Category: Issue 12.1

Forgo, Damjanovic & Partners Partner Zoltan Forgo talks about M&A in Hungary in 2025.

CEELM: What would be your bet at the start of the year – will 2025 see more, fewer, or the same level of activity in terms of M&A in Hungary?

Forgo: In general, market participants reported a slowing M&A market in 2024 due to high interest rates, high inflation, shrinking corporate profits, and no actual GDP growth.

The general market outlook for 2025 is cautiously positive, relying primarily on better GDP growth forecasts for Hungary, lower interest rates generally in Europe, and the potential end of the war between Russia and Ukraine.

Having said that, 2024 was a great year for our M&A practice. Before all, we acted on the high-profile FoxPost sale to CVC Capital and EMMA Capital, probably the largest private market deal in 2024 in Hungary, and advised on a number of transactions in the PV and healthcare industries. Regarding our M&A practice, we remain confident that we can replicate the successes of 2023 and 2024. Already in the pipeline, there are significant transactions in the PV, food supplement, healthcare, and IT industries.

CEELM: What do you believe will be the main factors determining the results at the end of the year?

Forgo: A possible peace accord in Ukraine in the first half of 2025 could be a very significant factor for foreign investors in deciding about Hungarian acquisitions. This is relevant for the whole market, and especially for those targets with potential/actual business in Ukraine and Russia.

The easing tension between the EU and Hungary could also be a potentially positive factor, however, it is unlikely to happen in 2025.

What is a relatively new phenomenon and is growing in significance is the acquisition of foreign companies by mature Hungarian companies in several sectors, such as building developers and sponsors, and players in the pharmaceutical, banking, and car manufacturing sectors. Also, Hungary-based VC and PE companies are eager to look for investment opportunities in other CEE countries. This may present an opportunity for Hungarian M&A legal advisers with well-established contacts in other CEE countries to act as lead counsel on such transactions.

CEELM: Are there any pieces of legislation on the horizon that you are keeping an eye on as potentially impacting the M&A market in 2025?

Forgo: The termination of the extra-profit tax on pharmaceutical producers in 2025 is likely to add to the attractiveness of Hungarian targets in this area. However, the negative change in any areas typically subject to such extra-profit tax, such as banking, telecommunications, oil, and retail FMCG stores would have the opposite effect. The food supplement market is booming, and the activity is fully liberalized. However, a negative change in the use of distribution channels, such as forcing these products into pharmacies, would destroy the significant value of such companies. Such a possible change is looked at by the legislators from time to time.

In general, in Hungary, there is an increased risk of state intervention through taxes or other legislation, which makes Western European buyers particularly careful with the Hungarian market.

CEELM: Who do you expect to be the buyers in Hungary in 2025?

Forgo: For smaller transactions, such as EUR 1-10 million, we expect the market to be dominated by Hungarian strategic companies that add to their product and service portfolio through established businesses. In the range of EUR 10-50 million, the market will continue to be dominated by foreign strategic investors or PE investors who are adding Hungary as a new geographical reach to their existing portfolio companies, such as the purchase of the Hungarian PUDO company FoxPost in 2024 by CVC/EMMA/Packet or the purchase of food supplement player Vitaplus by PE-backed CERES.

Other than that, PE investors are not expected to be very active, given that Hungary is quite a small market, resulting in smaller targets.

CEE investors are expected to increase their activity in Hungary, especially those from the Czech Republic and Romania.

CEELM: What do you expect will be the most attractive targets in Hungary in 2025, and what will make them so?

Forgo: New energy companies, such as solar power companies, and infrastructure developers in the energy sector will remain attractive, and the considerable growth in these areas is expected to continue. IT companies can also be typical targets due to their scalability, especially those that do not have a high concentration of Hungary-based or government-related customers.

As the food supplement market continues to grow, mature food supplement companies will remain interesting targets for foreign strategic investors, typically for Western European investors.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Vernon David Partners Sergiu Bivol and Roman Ivanov talk about M&A in Moldova in 2025.

CEELM: What would be your bet at this start of the year – will 2025 see more, fewer, or the same level of activity in terms of M&As in Moldova?

Ivanov: We always hope for the best, but we are closely watching Ukraine. Whatever happens there will affect us. We are still involved in a couple of M&A transactions and hope that this year won’t be worse than last year.

