Bosnia: Market liberalization 2015, preparations underway

31. October 2013. / SEE Energy News

Since the beginning of 2015. Bosnian households should get a possibility of choice from which electro distributers, registered in BiH, will buy electricity, and the opening of such possibility could create turbulence between three domestic power utilities companies in the future.

Analysts believe that the process of market opening will not lead to a significant entry of foreign distribution companies, as domestic power utilities companies offer lower electricity prices to the households in comparison to the region and Europe. However, the fact is that the costs of “Power Utility Company of RS” (ERS) are lower than those of “BiH Power Utility Company” (EP BiH) and “Power Utility Company HZHB” announces demolition of existing monopolies and creation of new market relations.

In the ERS consider that precisely their lower electricity prices are just the biggest barrier to future liberalization of the electricity market, which is open conclusion which avoided commenting in the EP BiH. For EP BiH, however, a key obstacle in the planned liberalization is “insufficient definition of the legal framework”.

Despite differing views on the current obstacles for the liberalization of the electricity market for households, in the both companies state that they work on  completing of the agreement dynamics of the Energy Community of South East Europe, according to which states parties were obliged to open the electricity market at the beginning of 2008. for all non-household customers, and for households starting by 2015.

The liberalization principle is such that any company registered in Bosnia and Herzegovina for the electricity sale may take part in it, no matter from which world country comes. Bosnian market is already open on the way that businesses have the opportunity to purchase electricity from the electricity distributers, which they consider the best one.

In the power utility companies say that in this process are currently underway the activities on the separation of distribution and electricity supply.

“Due to the fact that the prices at which ERS supplies are significantly lower than the market ones, none of the customers in the RS, who have got the right on a free supplier choice,  did not procure electricity on the free market in the current period”,  state in the ERS headquarters in Trebinje.

In the EP BiH, however, stressed that for the electricity market liberalization there are a number of legislative obstacles, or that the legal and regulatory framework do not fully comply with the conditions prevailing in a fully open market. They add that the lack of information and lack of customers’ preparedness for new business conditions may also slow down the process of market opening.

It is interesting that the practice of a number of European countries that have completed the process of electricity market liberalization has shown that it has not led to electricity prices falling. In the Energy Regulatory Commission of RS say that , despite that increased choice and supplier competition on the market should bring down prices, the practice of opening markets in Slovakia, Hungary, the Baltic states and Romania led to the opposite trend, namely to the price rises.

“In addition to the liberalization process, the reason for rising prices in these countries could be very easily a limiting factor for competitiveness and market abuse”, says Republican regulator.

Among the countries where liberalization has led to the electricity cheapening, the positive example is Croatia.

From the Ministry of Industry, Energy and Mining reminded that with the opening of the electricity market would be realized long-term objectives of the RS energy policy relating to the introduction of competition, bringing the energy price on an economically sustainable level and the conditions creation for investment in the sector.

In this context, they point out that the activities on the development of law on electricity are underway, with which will be created the preconditions for the obligations fulfillment from the so-called “Third EU package” and  market opening in accordance with EU directives.

Source; Serbia Energy See desk

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