Energy Law amendment | In Principle

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Energy Law amendment

The Act of 22 July 2016 Amending the Energy Law and Certain Other Acts was published on 2 August 2016.

The act is intended to eliminate the black market in fuels, strengthen competition on the market, and improve Poland’s energy security. The amendments introduced by the act primarily concern the market for natural gas and liquid fuels.

No exemption from the obligation to store gas reserves

The current provisions of the Fuel Reserves Act of 16 February 2007 allow an exemption from the obligation to maintain reserves of natural gas to energy enterprises with fewer than 100,000 customers and imports of natural gas not exceeding 100 million m3 in a calendar year. This type of exemption has been granted by the Minister of Energy by way of an administrative decision.

Under the proposed amendment, the obligation to maintain gas reserves will be absolute, and the possibility of obtaining an exemption will be eliminated. Previously issued exemptions will remain in effect until 30 September 2017.

Expansion of the list of enterprises required to maintain mandatory gas reserves

Under current law, the requirement to maintain mandatory gas reserves applies to energy enterprises conducting commercial activity involving import of natural gas from abroad and resale to customers.

Under the amended act, the duty to maintain mandatory gas reserves will apply to energy enterprises conducting foreign trading in natural gas, as well as any other entities conducting importation of natural gas.

Possibility of using “ticket” agreements

The duty to maintain reserves of natural gas will apply to all enterprises trading in gas in Poland. Energy enterprises without their own natural gas stores will be able to use stores of other entities based on a “ticket” agreement (a similar solution currently functions with respect to mandatory reserves of petroleum and other fuels). This enables outsourcing of tasks involving storage of mandatory gas reserves to another energy enterprise which conducts commercial activity involving foreign trading in natural gas, or another entity conducting importation of natural gas.

Increased monitoring of the liquid fuels market

The act introduces legal solutions aimed at increasing controls over the process of the initial supply of liquid fuels on the Polish market connected with their production or importation, as well as exports as part of licensed activity or in connection with importation. The changes provide that every importation into Poland of two main types of liquid fuels (petrol and diesel oil), except for importation in standard automobile tanks, will give rise to the obligation to hold a licence or entry in a newly created register of importers, creation of a mandatory reserve, payment of a reserve fee, and realisation of the national target indicator. The amendment also imposes on enterprises producing LPG or conducting foreign trading in LPG the difficult obligation of submitting financial security in the amount of PLN 10 million.

Other major changes in the Energy Law

The amendment also introduces an obligation to obtain a licence for the activity of handling of liquid fuels. The exemption from licensing for trading in aviation fuel is also eliminated. The act lengthens the list of acts punishable by fines and related criminal offences. Conducting commercial activity involving production, storing, handling, transmission, distribution or trading in liquid fuels without a required licence, including foreign trading, will be subject to a fine of up to PLN 5 million or imprisonment of 6 months to 5 years.

The amendment enters into force 30 days after publication.

Karol Czuryszkiewicz, Energy Law Practice, Wardyński & Partners