RP318

Legal procedure regulating the acquisition of land for theconstruction of electric power facilities

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Expropriation is a procedure the Public Company Electric Power Industry (JP EPS) hasbeen faced with over a long period of time. The procedures related to the expropriation,proclaiming the industrial easement etc., are acts the representatives of JP EPS are alwaysfacing when erecting their electric power facilities. All these processes have beenresolved to date in practice in a satisfactory manner. Both parties in the process, JP EPSon one part and the users on the other, have participated in a satisfactory manner, withmutual observation of legal procedures and standards in resolving these issues. Theprocedures alone require a certain period of time and during their realization, it isnecessary to perform a series of individual procedures.

The following paragraphs will present a full explanation of the individual steps that needto be taken in the execution of the subject procedures

A Transformer Stations

1. Each municipality must have its own regional plan or town plans and plans ofprotection and use of the agricultural land.

2. The Municipal Assembly determines the need for agrarian regroupment anddefines the areas where the agrarian regroupment is conducted. Agrarianregroupment as a process represents the organizing of agricultural land and isperformed in the case, when due to extensive fragmentation and irregular shape ofthe lots the land cannot be used rationally, or the work on land developmentcannot be conducted or the expansion of the building zone results in furtherfragmentation of the current lots. A great part of the agricultural land in theterritory of Serbia consists of a very large number of small lots of totally irregularshape. This type of lots is the inheritance from the previous period when the landwas given to poor farmers during the process of nationalization. Thus, there is agreat number of proprietors today that own a large number of small irregularlyshaped lots. Agrarian regroupment is performed on the basis of land regroupmentpassed by the Municipal Assembly, approved by the Ministry of Agriculture. Therequest for agrarian regroupment is made by anyone interested in its realization,which includes also the owners of agricultural land. The decision on conductingagrarian regroupment is made by the Municipal Assembly based on theregroupment program and published in the municipal official gazette. It isnecessary to obtain the opinion of all regroupment participants before passing thedecision on conducting the agrarian regroupment. Upon coming into force of thedecision on conducting the agrarian regroupment, the courts and other authoritiesare obliged to provide the committee with valid passed decisions on the change ofthe proprietary right and other real rights on the real estate within the propertyrights over real estate in the agrarian regroupment in accordance with the Law onAgricultural Land.

3. The Municipal Assembly forms a Committee to carry out the agrarianregroupment. The Committee performs the distribution of land from theregroupment mass pursuant to Article 37 of the Law on Agricultural Land, whereeach participant must receive as good as possible integral land, of as proper shapeas possible and on smaller number of sites than it had entered in the regroupmentmass, if it had entered land located in two or more locations. Returning to theprevious position and renewal of procedure is not allowed in the agrarian

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regruopment procedure. The decision on distribution of regroupment mass isexhibited for public inspection within 15 days. A participant in the agrarianregroupment can file an appeal against this decision with the Ministry ofAgriculture within 15 days from the date of submission of excerpt from thedecision on distribution of regroupment mass.

Status of Land Acquisition for Substations (SS)

Land OwnersLLand ad Government Current Process of

Name of SS required possession Municipality land use acquisitionpossession Private

CompanyArilje owns the

landCompany

Vranje 2 owns theland

Vacant, but0.2567Ha to in the zoning

Jagodina 3 0.5261Ha 0.2694Ha be acquired regulation, Negotiationsfrom private landowners anticipated

for SS

Macvanska CompanyMitrovica 0.5729Ha owns theMitrovica ~~~land

SS building CompanyNis 8 aready owns the

constructed landValue

determined by

Mosna 0.5 Hc None Private owners Agriculture the MunicipalJudge, followedby negotiations

with owners.

B Overhead lines

In the execution of projects related to the construction of overhead transmission linesonly the sites of the poles and not the entire route of the respective transmission line arepurchased. In order to carry out this procedure it is necessary to conduct the followingindividual procedures:

1. It is necessary to establish the permanent industrial easement - the right of theElectric Distribution Company to trespass over the land of others to put up thepower lines. Permanent industrial easement is regulated by the Law on BasicProprietary Relations. This Law was passed by the Parliament of SFR Yugoslaviaand is still effective. The easement is the right of the owner of a real estate toperform for the need of such real estate certain activities on the real estate ofanother owner, or to request from the owner of the used real estate to refrain from

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performing certain activities it would otherwise perform on own real estate. Thisactual easement is acquired by legal transaction with or without compensation,and is granted by the Property and Legal Department of the municipaladministration.

