Bosnia: Electricity market liberalization may boost investments claim Energy Minister

7. November 2014. / SEE Energy News

In the Federation of Bosnia and Herzegovina electricity market from January1s will be liberalized by which federal energy and power supply power companies will lose a monopoly.

In the first phase there will be a decline in the electricity cost to large customers, which is the authorities’obligation of Bosnia and Herzegovina from the guidelines of the European Union.

Erdal Trhulj, Minister of Energy, Mining and Industry pointed out that except the EU accession process and the international treaties which BiH signed, the main driver in making decision, when making this important decision political the main driver was initiation of new investments.

Great potential

“Where the market is regulated and where there is potential, investors will surely come, and BH is certainly a country with great potential in this sector”, noted Trhulj, adding that BiH is the only country in the region that produces an electricity surplus.

“Although we have the lowest electricity prices in South East Europe, the companies that operate in this sector operate with a profit”, said the Minister.

“BiH is sufficiently slow in the electricity market liberalization, so it has a great chance to avoid the pitfalls in which Croatia and Slovenia have fallen. Croatia liberalized market on paper,but in reality these legal acts and bylaws do not have much to do with the actual market situation”, warned Zoran Milisa, Director of RWE Croatia, adding that RWE sees long-term potential for investment in BiH.

Trhulj noted that the burden of subsidizing renewable energy would not submit businesses and citizens: “We will subsidize them with a maximum of 3 percent or 3 MEUR per year because we believe that it is better to invest in our hydro potentials than in expensive solar or wind energy”.Milisa said how it was a smart move because, for example, only in 2014th Croatia will spend about 100 MEUR on subsidies, while according to the projections these subsidies will amount 150MEUR in 2015th. with him also agreed Aleksander Mervar, Director of Slovenian company EELS who pointed out that so far Slovenia had spent a billion on renewable energy sources, and that the Slovenian economy of that hardly had any use.

There is no risk

“Mujo Selimovic, Managing Director of MIMS Group and an investor in some energy facilities said that it was true that there almost was no risk of investment return, and that investment return was expected for 7.8 years.”BiH currently exploits only one-third of hydropower potential while two-thirds is free. Why is it free? “, asks Selimovic and also gives an answer to this question:” The main problem in the Federation is slowly issuing of concessions for small hydro power plants, and because of the forest barrier there is no possibility of investing money as it takes too long to overcome the bureaucracy”.

“There were issued 200 concessions in FBiH, so far have been made 43 mini hydro power plants. The problem is that there are three different levels of government in BiH, and after passing all filters you lose a bit of will”, admits Trhulj and adds that capital is as a rabbit, and any kind of cabbage can be offered to rabbit, but he would not come if he is scared: “We must create an environment in this country to take advantage that it has in order that investors come here. Political stability is key to that”, concluded Trhulj.

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