Natural gas undertaking licence

An undertaking must have an operating licence for the following fields of activities:

  • provision of gas transmission service;
  • provision of gas distribution service;
  • import of gas;
  • operation of a liquefied gas (LNG) terminal;
  • provision of gas storage service.

The activity licence to provide gas transmission service is granted to one network undertaking only, to whom special rights and obligations are set out in sections 15¹ and 16, 29¹ - 294 and 30¹ of the Natural Gas Act. Distribution network undertakings shall observe the special requirements set out in section 295 of the Natural Gas Act.

The Estonian Competition Authority grants previously mentioned licences for an unspecified term.

Activities of a gas undertaking are regulated by:

Requirements for applicants

In order to obtain the operating licence, an undertaking must correspond to the following requirements:

  • it possesses the technical capability and employs personnel with the requisite skills for pursuing the activity stated in the application;
  • it has the required economic and organisational prerequisites and conditions to engage in the activity in respect of which it seeks an authorisation;
  • the share capital of a distribution network operator must amount to at least 31,950 euros;
  • the share capital of an undertaking that provides gas transmission services must amount to at least 128,000 euros;
  • the share capital of an undertaking that provides the service of operating an LNG terminal must amount to at least 128,000 euros;
  • the share capital of an undertaking that provides gas storage services must amount to at least 128,000 euros;
  • the undertaking has submitted all the necessary documents (please refer to below subsection “Filling in and submitting the application form”);
  • the special requirements for the undertaking which provides gas transmission service are set out in sections 29¹ - 294 and 30¹ of the Natural Gas Act;
  • the requirements for distribution network operators are laid down in section 295 of the Natural Gas Act;
  • the requirements for a person in charge of managing the network of storage facilities are set out in section 296 of the Natural Gas Act.

Cross-border operation

As activity licence for an unspecified term to provide gas transmission service is granted to one network undertaking only, it is impossible to apply for the provision of cross border gas transmission services, once such licence has been already issued to a network operator providing this service.

If an undertaking holds licence for the provision of gas transmission service, provision of gas distribution service, import of gas and operation of an LNG terminal in another State that is a Contracting Party to the European Economic Area (hereinafter EEA) Agreement, which by its subject of review predominantly corresponds to the Estonian licence and if its validity has not been confined to a territory or place of business situated outside Estonia, then such undertaking does not need a separate licence for its activity in Estonia.

In such case, the foreign undertaking shall submit an application to the Competition Authority for exemption from the licence obligation, which contains the following information:

  • in the case of a sole proprietor, the name, personal identification code, in the absence thereof the date of birth, and business name upon the existence thereof, in the case of an undertaking which is a legal person, the business name and registry code;
  • address of the seat of the undertaking;
  • contact details of the undertaking (phone number, postal address and e-mail address);
  • name of the authority that has granted the licence and the date of issue of the latter.

In the adjudication of an application for exemption from the licence obligation, the Competition Authority is guided by the provisions of section 22 of the General Part of the Economic Activities Code Act. If a foreign company wants to offer goods or services in Estonia in one’s own name continuously, it shall register a branch in the Commercial Register. If an undertaking holds provision of gas transmission or distribution service, import of gas, operation of an LNG terminal or provision of gas storage services, wishes to provide these services in another EEA state, it is recommended to contact relevant economic authority in that state with an inquiry prior to commencement of activity or applying for exemption from the licence obligation, as the procedure rules may differ from country to country. Information on activities in other EEA states can be found at the EUGO Point of Single Contact of respective country.

Filling in and submitting the application form

Together with the filled-in application for the operating licence and in addition to the data stipulated in section 19 of the General Part of the Economic Activities Code Act, the applicant must also present the following documents to the Competition Authority:

  • the licensed territory applied for, except in the case of the area of activity of import of gas;
  • in the case that the authorisation applied for concerns the import of gas through a network, a declaration from the system operator that, in view of the technical capacity of the system, the transmission and distribution of gas is permissible and does not jeopardise the security of supply;
  • layout plans and description of the networks located within the licensed territory, except for import of gas;
  • description of the activity that is applied for.

The applicant must consider that the following ancillary conditions will be added to the operating licence:

  • The requirements for the import of gas set by the system operator in accordance with the provisions of section 28 (2) 2) of the Natural Gas Act in consideration of the technical capacity and security of supply of the gas system;
  • The development obligation in accordance with section 22 of the Natural Gas Act;
  • Other ancillary conditions, if this is necessary in order to ensure security of supply or the performance of obligations or in order to achieve any objectives arising from the Natural Gas Act or the legislation enacted on its basis or in order to take into consideration the particular character of a specific activity.

NB! Before the submission of the application, the undertaking must pay a state fee in the extent stipulated in the State Fees Act.

Application can be submitted:

Payment of the state fee

Depending on the type of the operating licence, a state fee is paid for the review of the operating licence application:

  • import of gas — 640 euros for every year of validity;
  • provision of gas transmission service — 260 euros for every year of validity;
  • provision of gas distribution service — 260 euros for every year of validity.

A state fee in the amount 50 percent of the above stated state fee rates must be paid for the review of an application for changing the terms and conditions of the operating licence. State fees must be paid to the bank account of the Ministry of Finance by using the reference number 2900080076:

  • Swedbank – EE932200221023778606
  • SEB – EE891010220034796011
  • Nordea Bank – EE701700017001577198
  • Danske Bank –EE40330033416110002

Processing the application

The bases and terms for the procedure of assessment of compliance with established requirements of the gas transmission service provider are laid down in section 293 of the Natural Gas Act.