2. In case the redemption of land is not performed in the manner referred to in theparagraph above, the procedure of total expropriation is launched (change ofowner of the expropriated real estate). Expropriation is a process regulated by theLaw on Expropriation passed on January 5, 1996 by the Parliament of theRepublic of Serbia. This procedure changes the form of ownership or limits theownership over real estate subject to this being the result of general interest. Theexpropriation procedure is launched by the expropriation beneficiary. The motionfor expropriation is submitted to the municipal administration of the municipalityon the territory of which is situated the real estate proposed for expropriation,within one year from the date of determination of the general interest. Theproposer, a legal entity in this case, files a motion for expropriation to themunicipal administration, which must state the elements referred to under Article26 and 27 of the Law on Expropriation. Easement over real estate or lease of landcan be established for a specific period of time (incomplete expropriation).Furthermore, the real estate can be expropriated only against fair compensation,which cannot be lower than the market value.

Status of Land Acquisition for Transmission Lines

Land ~~~~OwnersLenght of Land Land aready Government Current

Name of SS .required for .line (km) iers In possession Municipality land use

towers Private

Arilje 1.4 5 towers Nil Private AgricultureVranje 2 9.1 38 towers Private owners Agriculture

ExistingJagodina 3 5.329 corridor of All plots

35kV line

Macvanska 41 towersMitrovica 9.418 93 owners of All plots AgricultureMitrovica plots

9.6 plus a For about 5section of % of the

Nis 8 3.5 km 56 plus 7 or 8 towers land 95% Private Agriculture,Niubjextension xtowersior already in ordhardssubjectto extension possession of

fundsthcopnavaliability the company

PublicEnterprise

Mosna 27.2 0.17 Nil "Srbijasume" Pastureand private

owers

3. A motion is made to the Government of the Republic of Serbia through theMinistry of Finances to determine the general interest of expropriation of real

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estate in order to erect the subject overhead power transmission line. According tothe Law on Expropriation the Government can determine the general interest for

expropriation of real estate if the expropriation of real estate is necessary for the

construction of the facility in the sphere, inter alia, of power and communal utility

infrastructure, subject to passing a respective plan - deed foreseeing the erection

of the subject facilities, in accordance with the Law. By the deed on determining

the general interest the Government determines also the beneficiary of

expropriation.4. Once the general interest for expropriation of real estate is determined by the

Law, the beneficiary of expropriation can file a proposal for expropriation. Besidethe documents referred to under Art. 27 of the Law on Expropriation the

beneficiary is obliged to submit with the motion for expropriation a guarantee

issued by a commercial bank in the amount of the dinar assets required to providethe indemnification for the expropriated real estate, valid until the payment of the

indemnification. The municipal administration in charge of proprietary legal

affairs of the municipality, on the territory of which the real estate foreseen for

expropriation is located, conducts the procedure based on the motion for

expropriation and passes the decision on expropriation.5. The expropriation beneficiary gains the right to take over the possession of the

expropriated real estate on the date of effectiveness of the decision on

indemnification, namely the date the agreement on indemnification is entered. For

the erection of electric power generating, transmission or distribution facilities, at

the motion of the expropriation beneficiary, the expropriated real estate shall be

delivered in order to turn the real estate to its purpose, based on the final decision

on expropriation, subject to the beneficiary having previously submitted a written

offer on the form and level of indemnification for the expropriated real estate. The

value of the facility delivered as property or co-property as indemnification and

value of the expropriated facility, in case of establishing the property or co-

property right, is determined according to the market price for such facilities at

the moment the property, namely co-property right is established. The market

value of the real estate means that it is determined on the basis of the price that

can be achieved in sale of such real estate. The value of the real estate can be

determined on the basis of value such real estate has at the Revenue Service. The

Revenue Service is a Republic body authorized to determine the subject market

value of real estate.6. The level of indemnification in money for the expropriated real estate is

determined at the market price for such land, according to the circumstances at themoment of entering the, agreement on the level of indemnification, and if no

agreement was reached, according to the circumstances at the moment of passingthe decision on indemnification in the first instance.

7. Value of the land to be acquired is determined by the State Revenue Office, based

on its internal rules. State Revenue Office is the republic body which determinesbased on its criteria, the cash value of certain plots of land. Therefore, neither the

owners nor the distribution company have an impact on the increase and decreaseof this value. These values mainly depend from the type of the land (agricultural,industrial zone, city), as well as from the municipality itself.

