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. 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. Nevertheless, from 2003 the State Energy Regulatory Commission (SERC) is acting as a functional state level institution, having jurisdiction over the transmission of electricity, transmission system operation and international trade in electricity all over the teritorry of BiH.
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). In the course of 2004 the actual realization of the power sector reform started with the Law on Establishing an Independent System Operator for the Transmission System of BiH was adopted. By its participation in the Athens process and by signing the Treaty Establishing the Energy Community in October 2005, BiH expressed its stance with regard to energy sector reforms, electricity market opening, and harmonization of its policy and legislation with the European Union, which required and will require significant institutional, legislative and structural changes.
In 2009, the SERC in BiH conducted a number of activities on the creation of conditions for free trade and unhindered electricity supply in accordance with the previously defined quality standard to the benefit of the citizens of BiH, and in compliance with the applicable laws, relevant European directives and the rules of internal electricity market.
In 2009, in line with their jurisdictions, the Regulators in BiH (SERC, FERC and RERC were focused on:
- Setting of tariffs for services of electricity transmission, the operation of the Independent System Operator and ancillary services, and setting of regulated generation prices and tariffs for the distribution network and electricity and natural gas supply,
- Issuance of licenses,
- Monitoring of licensed entities,
- Analysis of regulatory rules and practice,
- Creation of regulatory rules,
- Design of a single electricity market,
- Capacity building in terms of the fulfillment of international obligations with regard to regulatory reporting towards the ERGEG structure, Social aspect within the field of regulatory practice,
- Monitoring the implementation of the ITC mechanism and establishment of the mechanism for coordinated explicit capacity auctions,
- Sharing information on regulatory practice with the regulated entities and the public.
The Regulatory Commissions, especially SERC, put a particular focus on the activities of international bodies pertaining to the regulation of the electricity market:
- ECRB – the Energy Community Regulatory Board (including the Electricity Working Group, Gas Working Group, Customers Working Group, South East Europe Co-ordinated Auction Office Implementation Group),
- ERRA – the Energy Regulators Regional Association (including the Standing Licensing/ Competition Committee, Standing Tariff/Pricing Committee and Legal Regulation Working Group),
- MEDREG – the Mediterranean Working Group on Electricity and Natural Gas Regulation (including Ad Hoc Working Groups on institutional issues, electricity, gas and environment, renewable energy sources and energy efficiency),
- IERN – International Energy Regulation Network.
In 2009, follow up of the work of CEER (Council of European Energy Regulators) and ERGEG (European Regulators’ Group for Electricity and Gas) was continued, as well as the analysis of the content and activities related to the adoption of the Third Package for EU energy market liberalization.
Taking into account that the Third Package was published in the Official Journal of EU on August 14, 2009, and entered into force on the twentieth day after the publication, and that the new European Union regulations on the internal energy market will become mandatory for BiH through the Treaty Establishing the Energy Community, the analysis of the content and preparatory activities on the implementation of the relevant provisions were initiated.
[Report on the energy sector of BiH in 2009]
“JP Elektroprivreda BiH”
EPBiH is based in Sarajevo, and serves a customer base of approximately 638.800 users, over 90% of which are household customers. Electricity distribution (ED) is organised in five distribution areas: ED Sarajevo (190,000 users), ED Tuzla (157,000 users), ED Zenica (170,000 users), ED Bihac (86,000 users) and ED Mostar (32,000 users).
EPBiH operates 2 coal-fired thermal power plants (Kakanj, 385 MW and Tuzla, 630 MW) and 3 hydro power plants (Grabovica, Jablanica, Salakovac) with a total installed capacity of 496 MW in 2009.In addition, EPBiH operates 6 small hydro power plants with a total installed capacity of 20.3 MW. In 2009, the company's production amounted to approximately 6,926 GWh (53% of the country's installed capacity). 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% in 2009 Coupled with an increase in tariffs over the same period and an improvement in the cash collection rates – to around 95% - 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 BiH, with its seat in Mostar. In 2009, it served around 250,000 customers, including the Aluminij Mostar which consumes approximately 20% of the total consumption. Electricity distribution is organised in three distribution areas (DA): DA South (190,000 users), DA Center (44,000 users) and DA North (16,000 users).
EPHZHB operates only hydro power plants with a total installed capacity of 747 MW in 2009. In 2009 EPHZHB generated 1,589 GWh (12% of the country's installed capacity)..
The company is divided into 7 departments: generation, transmission, distribution, research and development, system control and operation, finance and legal, personnel and administrative. It employs 1,745 people in total.