For the provision of gas transmission or distribution service, import of gas, operation of an LNG terminal the Competition Authority submits a preliminary reply to the applicant within three days as of receipt of application from the undertaking, which, amongst other, contains information on the validity term of the authorisation and the requirements for economic activities included in the subject of scrutiny of the licence.

The Competition Authority adjudicates the licence applications within 30 days as of submission of all required data. If an undertaking fails to submit all the required information in its application, the Competition Authority notifies the undertaking thereof no later than on the working day following the day of detecting such failure, determining a reasonable time limit for remedy of the deficiency. If the undertaking still fails to submit sufficient information, the Authority may not adjudicate the application.

In case of necessity, the Authority may suspend the adjudication time limit for 30 days or prolong it for up to 30 days.

The licence is granted for an unspecified term. The Competition Authority issues licence to the undertaking in an electronic format.

Amending the terms and conditions of the operating licence

An undertaking holding a licence notifies the Competition Authority on changes in the circumstances of economic activity pursuant to the procedure prescribed in section 30 (1-3) of the General Part of the Economic Activities Code Act:

  • of an intention to change the circumstances related to the subject of review of the licence or the circumstances related to the ancillary conditions no less than 30 days before the intended change by an undertaking and no less than three months before the intended change by a provider of services of general interest (hereinafter notice on intention to change economic activities). A notice on intention to change economic activities shall also be submitted if an undertaking founds a subsidiary, which commences economic activities within the framework of the subject of regulation of the licence.

An undertaking notifies the Competition Authority promptly, but no later than within five working days, of changes in the circumstances related to the subject of review of the licence and circumstances related to the ancillary conditions that have occurred independently of the undertaking (hereinafter notice on change in economic activities).

If it appears from the notice that the changes bring along non-compliance with the economic activity requirements in the subject of review of the licence or the ancillary conditions of the licence, a need to review the economic activity requirements, amend the licence or apply for a new licence, the Competition Authority notifies the undertaking thereof immediately.

If a need for amendment of the licence or application for a new licence appears, the notices are regarded as applications for amendment of the licence unless the undertaking has specified in the notice that it has no such wish.

The Competition Authority adjudicates applications for the modification (amendment) of an licence within 60 days.

Both the notice on intention to change economic activities and the notice on change in economic activities can be submitted to the Competition Authority by one of the following means:

Suspension of the operating licence and termination of economic activity

A network operator may terminate its activities only if it transfers to another network operator the obligations incumbent upon itself by virtue of section 22 of the Natural Gas Act.

A network operator shall give the Competition Authority at least a twelve months’ written notice regarding termination of its activities, specifying the date and schedule for termination, and provide a sufficiently detailed overview of the circumstances which guarantee that the requirements provided in section 14 of the District Heating Act are met.

Companies which hold the operating licence and cannot be regarded as providers of service of general interest must notify the Competition Authority about the circumstances related to economic activity (including the temporary suspension or termination of economic activity) at least 30 days in advance. The Competition Authority processes the application based on the principles provided in section 30 of the General Part of the Economic Activities Code Act.

NB! The right to renounce the economic activity does not exclude the obligation of the undertaking arising from law, administrative act or agreement to continue its economic activity, also, in case of the existing obligation, the undertaking is not regarded as renounced from economic activity.

The note about the temporary suspension of economic activity and the application about the termination of the operating licence together with justifications can be submitted to the Competition Authority:

Revocation of operating licence

A licence is revoked on the following bases:

  • intentional submission of incorrect information by an undertaking upon application for an licence, which affected the grant of a licence, provided that if such information had not been submitted, the grant of an licence would have been denied;
  • renouncement of economic activities by an undertaking;
  • validity of a relevant prohibition on economic activities imposed by a court judgment or arising from law in a relevant area of activity in respect of an undertaking, except for validity of a prohibition on economic activities imposed pursuant to the General Part of the Economic Activities Code Act.

The licence may be revoked on the following bases:

  • failure to commence economic activities within two years after issue of the licence or failure to pursue economic activities within two years, and in the case of provision of services of general interest, failure to commence economic activities within 12 months after issue of the licence or failure to pursue economic activities within 12 months or failure to commence economic activities within the term prescribed by an ancillary condition of the licence;
  • material violation of an economic activity requirement in the subject of review of the licence or ancillary condition of the licence;
  • a significant damage or danger caused to public order by the activity permitted by the licence, which did not exist or was not known at the time of grant of the licence and which overrides the interest of the undertaking in continuing the activity and which cannot be eliminated by amendment of the licence;
  • amendment of the ancillary conditions of the licence;
  • the notice on renouncement of provision of services of general interest.

In addition, the Competition Authority may revoke the licence for the provision of gas transmission service if the system operator or the person in control of it repeatedly fails to fulfil the precept on the violation of the requirements set out in section 29¹ of the Natural Gas Act from 1 January 2015. An licence is revoked as of communication or delivery of the revocation decision to the undertaking.

Supervision

The procedures related to the operating licences issued based on the Natural Gas Act are within the competence of the Competition Authority.

Contact details

Substantive information

Tiina Maldre, Competition Authority, tel: +372 667 2573, e-mail: tiina.maldre@konkurentsiamet.ee

Anu Vainik, Competition Authority, tel: +372 667 2572, e-mail: anu.vainik@konkurentsiamet.ee

Registry information and technical questions

Register of Economic Activities, tel: +372 668 7080, e-mail: register@mkm.ee

Last amended: 04-04-2017 10:42 | Compiled by: Konkurentsiamet