Bosnia - Energy Bosnia-Energy

Overview

Electric power generation is a key sector of economic activity in BiH.  Electric power is generated in both thermal and hydro power plants, and the country is a net exporter of electrical energy.  The generating capacity is about 16,000 GWh.  BiH has a comparative advantage in electricity, particularly because of its natural hydropower resources.  With investment in new hydropower generation, the country could double its current hydropower production levels.

After the 1992-1995 war, the once-unified power system in BiH was divided into three vertically-integrated companies split along geographic/ethnic lines.  The three state-owned electric power generation and distribution companies are: Elektroprivreda BiH (EPBiH), Elektroprivreda Republika Srpske (EPRS), and Elektroprivreda Hrvatske Zajednice Herceg-Bosna (EPHZHB).  Early international assistance focused on reconstruction of the physical infrastructure that was destroyed in the war.  As part of this effort, the international community spent hundreds of millions of dollars from 1996-2001 on the reconstruction of facilities and networks.  International financing, particularly from the World Bank, for physical improvements continues and the U.S. Government has focused on the institutional strengthening and restructuring of the electricity market since 2001. 

When BiH's energy infrastructure was constructed from 1948 to 1989, the intention was to create a diversified energy supply that covered the entire country.  Therefore, the energy generation makeup of BiH as a whole is roughly 40 percent hydroelectric and 60 percent thermal (coal-fired) generation – an ideal energy mix given that BiH has abundant coal resources and multiple rivers ideal for generating hydropower.  As the companies were created along ethnic/geographic lines and not for any technical reasons, there are significant generation disparities between the companies:

Table 3: 2018 BiH Electricity Generation Mix

BiH needs to implement reforms to make the power sector more efficient, transparent, independently regulated, and free from corruption.  However, because of structural problems, the governments of the Federation of Bosnia and Herzegovina and the Republika Srpska have not fully capitalized on potential energy investment projects.

In the long run, the World Bank estimates that BiH’s energy sector would require more than $6 billion in investment for modernization, life extension, and new generation facilities for the power generation and coal mines sectors.
 

Leading Sub-Sectors

• Desulphurization equipment/technology

• Emission control equipment and systems

• Generation equipment for hydro and thermal (coal) power plants

Opportunities

BiH’s electrical grid has suffered from decades of neglected maintenance and a lack of investment.   The European Bank for Reconstruction and Development (EBRD) intends to give a corporate loan of up to EUR 20.1 million to Transco for the modernization and upgrading of its telecommunication system. The project should lead to improvements in cross-border trade through improved management of the transmission network that a modernized and upgraded telecommunications system needs.  

The project will facilitate the purchase and installation of a new telecommunication system for the entire transmission network in BiH; the delivery and installation of backup power supplies for substations; reconstruction of data centers; and provide advisory services for the Project Implementation Unit.

In the Federation, political disagreements have thwarted attempts to initiate large power generation projects.  In 2007, the Federation Ministry of Energy, Mining, and Industry selected four “strategic partners” – international investors with significant expertise in the field – for the construction of seven hydro-power plants and four coal-fired power plants, with a combined installed capacity of 2,000 megawatts and estimated value around $2.5 billion.  In 2011, the Federation Government again announced interest in a massive energy investment scheme, with assurances of a fully transparent selection process.  Those plans are still on an indefinite hold.  Chinese and Russian companies have expressed interest in power generation projects, but only one – Stanari – has been completed. 

Some projects appear to be moving forward, albeit many remain in the preliminary phases.  In April 2014, EPBiH chose a consortium consisting of China's Gezhouba Group and Guangdong Electric Power Design Institute for the construction of a 450 megawatt (MW) coal-fired unit known as “Tuzla 7” at its Tuzla power plant; construction costs are estimated at around $1 billion.  The construction of this largest post-war investment in BiH’s energy sector is expected to start in 2019. General Electric is a major supplier for this project.

In 2016, the Chinese company Dongfang International Corporationcompleted construction of the Stanari coal-fired power plant in
the RS.  The project is a collaboration of the Chinese Development Bank (CDB), the energy company EFT Group, Dongfang International Corporation, and the RS government.  The CDB provided EFT Group with a structured loan of $455 million, accounting for 65 percent of the project’s total estimated cost of $715 million. 

Comsar Energy Group, a private company owned by Russian businessman Rashid Sardarov, is completing the pre-construction phase for a new 600 megawatt (MW) coal-fired thermal power plant near the existing RS government-owned Ugljevik 1 TPP.  The project, fully funded by Comsar’s private funds, envisions the construction of two thermal plant blocks, each with a generating capacity of 300 MW with a total estimated investment of $1.38 billion.  The initial construction phase, which includes onsite workers’ quarters, roads, and utilities, is complete.  Comsar has not specified a completion date, but it has received the required permits for the next phase of construction and an Austrian firm is reviewing the project for compliance with European Union regulations.  As of 2019, Comsar Energy is still seeking a company to build the thermal power plant. Comsar is negotiating on the TPP construction with several companies, aiming to conclude a turnkey contract.  The energy ministry of the RS also said that the project was halted due to the failed negotiations with the Chinese partners.

In October 2015, the Federation government selected the Chinese Dongfang Electric Corporation to partner with public company Brown Coal Mines Banovici to finance and build a 350 megawatt coal-fired thermal power plant 19 miles from Tuzla.  The plant will burn coal from the adjacent Banovici mines and produce 2,047 GWh of electricity per year.  Construction of the plant has not yet started pending final government and parliamentary approval.

In September 2015, China's Dongfang Electric Corporation sent the RS government a letter of intent for cooperation in the construction of a new 350MW unit at the existing Gacko TPP.   The next steps will be to initiate legal procedures needed for selecting the main contractor.  China's Dongfang Electric Corporation has presented proposals for providing financing under a credit framework which may be very favorable for power utility ERS, which will be the main investor on behalf of the RS government.  ERS and TPP have started the process of selecting a consultant for the feasibility study. The cost of the project has not yet been announced.

The RS has established cooperation with the Russian company ZiO which plans to modernize the Gacko and Ugljevik thermal power plants, an investment worth 200 million EUR. These projects should help extend the life span of these two power plans and boost their output. With modernization, JSC ZiO can potentially extend the plants’ life for 30 years, a necessary step in BiH since the majority of Yugoslav-era coal-fired plants will age out of their useful life in the next 10-15 years.  The Japanese Yokogawa Electric Corporation announced that it will deliver a control system for monitoring and control of a flue gas desulfurization system that is to be installed at the Ugljevik coal-fired power plant.

The Federation energy ministry completed a tender for a consultant to advise the issuing of an international public invitation for oil and gas exploration on the entity's territory and chose the British consulting firm HIS Global. The consulting firm will advise the Federation government on the preparation of a tender for awarding a concession for oil and gas exploration and production in the entity. According to estimates of the geology institute of the Federation, the territory of the Dinaric Alps could potentially contain deposits of about 1 billion barrels of oil.
 

Web Resources

Elektroprenos BiH (Transco)
Elektroprivreda BiH (EPBiH)
Elektroprivreda Republike Srpske (ERS)
Elektroprivreda Hrvatske Zajednice Herceg Bosna (EPHZHB)