EPHZHB has shown an improvement in billing and collection since the end of the war with collection reaching 95% of total billings in 2009. Distribution losses are still a major problem in the service territory, reaching 19.88% in 2009.
“Elektroprivreda Republike Srpske”
EPRS serves the Republic of Srpska, from its base in Trebinje. EPRS has a customer base of 498,000, over 400,000 of which are household customers. Electricity distribution is organised in five independent distribution system operators (ED): Elektrokrajina (232,000 users), Elektro Doboj (88,000 users), Elektro Bijeljina (100,000 users), Elektrodistribucija Pale (51,000 users) and Elektrohercegovina (27,000 uesrs).
EPRS operates two lignite-fired thermal power plants (Gacko 255 MW and Ugljevik, 235.6 MW),5 hydro plants (Bocac 100 MW, Trebinje 187.6 MW and Visegrad 315 MW) and several small hydro plants with a total installed capacity of 14.08 MW (35% of the country's installed capacity). EPRS annually generates around 4,464 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. It employs 2,900 people in total..
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 19% in 2009.
Brcko District
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.
Independent electricity producers
In BiH there are 12 independent electricity producers licensed to produce the electricity from their own small hydropower plants with the total capacity of 18.124 MW and annual electrity production of 90.358 GWh.
Electricity traders
Electricity traders are energy entities, holders of licenses for performance of the activities of electricity trading and supply in the territory of BiH and second-tier supply licenses issued by the RERC and the FERC respectively, and owners of licenses for performance of activity of international trade in electricity issued by the SERC.
In 2009, owners of licenses for trading in the territory of BiH conducted purchase and sale of electricity both in the internal BiH market and in cross border trade based on bilateral contracts concluded with generators within the three existing companies in BIH (ERS, EP BiH and EP HZHB) and on a mutual basis.
Total energy traded in the BiH wholesale market in 2009 amounted to 4,827 GWh. This is a total amount of energy purchased and sold by entities owning trading licenses in mutual bilateral transactions. Among public utilities and purely trading companies the largest scope of trading was achieved by Elektroprivreda BiH and EFT Trebinje respectively, followed by Rudnap Banja Luka and Atel Sarajevo.
Good connections of the BiH System with the neighboring power systems enable intensive cross border trade. This enables placement of electricity in the countries in the region which have significant shortages.
[Report on the energy sector of BiH in 2009]
Oil and gas market
Oil
Bosnia and Herzegovina does not have its own sources of crude oil, but has two refineries, oil refinery in Bosanski Brod, with capacity of old line 2 million tons/year and contemporary new line 3 million tons/year., which was built shortly before the dissolution of Yugoslavia in 1991, and the lube refinery in Modrica (founded in 1954 and integrated with the refinery in Bosanski Brod in 1960), both located in RS.
Gas
Bosnia and Herzegovina has no indigenous natural gas resources and the total supply is based exclusively on its imports. There is only one source of gas supply and one transport route. Gas transport to consumers' needs in BiH shall be secured by the transport system of the Russian Federation to Beregovo place bordering Ukraine and Hungary, than via Hungarian transit system continues to Kiškumdorožme on the border with Serbia, and continues to transport gas system in Serbia to Zvornik where is the main gas station of BiH. The total length of this transport system to the borders of BiH is about 640 km. BiH has a long term contract for transportation capacity with foreign partners (with MOL by 2018 and Srbijagas by 2017) that includes both transport systems outside of its territory and on the level of 600 million Nm³ (20.44 PJ; 0.5 Mtoe) per year.
Coal market
Mining coal in Bosnia and Herzegovina started in the late 19th century, the Austro-Hungarian monarchy. The culmination of the development has been reached during the 80-ies of the last century, especially in the important coal deposits located in the carbon pools: Tuzla (RU: Kreka, Banovici Đurđevik and Ugljevik), Middle Bosnia (RU: Kakanj, Breza, Zenica and She), Bugojno (RU : Gracanica), Livno-Duvno (RU: Tušnica), Gacko (RU: Gacko) and Doboj-Banja Luka (RU: Tenants).
The total geological coal reserves are estimated at 5.5 billion tons, of which more than 58 percent is lignite. The coal mines with the biggest geological reserves are Kreka (1.126 billion tons of 100% lignite), Bugujno (1.294 billion tons of 100% lignite), Zenica (0.996 billion tons of 100% brown coal) and Kakanj (0.440 billion tons of 100% brown coal).
