BiH power trading report: Electricity traders ruined Aluminum company in Mostar says SB

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Aluminum Combine “Mostar” ended last year with record loss of 65,8 million KM; Slobodna Bosna analyses why the former successful industrial giant became a chronic loser whose continuation of production is questionable.

Slobodna Bosna reported about scandalous arrangement with Elektroprivreda BiH electricity resale over Belgrade’s Company Rudnap Group on pages of Slobodna Bosna a year ago.

Elektroprivreda from Sarajevo sold to Belgrade’s Rudnap all available electricity surplus which was 160 million KM worth in 2012 and Rudnap exported all electricity bought in Sarajevo and sold it to Elektroprivreda HZHB ten days later. Rudnap Group made tens of millions KM provision.

All proportions of the damage made by resell of federal electricity are difficult to determine but the symptomatic fact is that all these companies that participated in this arrangement made horrible business results in 2012. Elektroprivreda from Sarajevo made an unpretentious result of 600 thousand KM which is about 20 times lower than planned profit.

Elektroprivreda from Mostar was even worse. Its business loss at the end of the year 2012 was 44 million KM!

However, the worst result was made by Aluminum Combine whose business loss at the end of last year in record amount of 65,8 million KM literally endangered the continuation of production.

Special arrangement with Belgrade’s Rudnap is not the only one but it is doubtlessly the main reason for business losses of these two federal companies and Aluminum Combine Mostar. We should remember that both of these companies imported electricity to settle its needs in February last year when the big part of BiH was covered with ice and snow and the price of electricity was 5 times higher than the price which Belgrade’s Rudnap paid to Elektroprivreda BiH!

Two federal companies managed to compensate this huge damage caused by several months of draught with electricity price increase for households but Mostar found in hopeless situation.

Mostar Combine faced record low aluminum price on the world market besides high electricity price so the Administration of the biggest industrial system in Herzegovina was seriously reconsidered the option to terminate the production completely in order to prevent further losses.

This option is still “alive” and the Parliament members will face it on the first next session which is going to be held in the beginning of next month.

According to the words of Aluminum Combine Director Ive Bradivica, shareholders will decide on the next session if they will continue with work in Aluminij or terminate it.

Current business conditions are bad so Aluminum Combine Administration reconsiders option of temporary termination of production in order to stop “loss production”.

Termination of production of the biggest factory in Herzegovina will cause damage in enormous proportions. Aluminum Combine indirectly employs 850 workers but this industrial system which makes 600 million KM yearly is relied on hundreds of companies from metal, transport and construction industries of BiH. Mostar Combine is framework for metal procession industry in BiH.

It is the biggest, but also the best electricity consumer in BiH because it uses electricity 24 hours a day during the whole year. It is one of the biggest BiH exporters- more than 80 percent of production is ordinarily set on foreign market where it earns around 200 million EUR annually.

Termination of production in Aluminum Combine will cause unrecoverable economy and social damage in current conditions of widespread industrial crisis, unemployment increase and total illiquidity.

This move may be justified and considerable in some country that doesn’t have enough electricity and it is forced to import lack of electricity. But the situation in BiH is complete opposite- electricity production in BiH is 30 percent higher than needs of local market and this huge electricity overage was the main reason for establishment of Aluminum Combine in Mostar in the 70s estimating that it is more profitable to produce and export aluminum than electricity.

Source Slobodna Bosna