Energy market actors
Electricity market
Electricity Sector Overview
Since January 2008 the market has been open to competition for professional customers, which amount to approximately 60% of the market. It is planned that the market will be open to all customers by 2015.
The Entities' Ministries of Energy and Mining is supervising three electricity utilities, oil refineries, natural gas transmission and distribution utilities and coal mines. Except for Joint Power Co-ordination Centre, there are no functional state-level institutions. The legal and regulatory framework is also set at the entity level, although plans to establish State and Entity regulatory agencies are at an advanced stage. District heating facilities fall under the responsibility of municipal (RS) and cantonal governments (FBiH). These unique arrangements emerged as a consequence of political disputes among the ethnic groups.
Prior to the war, the energy sector played a key role in the economy, producing eight percent of GDP in 1992. At the time, there was a countrywide, vertically integrated state-owned power company. The power sector in BiH now consists of three vertically integrated monopolies: Elektroprivreda Bosne i Herzegovine (“EPBiH”), Elektroprivreda of the Republic of Srpska (“EPRS”) and Elektroprivreda Hrvatske Zajednice Herceg-Bosna (“EPHZHB”). The power companies are synchronised and interconnected but there is no competition among them; they are virtual monopolies within their exclusive ethnically based service territories.
In general, the electricity sector is facing a number of challenges. The multiple companies have led to major problems and inefficiencies in supplying customers in a cost-effective manner. All the companies are struggling with losses and revenue collection. Incidences of corruption have worsened their financial position. The service territories are relatively small with equally small customer numbers and an absence of major industrial and commercial customers. Investments are required in the distribution system and the cost of such investments relative to the size of the network is difficult to finance. Plans to restructure and privatise the power sectors are underway.
The Power Sector Restructuring Action Plan envisages multiple generation and (cross-entity) distribution companies and a single transmission company at state level. The Action Plans were adopted by the respective parliaments in 2002 (RS) and 2004 (FBiH) and have been in force since 2003 (RS) and June 2005 (FBiH).
“JP Elektroprivreda BiH”
EPBiH is based in Sarajevo, and serves a customer base of approximately 619,000 customers, over 90% of which are household customers. EPBiH operates 2 coal-fired thermal power plants (Kakanj, 578 MW and Tuzla, 779 MW) and 3 hydro power plants (Grabovica, Jablanica, Salakovac) with a total installed capacity of 1,750 MW in 2007.
In addition, EPBiH operates 6 small hydro power plants with a total installed capacity of 9.6 MW. In 2007, the company's production amounted to approximately 6,545 GWh.
EPBiH is divided into 6 departments: generation, transmission and system control, distribution, research and development, economic and financial affairs and human resources. The performance of EPBiH has been improving steadily over the last few years. Distribution losses have fallen from 25% in 1996 to around 10.4% (338 GWh) in 2002. Coupled with an increase in tariffs over the same period and an improvement in the cash collection rates – to around 90% - the income of the company has increased steadily.
“JP Elektroprivreda Hrvatske Zajednice Herceg-Bosna”
EPHZHB is the vertically integrated electricity company with a service territory in the immediate region of Bosnia around Mostar. In 2008, it served around 180,000 customers, including the Aluminij Mostar which consumes approximately 20% of the total consumption.
EPHZHB operates only hydro power plants with a total installed capacity of 900 MW in 2008. In 2002 EPHZHB generated 1,175 GWh, and was therefore unable to meet demand in its own supply area itself, which amounted to 2,897 GWh.
The company is divided into 7 departments: generation, transmission, distribution, research and development, system control and operation, finance and legal, personnel and administrative.
EPHZHB has shown an improvement in billing and collection since the end of the war with collection reaching 90% of total billings in 2002. A marked improvement followed a change of management, which was precipitated by the special audit of the company (OHR 2003). Distribution losses are still a major problem in the service territory, reaching 27% in 2001 and improving slightly in 2002 and 2003.
“Elektroprivreda Republike Srpske”
EPRS serves the Republika Srpska, from its base in Trebinje. EPRS has a customer base of 436,000, over 400,000 of which are household customers. EPRS operates two lignite-fired thermal power plants (Gacko and Ugljevik, 300 MW each) and 5 hydro plants (Bocac, Trebinje and Visegrad) with a total installed capacity of 1,424 MW (35% of the country's installed capacity).. EPRS annually generates around 4,600 GWh per year. Total electricity demand in the EPRS area is around 2,000 GWh per year.
EPRS operates as a holding company for 11 legally independent operating companies who are fully responsible for the operation of the company but report to the Directorate of EPRS.
