Harmonizing national law with EU legislation, implementing sizeable renewable energy projects, and addressing production shutdowns are high on North Macedonia’s domestic agenda, according to Kiril Papazoski, Director, Papazoski and Mishev Law Firm, an independent law firm in cooperation with PwC.
"Recently, North Macedonia has implemented some legal acts with far-reaching implications," Papazoski notes. "A new law transposing the EU Revised Payment Services Directive into our legal system will come into force on January 1, 2023." According to him, "this is revolutionary legislation, changing the entire payment system in the country, introducing a dramatic shift not only for banks and financial institutions but for the new payment institutions looking to join the market, including fintech and other players."
"Besides, we, as an EU candidate country, are already in the process of screening our legislation in order to align it with EU standards," Papazoski adds. "Recently, a new consumer protection law has been adopted, also transposing an EU directive." Additionally, he notes that ESG-related legislation is in the pipeline. "In that regard, the Macedonian stock exchange has published ESG guidelines for listed companies for the first time. At this point, they are not mandatory but provide directions on how regulatory matters are likely to develop in the future."
According to Papazoski, the hot topic for the past year has been the energy crisis. "A lot of renewable energy projects – such as wind farms, photovoltaics, and hydro energy projects – are either being developed or ready to be developed," he notes. "Our biggest hydro-project, Chebren, is planned to be developed, and the government has been looking for a private partner for a long time. With the closing of the recent tender, we have a viable bid from a regional energy company, so, hopefully, the project will start soon." Other than that, he says there are a lot of private initiatives on photovoltaics and wind farms, with some projects ready to start after having secured licenses and regulatory approvals.
Related to the energy crisis, Papazoski points out that "North Macedonia has only one connection with a gas pipeline, through Bulgaria, and that connection is practically 100% leased by Gazprom. Consequently, only Russian gas can come through that connection. The Macedonian transmission system operator has now agreed with the Greek TSO to connect the two gas transmission systems with a new gas interconnector and, thus, diversify gas suppliers in order to boost energy security."
"To tackle the energy crisis, there is a push from the business community asking the government to subsidize energy prices," Papazoski adds. "The government has already awarded such subsidies to food production facilities, but other businesses are still struggling." Additionally, he says that "a couple of quarries, mines, and production facilities have closed production due to energy and gas prices," noting that "they are not shut permanently but – being energy-intensive businesses – they decided to close production and send employees on paid leave for an indefinite period."
On a more positive note, Papazoski highlights the movements in the IT industry. "We have highly educated IT engineers in the country and a very high interest in universities for computer sciences and programming," he says. "And, considering the crisis, the banking sector is quite stable as well. There are a lot of distressed assets, triggering increased interest in M&A transactions. So there are some positive signs, definitely. And, hopefully, the crisis will also lead to some opportunities."