Bivol: I am also optimistic about 2025. We’re already working on significant M&A deals in financial and non-financial sectors, though we can’t disclose names. Additionally, European buyers are showing interest in Moldova.

CEELM: What do you believe will be the main elements determining the results at the end of the year?

Ivanov: I believe that geopolitical factors and donor support are critical. It’s unclear if Moldova will continue receiving assistance from the US, but the EU has recently announced significant support. This assistance could attract businesses to Moldova. It is difficult to foresee, but we will focus on finalizing deals and observing the situation.

Bivol: The situation in Ukraine is indeed a major hurdle. If the war stops, we could see a significant increase in investments and corporate M&A activity. Many Ukrainian investments were made in Moldova to relocate businesses. If the war ends, Moldova could become more attractive for international investments, especially for those interested in Ukraine’s reconstruction. We are also monitoring security issues related to energy supply and legislation changes.

CEELM: Since you mentioned it, are there any pieces of legislation on the horizon that you are keeping an eye on as potentially impacting the M&A market in 2025?

Ivanov: Yes, there are several legislative developments to watch. The government announced tenders for large-capacity renewable energy projects, which could boost M&A activity. However, new FDI legislation is being implemented, which includes stricter screening and assessment of investors. This could impact M&A deals, especially in the energy sector.

Bivol: Looking at the broader picture, Moldova is also aligning its legislation with EU requirements, as it’s now a candidate for EU membership. This includes improvements in corporate and financial laws, which should make it easier for investors to operate. These changes are positive overall but will take time to fully implement.

CEELM: Who do you expect to be the main buyers in Moldova in 2025?

Ivanov: Most buyers are international, with strategic investors leading the way. Local buyers aren’t as active due to limited resources and risk appetite. Geographically, many investors come from Romania, as it’s easier to set up logistics and operations there. We’re also seeing interest from more exotic countries like Qatar, Israel, and Denmark, which are just starting to explore opportunities in Moldova.

Bivol: I agree. Strategic investors dominate, especially in sectors like renewable energy, where Nordic countries are showing interest. Romania remains a key player, often serving as a gateway for investors entering Moldova. Local investors, unfortunately, lack the capacity to compete at the same level.

CEELM: What do you expect will be the most attractive targets in Moldova in 2025, and what will make them so?

Ivanov: The energy sector is booming and will likely see the most activity. Financial institutions, particularly smaller banks, are also attractive targets. Moldova has 10 banks, which is quite a lot for such a small country, and we’re already seeing larger banks acquiring smaller ones that lack the resources to compete.

Bivol: I have reservations about the attractiveness of the financial sector. While mergers are happening, the improved legal framework following past banking fraud has made Moldova more attractive for new banks to enter the market. Additionally, the energy sector will continue to be a key target due to legislative changes and the need for renewable energy sources.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Avellum Managing Partner Mykola Stetsenko talks about M&A in Ukraine in 2025.

CEELM: What would be your bet at the start of 2025 – will we see more, fewer, or the same level of M&A activity in Ukraine?

Stetsenko: Definitely more activity. Even last year, we saw a significant amount of work coming into the Ukrainian market, and that momentum is set to continue. Local M&A has proven to be incredibly resilient, and we’re seeing continued investment across various sectors, including niche and adjacent industries. Additionally, there’s hope that some form of ceasefire or settlement will take place this year, which could initially drive opportunistic investments. Once stability sets in, we expect a wave of foreign investments, leading to increased deal activity. We also anticipate growth in sectors that weren’t historically as attractive – defense being a key example. Logistics is another area that is rapidly evolving, given Ukraine’s position as a key transit hub on the EU’s eastern border. The demand for enhanced logistical infrastructure is a major talking point among our clients, and we expect this to drive significant M&A activity.

CEELM: What do you believe will be the main factors influencing the M&A pipeline throughout 2025?

Stetsenko: The war remains the number one factor shaping everything. The biggest game-changer would be a ceasefire, and there are already rumors that something could happen by Easter, possibly even leading to a more structured peace deal later in the year. While a full peace agreement is less certain, even a sustained ceasefire would provide enough stability to unlock M&A opportunities. Beyond that, macroeconomic conditions, investor sentiment, and regulatory developments will all play a role in determining how many deals actually close by year-end.

CEELM: Are there any upcoming legislative changes that could impact the M&A market in 2025?