Each of the two thermal and three hydro power stations is a separate company as well as the five distribution districts and the transmission business. Revenue collection has improved slowly since the formation of EPRS. After the war it rose from 52% of annual billings in 1996 to around 77% (cash only) in 2002. However, distribution losses were running at approximately 30% in 2002 (OHR, 2003), severely limiting revenues.
Brcko
In addition to the three main companies, there is also a small autonomous distribution grid in the town of Brcko. It has no generation assets, purchasing all the electricity from the three vertically integrated companies. It has approximately 26,000 customers, around 90% of which are household customers, who consume average 340 kWh per month.
Joint Power Co-ordination Centre (JPCC)
Since 1996, electricity exchange between the power companies has been limited due to breakdown of many transmission lines and the creation of three separate power companies.
Joint Power Coordination Centre in B&H was founded on November 3, 1998 on the base of agreement signed by the representatives of three power utilities in B&H: Elektroprivreda BiH Sarajevo, Elektroprivreda Republike Srpske Trebinje and Elektroprivreda Herceg Bosne Mostar. The JPCC was established in accordance with the standards of the Union for Co-ordination, and Transmission of Electricity (UCTE) and the European Union.
Independent System Operator (ISO)
At the higher state level an independent system operator (ISO) is to have the task of guaranteeing trouble-free operation of the system. In order to achieve this, a national transmission grid operator is to be created. The laws to bring this about (Law on the BiH Company for the Transmission of Electrical Energy; Law on Independent Service Operator for Electrical Energy) were passed in October 2003 by the Council of Ministries of Bosnia and Herzegovina.
Oil and gas market
Oil
The sector entails production of oil derivatives and lubricants, and storage and distribution facilities. Production of oil derivatives is located at the Brod Refinery, RS. The Brod Refinery had to be shut down in 2005 due to large depts, but reopened in Novemeber 2008 with the help of the new owner Zarubezhneft (Russian company).
The refinery became operational in the late 19th century. Following upgrades in the 1970s and the installation of a new production line with 3 million tons annual capacity, total capacity increased to 5 million tons (36.7 million barrels). Product lines included: petrol, gas, oil, fuel oil, bitumen, greasing fuels, gases, aromatic compounds, etc. Output was sold within the former Yugoslavia and to the international market. Oil was supplied via pipeline from Krk (Croatia) to Brod (Note: Krk is connected to a pipeline that traverses Hungary from Russia). In the mid 1950s, a small refinery for lubricating oils and greases was constructed at Modrica (about 20km away from Brod).
Brod, lubricant producer Modrica and fuel retailer Petrol were sold to Zarubezhneft in 2007 by the Serb Republic, one of Bosnia's two autonomous regions along with the Muslim-Croat federation.
The Russians made the 121.1 million euro ($161.1 million) deal conditional on Brod being allowed to produce lower quality oil until 2010, when Zarubezhneft aims to have finished renovations, an extension that needed the approval of the central government.
Brod, in northern Bosnia on the border with Croatia, can process 120,000 tonnes of crude a month (around 30,000 barrels per day) covering 80 percent of Bosnia's needs.
Gas
The natural gas system in BiH was developed starting in 1975 under the World Bank’s Sarajevo Air Pollution Control Project. The system consists of a transmission pipeline, importing all gas from Russia (320 Mm3 in 2007), and several distribution systems, mainly for the supply of the capital of Sarajevo and several industrial consumers along the pipeline.
Transmission is organised at the entity level with three transmission companies -- BH Gas is the biggest gas carrier and the single wholesale supplier of the country. Gaspromet Pale and Sarajevo-gas Lukavica are also dealing with transmission. The pipeline is designed to supply 1.2 million cubic meters of gas per annum.
Coal market
Coal reserves are estimated at 3.8 billion tons, of which more than 60 percent is lignite. There are more than 30 coalmines in BiH with most production concentrated in the Middle Bosnia Basin and Tuzla Basin (Federation), and Ugljevik and Gacko (RS). Approximately 94 percent of brown coal reserves are located in five coal basins: Middle Bosnia, Tuzla, Ugljevik, Gacko, and Kongora. Annual production in 1991 was 18 million tons (12 million in the Federation), with brown coal accounting for 10 million tons and the remainder being lignite. Output of the mines dropped substantially 1992-1996, for example, in 1994, it was only 1.5 million tons, less than 10 percent of the pre-ware level. In 1997 and 1998, as results of reconstruction efforts, production increased to 3.25 and 4.04 million tons, respectively.
Sector restructuring: The future of the coal industry is one of the main issues currently affecting the energy sector. Restructuring the coal sector is a politically and economically sensitive issue, the implications of which will have considerable social ramifications. U.S. Trade & Development Agency (TDA) has funded a feasibility study of restructuring options for the coal industry in the Federation.
