Bosnian energy sector faces long term instability if corrective measures are not implemented, WB experts warn

19. March 2012. / Uncategorized

Existing and expected level of electricity prices in Bosnia and Hercegovina in the next three years is not sufficient for future investment needs in BH electric power companies, which endangers the financial and business potential and sector growth, warned in World bank.

WB in recently published report says that three energy companies are planning 6.1 bill convertible marks KM ( domestic currency) to invest up to 2015 for maintaining the import level, in production/power generation sectors of electricity and in coal supply. WB officials are explain that according the statements from energy companies this projects will be financed from internal funds of the companies and some external loans which will require state guaranties.

Announced need for loans and tariffs level shows that this trend will weaken the position of energy companies. None of the energy companies will not be able to cover its costs of investment cycles, considering the tariffs and price levels now, says in WB report. With this pricing levels three companies could face joint loss of 1,27 billion of KM.

BH Energy company negative balance for 2015 is estimated at almost 200 mill KM, and in energy company of Mostar power company almost 400 mil KM, and finally Republic of Srpska Energy company losses projection for same year reaches 670 mill KM. According to WB projections the companies will face problems in loans servicing but also with joint venture participation assets. The approach to funding will be harder and the government support will be surely neded for loans guaranties but this will also be an additional liability for federal government, WB warns in their report.

The measures proposed by WB experts are modernization and restructuring of coal mines with focus on implementation of modern technologies and increase of productivity.

Corporate management restructuring measures are also highly recommended by WB, tariff reform on level of full costs coverage with measures for socially endangered households.

According to Dusko Vrhovac, energy union from Republik of Srpska, their energy company has the lowest electricity price in the region which influences the investment cycles.

Electricity price should be in accordance with market conditions, while social categories of population should get incentive and low price, however this should be handled by Regulatory commission and our government, says Vrhovac.

Biggest energy union leader in Bosnia does not agree with proposed involvement of investors and underlines that new facilities should be developed with not more than 50% of joint venture ownership with foreign partner.

Source; Nezavisne novine

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