Stetsenko: Yes, quite a few. Ukraine is actively harmonizing its legal and regulatory framework with EU standards, so we expect substantial changes across various areas, including the regulation of goods, services, and corporate governance. One critical area to watch is capital control legislation. If a ceasefire is reached, we anticipate some relaxation of capital controls, which would boost investor confidence and make it easier for foreign capital to flow into Ukraine.

CEELM: Who do you expect to be the main buyers in Ukraine in 2025?

Stetsenko: We’re likely to see a mix of different investor types. Historically, after economic downturns or major geopolitical shifts, the first buyers tend to be non-strategic investors – those looking for undervalued assets and quick returns. This could include some venture capital or private equity companies, though not necessarily the traditional ones. Strategic investors will follow, but likely toward the latter part of the year once there’s more stability.

IFIs are already deeply invested in Ukraine and remain the country’s largest private capital providers. While they’ve primarily been lenders up to this point, we could see them shift toward equity investments. Additionally, privatization could create opportunities – many state-owned enterprises that were slated for sale before the war had their transactions put on hold, but a more stable environment could revive those deals.

CEELM: What will be the most attractive M&A targets in Ukraine in 2025, and why?

Stetsenko: State-owned enterprises will be among the key targets. The Ukrainian government has significantly increased its presence in certain industries, in some cases to an unsustainable level – such as banking, where the state now controls around 60% of the market. Once the war ends, privatization will be inevitable.

One major player to watch is Ukrnafta, the national oil company. Historically, Ukraine already had Naftogaz as a dominant force in the gas sector, but recent restructuring efforts could make privatization a viable path. Ideally, Ukraine would pursue a structured IPO rather than selling a 100% stake to a single foreign buyer. For example, it would be concerning if Ukrnafta were to become a full subsidiary of BP or another major international player.

Beyond state-owned enterprises, agriculture will continue to be a highly attractive sector. It has long been a cornerstone of Ukraine’s economy, but there’s still significant room for efficiency improvements. Even modest gains in productivity could translate into substantial profits.

Construction is another area to watch. The sector is already active, but many foreign investors looking to participate in reconstruction efforts – such as rebuilding schools, bridges, and other infrastructure – may find it easier to acquire existing companies or enter joint ventures rather than starting from scratch. I believe such companies will be attractive targets for 2025.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Jalsovszky Partner Tamas Feher and Managing Associate Peter Szilas talk about dispute resolution in Hungary in 2025.

CEELM: What types of disputes do you foresee will be most present in Hungary in 2025, and what do you expect will drive that activity?

Feher: Over the past few years, IT-related disputes have been on the rise, and we expect this trend to continue, driven by the central role technology plays in today’s economy. Specifically for 2025, the year is expected to bring significant turbulence. The European economic outlook is bleak, and Hungary could be particularly affected due to its substantial reliance on the automobile industry. As a result, we anticipate layoffs and payment difficulties, which may also have a ripple effect on companies indirectly connected to this sector. Consequently, we expect a rise in employment-related disputes as well as disputes arising from non-payments or bankruptcies.

CEELM: Are there any upcoming changes likely to impact disputes in the country in the year?

Szilas: At the beginning of the year, there was a notable change in Hungary regarding court fees. The previous capped system was replaced by a degressive, bracketed system without any caps. This means that, as the disputed amount increases, the cost of initiating a court case becomes higher. In addition, recent changes in court practices and legislation make it more likely for the prevailing party to recover their legal fees in full. These changes are likely to reshape the Hungarian dispute landscape. Arbitration may become more appealing, as it is now often cheaper than going through regular courts. There will also be less incentive to pursue uncertain claims, so settlements will likely become more common, and there may be a growing interest in third-party funding options.

CEELM: What would you identify as the biggest challenges faced by lawyers in handling disputes in Hungary at the moment, and how do these challenges impact your clients?

Feher: One of the main challenges faced by both dispute lawyers and their clients is the unpredictability of the procedural aspects, especially in ordinary courts. Despite the introduction of a more streamlined procedural framework in 2017 and a shift toward a system that makes departing from Supreme Court decisions difficult, it can still be hard to predict the time and costs involved in a case. While litigation should, in theory, follow a structured and well-choreographed process, this is often not the case in practice.

A key source of this uncertainty lies in the variability of judicial approaches. Some judges interpret procedural rules very strictly, while others are more flexible, leading to delays and unpredictability. For example, judges who readily accept excuses for late filings or witness no-shows can extend proceedings, resulting in higher costs and wasted time.

