was approved on March 10, 2004, the countrys natural gas market was opened to competition starting January 1, 2005, for all customers with metering systems to continuously record their gas usage. This deregulation was extended to all customers except households on January 1, 2006. The market is scheduled to open to all customers, including households, starting on January 1, 2007. Natural gas transmission has been unbundled and gas distribution is scheduled to be unbundled by December 31, 2006. Much of the countrys natural gas sector has already been privatized, with Germanys RWE holding a 100 percent stake in Transgas and majority stakes in all but two of the countrys eight regional distributors (see links). Transgas is responsible for importing and transiting natural gas, the inland pipeline grid and underground storage facilities. RWE will have to unbundle these assets according to EU regulations. In August 2002, the Polish government adopted a plan to restructure and privatize wholly state-owned oil and natural gas company POGC. According to the plan, POGC would remain responsible for natural gas transmission, storage and wholesale trade, while six separate regional companies would be responsible for distribution. The new EU Directive, however, will require POGC to unbundle its natural gas operations. In May 2004, the Polish government agreed to open the countrys natural market to competition, according to the schedule outlined by the EU Directive on natural gas.
Coal is the most prevalent energy resource in the Visegrad countries, although its role as a fuel and as an industry has declined over the past decade. In 1993, for example, coal accounted for 58.4 percent of the Groups combined total primary energy consumption and in 2003, for 45.3 percent. Poland is the exception, where coal accounted for 93 percent of the countrys primary energy production in 2003, and remains one of the countrys most important employers. Coal also remains significant in the Czech Republic, where it constituted 44.2 percent of the primary energy consumption in 2003. The region holds 25,442 million short tons (Mmst) of proven recoverable coal reserves, of which Poland has 15,432 Mmst. The Czech Republic contains 6,120 Mmst; Hungary 3,700 Mmst; and Slovakia 190 Mmst. In 2003, the region produced 266.2 Mmst, of which Poland was responsible for 67 percent with 177.8 Mmst. The Czech Republic had 70.4 Mmst, Hungary had 14.2 Mmst, and Slovakia had 3.4 Mmst. Coal consumption has generally decreased in the region over the past ten years. Between 1993 and 2003, coal consumption fell by 21 percent in Poland, 26 percent in the Czech Republic, 18 percent in Hungary, and 37 percent in Slovakia. In 2003, total coal consumption for the region was approximately 244 Mmst, an increase of 2.1 percent year-on-year.
Over the past decade, the Visegrad countries have continually restructured and downsized their coal industries by reducing the number of inefficient mines in operation, cutting the labor force associated with coal mining, and increasing awareness of environmental issues related to the industry in line with EU standards. In Poland, the coal industry is one of the countrys largest industries and employers, but inefficiencies have resulted in large annual losses, spurring the government to reform the sector. In 1998, the government introduced a five-year (1998-2002) Hard Coal Sector Reform Program which reduced employment from 248,000 to 140,000 at the end of 2002. In November 2003, the government introduced a second program to further consolidate and reform Polands coal sector Program of Restructuring of the Hard Coal Mining Sector for 2003-2006. The program is closing inefficient mines and reducing employment on a voluntary basis. For those who voluntarily leave, the government is providing various benefits, such as retraining, assistance in finding employment, social hardship allowances, and early retirement pensions. The program also aims to privatize the countrys coal industry by 2006. In April 2004, the World Bank provided Poland with a loan of $160 million to support the countrys restructuring program. According to the Czech Republics State Energy Policy (Government Decision No. 211 to March 10, 2004), coal, particularly lignite, will remain the countrys primary energy source in coming decades, despite increased use of natural gas and nuclear energy. The government expects coal, including black (hard) and brown (lignite), to account for 30.5 percent of total consumption in 2030. In line with EU regulations, the government lifted quotas on coal imported from Poland and Ukraine, as of January 2004. The decision was welcomed by Czech steel makers, which now have access to cheaper coal, namely Polish. Prior to this decision, steel makers, such as ISPAT NOVa HUT, were required to buy a large portion of its black coal requirements locally. The Czech Republics coal industry consists of six companies: three hard coal (black) mining companies and three lignite (brown) mining companies.