8. After the effectiveness of the decision on expropriation the municipaladministration is obliged to convene promptly and without any delay hold a

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hearing for an amicable determination of indemnification for the expropriated realestate. If the agreement is not reached within two months from the date ofeffectiveness of the decision on expropriation, the municipal administration shallsubmit the file documents to the competent municipal court for the purpose ofdetermination of indemnification.

9. The manager of a particular distribution enterprise transfers the authorization tothe corresponding executive included in land acquisition negotiation process. Thementioned executive has limited financial authorizations (up to which amount,negotiations could be carried out) and if this amount is exceeded he can directlymake a decision.

The payment of compensation fixed in the contract between the distributioncompany and the owner of the land is done by the commercial and financialdivision of the mentioned enterprise.

If the agreement is not reached (both in relation to land acquisition and the heightof compensation), legal division within the enterprise represents the enterprise inthe dispute before the court.

10. In order to determine the final area necessary for these projects, it is necessary tohave all projects elaborated. Legal regulations do not permit to start theconstruction of a power facility of any kind until all conditions are met and allpermits obtained.

11. Both legal regulations of Serbia and Montenegro and EU regulations do notpermit unlawful appropriation of private ownership until full compensation for theland is paid, according to fixed prices, procedures and legally binding contracts

12. According to the investments and development plan of the EPS, a budget isformed in the beginning of the year for the corresponding investment, with thefunds allocated for land acquisition during the implementation of the investment.

Matrix of Entitlements

Project Mosna

Estimted Nmber Amount ofCategory of Estimated Number Land Basis for Compensation Remarks

Affected Persons of Affected Involved ($) (if needed)(m2)

Land Purchased 6,700 25,340* * price withfrom Landowners , , VAT

Land included * price within Permanent 128 210,000 69,532* VAT

Industrial EasementLand Used

Temporarily for 128 12,800 781,160* * price withConstruction/ VATMaintenance

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Project Arilje

Estimated Number Amount ofCategory of ofiatected Land Basis for Compensation Remarks

Affected Persons of Affected Involved ($) (if needed)

Land Purchased 9 271 5,600from Landowners

Land includedin Permanent 1 9,750 65,000

Industrial EasementLand Used

Temporarily for 44 17,812 8,000Construction/Maintenance

Project Nis 8

Category of Affected Estimated Number of Amount of land Basic for RemarksPersons ~ Affected Persons inovdCompensation(ined)Persons (Households) involved (If needed)

* Status of landacquisition for

Land Purchased from Transmission Lines 95% Private -Landowners 95% Private - 30m2 9800L (Number of 3.000m

Affected Persons87)

* Company owns100% of the land

Land included in for SSPermanent Industrial * and 5% of the 350m2 11,300 /

Easement towers land(Number ofAffected Persons 3)

Land used temporarily Number of Affectedfor construction/ Persons 20 1.300 m

Maintenance

Vranje 2

Category of Affected Estimated Number of Amount of land Basic for RemarksPCa egrysons AffectAffected Persons involved Compensation (if needed)

(Households) (S)Land Purchased from 48 6,000 m2 130,000 /

Landowners

Land included inPermanent Industrial 90 30,000 /

Easement

Land usedtemporarily for 58 600 20,000 /

construction/

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Maintenance

Mae'vanska Mitrovica

Category of Affected Estimated Number of Amount of land Basic for RemarksPersons Affected Persons involved Compensation ($) (if needed)_________ ~~(Households)

Land is bought in1998 partly bycompensation and Land is the

Land Purchased from 0.57 29Ha partly by money property of ED

refund (here so Sabaccalledcommasation)

Land included inPermanent Industrial None NoneBasementLand UsedTemporarily for None NoneConstruction/Maintenance

OHL Macvanska Mitrovica-Sremska Mitrovica

Category of Affected Estimated Number of Amount of Land Basisor RemarksPersons ~~~Affected Persons Involved Compensation (US$) Reak

ersons ~~~~(Households)Land Purchased from None NoneLandowners

Contracts withowners of land for

Land included in towers are made

Permanent Industrial 63 0.0903SHa 1,700.00* Amount given on theBasement left is total for all

contractsED Sabac was started making contract with the owners of land that will be usedtemporarily for construction/maintenance. In the meantime, local (municipality)authorities decided that construction of OHL will start without preliminary contracts with

Land Used Temporarily the owners. According to written agreement, ED Sabac will pay all necessaryforaCondsedTructon! ry compensation to the owners (temporary land use, damage, loss of crops etc.). ExistingforaConstenancti/ department of Municipality of Sabac (authorized for estimating costs), with agreement of

nIaintenance the owners, will determine basis for compensation. The basis is very different, depending

of location of land, its importance, quality, purpose etc. Basis for compensation of damage,oss of crops etc. is also very different. It depends of time of work (plans are that works

ill be held in the time when there is no crops on fields), type of crops, quality etc.