For clients, this could mean unexpected increases in both legal costs and the time required to resolve their cases.

CEELM: How likely is it in your view that these challenges will be addressed in 2025?

Szilas: There are a few things that help mitigate these issues.

Arbitration presents a more predictable alternative to ordinary courts. While the composition of the arbitral tribunal may still introduce some uncertainty, the parties have more control over the tribunal’s makeup, and they can agree on procedural matters in advance.

Even in the event that a client remains in litigation before ordinary courts, there are procedural tools available to expedite the process. Additionally, familiarity with the judge handling a case can help predict how the proceedings may unfold.

Where this is not possible, lawyers and clients can still find ways to manage litigation costs and delays. For example, contingency fees could be a useful approach in balancing costs.

Finally, the said increase in the costs of litigation and the increased incentive for alternative dispute resolution will likely reduce the workload on the regular courts – likely leading to quicker and more efficient procedures eventually.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Law Office Lazarov Attorney At Law Anja Stefanovska talks about dispute resolution in North Macedonia in 2025.

CEELM: What types of disputes do you foresee will be most present in North Macedonia in 2025 and what do you expect will drive that activity?

Stefanovska: In 2025, commercial and contractual disputes, employment and labor issues, and digital/technology-related conflicts will likely dominate the legal landscape in North Macedonia. These disputes will be driven by economic growth, digital transformation, regulatory shifts, and evolving societal norms. Businesses and individuals will need to navigate a more complex regulatory environment, with the added challenge of integrating new technologies while ensuring compliance with both national and international standards.

CEELM: Are there any upcoming changes likely to impact disputes in the country in the year?

Stefanovska: In 2025, regulatory reforms, digital transformation, and the alignment with EU standards will drive much of the disputes in North Macedonia. Commercial disputes, employment conflicts, data protection issues, and tax-related disagreements will be prominent as businesses and individuals adapt to new legal and technological environments.

CEELM: What would you identify as the biggest challenges faced by lawyers in handling disputes in North Macedonia at the moment?

Stefanovska: One of the biggest challenges for lawyers is navigating the complexity and constant evolution of the legal landscape. With North Macedonia aligning its laws with EU standards, lawyers must stay updated on new regulations, reforms, and directives, especially in areas like taxation, data protection, anti-money laundering, and intellectual property. Among the most pressing challenges are judicial inefficiencies, slow court processes, and the complexity of evolving legal frameworks. The growing demand for speedy dispute resolution and the internationalization of legal matters add further pressure on the legal profession. However, these challenges also present opportunities for lawyers to improve their practices, adapt to technological advancements, and find creative solutions for clients in an increasingly globalized legal environment.

CEELM: And how do these challenges impact your clients?

Stefanovska: The challenges faced by lawyers in North Macedonia also significantly impact their clients. As these challenges evolve, clients may experience various difficulties in managing legal disputes, with consequences for their time, finances, and overall legal strategy. Clients often deal with higher costs, delays, uncertainty, and lack of clarity in their legal proceedings. These challenges can strain their financial resources, business operations, and even reputational standing. As the legal system continues to evolve, clients will need to adjust their expectations and strategies for dispute resolution, often turning to alternative dispute resolution mechanisms or seeking innovative solutions to navigate the complexities of the legal landscape.

CEELM: How likely is it in your view that these challenges will be addressed in 2025?

Stefanovska: Promoting alternative dispute resolution in North Macedonia, particularly as an alternative to traditional court proceedings, could indeed be a key part of the country’s future, especially in the context of financial disputes and broader legal matters. As North Macedonia strives to modernize its legal and financial systems, ADR offers several advantages that could align well with the country’s goals for improving its judicial efficiency and enhancing economic growth.

With its ability to reduce costs, improve efficiency, preserve relationships, and align with international standards, ADR could help streamline dispute resolution processes and support the overall development of a more dynamic, transparent, and attractive legal environment for businesses and investors. As the country continues to modernize, shifting toward ADR where possible could be a key factor in fostering a more flexible, effective, and client-friendly legal system.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

CMS Sofia Managing Partner Kostadin Sirleshtov and Counsel Borislava Piperkova talk about energy in Bulgaria in 2025.

CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Bulgaria?

