Bosnia and Herzegovina, Could privatization help EPBiH’s coalmines

, SEE Energy News

Six of the seven coalmines operated by Bosnian state-owned power utility EPBiH generated a loss of 39.5 million euros in 2020 and it is the largest in the last five years. The question is could this problem be solved through privatization.

According to Bosnian media, there are foreign companies that would take over certain coalmines, but the unclear legal framework and strategic guidelines of this sector make it impossible. However, Federal Minister of Energy, Mining and Industry Nermin Dzindic claims that the privatization of coalmines is possible, even foreseen by strategic documents. He said that some coalmines are deemed unprofitable and should go in bankruptcy, which will allow the change of the concessionaire.

The analysis made by Transparency International shows that coalmines are in most cases over-indebted and have limited opportunities to improve their operations through borrowing. Since 2017, the revenues of the mines have been constantly falling and today they are lower by more than 25 million euros, salaries are not paid regularly, the state owes taxes and concession fees, so short-term liabilities at the end of last year amounted to almost 400 million euros, which is considerably more than before.

The analysis clearly shows that the financial situation in coalmines operated by EPBiH is very bad and that without reforms that have been delayed for years, the situation can only get worse. The problem of over-employment and
misuse of resources of these public companies has been warned for years, but despite this, this practice has continued. Despite court rulings and auditors’ warnings, privileged private companies get lucrative jobs in the mines for years, from which they make a million profit while the mines accumulate debts.

The management of EPBiH recently admitted that there are more than 2,200 redundant workers and that this number refers exclusively to administrative staff, while the lack of production workers was emphasized.