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Jagodina 3

Estimated Number Amount of Basis forCategory of Affected persons of Affected Persons Land Involved Compensation Remarks

(Households) LnIvoed (US$)

In possesion None 0.26 9411a In possesion before ED Jagodina isLand a possesion None 0.26 94Ha 1980 the ownerPurchased fromLandowners To be bought 5 0.25 67Ha 260.OO0US$/Ha Total 66,742.00

Land included in Permanent None None -

Industrial Basement

Land Used Temporarily forConstruction/ Maintenance None None

13. According to the Law on Energy, the power entity using and maintaining thepower facilities, has the right to trespass over the real estate of another owner inorder to conduct the works on maintenance, control the proper functioning of thefacility, units, plants or equipment and perform other necessary works and use thereal estate on which the subject works are performed, only as long as such workslast. The owner of the real estate is obliged to enable access to the powerfacilities, as well as to endure the performance of such works. The owners andholders of other rights on the real estate located below, above or beside the powerfacilities cannot undertakes works or other actions that disable or jeopardize thework and functioning of the power facility without previous approval by thepower entity, namely user of the power facility.

14. Before starting construction itself, prognosis is made on when the correspondingfacility is going to be built and based on this, environment damages are identified.In this case, compensation is agreed with the owner of the land throughnegotiations. If the agreement is not reached, a court expert is engaged, whorepresents a person authorized to settle disputes between the parties.

15. The matter of covering the damages wrought while erecting the electric powerfacility is regulated by the Law on Contracts and Torts. In case damage occursduring the subject construction to the surrounding crops or during themaintenance of the power transmission line, it shall be paid in accordance withthe subject Law in case no other agreement is reached between the parties.

Company's Approach for Minimizing Impact

Name of no footprint alignments are kept to impacts easements people areSS residents size is property boundaries are are informed

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or kept to a and periphery of minimized compensated of thebuildings minimum agricultural/residential and procedures

will be areas as much as restrictions for appealaffected possible are clear to during

affected negotiationpeople

Arilje + + + + + +Vranje 2 + + + + + +

Jagodina 3 + + + + + +

Macvanska +Mitrovica

Nis 8 + + + + ± +Mosna + + + + + +

Cultural heritage

In case archeological findings are discovered during the construction of the electric

power facilities (transformer stations and respective transmission lines), the

construction process shall be suspended and the competent institutions shall be

notified accordingly (Republic Agency for Protection of Monuments and Culture).

The Republic Agency is obliged to promptly instruct a committee from the Regional

Agency on the territory of which the subject facility is located to visit the site and

perform trial excavation The Committee is obliged to file a report on the subject

locality within 30 days. In this case all the costs of the trial excavation shall be borne

by the principal. Should the committee make a decision on further excavations the

procedure would continue, whereby an agreement would be entered on the manner of

further execution of works between the principal and the Republic Agency for

Protection of Monuments and Culture. On the occasion of obtaining the building

permit each principal receives within the subject permit the right to perform works in

the vicinity of archeological findings (excavations) in accordance with the respective

technical measures.

The subject facilities dispose with building permits and are not located within

the zone of the archeological findings.

Appeals

Local authorities (the municipality) through the media (local TV and radio stations or

local press) inform interested parties about land comasation and acquisition plans.

Information related to the compensation and plans for the construction of power

facilities can be seen at the technical division of the enterprise, which keeps special

records about this.

In direct negotiations, the owner of the land can influence the acquisition procedure

and construction activities. In case that the agreement has not been reached in direct

negotiations about the height of compensation for the land in question, a court

procedure is initiated and the compensation paid after the litigation has ended.

Disclosure

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The Electric Power Company of Serbia (EPS) has disclosed the Land Acquisition

Plan (LAP) to the public on April 14, 2005. The LAP can be obtained from the web-

site of EPS and from the web-sites of local distribution companies (where in

existence). Also, printed copies of LAP were made available at all sites.

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