Sirleshtov: Both the Bulgarian renewable energy sector and the rest of the carbon-free technologies are expecting the introduction of Contracts for Differences (CfD) in Bulgaria. Judging from the recent success stories in countries like Romania, this change will have a transformational impact on the Bulgarian energy. Similarly, extending the stability clause in the Bulgarian Underground Resources Act to fiscal stability will allow for streamlining of oil & gas upstream investments. Last, but certainly not least, the amendments to the Bulgarian legislation, which will streamline the wind energy investments and will allow offshore wind investment, are desperately needed for unlocking the Bulgarian wind energy potential.

CEELM: Of the above, which ones are you/your clients most excited about and why?

Piperkova: These reforms are not only exciting but also necessary for all the stakeholders in the Bulgarian energy sector. In a situation where the society is sensitive about the cost of energy and the security of the supply, the CfD reform will allow for huge investments at the minimal cost, thus allowing greater generation and an appropriate mix of sources. Furthermore, CfDs will allow for nuclear energy financing, capitalizing on the unprecedented public support for this technology in Bulgaria. Extending the stability clause in the Bulgarian Underground Resources Act to fiscal stability will bring the necessary certainty into the international investment community about the long-term support of the Republic of Bulgaria for these investments. A discovery offshore Bulgaria (such as Neptun Deep in Romanian waters and Sakarya in Turkish waters) will be a game-changer for the Bulgarian energy sector. The direct and indirect benefits for the society could be in tens of billions of euros. Between 2019 and 2024, Bulgaria put some 3 gigawatts of new photovoltaic projects in operation and no wind capacities. These two are the technologies that provide the lowest levelized cost of energy, i.e., produce the cheapest electricity. These are also technologies, which are complimentary – usually the wind turbines produce when the sun is now shining and vice versa. Bulgaria desperately needs further reforms to bring wind and offshore wind investments.

CEELM: On the flip side, what updates are you/your clients dreading the most and why?

Sirleshtov: Both international and local clients dream about stability and lack of regulatory reforms changing the “name of the game” upon completing an investment. As most of the renewable energy projects started under the old feed-in tariff are approaching the end of the validity of the support mechanism, it is necessary for the Bulgarian state to honor these undertaking and to avoid any escalation of disputes locally and internationally, as we have proven that we could win these in court or in arbitration.

Political stability is a must for long-term energy investors. Our clients are dreading the thought that Bulgaria might face its eighth general elections in the last three years. Reforms in the energy sector need political stability and years in the making and therefore everyone hopes for a stable government and regulatory bodies.

CEELM: What are the main/largest energy projects you expect to be finalized in Bulgaria in 2025?

Piperkova: To name a few, we expect to have the first Enka project in Bulgaria – the Kameno 40-megawatt peak photovoltaic project – in operation. We also expect all three Chint/Astronergy new photovoltaic projects with 200 megawatt peak capacity to be put in operation. We anticipate a lot of Bulgarian-sponsored photovoltaic projects, such as the Sinitovo 50 megawatt peak capacity plan, to become operational. Finally, we hope for a discovery in the Han Asparuh oil & gas block by OMV Petrom following the new drilling campaign in 2025. We also expect 2025 to be the year of battery storage in Bulgaria, with at least 3 gigawatts of such capacities in the pipeline.

CEELM: What is the biggest challenge for the energy sector in Bulgaria at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?

Sirleshtov: The Bulgarian energy sector has a permanent problem, and it is the lack of understanding in the decision-makers about the regulatory conditions for the successful financing of energy projects and the fact that financial structuring and regulatory reforms come first – much before the appointment of technology providers, EPC contracts, etc.  We have around EUR 1 billion at risk due to this somewhat unique problem that the Bulgarian energy sector has been facing for decades. In addition, the Bulgarian regulatory environment has been lagging for so many years that it becomes a colossal and close-to-impossible task to update it. Following the successful adaptation of the new Energy Strategy in 2025, the new Bulgarian government and Parliament need to dedicate 2-3 years for a new Energy Law, a new Renewable Energy Law, and subsequent reforms.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Marohnic, Tomek & Gjoic Attorney at Law Ivona Zagajski talks about energy in Croatia in 2025.

CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Croatia?

Zagajski: The government has adopted a plan to align Croatian legislation with the EU acquis, including amendments to the Energy Electricity Market Act and the Renewables Act, as well as the adoption of the Act on Alternative Fuels. Since the plan is newly adopted and no draft texts are publicly available yet, it remains unclear what specific changes will be introduced. It also remains to be seen whether the amendments will address broader market challenges, such as the expiration of certain permits due to legislative delays that impact the timely issuance of other required permits. Additionally, we are still awaiting the adoption of the Rules on the Organization of Wholesale Electricity Markets and the unit connection fee that would trigger the implementation of a long-awaited “new” methodology for calculating grid connection costs. This methodology, which shifts the Croatian market from a deep to a shallow cost approach, has been delayed for over two and a half years.

CEELM: Of the above, which ones are you/your clients most excited about and why?

Zagajski: The market is eagerly awaiting the adoption of the mentioned long-overdue legislation that has been in the pipeline for over two years. The first draft of the Rules on the Organization of Wholesale Electricity Markets was published in March 2023, but no further progress has been made since. This regulation is critical for several reasons. We have seen a number of rooftop solar power plants being constructed in the past year on commercial properties. Without the concept of active customers, owners or tenants of such rooftop plants must register as producers to sell excess electricity on the wholesale market, which creates an unnecessary regulatory burden. Additionally, the absence of this regulation is stalling the development of the PPA market, as final customers cannot enter into direct agreements with producers without the involvement of a supplier.

Equally urgent is the adoption of the unit connection fee, whose absence has halted the development and construction of renewable energy projects in recent years. Without it, projects cannot obtain grid connection agreements, a prerequisite for location and construction permits, and further project development. The primary obstacle has been the long-pending appointment of the President and other members of the Management Board of the Croatian Energy Regulatory Agency, which is responsible for making this decision. However, after two years, the government has finally conducted a public tender, and we hope the unit connection fee will follow shortly under the new management of the agency as its first task.

CEELM: On the flip side, which ones are you/your clients dreading the most and why?

Zagajski: Croatia underwent a significant legislative change a few years ago regarding the development of renewable energy projects, reshaping the permitting process. This introduced the requirement for energy approval – a document that now grants legal interest for obtaining other permits – aiming to coordinate projects being developed on public land. However, the introduction of this document further contributed to already cumbersome development red tape. Given these changes and the prolonged delays in adopting key legislation, any amendments or new regulations that help move projects forward and support their effective development would be a positive step.

CEELM: What are the main/largest energy projects you expect to be finalized in Croatia in 2025?

Zagajski: Given the challenges mentioned earlier, it is difficult to estimate the timeline for project completion or how many will be able to start producing and selling electricity by the end of this year. However, if the necessary legislation is adopted, a significant number of projects may become operational in 2026 and 2027.

CEELM: What is the biggest challenge for the energy sector in Croatia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?

Zagajski: The biggest challenge at the moment is transmission electricity grid development – specifically the construction of new grid capacity. Beyond the ongoing issues with calculating grid connection costs, transmission and distribution system operators indicate that the grid is already at maximum capacity, meaning that connecting additional projects will depend on necessary upgrades and expansions. These upgrades require significant capital investment, time, and additional resources – both financial and human. Given these factors, it is unlikely that these challenges will be resolved in 2025. Until then, project holders will likely face curtailment in their feed-in capacity.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

JPM & Partners Senior Partner Jelena Gazivoda talks about energy in Serbia in 2025.

CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Serbia?

Gazivoda: The second half of 2024 was marked by several important regulations.  This includes the adoption of the Integrated National Energy and Climate Plan of the Republic of Serbia for the period up to 2030 with projections up to 2050, the Energy Sector Development Strategy of Serbia up to 2040 with forecasts up to 2050, and amendments to the Law on Energy. Additionally, a set of regulations that were a prerequisite for organizing the second round of auctions for the market premium expired on February 5, 2025, and we are waiting for its official results.

In light of the above, I do not expect further significant changes in regulations in 2025, except possibly in the sector that governs nuclear energy (on which we are still waiting for the results of the feasibility and justification studies for which the Ministry of Mining and Energy organized an international public tender in mid-summer 2024). It is certainly one of the topics that will be relevant in the coming period toward enriching Serbia’s energy mix.

CEELM: In which types of energy projects do you expect most activity this year?

Gazivoda: Clients are, without a doubt, most interested in the sector of renewable energy sources, which shows a strong growth trend in Serbia, thanks to the improved regulatory framework and the clear commitment to persevere on the path of the Green Agenda. In this sense, the official results of the second round of auctions, for which there was great interest, are eagerly awaited. Positive elements are the total number of projects that are being developed, the increase in interest in solar power plants compared to wind farms, and the diversity and multi-nationality of investors and the increasing readiness for significant investments in Serbia, complemented by the willingness of banks and international financial institutions to support a wider range of projects than in the past.

CEELM: On the flip side, which ones seem less appealing?

Gazivoda: The impression is that the biomass market is not sufficiently developed, although, according to expert studies, there is significant potential for it. We believe that two grants worth close to EUR 10 million with the German Development Bank KfW for the second phase of the Renewable energy sources – development of the biomass market in Serbia program will contribute to the development of this sector. The project will provide financing for the construction and reconstruction of up to five district heating systems that replace polluting and inefficient fossil fuels, and several Serbia municipalities will participate in it.

CEELM: What are the main/largest energy projects you expect to be finalized in Serbia in 2025?

Gazivoda: The Petka solar power plant, with an expected installed capacity of 9.75 megawatts and a planned annual production of 15.6 gigawatt-hours will likely be completed in the first half of 2025. At the same time, the Kostolac wind farm – being built on an old mining dump – is expected to be completed in the middle of 2025. 2025 is supposed to result in the further continuation of modernization and transformation of EPS, as well as upcoming large investments in strengthening the capacity of the transmission and distribution network.

CEELM: What is the biggest challenge for the energy sector in Serbia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?

Gazivoda: The biggest challenge will undoubtedly be solving the issue of sanctions imposed on the Oil Industry of Serbia (NIS). On January 10, 2025, the Office for the Control of Foreign Assets at the US Department of Finance placed the NIS on the list of sanctioned companies. The full implementation of sanctions against NIS should occur on February 27, 2025. On February 4, 2025, NIS sent an official request to the US OFAC to postpone the sanctions for 90 days, and this activity was supported by the governments of Serbia and Hungary. According to publicly available sources, there has still been no official response to this request. Due to the sanctions, trading of NIS shares on the Belgrade Stock Exchange was temporarily suspended. One thing is certain: the ownership structure of NIS will not be able to remain as it is now and it is expected that this issue will be worked on in the coming period. There are different scenarios, but the solution should be found in negotiations between OFAC, NIS, and the Republic of Serbia. Otherwise, the consequences could be severe and long-lasting, with everything made worse by the fact that NIS contributes significantly to the budget of the Republic of Serbia.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Eversheds Sutherland Managing Partner Bernhard Hager talks about energy in Slovakia in 2025.

CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Slovakia?

Hager: There is a whole package of amendments to the Energy Act, Network Regulation Act, and Act on Renewables in Parliament that would bring several significant changes.

We can expect, among other things, the regulation of (1) flexible connection contracts to support the development of renewable energy sources in areas with limited or no grid connection capacity, (2) fixed-price electricity supply or electricity pooling contracts for a fixed period of time, (3) suppliers’ risk management in the electricity sector, (4) setting of support in the form of a balancing contract for the production of electricity from selected renewable sources. Additionally, we expect the introduction of (1) a mechanism for credits issued for electricity from renewable sources used in transport and (2) the legal framework for RES targets in the transport and industrial sectors. Lastly, we foresee changes regarding biomass and other related changes in the area of consumer protection.

Further, there will be a new EIA Act and new construction legislation that should remove red tape and accelerate the permitting and realization of energy projects.

CEELM: Of the above, which ones are you/your clients most excited about and why?

Hager: Not only in energy but in general, clients expect that the new construction laws and pertaining legislation will accelerate the realization of projects and make everything more efficient. As for the energy sector specifically, clients expect that mainly renewable projects and projects for energy efficiency are becoming a reality and financially more sound.

CEELM: On the flip side, which ones are you/your clients dreading the most and why?

Hager: Energy prices are still high and highly volatile. The Slovak government enacted a so-called “consolidation package” to improve the tight situation of the state budget. This includes not only an increase in taxes but also cutting state expenses. In such a situation, it is questionable to which extent the state will continue with its support for energy prices, and this makes planning and pricing difficult for clients.

CEELM: What are the main/largest energy projects you expect to be finalized in Slovakia in 2025?

Hager: In 2025, the fourth block of the Mochovce nuclear power plant should be put into regular operation. Then, Slovakia will have 70% of its electricity from nuclear sources. There were also projects planned for the co-incineration of waste. However, in the most promising project – Sala, the minister stopped the EIA process and sent the project back to the start. In Surany, a battery gigafactory is planned, and the Slovak Republic has started to buy the land and prepare the framework for the investor.

CEELM: What is the biggest challenge for the energy sector in Slovakia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?

Hager: Energy prices are difficult to foresee, and the geopolitical situation is currently unpredictable. There are also uncertainties on the demand side. Industry in general, and the automotive sector in particular, is slowing down production and, as a result, the demand for energy is decreasing.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

DLA Piper Hungary Senior Associate and ESG Practice Coordinator Dora Dranovits talks about ESG in Hungary in 2025.

CEELM: Are there any ESG-related pieces of legislation that will impact your work in 2025 in Hungary?

Dranovits: With large entities becoming in scope for both sustainability reporting (including EU Taxonomy disclosures) and ESG reporting, we expect that the Accounting Act and the ESG Act – together with its implementing decrees – will be in major focus for our clients in 2025 in the field of ESG.

Another development keeping ESG reporting rules in the news is the Omnibus initiative, the EU Commission’s efforts to simplify, streamline, and – if necessary – reduce the reporting obligations of European companies by comprehensive harmonization and amendment of the CSRD, EU Taxonomy Regulation, and CS3D. At the time of writing, the first package by the Commission is promised to be published on February 26, 2025, and the procedure is worth following as it may have a serious impact on current reporting and disclosure obligations.

Companies in the financial sector may look out for the revised SFDR rules expected this year as well as certain implementation-related documents regarding the ESG rules of the new EU banking package, while companies in the CFGR and industrial sectors will have to start preparing for practical issues of EUDR and watch out for the first working group report under the Eco-Design Regulation to see when the eco-design requirements for their products may be expected to be out.

CEELM: Up until now, has Hungary been relatively up to date with implementing ESG-focused regulations or lagging? Do you expect that trend to continue in 2025?

Dranovits: While maybe lagging a bit in certain areas (such as waste management), we find Hungary to be up to date with implementation and even being ahead of the rest of Europe in regulating sustainability due diligence.

The ESG Act, while not being a direct implementation of the CS3D, has similar regulatory goals to ensure that companies have an integrated ESG risk assessment and management system in place, covering risks not only from their own operation but the operation of their upstream and downstream supply chain.

CEELM: Between the “E”, “S”, and “G” components, which one would you predict will be in the main spotlight in Hungary in 2025? Why?

Dranovits: We predict that the “E” component will remain in the main spotlight. That is due to several factors: the regulators’ activities in environmental matters, the “environment-heavy” nature of sustainability reporting, and the fact that in Hungary – and in Europe as a whole, protection of human rights, social issues, and governance are maybe less problematic from a sustainability point of view.

CEELM: What would you identify as the main challenges faced by companies in terms of ESG matters at the moment in Hungary, and how likely is it in your view that these challenges will be addressed in 2025?

Dranovits: As mentioned above, 2025 is the first year in which large entities shall prepare an ESRS-based sustainability report and an ESG report under the ESG Act. The two partly overlapping reporting systems will need significant resources and expertise as well as bring great challenges to Hungarian companies, especially if they want to incorporate sustainability reporting and due diligence in their long-term strategy and entire operation and not treat it as just a tick-the-box exercise.

It will take a lot of time and effort to set up the data collection and risk management systems that are operable, effective, and properly aligned with the company’s operation. In addition, part of the sustainability reporting is transition planning and ESG goal setting which is a thin line to walk – be sufficiently ambitious with your goals but avoid aiming too high and risk the reputational loss (at best) or greenwashing claims when not being able to perform.

The challenges must be addressed in 2025 but may only be successfully tackled if the necessary financial and human resources are allocated. Notwithstanding, CSRD-based and ESG Act-based reporting regimes are very new and may be even changing as we speak.

Properly navigating these new regimes and creating and fine-tuning the corresponding internal processes and strategies will keep the companies busy for years.

Also, the first CSRD reports of listed large entities are coming out in the first and second quarters that are public and to be disclosed in the financial statements and on company websites. As a result, the reports will be up for public scrutiny and greenwashing and other ESG-related claims may be expected to follow and cause challenging times for the companies involved.

This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.